EXHIBIT D
Amendment to Lease dated May 22, 1989, by Heffernan Family Trust, ("Lessor") and
Coast Commercial Bank ("Lessee") for 1975 Soquel Drive, Santa Cruz, California.
The following paragraphs in said lease are hereby amended and all other terms
and conditions shall remain the same and, in the event of any conflict, this
amendment shall supersede the lease.
1.6 Term: The actual term ( the "Initial Term") shall be for a ten (10) year
period commencing on OCTOBER 1, 1990.
1.7 Options To Extend Lease Term: Lessee shall have the option pursuant to
paragraph 3.2 to extend the term of this Lease for two (2) additional terms at
Market Rate rent as set forth in paragraph 4.3 of this Lease. Paragraph 4.3 of
Lease shall be amended to two (2) options.
1.8 Base Rent: During the Initial Term, the base rent per net rentable square
foot shall be:
Year Rate Per Square Foot Per Month N.N.N.
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1 $0.95
2 $1.20
3 $1.25
4 $1.30
5 $1.35
6 $1.40
7 $1.45
8 $1.50
9 $1.50
10 $1.50
READ AND APPROVED AND RECEIPT OF A COPY IS HEREBY ACKNOWLEDGED:
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Date Date
/s/ /s/
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Heffernan Family Trust Coast Commercial Bank
Exhib-A 1
Exhibit A
Amendment to Lease
Acceptance Agreement
This Acceptance Agreement dated July 16, 1990 and made with regard to that lease
dated May 22, 1989 between Heffernan Family Trust, Lessor, and Coast Commercial
Bank, Lessee, and affecting those premises commonly known as 1975 Soquel Drive.
The parties agree as follows:
1. All improvements required to be constructed by Lessor have been
completed in accordance with the terms of this lease and are hereby
accepted by Lessee.
2. Possession of the premises has been delivered to Lessee and Lessee has
accepted premises.
3. The commencement date of the lease term (paragraph 1.6) is October 1,
1990 and shall expire on September 30, 1993, unless terminated sooner
according to the terms of this lease or by mutual agreement.
4. The base rent due pursuant to this lease for the first year is Four
Thousand Six Hundred Eighty-Eight Dollars and Twenty-Five cents
($4,688.25) per month.
5. Lessor has received a Security Deposit in the amount of Fourteen
Thousand Sixty-Four Dollars and Seventy-Five cents, ($14,064.75). In
accordance with paragraph 1.10 of this lease, Landlord will apply Four
Thousand Six Hundred Eighty-Eight Dollars and Twenty-Five cents
($4,688.25) on the commencement date to cover the first month's base
rent. This will leave a Security Deposit balance of Nine Thousand
Three Hundred Seventy-Six Dollars and Fifty cents ($9,376.50).
6. Allowances for Lessee Tenant Improvements are as follows:
6.1 Allowance for 2' x 4' suspended ceiling $5,000.
system per Plans and Specs -- 1st floor only
6.2 Allowance for Troffer Lights per Plans and Specs $5,500.
-- 1st floor only
6.3 Allowance for sprinkler system per Plans $5,299.
and Specs -- 1st floor only
6.4 Allowance for HVAC roof mounting equipment and $24,647.
distribution to 1st floor ceiling
7. This lease is in full force and effect, neither party is in default of
its obligations under this lease, and Lessee has no setoffs, claims,
or defenses to the enforcement of the lease.
Exhib-A 1
Exhibit A
Amendment to Lease
Acceptance Agreement
LESSOR LESSEE
HEFFERNAN FAMILY TRUST COAST COMMERCIAL BANK
By /s/ By /s/
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Its Its
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Date Date
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Exhib-A 2
STANDARD OFFICE LEASE-NET
1. BASIC LEASE PROVISIONS ("Basic Lease Provisions")
1.1 PARTIES: This Lease, dated May ___, 1989, is made by and between
Heffernan Family Trust, (herein called "Lessor") and Coast Commercial Bank,
(herein called "Lessee").
1.2 PREMISES: The ground floor of the building described in paragraph 1.4
of this Lease, consisting of approximately 4,935 net rentable square feet, more
or less, as defined in paragraph 2 and as shown on EXHIBIT A hereto (the
"Premises") plus any space leased to Lessee as a result of the exercise of
Lessee's option to expand the Premises as set forth in paragraph 39.2 hereto.
1.3 OPTION TO EXPAND PREMISES: Lessee shall have the option to expand the
Premises as set forth in paragraph 39.2 of this Lease.
1.4 BUILDING: To be constructed at the location commonly described as
1975 Soquel Drive, in the County of Santa Cruz, State of California, and as
defined in paragraph 2.
1.5 USE: Lessee shall use the Premises for the operation of a commercial
bank, subject to paragraph 6.
1.6 TERM: The initial term (the "Initial Term") shall be for a three (3)
year period commencing (a) upon substantial completion of the tenant
improvements pursuant to the provisions of EXHIBIT C hereto, or (b) one month
after delivery of substantially completed building shell, whichever event occurs
first ("Commencement Date"). The parties shall immediately execute an amendment
to this Lease stating the Commencement Date when it is ascertained.
1.7 OPTIONS TO EXTEND LEASE TERM: Lessee shall have the option pursuant
to paragraph 3.2 to extend the term of this Lease for three (3) additional terms
at Market Rate rent as set forth in paragraph 4.3 of this Lease.
1.8 BASE RENT: During the Initial Term, the base rent per net rentable
square foot shall be Ninety-Five Cents ($0.95) per month in the first year, One
Dollar and Ten Cents ($1.10) per month in the second year and One Dollar and
Fifteen Cents ($1.15) per month in the third year.
1.9 ESCALATION OF BASE RENT: During the First Extended Term, Second
Extended Term and Third Extended Term (as defined in paragraph 3.2), if any, the
base rent payable by Tenant shall be adjusted, upwards only, as provided in
paragraph 4.3 below.
1.10 LEASE DEPOSIT: Lessee shall pay a lease deposit (the "Lease Deposit")
totaling three (3) months rent (Fourteen Thousand Sixty-Four Dollars and
Seventy-Five Cents ($14,064.75). The parties hereby acknowledge that the Lessee
has already paid Lessor a One Thousand Dollar ($1,000) "good faith" deposit,
which shall be credited to the Lease Deposit. Upon the execution of this Lease,
Lessee shall pay Lessor Thirteen Thousand Sixty-Four Dollars and Seventy-Five
Cents ($13,064.75) as the balance of the Lease Deposit. On the Commencement
Date, Four Thousand Six Hundred Eighty-Eight Dollars and Twenty-Five Cents
($4,688.25) of the Lease Deposit shall be credited to the base rent for the
first month of the lease term, and the balance of Nine Thousand Three Hundred
Seventy-Six Dollars and Fifty Cents ($9,376.50) shall be held as a security
deposit.
1.11 SECURITY DEPOSIT: The security deposit of Nine Thousand Three Hundred
Seventy-Six Dollars and Fifty Cents ($9,376.50) equals that portion of the Lease
Deposit which remains after the base rent for the first month is deducted as set
forth in paragraph 1.10 of this Lease. The security deposit shall be held as
provided in paragraph 1.10 of this Lease. The security deposit shall be held as
provided in paragraph 5 of this Lease.
1.12 FIRST RIGHT TO PURCHASE BUILDING: Lessee shall have the first right
to purchase the Building (as defined in paragraph 2.1 hereto) pursuant to
paragraph 39.3 of this Lease.
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1.13 LESSEE'S SHARE OF OPERATING EXPENSES: Lessee's Share of Operating
Expenses shall be fifty-five percent (55%), as set forth in paragraph 4.2.
2. PREMISES, PARKING AND COMMON AREAS.
2.1 PREMISES: The Premises are a portion of a building, herein sometimes
referred to as the "Building" identified in paragraph 1.3 of the Basic Lease
Provisions. "Building" shall include adjacent parking facilities used in
connection therewith. The Premises, the Building, the Common Areas (as defined
in paragraph 2.3 hereto), the land upon which the same are located, along with
all other buildings and improvements thereon or thereunder, are herein
collectively referred to as the "Office Building Project." Lessor hereby leases
to Lessee and Lessee leases from Lessor for the term, at the rental, and upon
all of the conditions set forth herein, the real property referred to in the
Basic Lease Provisions, paragraph 1.2, as the "Premises," including rights to
the Common Areas as hereinafter specified. The parties acknowledge that the
actual net rentable square footage of the Premises will not be established until
completion and final approval of the building design. The parties also
acknowledge that the computation of "net rentable" does not include the
stairwell, electrical closet, or the top floor tenant's proportionate share of
lobby space.
2.2 VEHICLE PARKING: So long as Lessee is not in default, and subject to
the rules and regulations attached hereto and as established by Lessor from time
to time, Lessee shall be entitled to use twenty-four (24) parking spaces in the
Office Building Project. Six (6) of the parking spaces located nearest the main
entrance to the Building shall be designated for use solely by Lessee and its
customers.
2.2.1 PROHIBITED ACTIVITIES; TOWING. If, in connection with
vehicular parking, Lessee commits, permits or allows any of the prohibited
activities described in this Lease or the rules then in effect, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved in such
prohibited activities and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.3 COMMON AREAS--DEFINITION. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Office Building Project that are provided and designated by the Lessor
from time to time for the general non-exclusive use of Lessor, Lessee and other
lessees of the Office Building including but not otherwise prohibited by this
Lease, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, ramps, driveways, landscaped areas and decorative walls.
2.4 COMMON AREAS--RULES AND REGULATIONS. Lessee agrees to abide by and
conform to the rules and regulations attached hereto as EXHIBIT B with respect
to the Office Building Project, and to cause its employees, suppliers, shippers,
customers and invitees, to so abide and conform. Lessor or Lessor's agent shall
have the exclusive control and management of the Common Areas and shall have the
right, from time to time, to modify, amend and enforce said rules and
regulations. Lessor shall not be responsible or liable to Lessee for the non-
compliance with said rules and regulations by Lessor or other lessees of the
Office Building Project, or their respective agents, employees and invitees.
2.5 COMMON AREAS--CHANGES. Lessor shall have the right, in Lessor's sole
discretion, from time to time:
(a) To make changes to the Building interior and exterior and Common
Areas, including without limitation, changes in the location, size, shape,
number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Lessor shall at all times provide the parking facilities
required by applicable law;
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(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land and improvements outside the boundaries
of the Office Building Project to be a part of the Common Areas, provided that
such other land and improvements have a reasonable and functional relationship
to the Office Building Project;
(d) To add additional buildings and improvements to the Common Areas;
(e) To use the Common Areas while engaged in making additional
improvements,
repairs or alterations to the Office Building Project, or any portion
thereof;
(f) To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Office Building Project as Lessor
may, in the exercise of sound business judgment deem to be appropriate.
3. TERM.
3.1 TERM. The Initial Term and Commencement Date of this Lease shall be as
specified in paragraph 1.6 of the Basic Lease Provisions.
3.2. OPTION TO EXTEND LEASE TERM. Lessee is hereby granted the option to
extend the term of this Lease for three (3) additional terms, hereinafter
referred to as the "First Extended Term," "Second Extended Term," and the
"Third Extended Term" respectively, on all of the terms and. provisions
contained in this Lease, except rent (which rent shall be set at the Market Rate
as defined in paragraph 4.3) and expiration date of the Initial Term. Lessee may
exercise its option to extend the term of this Lease by giving written notice Of
such exercise (a "Lessee's Renewal Notice") to Lessor not later than nine (9)
months prior to the expiration of the term to be extended; provided, however,
that if Lessee is in default on the date of giving Lessee's Renewal Notice, the
Lessee's Renewal Notice shall be null and void and of no force or effect, and
provided further, that if Lessee is in default on, or this Lease has been
otherwise terminated prior to, the date that the First Extended Term, the Second
Extended Term, or the Third Extended Term, as the case may be, would otherwise
commence, such extended term shall not commence and this Lease shall expire at
the end of the Initial Term, the First Extended Term or the Second Extended
Term, as the case may be. The First Extended Term shall before five (5) years,
commencing on the day after the expiration of the initial Term. The Second
Extended Term shall be for a period of five (5) years, commencing on the day
after the expiration of the First Extended Term. The Third Extended Term shall
be for a period of five (5) years, commencing on the day after the expiration of
the Second Extended Term. Lessee shall have no right to extend the term of this
Lease beyond the Third Extended Term described herein. The Initial Term and any
Extended Term(if commenced as provided above) shall be collectively referred to
herein as the "Lease Term."
3.3 DELAY IN POSSESSION. Notwithstanding said Commencement Date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date and subject to paragraph 3.3.2, Lessor shall not be subject to any
liability therefore, nor shall such failure affect the validity of this Lease or
the obligations of hereunder or extend the term hereof; but in such case, Lessee
shall not be obligated to pay rent or perform any other obligation of Lessee
under the terms of this Lease, except as may be otherwise provided in this
Lease, until possession of the Premises is tendered to Lessee, as hereinafter
defined; provided, however, that if Lessor has not delivered possession of the
Premises within one hundred twenty (120) days following said Commencement Date,
as the same may be extended by written agreement between Lessor and Lessee,
Lessee may, at Lessee's option, cancel this Lease, by giving notice in writing
to Lessor within ten (10) days after the 120 days following the Commencement
Date, as extended, in which event the parties shall be discharged from all
obligations hereunder; provided, however, that, as to Lessee's obligations,
Lessee shall first reimburse Lessor for all costs incurred for Lessee
Improvements (as defined in Exhibit C) and, as to Lessor's obligations, Lessor
shall return any money previously deposited by Lessee (less any offsets due
Lessor for Lessee Improvements); and provided further, that if such
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written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease hereunder shall terminate and be of
no further force or effect.
3.3.1 POSSESSION TENDERED -- DEFINED. Possession of the Premises
shall be deemed tendered to Lessee ("Tender of Possession") ten (10) days after
Lessor has provided written notice to Lessee that within ten (10) days from such
notice (1) the improvements to be provided by Lessor under this Lease will be
substantially completed, (2) the Building utilities will be brought to and
"stubbed off" inside the Building, and (3) Lessee will have reasonable access to
the Premises.
3.3.2 DELAYS CAUSED BY LESSEE. There shall be no abatement of
rent for, and the one hundred twenty (120) day period following the Commencement
Date before which Lessee's right to cancel this Lease accrues under paragraph
3.3 shall be deemed extended to the extent of, any delays caused in whole or in
part by acts or omissions of Lessee, its agents, employees and contractors.
3.4 EARLY POSSESSION. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease and such occupancy shall not change the termination date.
3.5 UNCERTAIN COMMENCEMENT. In the event commencement of this Lease term
is defined as the substantial completion of the improvements, Lessee and Lessor
shall execute an amendment to this Lease establishing the date of Tender of
Possession (as defined in paragraph 3.3.1) or the actual taking of possession by
Lessee, whichever first occurs, as the Commencement Date.
3.6 CERTAIN DUTIES OF LESSEE; RIGHTS OF LESSOR UPON TERMINATION.
(a) At the expiration or earlier termination of this Lease or
Lessee's right of possession, Lessee shall (1) notify Lessor of the existence of
any Hazardous Substance (as defined in paragraph 6.1.3 hereto), and if Lessee
caused such Hazardous Substances to be located on the Office Building Project,
cause such Hazardous Substances to be removed from the Premises and the Office
Building Project and to be transported for use, storage, or disposal in
accordance and compliance with all applicable Hazardous Substances Laws (as
defined in paragraph 6.1.3 hereto), and (2) surrender Possession of the Premises
and all keys, any key cards, and any parking stickers or cards, to Lessor, and
advise Lessor as to the combination of any locks or vaults then remaining in the
Premises.
(b) If Lessee fails to perform any removal of Hazardous Substances or
fails to make repairs or restoration or to remove any items from the Premises as
required under paragraph 7.3(a) hereunder or otherwise, Lessor may do so, and
Lessee shall pay Lessor the costs thereof immediately upon demand. All property
removed from the Premises by Lessor pursuant to any provision of this Lease or
any law may be handled or stored by Lessor at Lessee's expense, and Lessor shall
in no event be responsible for the value, preservation or safekeeping thereof.
Unless prohibited by applicable law, Lessor shall have a lien against such
property for the costs incurred in removing and storing same.
4. RENT.
4.1 BASE RENT. Lessee shall pay to Lessor the base rent for the Premises
set forth in paragraphs 1.8 and 1.9 of the Basic Lease Provisions, in advance on
the first day of each month without offset or deduction. Lessee shall begin
paying rent on the Commencement Date. Rent for any period during the term
hereof which is for less than one month shall be prorated based upon the actual
number of days of the calendar month involved. Rent shall be payable in lawful
money of the United States to Lessor at the address stated herein or to such
other persons or at such other places as Lessor may from time to time designate
in writing.
4.2 OPERATING EXPENSES. Lessee shall pay to Lessor during the term
hereof, in addition to the base rent, Lessee's Share, as hereinafter defined, of
all Operating Expenses, as hereinafter defined, during each calendar year of the
term of this Lease, in accordance with the following provisions:
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(a) "Lessee's Share" is defined for purposes of this Lease as the
percentage set forth in paragraph 1.13 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate net rentable square
footage of the Premises by the total approximate net rentable square footage of
the Office Building Project. It is understood and agreed that the square
footage figures set forth in the Basic Lease Provisions are approximations which
Lessor and Lessee agree are reasonable and shall not be subject to revision
except in connection with an actual change in the size of the Premises or a
change in the space available for lease in the Office Building Project.
(b) "Operating Expenses" is defined for purposes of this Lease to
include all costs, if any, incurred by Lessor in the exercise of its reasonable
discretion, for:
(i) The operation, repair, maintenance, and replacement, in
neat, clean, safe, good order and condition, of the Office Building Project,
including but not limited to, the following:
(aa) The Common Areas, including their surfaces, coverings,
decorative items, carpets, drapes and window coverings, and including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
stairways, parkways, driveways, landscaped areas, striping, bumpers, irrigation
systems, Common Area lighting facilities, building exteriors and roofs, fences
and gates;
(bb) All heating, air conditioning, plumbing, electrical
systems, life safety equipment, telecommunication and other equipment used in
common by, or for the benefit of, lessees or occupants of the Office Building
Project, including without limitation tenant directories and fire detection and
suppression systems, elevators and escalators, including sprinkler system
maintenance and repair.
(ii) Trash disposal, janitorial and security services;
(iii) Any other service to be provided by Lessor that is
elsewhere in this Lease stated to be an "Operating Expense";
(iv) The cost of the premiums for the liability, property
damage (including earthquake and plate glass damage) and rental value insurance
policies to be maintained by Lessor under paragraph 8 hereof;
(v) The amount of the real property, taxes to be paid by
Lessor under paragraph 10.1 hereof;
(vi) The cost of water, sewer, gas, electricity, and other
publicly mandated services to the Office Building Project;
(vii) Labor, salaries and applicable fringe benefits and costs,
materials, supplies and tools, used in maintaining and/or cleaning the Office
Building Project and accounting and a management fee attributable to the
operation of the Office Building Project;
(viii) Replacing and/or adding improvements mandated by any
governmental agency and any repairs or removals necessitated thereby amortized
over its useful life according to Federal income tax regulations or guidelines
for depreciation thereof (including interest on the unamortized balance as is
then reasonable in the judgment of Lessor's accountants);
(ix) The costs of cleanup, decontamination, or closure arising
out of or in connection with a release of a Hazardous Substance, which costs are
not the responsibility of Lessee pursuant to paragraph 7.2(c).
(c) Operating Expenses shall not include the costs of replacements of
equipment or improvements that are not either "3-year property" or "5-year
property" for purposes of MACRS, unless the equipment or improvements are of the
type described in paragraph 4.2(b)(viii), in which case their replacement costs
shall be included as above provided.
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(d) Operating Expenses shall not include any expenses paid by any
lessee directly to third parties, or as to which Lessor is otherwise reimbursed
by any third party, other lessee (except such lessee's share of operating
Expenses), or by insurance proceeds.
(e) Lessee's Share of Operating Expenses shall be payable by Lessee
within ten (10) days after a reasonably detailed statement of actual expenses is
presented to Lessee by Lessor. At Lessor's option, however, an amount may be
estimated by Lessor from time to time of Lessee's Share of annual operating
Expenses and the same shall be payable monthly or quarterly, as Lessor shall
designate, during each calendar year of the Lease term, on the same day as the
base rent is due hereunder. If Lessee pays Lessor's estimate of Lessee's Share
of Operating Expenses as aforesaid, Lessor shall deliver to Lessee within sixty
(60) days after the expiration of each calendar year a reasonably detailed
statement showing Lessee's Share of the actual Operating Expenses incurred
during the preceding year. If Lessee's payments under this paragraph 4.2(e)
during said preceding calendar year exceed Lessee's Share as indicated on said
statement, Lessee shall be entitled to credit the amount of such overpayment
against Lessee's Share of Operating Expenses next falling due. If Lessee's
payments under this paragraph during said preceding calendar year were less than
Lessee's Share as indicated on said statement, Lessee shall pay to Lessor the
amount of the deficiency within ten (10) days after delivery by Lessor to Lessee
of said statement.
4.2.1 SEPARATE METERS. Notwithstanding anything to the contrary in
paragraph 4.2 of this Lease, Lessee shall pay the entire cost of separately-
metered electric and/or other services provided solely for the benefit of the
Premises and/or Lessee.
4.3 RENT APPLICABLE TO EXTENDED TERM OR EXPANDED PREMISES. If Lessee
exercises its option under paragraph 3.2 of this Lease to extend the term hereof
or its option under paragraph 39.2 of this Lease to expand the Premises, the
base rent for the first year of the Extended Term or for the first year the
Second Floor Space (as defined in paragraph 39.2) is leased shall be set at the
market rate as determined by this paragraph 4.3 (the "Market Rate") and shall be
adjusted upwards each year thereafter according to the procedure set forth in
paragraph 4.3.2 of this Lease.
4.3.1 MARKET RATE DETERMINATION. Within thirty (30) days after
receipt of a Lessee's Renewal Notice (as defined in paragraph 3.2) or Lessee's
Expansion Notice (as defined in paragraph 39.2), if such notice is delivered in
accordance with paragraph 3.2 or 39.2, Lessor shall advise Lessee in writing of
Lessor's determination of the Market Rate ("Market Rate Notice") to be
applicable during the first year of the lease for the Extended Term or for the
Second Floor Space, as applicable. Unless Lessee objects to Lessor's
determination in writing within five (5) days after receipt of the Market Rate
Notice, Lessee shall be bound by Lessor's determination. If Lessee objects to
such determination, Lessee shall deliver a written notice to Lessor either (a)
rescinding the Lessee's Renewal Notice or Lessee's Expansion Notice, or (b)
advising Lessor of its proposal as to an alternative Market Rate. If Lessee
elects to rescind its Lessee's Renewal Notice or Lessee's Expansion Notice,
Lessee's option as set forth in paragraph 3.2 or 39.2, as the case may be, shall
terminate. If Lessee gives notice of an alternative proposal regarding the
Market Rate, Lessor may either accept Lessee's proposal, in which event such
proposal by Lessee shall establish the base rent for the Extended Term or Second
Floor Space for the first year, or attempt to negotiate a mutually acceptable
Market Rate with Lessee. If Lessor and Lessee shall not, within five (5) days
of the date of delivery of Lessee's written response to the Market Rate Notice,
have reached agreement as to the Market Rate and if Lessee has not rescinded the
Lessee's Renewal Notice or Lessee's Expansion Notice as provided above, then
upon the written request of either party, made no later than ten (10) days after
the termination of such five (5) day period, the Market Rate issue shall be
submitted for decision to the American Arbitration Association in Santa Cruz
County, California, in accordance with the then rules of said association and
the decision of the arbitrators shall be binding upon the parties,
notwithstanding one party failing to appear after due notice of the proceeding.
The cost of said Arbitrators shall be paid equally by Lessor and Lessee. In the
event that neither party makes a request for arbitration within the ten (10) day
period, Lessee's option to extend the term or lease the Second Floor Space shall
automatically terminate.
4.3.2 ADJUSTMENT OF MARKET RATE. The monthly base rent payable
pursuant to paragraph 4.3.1 shall be adjusted each year subsequent to the first
year by the increase, if any, in the Consumer Price Index of the
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Bureau of Labor Statistics of the Department of Labor for All Urban Consumers,
(1982-1984=100), "All Items," for the San Francisco-Oakland Region, herein
referred to as "C.P.I.," as follows:
(a) The CPI adjustment to the monthly base rent payable pursuant to
paragraph 4.3.1 shall be calculated as follows: the base rent payable for the
first full calendar month of the Extended Term or expansion into the Second
Floor Space ("Adjustment Base Month"), as the case may be, shall be multiplied
by a fraction, the numerator of which shall be the C.P.I. of the calendar month
during which the adjustment is to take effect, and the denominator of which
shall be the C.P.I. for the Adjustment Base Month. The sum so calculated shall
constitute the new monthly base rent hereunder, but, IN no event, shall such new
monthly base rent be less that the base rent payable for the month immediately
preceding the date for the rent adjustment.
(b) In the event the compilation and/or publication of the C.P.I.
shall be transferred to any other governmental department or bureau or agency or
shall be discontinued, then the index most nearly the same as the C.P.I. shall
be used to make the calculations of subparagraph (a). If Lessor and Lessee
cannot agree on such alternative index, then the matter shall be submitted for
decision to the American Arbitration Association in Santa Cruz County,
California, in accordance with the then rules of said association and the
decision of the arbitrators shall be binding upon the parties, notwithstanding
one party failing to appear after due notice of the
proceeding. The cost of said Arbitrators shall- be paid equally by
Lessor and Lessee.
(c) Lessee shall continue to pay the rent at the rate previously in
effect until the increase, if any, is determined. Within five (5) days
following the date on which the increase is determined, Lessee shall make such
payment to Lessor as will bring the increased rental current, commencing with
the effective date of such increase through the date of any rental installments
then due. Thereafter the rental shall be paid at the increased rate.
(d) At such time as the amount of any change in rental required by
this Lease is known or determined, Lessor and Lessee shall execute an amendment
to this Lease setting forth such change.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
the security deposit set forth in paragraph 1.11 of the Basic Lease Provisions
as security for Lessee's faithful performance of Lessee's obligations hereunder.
If Lessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Lessor may use, apply or
retain all or any portion of said deposit for the payment or offset of any rent
or other charge in default, for the payment of any other sum to which Lessor may
become obligated by reason of Lessee's default, or to compensate Lessor for any
loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessee shall within ten (10) days after
written demand therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount then required of Lessee. As the monthly
base rent shall increase at the commencement of the First Extended Term, Second
Extended Term and Third Extended Term of this Lease, Lessee shall, at the time
of such increase, deposit with Lessor additional money as a security deposit so
that the total amount of the security deposit held by Lessor shall equal three
(3) months of the then monthly base rent. Lessor shall not be required to keep
said security deposit separate from its general accounts. If Lessee performs
all of Lessee's obligations hereunder, said deposit, or so much thereof as has
not heretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, the
last assignee, if any, of Lessee's interest hereunder) at the expiration of the
term hereof, and after Lessee has vacated the Premises. No trust relationship
is created herein between Lessor and Lessee with respect to said security
deposit.
6. USE.
6.1 USE.
(a) Lessee shall use and occupy the Premises only for the purposes
set forth in paragraph 1.5 of the Basic Lease Provisions or any other use which
is reasonably comparable to that use and for no other purpose.
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(b) Lessee shall not cause or permit any Hazardous Substances, as
defined in paragraph 6.1(c) below, to be brought upon or kept or used in or
about the Office Building Project by Lessee, its agents, employees, contractors,
or invitees, unless (1) such Hazardous Substances are necessary for Lessee's
business (and such business is a permitted use under paragraph 6.1(a) above) and
(2) Lessee first obtains the written consent of Lessor. In any event, Lessee
shall report to Lessor not less frequently than annually the presence on or in
the Office Building Project of any Hazardous Substances brought upon or kept or
used in or about the Office Building Project by Lessee, its agents, employees,
contractors, or invitees, and the type, quantity and location thereof.
(c) As used in this Lease, the term "Hazardous Substance or
Substances" means any hazardous or toxic substances, materials or wastes,
including, but not limited to, those substances, materials, and wastes defined
as a "hazardous waste," "extremely hazardous waste," "restricted hazardous
waste," "hazardous substance," or "hazardous material" under any local, state or
federal laws, ordinances, regulations and orders (collectively, "Hazardous
Substances Laws"), or otherwise regulated by Hazardous Substances Laws, and
including, without limitation, any material, waste or substance which is (i)
petroleum, (ii) asbestos, or (iii) polychlorinated biphenyls.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, do not violate any covenants or restrictions of record, or
any applicable building code, regulation or ordinance in effect on such Lease
term Commencement Date. If it is determined that this warranty has been
violated, then it shall be the obligation of the Lessor after written notice
from Lessee, to promptly and at Lessor's sole cost and expense, rectify any such
violation.
(b) Except as provided in paragraph 6.2(a) Lessee shall, at Lessee's
expense, promptly comply with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements of
any fire insurance underwriters or rating bureaus, now in effect or which may
hereafter come into effect, whether or not they reflect a change in policy from
that now existing, during the term or any part of the term hereof, relating in
any manner to the Premises and the occupation and use by Lessee of the Premises.
Lessee shall conduct its business in a lawful manner and shall not use or permit
the use of the Premises or the Common Areas in any manner that will tend to
create waste or a nuisance or shall tend to disturb other occupants of the
Office Building Project.
(c) Without limiting the foregoing, Lessee shall at all times and in
all respects comply with all Hazardous Substances Laws relating to industrial
hygiene, environmental protection, or the use, analysis, generation,
manufacture, storage, disposal, or transportation of any Hazardous Substances.
Lessee shall at its own expense procure, maintain in effect, and comply with all
conditions of any and all permits, licenses, and other governmental and
regulatory approvals required for Lessee's use of the Premises, including,
without limitation, discharge of (appropriately treated) materials or wastes
into or through any sanitary sewer serving the Office Building Project. Lessee
shall promptly deliver to Lessor copies of applications for such permits,
licenses and approvals upon making such application, and shall promptly deliver
copies of the permits, licenses and approvals upon receipt. Lessee shall also
supply to Lessor as promptly as possible, and in any event within five (5)
business days after Lessee first receives or sends the same, copies of all
claims, reports, complaints, notices, warnings, or asserted violations relating
in any way to Lessee's use of the office Building Project. Except as discharged
into the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Substances Laws, Lessee shall cause any and all Hazardous Substances
removed from the Premises or from the Office Building Project, if removed at
Lessee's direction, to be removed and transported solely by duly licensed
haulers to duly licensed facilities for final disposal of such materials and
wastes. Lessee shall promptly deliver to Lessor copies of hazardous waste
manifests reflecting the legal and proper disposal of all Hazardous Substances
removed from the Premises or from the Office Building Project, if removed at
Lessee's direction.
(d) If at any time Lessee becomes aware, or has reasonable cause to
believe, that any Hazardous Substance has come to be located on or beneath the
Office Building Project, or that Lessee, any other lessee, or Lessor may have
violated a Hazardous Substances Law, then Lessee shall, immediately upon
discovering such
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presence or suspected presence of the Hazardous Substance or violation or
suspected violation of law, give written notice of that condition or violation
to Lessor.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee in a clean condition
on the Commencement Date (unless Lessee is already in possession) and Lessor
warrants to Lessee that, to the extent such items are provided by Lessor as
Standard Improvements, the plumbing, lighting, air conditioning, and heating
system in the Premises shall be in good operating condition. If it is
determined that this warranty has been violated then it shall be the obligation
of Lessor, after receipt of written notice from Lessee setting forth with
specificity the nature of the violation, to promptly and at Lessor's sole cost,
rectify such violation.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts
the Premises and the Office Building Project in their condition existing as of
the Commencement Date or the date on which Lessee takes possession of the
Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws. ordinances and regulations governing and regulating the
use of the Premises, and any easements, covenants restrictions of record, and
accepts this Lease subject thereto and to all matters disclosed thereby and by
any exhibits attached hereto. Lessee acknowledges that it has satisfied itself
by its own independent investigation that the Premises are suitable for its
intended use, and that neither Lessor nor Lessor's agent(s) has made any
representation or warranty as to the present or future suitability of the
Premises, Common Areas, or Office Building Project for the conduct of Lessee's
business.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.
7.1 LESSOR'S OBLIGATIONS. Lessor shall keep the exterior walls, roof, and
Common Areas of the Office Building Project, and the equipment used in common
with other premises, in good condition and repair. Lessor shall not be
obligated to paint, maintain or repair the Premises or any Lessee Improvements,
including, without limitation, doors, walls, interior partitions, ceilings and
floors. Except as provided in paragraph 9.5, there shall be no abatement of
rent or liability of Lessee on account of any injury or interference with
Lessee's business with respect to any improvements, alterations or repairs made
by Lessor to the Office Building Project or any part thereof. Lessee expressly
waives the benefits of any statute now or hereafter in effect which would
otherwise afford Lessee the right to make repairs at Lessor's expense or to
terminate this Lease because of Lessor's failure to keep the Premises in good
order, condition and repair, including, without limitation, California Civil
Code sections 1931 and 1941-1942, inclusive.
7.2 LESSEE'S OBLIGATIONS.
(a) Lessee shall keep the Premises and any equipment (wherever
located) that serves only Lessee or the Premises in good condition and repair.
If Lessee fails to maintain or repair the Premises or equipment as provided
herein, Lessor may do so and charge Lessee the costs thereof (to the extent such
cost is attributable to causes beyond normal wear and tear) as additional rent.
Lessee shall be responsible for the cost of painting, repairing or replacing
Premises wall and floor coverings and ceilings, and to repair or replace any
Lessee Improvements.
(b) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as received,
ordinary wear and tear excepted, clean and free of debris. Any damage or
deterioration of the Premises shall not be deemed ordinary wear and tear if the
same could have been prevented by good maintenance practices by Lessee. Lessee
shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, alterations, furnishings and equipment.
Except as otherwise stated in this Lease, Lessee shall leave the air lines,
power panels, electrical distribution systems, lighting fixtures, air
conditioning, window coverings, wall coverings, carpets, wall paneling, ceilings
and plumbing on the Premises in good operating condition.
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(c) Lessee shall maintain the Premises and Office Building Project
free of Hazardous Substances, and shall at its sole cost and expense clean up
any releases of Hazardous Substances which occur in, on or around the Premises
or Office Building Project as a result of, or in connection with, Lessee's
operations.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, Utility Installations or repairs in, on or
about the Premises, or the office Building Project. @s used in this paragraph
7.3 the term "Utility Installation" shall mean carpeting, window and wall
coverings, power panels, electrical distribution systems, lighting fixtures, air
conditioning, plumbing, and telephone and telecommunication wiring and
equipment. At the expiration of the term, Lessor may require the removal of any
or all of said alterations, improvements, additions or Utility Installations,
and the restoration of the Premises and Office Building Project to their prior
condition, at Lessee's sole cost and expense. If Lessor permits Lessee to make
its own alterations, improvements, additions or Utility Installations, Lessee
shall use only such contractor as has been expressly approved by Lessor, and
Lessor may require Lessee to provide Lessor, at Lessee's sole cost and expense,
a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such improvements, to insure Lessor against any liability for
mechanic's and materialmen's liens and to insure completion of the work. If
Lessee makes any alterations, improvements, additions or Utility Installations
without the prior approval of Lessor, or uses a contractor not expressly
approved by Lessor, Lessor may, at any time during the term of this Lease,
require that Lessee remove any part or all of the same at Lessee's sole cost and
expense.
(b) Any alterations, improvements, additions or Utility Installations
in or about the Premises or the Office Building Project that Lessee desires to
make shall be presented to Lessor in written form with proposed detailed plans.
Lessee shall pay Lessor a reasonable fee to cover Lessor's costs, including
overhead and the costs of outside consultants, in reviewing Lessee's plans and
specifications and performing any supervision of the work. If Lessor gives its
consent to Lessee's making such alterations, improvements, additions or Utility
Installation, the consent shall be deemed conditioned upon Lessee acquiring a
permit to do so from the applicable governmental agencies, furnishing a copy
thereof to Lessor prior to the commencement of the work, and compliance by
Lessee with all conditions Of said permit in a prompt and expeditious manner. If
Lessor consents or supervises, the same shall not be deemed a warranty as to the
adequacy of the design, workmanship or quality of materials, and Lessor hereby
expressly disclaims any responsibility or liability for the same.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building or the Office Building
Project, or any interest therein.
(d) Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises by Lessee, and Lessor
shall have the right to post notices of non-responsibility in or on the Premises
or the Building as provided by law. If Lessee, in good faith, contests the
validity of any such lien, claim or demand, then Lessee shall at its sole
expense defend itself and Lessor against the same and shall- pay and satisfy any
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises, the Building or the Office Building Project,
upon the condition that, if Lessor requires, Lessee shall furnish to Lessor a
surety bond satisfactory to Lessor in an amount equal to such contested lien
claim or demand indemnifying Lessor against liability for the same and holding
the Premises, the Building and the Office Building Project free from the effect
of such lien or claim. In addition, Lessor may require Lessee to pay Lessor's
reasonable attorneys fees and costs in participating in such action if Lessor
shall decide it is to Lessor's best interest so to do.
(e) All alterations, improvements, additions or Utility Installation
(whether or not such Utility Installations constitute trade fixtures of Lessee,
which may be made to the Premises by Lessee, including but not limited to, floor
coverings, panelings, doors, drapes, built-ins, moldings, sound attenuation, and
lighting and telephone or communication systems, conduit, wiring and Outlets,
shall be made and done in a good and workmanlike manner and shall be of good and
sufficient quality and materials and shall be the property of Lessor and remain
upon and be surrendered with the Premises at the expiration of the Lease term,
unless Lessor requires their removal pursuant to paragraph 7.3(a). Provided
Lessee is not in default, notwithstanding the provisions of
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this paragraph 7.3(e), Lessee's personal property and equipment, other than that
which is affixed to the Premises so that it cannot be removed without material
damage to the Premises or the Building, and other than utility installations,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of paragraph 7.2.
(f) Lessee shall provide Lessor with as-built plans and
specifications for any alterations, improvements, additions or Utility
Installations.
7.4 UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other lessee of the Office Building Project,
including, but not by way of limitation, such utilities as plumbing, electrical
systems, security systems, communication systems, and fire protection and
detection systems, so long as such installations do not unreasonably interfere
with Lessee's use of the Premises.
8. INSURANCE; INDEMNITY.
8.1 WORKERS' COMPENSATION INSURANCE--LESSEE. Lessee shall maintain during
the term of this Lease workers' compensation insurance as required by law.
8.2 LIABILITY INSURANCE-LESSEE. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease a policy of Comprehensive
General Liability insurance utilizing an Insurance Services Office standard form
with Broad Form General Liability Endorsement (GL0404), or equivalent, in an
amount of not less than one million Dollars ($1,000,000) per occurrence of
bodily injury and property damage combined or in a greater amount as reasonably
determined by Lessor and shall insure Lessee with Lessor as an additional
insured against liability arising out of the use, occupancy or maintenance of
the Premises. Compliance with the above requirement shall not, however, limit
the liability of Lessee hereunder.
8.3 PROPERTY INSURANCE--LESSEE. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease for the benefit of Lessee,
business interruption insurance and replacement cost fire and extended coverage
"all risk" property damage insurance, with vandalism and malicious mischief,
sprinkler leakage and earthquake endorsements, in an amount sufficient to cover
not less than one hundred percent (100%) of the full replacement cost, as the
same may exist from time to time, of all of Lessee's personal property,
fixtures, equipment and tenant improvements.
8.4 LIABILITY INSURANCE--LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other risks
Lessor deems advisable from time to time, insuring Lessor, but not Lessee,
against liability arising out of the ownership, use, occupancy or maintenance of
the Office Building Project in an amount not less than Five Million Dollars
($5,000,000) per occurrence.
8.5 PROPERTY INSURANCE--LESSOR. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in the amount of the full
replacement cost thereof, as the same may exist from time to time, utilizing
Insurance Services Office standard form, or equivalent, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, earthquake, plate glass, and such other
perils as Lessor deems advisable or may be required by a lender having a lien on
the Office Building Project. In addition, Lessor shall obtain and keep in
force, during the term of this Lease, a policy of rental value insurance
covering a period of one year, with loss payable to Lessor, which insurance
shall also cover all Operating Expenses for said period. Lessee will not be
named in any such policies carried by Lessor and shall have no right to any
proceeds therefrom- The policies required by these paragraphs 8.4 and 8.5 shall
contain such deductibles as Lessor or the aforesaid lender may determine. if the
Premises suffers an insured loss as defined in paragraph 9.1(f) hereof, the
deductible amounts under the applicable insurance policies shall be deemed an
Operating Expense. Lessee shall not do or permit to be done anything which
shall invalidate the insurance policies carried by Lessor. Lessee shall pay the
entirety of any increase in the
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property insurance premium for the Office Building Project over what it was
immediately prior to the commencement of the term of this Lease if the increase
is specified by Lessor's insurance carrier as being caused by the nature of
Lessee's occupancy or any act or omission of Lessee.
8.6 INSURANCE POLICIES. Lessee shall deliver to Lessor copies of
liability insurance policies required under paragraph 8.2 or certificates
evidencing the existence arid amounts of such insurance (and showing Lessor as
an additional insured) prior to the Commencement Date of this Lease or prior to
the date that Lessee enters the Premises pursuant to paragraph 8 of Exhibit C,
whichever is earlier. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with renewals thereof.
8.7 WAIVER OF SUBROGATION. Lessor and Lessee release each other, and
their respective representatives, from any claims for damage to any person or to
the Premises and the Office Building Project that are caused by or result from
risks insured against under any insurance policies carried by Lessor or Lessee
and in force at the time of any such damage. Lessor and Lessee shall cause each
insurance policy obtained by it to provide that the insurance company waives all
right of recovery by way of subrogation against the other party in connection
with any damage covered by any such policy. Neither Lessor or Lessee shall be
liable to the other for any damage caused by fire or any of the risks insured
against under any insurance policy required by this Lease. if any insurance
policy cannot be obtained with a waiver of subrogation, or is obtainable only by
the payment of an additional premium charge above that charged by insurance
companies issuing policies without waiver of subrogation, the party undertaking
to obtain the insurance shall notify the other party of this fact. The other
party shall have a period of ten (10) days after receiving the notice either to
place the insurance with a company that is reasonably satisfactory to the other
party and that will carry the insurance with a waiver of subrogation, or to
agree to pay the additional premium if such a policy is obtainable at additional
cost. If the insurance cannot be obtained or the party in whose favor a waiver
of subrogation is desired refuses to pay the additional premium charged, the
other party is relieved of the obligation to obtain a waiver of subrogation
rights with respect to the particular insurance involved.
8.8 INDEMNITY. Lessee shall indemnify and hold harmless Lessor and its
agents, Lessor's master or ground lessor, partners and lenders, from and against
any and all claims for damage to the person or property of anyone or any entity,
and from and against any charges of violations of Hazardous Substances Laws,
arising from Lessee's use of the Office Building Project, Lessee's release or
improper handling or disposal of Hazardous Substances, or from the conduct of
Lessee's business or from any activity, work or things done, permitted or
suffered by Lessee in or about the Premises or elsewhere and shall further
indemnify and hold harmless Lessor from and against any and all claims, costs
and expenses arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any of Lessee's agents,
contractors, employees or invitees and from and against all costs (including
without limitation the costs of cleanup, detoxification or decontamination of
the Office Building Project), fines, attorneys' fees, expenses, losses
(including without limitation diminution in the value of the Office Building
Project) and liabilities incurred by Lessor as the result of any such use,
conduct, activity, work, things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but not limited to
the defense or pursuit of any claim or any action or proceeding involved
therein; and if any action or proceeding is brought against Lessor by reason of
any such matter, Lessee, upon notice from Lessor, shall defend the same at
Lessee's sole cost and expense by counsel reasonably satisfactory to Lessor and
Lessor shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be so indemnified. Lessee, as a material part
of the consideration to Lessor, hereby assumes all risk of damage to property of
Lessee or injury to persons, in, upon or about the office Building Project
arising from any cause and Lessee hereby waives all claims in respect thereof
against Lessor.
8.9 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other person
in or about the Premises or the office Building Project, nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from theft,
fire, steam, electricity, gas, water
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or rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether said damage or injury results from conditions
arising upon the Premises or upon other portions of the Office Building Project,
or from other sources or places, or from new construction or the repair,
alteration or improvement of any part of the Office Building Project, or of the
equipment, fixtures or appurtenances applicable thereto, and regardless of
whether the cause of such damage or injury or the means of repairing the same is
inaccessible, Lessor shall not be liable for any damages arising from any act or
neglect of any other lessee, occupant or user of the Office Building Project,
nor from the failure of Lessor to enforce the provisions of any other lease of
any other lessee of the Office Building Project. In any event of liability for
which Lessor is not expressly exempted by the provisions of this paragraph 8.9,
Lessor's liability, if any, shall be limited to an amount equal to Lessor's
interest in the Office Building Project.
8.10 NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Lessee's property or obligations under
this Lease.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.
(b) "Premises Building Partial Damage" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is less than thirty-three percent (33%) of the then Replacement
Cost of the Building.
(c) "Premises Building Total Destruction" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is thirty-three percent (33%) or more of the then Replacement
Cost of the Building.
(d) "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.
(e) "Office Building Project Buildings Total Destruction" shall mean
if the Office Building Project Buildings are damaged or destroyed to the extent
that the cost to repair is thirty-three percent (33%) or more of the then
Replacement Cost of the Office Building Project Buildings.
(f) "Insured Loss" shall mean damage or destruction which was caused
by an event required to be covered by the insurance described in paragraph 8.
The fact that an Insured Loss has a deductible amount shall not make the loss an
uninsured loss.
(g) "Replacement Cost" shall mean the amount of money necessary to be
spent in order to repair or rebuild the damaged area to the condition that
existed immediately prior to the damage occurring, excluding all improvements
made by lessees, other than those installed by Lessor at Lessee's expense.
9.2 PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGES.
(a) Insured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
Insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Lessor shall, as soon as reasonably
possible and to the extent the required materials and labor are readily
available through usual commercial channels, at Lessor's expense, repair such
damage (but not Lessee's fixtures or equipment or Lessee Improvements) to its
condition existing at the time of the damage, and this Lease shall continue in
full force and effect.
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(b) Uninsured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is not
an Insured Loss and which falls within the classification of Premises Damage or
Premises Building Partial Damage, unless caused by a negligent or willful act or
omission of Lessee (in which event Lessee shall make the repairs at Lessee's
expense), which damage prevents Lessee from making any substantial use of the
Premises, Lessor may, at Lessor's option, either (i) repair such damage as soon
as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect; or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.
9.3 PREMISES BUILDING TOTAL DESTRUCTION; OFFICE BUILDING PROJECT TOTAL
DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any
time during the term of this Lease there is damage, whether or not it is an
Insured Loss, which falls into the classifications of either (i) Premises
Building Total Destruction, or (ii) Office Building Project Total Destruction,
then Lessor may, at Lessor's option, either (a) repair such damage or
destruction as soon as reasonably possible at Lessor's expense (to the extent
the required materials are readily available through usual commercial channels)
to its condition existing at the time of the damage, but not Lessee's fixtures
or equipment or Lessee Improvements, and this Lease shall continue in full force
and effect; or (b) give written notice to Lessee within thirty (30) days after
the date of occurrence of such damage of Lessor's intention to cancel and
terminate this Lease, in which case this Lease shall terminate as of the date of
occurrence of such damage.
9.4 DAMAGE NEAR END OF TERM. If at any time during the last twelve (12)
months of the term of the Initial Term, First Extended Term, Second Extended
Term or Third Extended Term the Premises are more than eighty percent (80%)
damaged or destroyed, Lessor may at Lessor's option cancel and terminate this
Lease as of the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within thirty (30) days after the date of
occurrence of such damage.
9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) If Lessor repairs or restores the Building or Premises pursuant
to the provisions of this paragraph 9, and any part of the Premises are not
usable (including loss of use due to loss of access or essential services), the
rent payable hereunder (including Lessee's Share of Operating Expenses) for the
period during which such damage, repair or restoration continues shall be
abated, provided (1) the damage was not the result of the negligence of Lessee,
and (2) such abatement shall only be to the extent the operation of Lessee's
business as operated from the Premises is adversely affected. Except for said
abatement of rent, if any, Lessee shall have no claim against Lessor for any
damage suffered by reason of any such damage, destruction, repair or
restoration.
(b) If Lessor is obligated to repair or restore the Premises or the
Building under the provisions of this paragraph 9 and does not commence such
repair or restoration within ninety (90) days after such occurrence, or if
Lessor does not complete the restoration and repair within six (6) months after
such occurrence, Lessee may at Lessee's option cancel and terminate this Lease
by giving Lessor written notice of Lessee's election to do so at any time prior
to the commencement or completion, respectively, of such repair or restoration,
and this Lease shall terminate as of the date of such notice.
(c) Lessee agrees to cooperate with Lessor in connection with any
such restoration and repair, including but not limited to the approval and/or
execution of plans and specifications required.
9.6 TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
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9.7 WAIVER. Lessor and Lessee waive the provisions of any statute which
relates to termination of leases when leased property is destroyed (including
but not limited to California Civil Code Section 1932) and agree that such event
shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax, as defined
in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2 except as otherwise provided in paragraph 10.2.
10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for paying
any increase in real property tax specified in the tax assessor's records and
work sheets as being caused by additional improvements placed upon the Office
Building Project by other lessees or by Lessor for the exclusive enjoyment of
any' other lessee. Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or by Lessor at Lessee's
request.
10.3 DEFINITION OF REAL PROPERTY TAX. As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Office Building Project or any portion thereof
by any authority having the direct or indirect power to tax, including any city,
county, state or federal government, or any school, agricultural, sanitary,
fire, street, drainage or other improvement district thereof, as against any
legal or equitable interest of Lessor in the Office Building Project or in any
portion thereof, as against Lessor's right to rent or other income therefrom,
and as against Lessor's business of leasing the Office Building Project. The
term "real property tax" shall also include any tax, fee, levy, assessment or
charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of "real
property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax," or (iii) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a change
in ownership, as defined by applicable local statutes for property tax purposes,
of the Office Building Project or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason of such change of
ownership, or (v) which is imposed by reason of this transaction, any
modifications or charges hereto, or any transfers hereof.
10.4 JOINT ASSESSMENT. If the improvements or property, the taxes for
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
separately assessed, Lessee's portion of that tax shall be equitably determined
by Lessor from the respective valuations assigned in the assessor's work sheets
or such other information (which may include the cost of construction) as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere.
(b) If any of Lessee's said personal property is assessed with
Lessor's real property, Lessee shall pay to Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11. UTILITIES.
11.1 SERVICES PROVIDED BY LESSOR. Lessor shall provide heating,
ventilation, air conditioning and janitorial services as reasonably required,
reasonable amounts of electricity for normal lighting and office
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machines, water for reasonable and normal drinking and lavatory use and
replacement light bulbs and/or fluorescent tubes and ballasts for standard
overhead fixtures.
11.2 SERVICES EXCLUSIVE TO LESSEE. Lessee shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon. If any such services are not separately metered
to the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises in the Building.
11.3 HOURS OF SERVICE. Said services and utilities shall be provided
during generally accepted business days and hours or such other days or hours as
may hereafter be set forth. Utilities and services required at other times shall
be subject to advance request and reimbursement by Lessee to Lessor of the cost
thereof.
11.4 EXCESS USAGE BY LESSEE. Lessee shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water, lighting
or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including but not limited to security services, over
standard office usage for the Office Building Project. Lessor shall require
Lessee to reimburse Lessor for any excess expenses or costs that may arise out
of a breach of this subparagraph by Lessee. Lessor may, in its sole discretion,
install at Lessee's expense supplemental equipment and/or separate metering
applicable to Lessee's excess usage or loading.
11.5 INTERRUPTIONS. There shall be no abatement of rent and Lessor shall
not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor's
reasonable control or in cooperation with government request or directions.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void and shall constitute a material
default and breach of this Lease without the need for notice to Lessee under
paragraph 13.1. "Transfer" within the meaning of this paragraph 12 shall include
the transfer or transfers aggregating (a) If Lessee is a corporation, more than
twenty-five percent (25%) of the voting stock of such corporation, or (b) if
Lessee is a partnership, more than twenty-five percent (25%) of the profit and
loss participation in such partnership.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof without
Lessor's consent, to any corporation which controls, is controlled by or is
under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, all of which are referred to as "Lessee Affiliate;"
provided that before such assignment shall be effective, (a) said assignment
shall assume, in full, the obligations of Lessee under this Lease and (b) Lessor
shall be given written notice of such assignment and assumption. Any such
assignment shall not, in any way, affect or limit the liability of Lessee under
the terms of this Lease even if after such assignment or subletting the terms of
this Lease are materially changed or altered without the consent of Lessee, the
consent of whom shall not be necessary.
12.3 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, no assignment or subletting shall
release Lessee of Lessee's obligations hereunder or alter the primary liability
of Lessee to pay the rent and other sums due Lessor hereunder
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including Lessee's Share of Operating Expenses, and to perform all other
obligations to be performed by Lessee hereunder.
(b) Lessor may accept rent from any person other than Lessee pending
approval or disapproval of such assignment.
(c) Neither a delay in the approval or disapproval of such assignment
or subletting, nor the acceptance of rent, shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for the breach of any of the terms or
conditions of this paragraph 12 or this Lease.
(d) If Lessee's obligations under this Lease have been guaranteed by
third parties, then an assignment or sublease, and Lessor's consent thereto,
shall not be effective unless said guarantors give their written consent to such
sublease and the terms thereof.
(e) The consent by Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on this Lease or sublease and without obtaining their consent and such
action shall not relieve such persons from liability under this Lease or said
sublease; provided, however, such persons shall not be responsible for the
extent any such amendment or modification enlarges or increases the obligations
of the Lessee or sublessee under this Lease or such sublease.
(f) In the event of any default under this Lease, Lessor may proceed
directly against Lessee, any guarantors or any one else responsible for
performance of this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor of Lessee.
(g) Lessor's written consent to any assignment or subletting of the
Premises by Lessee shall not constitute an acknowledgment that no default then
exists under this Lease of the obligations to be performed by Lessee nor shall
such consent be deemed a waiver of any then-existing default, except as may be
otherwise stated by Lessor at the time.
(h) The discovery of the fact that any financial statement relied
upon by Lessor in giving its consent to an assignment or subletting was
materially false shall, at Lessor's election, render Lessor's said consent null
and void.
12.4 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. Regardless
of Lessor's consent, the following terms and conditions shall apply to any
subletting by Lessee of all or any part of the Premises and shall be deemed
included in all subleases under this Lease whether or not expressly incorporated
therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease heretofore or
hereafter made by Lessee, and Lessor may collect such rent and income and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a default shall occur in the performance of Lessee's obligations under this
Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease, to the extent such rents are not otherwise payable to Lessor as
Lessor's share of any Transfer Premium, as defined in Paragraph 12.9. Lessor
shall not, by reason of this or any other assignment of such sublease to Lessor
nor by reason of the collection of the rents from a sublessee, be deemed liable
to the sublessee for any failure of Lessee to perform and comply with any of
Lessee's obligations to such sublessee under such sublease. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a written
notice from Lessor stating that a default exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor the rents due and to become due
under the sublease. Lessee agrees that such sublessee shall have the right to
rely upon any such statement and request from Lessor, and that such sublessee
shall pay such rents to Lessor without any obligation or right to inquire as to
whether such default exists and notwithstanding any notice from or claim from
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Lessee to the contrary. Lessee shall have no right or claim against said
sublessee or Lessor for any such rents so paid by said sublessee to Lessor.
(b) No sublease entered into by Lessee shall be effective unless and
until it has been approved in writing by Lessor. In entering into any sublease,
Lessee shall use only such form of sublease as is satisfactory to Lessor, and
once approved by Lessor, such sublease shall not be changed or modified without
Lessor's prior written consent. Any sublessee shall, by reason of entering into
a sublease under this Lease, by deemed, for the benefit of Lessor, to have
assumed and agreed to conform and comply with each and every obligation herein
to be performed by Lessee other than such obligations as are contrary to or
inconsistent with provisions contained in a sublease to which Lessor has
expressly consented in writing.
(c) In the event Lessee shall default in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of Lessee under such sublease from the time of
the exercise of said option to the termination of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to Lessee or for any other prior defaults of Lessee under
such sublease.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) With respect to any subletting to which Lessor has consented,
Lessor agrees to deliver a copy of any notice of default by Lessee to the
sublessee. Such sublessee shall have the right to cure a default of Lessee
within three (3) days after service of said notice of default upon such
sublessee, and the sublessee shall have right of reimbursement and offset from
and against Lessee for any such defaults cured by the sublessee.
12.5 LESSOR'S EXPENSES. If Lessee assigns or sublets the Premises or
requests the consent of Lessor to any assignment or subletting or if Lessee
requests the consent of Lessor for any act Lessee proposes to do, then Lessee
shall pay Lessor's reasonable costs and expenses incurred in connection
therewith, including attorneys', architects', engineers' or other consultants'
fees.
12.6 CONDITIONS TO CONSENT. Lessor reserves the right to condition any
approval to assign or sublet upon Lessor's determination that (a) the proposed
assignee or sublessee shall conduct a business on the Premises of a quality
substantially equal to that of Lessee and consistent with the general character
of the other occupants of the Office Building Project and not in violation of
any exclusives or rights then held by other lessees, and (b) the proposed
assignee or sublessee be at least as financially responsible as Lessee was
expected to be at the time of the execution of this Lease or of such assignment
or subletting, whichever is greater.
12.7 NOTICE OF PROPOSED ASSIGNMENT OR SUBLEASE. If Lessee desires
Lessor's consent to any proposed assignment or sublease, Lessee shall notify
Lessor in writing, which notice shall include:
(a) the proposed effective date (which shall not be less than 30 nor
more than 180 days after Lessee's notice);
(b) the portion of the Premises to be transferred (the "Subject
Space");
(c) the terms of the proposed assignment or sublease and the
consideration therefor, the name and address of the proposed transferee, and a
copy of all documentation pertaining to the proposed assignment or sublease; and
(d) current financial statements of the proposed transferee certified
by an officer, partner or owner thereof, and any other information to enable
Lessor to determine the financial responsibility, character, and reputation of
the proposed transferee, nature of such transferee's business and proposed use
of the Subject Space, and such other information as Lessor may reasonably
require.
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12.8 LESSOR'S RECAPTURE OF SUBJECT SPACE. Lessor shall have the option, by
giving written notice to Lessee within thirty (30) days after receipt of
Lessee's notice of a proposed assignment or sublease, to recapture the Subject
Space. Lessee shall have fifteen (15) days after receipt of Lessor's notice of
intent to recapture to withdraw Lessee's notice of the proposed assignment or
sublease; if Lessee so withdraws its notice of the proposed assignment or
sublease, Lessor's option to recapture shall terminate and this Lease shall
continue in full force and effect. If Lessee does not withdraw its notice of
proposed assignment or sublease within said fifteen (15) day period, then
Lessor's recapture notice shall cancel and terminate this Lease with respect to
the Subject Space as of the date stated in Lessee's notice as the effective date
of the proposed assignment or sublease (or, at Lessor's option, shall cause the
assignment or sublease to be made to Lessor or its agent, in which case the
parties shall execute the transfer documentation promptly thereafter). If this
Lease is canceled with respect to less than the entire Premises, the Rent
reserved herein shall be prorated on the basis of the number of rentable square
feet retained by Lessee in proportion to the number of rentable square feet
contained in the Premises, this Lease as amended shall continue thereafter in
full force and effect, and upon request of either party, the parties shall
execute written confirmation of the same.
12.9 TRANSFER PREMIUM. If Lessor consents to an assignment or sublease, and
as a condition thereto which the parties hereby agree is reasonable, Lessee
shall pay to Lessor fifty percent (50%) of any Transfer Premium derived by
Lessee from such transfer. "Transfer Premium" shall mean all rent, additional
rent or other consideration paid by such transferee in excess of the Rent
payable by Lessee under this Lease (on a monthly basis during the term, and on a
per rentable square foot basis, if less than all of the Premises is
transferred), after deducting the reasonable expenses incurred by Lessee for any
changes, alterations and improvements to the Premises, any other economic
concessions or services provided to the transferee, and any customary brokerage
commissions paid in connection with the assignment or sublease. If part of the
consideration for such transfer is paid in other than cash, Lessor's share of
such non-cash consideration shall be in such form as is reasonably satisfactory
to Lessor. The percentage of the Transfer Premium due Lessor hereunder shall be
paid within ten (10)days after Lessee receives any Transfer Premium from the
transferee.
13. DEFAULT; REMEDIES.
13.1 DEFAULT. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by lessee:
(a) The vacation or abandonment of the Premises by Lessee. Vacation
of the Premises shall include the failure to occupy the Premises for a
continuous period of ten (10) days or more, whether or not the rent is paid.
(b) The breach by Lessee of any of the covenants, conditions or
provisions of paragraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment or
subletting), 13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f)
(false statement), 13.1(g) (Hazardous Substances), 16(a) (estoppel certificate),
30(b) (subordination), 33 (auctions) or 41.1 (easements), all of which are
hereby deemed to be material, noncurable defaults without the necessity of any
notice by Lessor to Lessee thereof.
(c) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of five (5) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also Constitute the notice required by
this subparagraph.
(d) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee other than those referenced in subparagraphs (b) and (c), above, where
such failure shall continue for a period of fifteen (15) days after written
notice thereof from Lessor to Lessee; provided, however, that if the nature of
Lessee's noncompliance is such that more than fifteen (15) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said fifteen (15) day period and thereafter
diligently pursues such cure to completion. To the extent
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permitted by law, such fifteen (15) day notice shall constitute the sole and
exclusive notice required to be given to Lessee under applicable Unlawful
Detainer statutes.
(e) (i) The making by Lessee of any general arrangement or general
assignment for the benefit of creditors; (ii) Lessee becoming a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within thirty
(30) days; (iii) the appointment of a trustee or receiver to take Possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. In the event that any provision of this paragraph 13.1(e) is contrary to
any applicable law, such provision shall be of no force or effect.
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee, its successor in interest or by any guarantor of Lessee's
obligation hereunder was materially false.
(g) The release by Lessee, its employees, contractors or agents of
any Hazardous Substance, the violation by Lessee, its employees, contractors or
agents of any Hazardous Substances Law, or the failure by Lessee, its employees,
contractors or agents to comply with all conditions of any and all permits,
licenses and governmental and regulatory approvals.
13.2 REMEDIES. In the event of any material default or breach of this
Lease by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises. to Lessor. In
such event, Lessor shall be entitled to recover from Lessee all damages incurred
by Lessor by reason of Lessee's default including, but not limited. to, the cost
of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and any real estate commission actually paid, and all amounts recoverable
pursuant to Section 195i.2 of the California Civil Code, including but not
limited to (1) the worth at the time of award by the court having jurisdiction
thereof of the unpaid rent which had been earned at the time of termination; (2)
the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Lessee proves could have been reasonably
avoided; (3) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Lessee proves could be reasonably avoided; and (4) any
other amount necessary to compensate Lessor for all the detriment proximately
caused by Lessee's failure to perform his obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom.
(b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have vacated or abandoned
the Premises. In such event, Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the State of California. Unpaid
installments of rent and other unpaid monetary obligations of Lessee under the
terms of this Lease shall bear interest from the date due at the maximum rate
then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor and
to the holder of any first mortgage or deed of trust covering the Premises whose
name and address shall have theretofore been furnished to Lessee in writing,
specifying wherein Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days are
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required for performance then Lessor shall not be in default if Lessor commences
performance within such thirty (30) day period and thereafter diligently pursues
the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
to Lessor of base rent, Lessee's Share of Operating Expenses or other sums due
hereunder will cause Lessor to incur Costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges and late
charges which may be imposed on Lessor by the terms of any mortgage or trust
deed covering the Office Building Project. Accordingly, if any installment of
base rent, Operating Expenses, or any other rum due from Lessee shall not be
received by Lessor or Lessor's designee within five (5) days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a late charge equal to six percent (6%) of such overdue amount.
The parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.
14. CONDEMNATION. If the Premises or any portion thereof or the Office
Building Project are taken under the power of eminent domain, or sold under the
threat of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first occurs;
provided that if so much of the Premises or the office Building Project are
taken by such condemnation as would substantially and adversely affect the
operation and profitability of Lessee's business conducted from the Premises,
Lessee shall have the option, to be exercised only in writing within thirty (30)
days after Lessor shall have given Lessee written notice of such taking (or in
the absence of such notice, within thirty (30) days after the condemning
authority shall have taken possession), to terminate this Lease as of the date
the condemning authority takes such possession. If Lessee does not terminate
this Lease in accordance with the foregoing, this Lease shall remain in full
force and effect as to the portion of the Premises remaining, except that the
rent and Lessee's Share of Operating Expenses shall be reduced in the proportion
that the floor area of the Premises taken bears to the total floor area of the
Premises. Common Areas taken shall be excluded from the Common Areas usable by
Lessee and no reduction of rent shall occur with respect thereto or by reason
thereof. Lessor shall have the option in its sole discretion to terminate this
Lease as of the taking of possession by the condemning authority by giving
written notice to Lessee of such election within sixty (60) days after receipt
of notice of a taking by condemnation of any part of the Premises or the Office
Building Project. Any award for the taking of all or any part of the Premises or
the Office Building Project under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any separate award for loss of or
damage to Lessee's trade fixtures, removable personal property and unamortized
tenant improvements that have been paid for by Lessee. For that purpose, the
cost of such improvements shall be amortized over the original term of this
Lease excluding any options. In the event that this Lease is not terminated by
reason of such condemnation, Lessor shall, to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by such condemnation which materially impairs the conduct of
the ordinary business for which the Premises are leased, except to the extent
that Lessee has been reimbursed therefor by the condemning authority. Lessee
shall pay any amount in excess Of such severance damages required to complete
such repair.
15. BROKER'S FEE.
(a) The brokers involved in this transaction are J. R. Parrish Inc.
as "listing broker" and J.R. Parrish, Inc. as "cooperating broker," licensed
real estate broker(s). A "cooperating broker" is defined as any broker other
than the listing broker entitled to a share of any commission arising under this
Lease. Upon execution of this Lease by both parties, Lessor shall pay to said
brokers jointly, or in such separate shares as they may mutually designate in
writing, a fee as set forth in that certain Commission Agreement between J. R.
Parrish Inc. and Lessor, dated as of September 29, 1988.
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(b) Lessee and Lessor each represent and warrant to the other that
neither has had any dealings with any person, firm, broker or finder (other than
the person(s) whose names are set forth in paragraph 15(a) above) in connection
with the negotiation of this Lease arid/or the consummation of the transaction
contemplated hereby, and no other broker or other person, firm or entity is
entitled to any commission or finder's fee in connection with said transaction
and Lessee and Lessor do each hereby indemnify and hold the other harmless from
and against any costs, expenses, attorneys' fees or liability for compensation
or charges which may be claimed by any such unnamed broker, finder or other
similar party by reason of any dealings or actions of the indemnifying party.
16. ESTOPPEL CERTIFICATE.
(a) Each party (as "responding party") shall at any time upon not
less than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Office Building Project or
of the business of Lessee.
(b) At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease in full force and effect
without modification except as may be
represented by the requesting party, (ii) there are no uncured defaults
in the requesting party's performance and (iii) if Lessor is the requesting
party, not more than one (1) month's rent has been paid in advance.
(c) If Lessor desires to finance, refinance or sell the Office
Building Project, or any part thereof, Lessee hereby agrees to deliver to any
lender or purchaser designated by Lessor such financial statements of Lessee as
may be reasonably required by such lender or purchaser. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
owner or owners at the time in question of the fee title or a lessee's interest
in a ground lease of the Office Building Project, and in the event of any
transfer of such title or interest, Lessor herein named (and in case of any
subsequent transfers the then grantor) shall be relieved from and after the date
of such transfer of all liability as respects Lessor's obligations thereafter to
be performed, provided that any funds in the hands of Lessor or the then grantor
at the time of such transfer, in which Lessee has an interest, shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns only during their respective periods of ownership.
18. SEVERABILITY. The invalidity of any provision of this Lease as determined
by a court of competent jurisdiction shall in no way affect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at the maximum
rate then allowable by law or judgments from the date due until paid. Payment of
such interest shall not excuse or cure any default by Lessee under this Lease,
provided, however, that interest shall not be payable on late charges incurred
by Lessee nor on any amounts upon which late charges are paid by Lessee.
20. TIME OF ESSENCE. Time is of the essence with respect to the obligations
to be performed under this Lease.
-22-
21. ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expense and any other expenses payable by Lessee hereunder shall be deemed to be
rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease and the
Exhibits attached hereto contain all agreements of the parties with respect to
any matter mentioned herein or therein. No prior or contemporaneous agreement or
understanding pertaining to any such matter shall be effective. This Lease may
be modified in writing only, signed by the parties in interest at the time of
modification. Except as otherwise stated in this Lease, Lessee hereby
acknowledges that neither the real estate broker listed in paragraph 15 hereof
nor any cooperating broker on this transaction nor the Lessor or any employee or
agents of any of said persons has made any oral or written warranties or
representations to Lessee relative to the condition or use by Lessee of the
Premises or the Office Building Project and Lessee acknowledges that Lessee
assumes all responsibility regarding the Occupational Safety Health Act, the
legal use and adaptability of the Premises and the compliance thereof with all
applicable laws and regulations in effect during the term of this Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall be
in writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given if delivered or addressed to Lessee
or to Lessor at the address noted adjacent to the signatures of the respective
parties. mailed notices shall be deemed given upon actual receipt at the address
required, or forty-eight hours following deposit in the mail, first-class
postage prepaid, whichever first occurs. Either party may by notice to the other
specify a different address for notice purposes except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to William H. Plageman, Jr.;
Thelen, Marrin, Johnson & Bridges, One Kaiser Plaza, Suite 1950, Oakland,
California; or to such other party or parties at such addresses as Lessor may
from time to time hereafter designate by notice to Lessee.
24. WAIVERS. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof. No acceptance of a lesser amount than the rent herein stipulated shall
be deemed a waiver of Lessor's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Lessor may
accept such check or payment without prejudice to Lessor's right to recover the
full amount due.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. HOLDING OVER. Unless Lessor expressly agrees otherwise in writing, Lessee
shall pay Lessor two hundred percent (200%) of the amount of Rent then
applicable (or the highest amount permitted by law, whichever is less) prorated
on per them basis for each day Lessee shall retain possession of the Premises or
any part thereof after expiration or earlier termination of this Lease, together
with all damages sustained by Lessor on account thereof. The foregoing
provisions shall not serve as permission for Lessee to hold-over, nor serve to
extend the term (although Lessee shall remain bound to comply with all
provisions of this Lease until Lessee vacates the Premises, and shall be subject
to the provisions of paragraph 3.5 hereof). Notwithstanding the foregoing to the
contrary, at any time before or after the expiration or earlier termination of
this Lease, Lessor may serve notice advising Lessee of the amount of Rent and
other terms required, should Lessee desire to enter a month-to-month tenancy
(and if Lessee shall hold over more than one full calendar month after such
notice, Lessee shall thereafter be deemed a month-to-month tenant, on the terms
and provisions of this Lease as in effect immediately prior to the beginning of
such hold-over, as modified by Lessor's notice, and except that Lessee shall not
be entitled to any renewal or expansion rights contained in this Lease or any
amendments hereto).
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
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28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
paragraph 17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State of
California and any litigation concerning this Lease between the parties hereto
shall be initiated in the County of Santa Cruz.
30. SUBORDINATION.
(a) This Lease, and any Option or right of first refusal granted
hereby, at Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed
upon the Office Building Project and to any and all advances made on the
security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease and any
Options granted hereby prior to the lien of its mortgage, deed of trust or
ground lease, and shall give written notice thereof to Lessee, this Lease and
such Options shall be deemed prior to such mortgage, deed of trust or ground
lease, whether this Lease or such Options are dated prior or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of recording
thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination, or to make this Lease or any Option granted herein
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be, Lessee's failure to execute such documents within ten (10) days after
written demand shall constitute a material default by Lessee hereunder without
further notice to Lessee, or at Lessor's option, Lessor shall execute such
documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does hereby
make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and
in Lessee's name, place and stead, to execute such documents in accordance with
this paragraph 30(b).
31. ATTORNEY'S FEES.
31.1 If either party or the broker(s) named herein bring an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to its reasonable
attorneys' fees to be paid by the losing party as fixed by the court in the same
or a separate suit, and whether or not such action is pursued to decision or
judgment. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
31.2 The attorneys' fees shall not be computed in accordance with any court
fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred in good faith.
31.3 Lessor shall be entitled to reasonable attorneys' fees and all other
costs and expenses incurred in the preparation and service of notices of default
and consultations in connection herewith, whether or not a legal action is
subsequently commenced in connection with the default.
32. LESSOR'S ACCESS.
32.1 Lessor and Lessor's agents shall have the right to enter the Premises
at reasonable times for the purposes of inspecting the same, performing any
services required of Lessor, showing the same to prospective purchasers,
lenders, or lessees, inspecting and testing for presence of Hazardous
Substances, taking such safety measures, erecting such scaffolding or other
necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as lessor may
reasonably deem necessary or desirable
-24-
and the erecting, using and maintaining of utilities, services, pipes and
conduits through the Premises and/or other premises as long as there is no
material adverse effect to Lessee's use of the Premises. Lessor may at any time
place on or about the Premises or the Building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs.
32.2 All activities of Lessor pursuant to this paragraph shall be without
abatement of rent, nor shall Lessor have any liability to Lessee for the same.
32.3 Lessor shall have the right to retain keys to the Premises and to
unlock all doors in or upon the Premises other than to files, vaults and safes,
and in the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forcible or unlawful entry or
detainer of the Premises or an eviction. Lessee waives any charges for damages
or injuries or interference with Lessee's property or business in connection
therewith.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
without first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent. The holding of any auction on the Premises or Common Areas in violation
of this paragraph shall constitute a material default of this Lease.
34. SIGNS. Lessee shall have the right to use a pro-rata share of the
monument sign arid any other signage installed by Lessor and approved by Santa
Cruz County. Except as set forth in this paragraph 34, Lessee shall not place
any sign upon the Premises or the Office Building Project without Lessor's prior
written consent. Under no circumstances shall Lessee place a sign on any roof of
the Office Building Project.
35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. CONSENTS. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in this Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed. Lessee
acknowledges and agrees that it shall not be unreasonable for Lessor to withhold
its consent to any proposed assignment, subletting, or transfer of Lessee's
interest in this Lease if the anticipated or foreseeable use of the Premises by
the proposed assignee, subtenant, or transferee involves the generation,
storage, use, treatment, or disposal of Hazardous Substances. Lessor shall have
the absolute right to refuse to consent to or approve of any matter affecting
the structure, safety or security of the Office Building Project, or the
appearance of the Building or Premises from any common or public areas.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Office Building Project.
39. OPTIONS.
39.1 DEFINITION. As used in this paragraph, the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Office Building Project or other
-25-
property of Lessor or the right of first offer to lease other space within the
Office Building Project or other property of Lessor; (3) the right or option to
purchase the Premises or the Office Building Project, or the right of first
refusal to purchase the Premises or the Office Building Project or the right of
first offer to purchase the Premises or the Office Building Project, or the
right or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 OPTION TO EXPAND PREMISES. Lessee shall have the option to lease the
second floor of the Building (the "Second Floor Space") under the same terms and
conditions as set forth in this Lease except rent payable shall be at the Market
Rate rent as determined in paragraph 4.3 of this Lease. The option can be
exercised by Lessee at any time; provided, however, that if Lessor gives Lessee
notice that Lessor intends to commence negotiations to lease the Second Floor
Space to a third party (the "Notice of Intent to Lease"), Lessee shall have only
five (5) days in which to exercise tile option by giving Lessor written notice
of Lessee's intention to lease the Second Floor Space (the "Lessee's Expansion
Notice"), and the option shall terminate if it is not exercised by Lessee within
the five (5) day period. Upon termination of the option,, Lessor shall have one
hundred and eighty (180) days to lease the Second Floor Space to any third
party. If Lessor fails to lease the Second Floor Space within the one hundred
eighty (180) day period, Lessee's option to lease the Second Floor Space shall
be reinstated and can be exercised as set forth in this paragraph 39.2.
39.3 FIRST RIGHT TO PURCHASE BUILDING. If Lessor decides to sell the
Building to an unrelated third party, Lessor shall notify Lessee of the terms on
which Lessor is willing to sell. If Lessee, within five (5) days after receipt
of Lessor's notice, indicates in writing its agreement to purchase the Building
on the terms stated in Lessor's notice, Lessor shall sell and convey the
Building to Lessee on the same terms stated in the notice. If Lessee does not
indicate its agreement within five (5) days, Lessor thereafter shall have the
right to sell and convey the Building within one hundred eighty (180) days.
Subsequent to the one hundred eighty (180) day period, any further transaction
shall be deemed a new determination by Lessor to sell the Building and Lessee's
first right to purchase shall be reinstated. If Lessee purchases the Building
pursuant to this paragraph 39.3, this Lease shall terminate on the date title
vests in Lessee.
39.4 OPTIONS PERSONAL. Each Option granted to Lessee in this Lease is
personal to the original Lessee and may be exercised only by the original Lessee
while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than lessee; provided, however, that an Option may be
exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of
this Lease. The Options, if any, herein granted to Lessee are not assignable
separate and apart from this Lease, nor may any option be separated from this
Lease in any manner, either by reservation or otherwise.
39.5 MULTIPLE OPTIONS. In the event that Lessee has any multiple options
to extend or renew this Lease, a later option cannot be exercised unless the
prior option to extend or renew this Lease has been so exercised.
39.6 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary, (i) during the time
commencing from the date Lessor gives to Lessee a notice of default pursuant to
paragraph 13.1(c) or paragraph 13.1(d) and continuing until the noncompliance
alleged in said notice of default is cured; or (ii) during the period of time
commencing on the day after a monetary obligation to Lessor is due from Lessee
and unpaid (without any necessity for notice thereof to Lessee) and continuing
until the obligation is paid; or (iii) in the event that Lessor has given to
Lessee three (3) or more notices of default under paragraph 13.1(c) or paragraph
13.1(d), whether or not the defaults are cured, during the twelve (12) month
period of time immediately prior to the time that Lessee attempts to exercise
the subject Option; or (iv) if Lessee has committed any noncurable breach,
including without limitation those described in paragraph 13.1(b), or is
otherwise in default of any of the terms, covenants or conditions of this Lease.
(b) The period of time within which an option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
option because of the provisions of paragraph 39.6(a).
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(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
(without any necessity of Lessor to give notice thereof to Lessee) within the
number of days provided in this Lease for payment of each such monetary
obligation, including, but not limited to, the monetary obligations and payment
periods specified in Paragraphs 4.2(e), 12.9, 13.1 and 13.4; or (ii) Lessee
fails to commence to cure a default specified in paragraph 13.1(d) within thirty
(30) days after the date that Lessor gives notice to Lessee of such default
and/or Lessee fails thereafter to diligently prosecute said cure to completion;
(iii) Lessor gives to Lessee three (3) or more notices of default under
paragraph 13.1(c) or paragraph 13.1(d), whether or not the defaults are cured;
or (iv) if Lessee has committed any noncurable breach including without
limitation those described in paragraph 13.1(b), or is otherwise in default of
any of the terms, covenants and conditions of this Lease.
40. SECURITY MEASURES--LESSOR'S RESERVATIONS.
40.1 Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the protection of Lessee, its agents and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole option,
from providing security protection for the Office Building Project or any part
thereof, in which event the cost thereof shall be included within the definition
of Operating Expenses, as set forth in paragraph 4.2(b).
40.2 Lessor shall have the following rights:
(a) To change the name, address or title of the Office Building
Project or building in which the Premises are located upon not less than ninety
(90) days' prior written notice;
(b) To, at Lessee's expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate;
(c) To permit any lessee the exclusive right to conduct any business
as long as such exclusive does not conflict with any rights expressly given
herein;
(d) To place such signs, notices or displays as Lessor reasonably
deems necessary or advisable upon the roof, exterior of the buildings or the
Office Building Project or on pole signs in the Common Areas.
40.3 Lessee shall not:
(a) Use a representation (photographic or otherwise) of the Building
or the Office Building Project or their name(s) in connection with Lessee's
business;
(b) Suffer or permit anyone, except in emergency, to go upon the roof
of the Building.
41. EASEMENTS.
41.1 Lessor reserves to itself the right, from time to time, to grant such
easements, rights and dedications that Lessor deems necessary or desirable and
to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
41.2 The obstruction of Lessee's view, air or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon Lessor.
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42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
this Lease.
43. AUTHORITY. If Lessee is a corporation, trust or general or limited
partnership, Lessee, and each individual executing this Lease on behalf of such
entity, represent and warrant that such individual is duly authorized to execute
and deliver this Lease on behalf of said entity. If Lessee is a corporation
trust or partnership, Lessee shall, within thirty (30) days after execution of
this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
44. CONFLICT. Any conflict between the printed provisions, Exhibits or
addenda of this Lease and the typewritten or handwritten provisions, if any
shall be controlled by the typewritten or handwritten provisions.
45. NO OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully executed
by both parties.
46. LENDER MODIFICATION. Lessee agrees to make such reasonable modifications
to this Lease as may be reasonably required by an institutional lender in
connection with the obtaining of normal financing or refinancing of the Office
Building Project.
47. MULTIPLE PARTIES. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein, the
obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee,
respectively.
48. WORK LETTER; AGREEMENT REGARDING INITIAL CONSTRUCTION. This Lease is
supplemented by that certain Work Letter of even date executed by Lessor and
Lessee attached hereto as Exhibit C and incorporated herein by this reference.
This Lease is also supplemented by that certain Agreement Regarding Initial
Construction of even date executed by Lessor and Lessee attached hereto as
Exhibit D and incorporated herein by reference.
49. ATTACHMENTS. Attached hereto are the following documents which constitute
a part of this Lease:
- - --------------------------------------------------------------------------------
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LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
LESSOR LESSEE
HEFFERNAN FAMILY TRUST COAST COMMERCIAL BANK
By /s/ By /s/
--------------------------- ---------------------------
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Its Its
--------------------------- ---------------------------
Executed at Executed at
------------------- -------------------
On On
---------------------------- ----------------------------
Address Address
----------------------- -----------------------
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EXHIBIT A
STANDARD OFFICE LEASE
FLOOR PLAN
Exhibits -1-
EXHIBIT B
RULES AND REGULATIONS FOR
STANDARD OFFICE LEASE
This Exhibit B is made part of that certain lease between Heffernan Family Trust
("Lessor") and Coast Commercial Bank ("Lessee") dated May __, 1989 (the
"Lease").
GENERAL RULES
1. Lessee shall not suffer or permit the obstruction of any Common Areas,
including driveways, walkways and stairways.
2. Lessor reserves the right to refuse access to any persons Lessor in
good faith judges to be a threat to the safety, reputation, or property of the
Office Building Project and its occupants.
3. Lessee shall not make or permit any noise or odors that annoy or
interfere with other lessees or persons having business within the Office
Building Project.
4. Lessee shall not keep animals or birds within the Office Building
Project, and shall not bring bicycles, motorcycles or other vehicles into areas
not designated as authorized for same.
5. Lessee shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.
6. Lessee shall not alter any lock or install new or additional locks or
bolts.
7. Lessee shall be responsible for the inappropriate use of any toilet
rooms, plumbing or other utilities. No foreign substances of any kind are to be
inserted therein.
8. Lessee shall not deface the walls, partitions or other surfaces of the
Premises or Office Building Project.
9. Lessee shall not suffer or permit any thing in or around the Premises
or Office Building Project that causes excessive vibration or floor loading in
any part of the office Building Project.
10. Furniture, significant freight and equipment shall be moved into or
out of the Building only with the Lessor's knowledge and consent, and subject to
such reasonable limitations, techniques and timing, as may be designated by
Lessor. Lessee shall be responsible for any damage to the Office Building
Project arising from any such activity.
11. Lessee shall not employ any service or contractor for services or work
to be performed in the Building, except as approved by Lessor.
12. Lessor reserves the right to close and lock the Building on Saturdays,
Sundays and legal holidays, and on other days between the hours of -- P.M. and
A.M. of the following day. If Lessee uses the Premises during such periods,
Lessee shall be responsible for securely locking any doors it may have opened
for entry.
13. Lessee shall return all keys at the termination of its tenancy and
shall be responsible for the cost of replacing any keys that are lost.
Exhibits -2-
14. No window coverings, shades or awnings shall be installed or used by
Lessee.
15. No Lessee, employee or invitee shall go upon the roof of the Building.
16. Lessee shall not suffer or permit smoking or carrying of lighted
cigars or cigarettes in areas reasonably designated by Lessor or by applicable
governmental agencies as non-smoking areas.
17. Lessee shall not use any method of heating or air conditioning other
than as
18. Lessee shall not install, maintain or operate any vending machines
upon the Premises without Lessor's written consent.
19. The Premises shall not be used for lodging, manufacturing, cooking or
food preparation.
20. Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.
21. Lessor reserves the right to waive any one of these rules or
regulations, and/or as to any particular Lessee, and any such waiver shall not
constitute a waiver of any other rule or regulation or any subsequent
application thereof to such Lessee.
22. Lessee assumes all risks from theft or vandalism and agrees to keep
its Premises locked as may be required.
23. Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Lessee
agrees to abide by these and such rules and regulations.
PARKING RULES
1. Parking areas shall be used only for parking by vehicles no longer
than full size, passenger automobiles herein called "Permitted Size Vehicles."
Vehicles other than Permitted Size Vehicles are herein referred to as "Oversized
Vehicles."
2. Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.
3. Parking stickers or identification devices shall be the property of
Lessor and be returned to Lessor by the holder thereof upon termination of the
holder's parking privileges. Lessee will pay such replacement charge as is
reasonably established by Lessor for the loss of such devices.
4. Lessor reserves the right to refuse the sale of monthly identification
devices to any person or entity that willfully refuses to comply with the
applicable rules, regulations, laws and/or agreements.
5. Lessor reserves the right to relocate all or a part of any parking
spaces within the parking area and/or to reasonably adjacent offsite locations,
and to reasonably allocate them between compact and standard size spaces, as
long as the same complies with applicable laws, ordinances and regulations.
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Exhibits
6. Users of the parking area will obey all posted signs and park only in
the areas designated for vehicle parking.
7. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Lessor will not be responsible for
any damage to vehicles, injury to persons or loss of property, all of which
risks are assumed by the party using the parking area.
8. Validation, if established, will be permissible only by such method or
methods as Lessor and/or its licensee may establish at rates generally
applicable to visitor parking.
9. The maintenance, washing, waxing or cleaning of vehicles in the
parking structure or Common Areas is prohibited.
10. Lessee shall be responsible for seeing that all of its employees,
agents and invitees comply with the applicable parking rules, regulations, laws
and agreements.
11. Lessor reserves the right to modify these rules and/or adopt such
other reasonable and non-discriminatory rules and regulations as it may deem
necessary for the proper operation of the parking area.
12. Such parking use as is here-in provided is intended merely as a
license only and no bailment is intended or shall be created hereby.
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Exhibits
EXHIBIT C
WORK LETTER TO STANDARD OFFICE LEASE
This EXHIBIT C is made part of that certain lease between Heffernan Family
Trust ("Lessor") and Coast Commercial Bank ("Lessee'') dated May__, 1989 (the
"Lease").
1. Lessor's Standard Improvements shall include the following:
a. WALL SURFACES. Lessor will sheetrock the interior surface of the
exterior walls.
b. DOORS. Lessors will provide exterior doors.
c. UTILITY SERVICE LINES. Lessor will provide service lines for
water, gas and electricity which lines will be brought to the
Building and "stubbed off" inside the Building. The distribution
lines of utilities within the building shall be part of the
Lessee improvements.
d. CEILING. Lessor will provide a drop ceiling.
e. LIGHTING. Lessor will provide "troffer lights" as contemplated
by the Plans and Specifications.
f. HEATING AND AIR CONDITIONING SYSTEM. Lessor shall provide an
HVAC system.
Improvements not constructed in accordance with the above shall be deemed Lessee
Improvements.
2. Construction of Lessor's Standard Improvements.
2.1 Lessor shall construct and substantially complete Lessor's
Standard Improvements substantially in accordance with the plans and
specifications prepared by Ifland Engineers, Inc., dated [November 29, 1988],
consisting of [twenty-six (26)] sheets.
2.2 Lessee shall take possession of the Premises under the tender
thereof as provided in paragraph 3.3.1 of the Lease. Lessee shall notify Lessor
in writing of any items that Lessee deems incomplete or incorrect in order for
the Premises to be acceptable to Lessee within ten (10) days following Tender of
Possession as set forth in paragraph 3.3.1 of the Lease. Lessee shall be deemed
to have accepted the Premises and approved construction if Lessee does not
deliver such a list to Lessor within said number of days.
3. PREPARATION OF PLANS AND SPECIFICATIONS FOR LESSEE IMPROVEMENTS.
3.1 Within ten (10) days after the date of the Lease Lessor and
Lessee shall meet for the purpose of determining basic design parameters for the
Lessee Improvements. Within forty-five (45) days after the date of the Lease,
Lessee shall prepare at its cost and deliver to Lessor for its approval three
(3) copies of preliminary plans
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Exhibits
and specifications for the completion of the Lessee Improvements within the
design parameters set at the design meeting. Lessor shall approve said
preliminary plans and specifications or specify with particularity its
reasonable objections thereto within fifteen (15) days following receipt
thereof. Failure to so approve or reasonably reject within said period of time
shall constitute approval of the preliminary plans arid specifications.
3.2 If Lessor reasonably rejects said preliminary plans and
specifications with regard to minor details within the scope of the design
parameters set at the first design meeting, Lessee shall at its cost prepare
revised plans and specifications and deliver them to Lessor within fifteen (15)
days. Lessor shall approve or reasonably reject the revised plans and
specifications within five (5) days. Failure to so approve or reasonably reject
within said period of time shall constitute approval of the revised plans arid
specifications. Any other revision of the plans and specifications shall be
performed by Lessee at Lessee's sole cost and expense.
3.3 The plans and specifications, when approved by Lessor (or deemed
approved by Lessor pursuant to Paragraphs 3.1 or 3.2 of this Exhibit C), shall
be deemed "final plans and specifications" and shall supersede any prior
agreement concerning the improvements.
4. CONSTRUCTION OF LESSEE IMPROVEMENTS.
At its sole cost and expense, Lessee or a contractor reasonably
approved by Lessor shall construct the Lessee Improvements substantially in
accordance with the final plans and specifications as defined in paragraph 3.3
of this Exhibit C.
5. COMPLETION.
5.1 Lessee shall obtain a building permit to construct the
improvements as soon as reasonably possible.
5.2 Lessee shall substantially complete the construction of the
improvements as soon as reasonably possible after the obtaining of necessary
building permits.
5.3 The term "substantial completion" as used in this Exhibit C is
hereby defined to mean the date the Planning Department of the County of Santa
Cruz shall have made a final inspection of the improvements and authorized a
final release of restrictions on the use of public utilities in connection
therewith and the same are in a broom-clean condition.
5.4 Lessee shall use its best efforts to achieve substantial
completion of the Lessee Improvements on or before the Commencement Date set
forth in paragraph 1.6 of the Basic Lease Provisions.
5.5 In the event that the Lessee Improvements or any portion thereof
have not reached substantial completion by the Commencement Date, the Lease
shall not be invalid, but rather the Lease shall commence on the Commencement
Date and Lessee shall substantially complete the same as soon thereafter as is
possible and Lessor shall not be liable to Lessee for damages in any respect
whatever.
6. WORK DONE BY LESSEE.
Any work done by Lessee shall be done only with Lessor's prior written
consent and in conformity with a valid building permit and all applicable rules,
regulations, laws and ordinances, and be done in a good and workmanlike manner
of good and sufficient materials.
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Exhibits
EXHIBIT D
AGREEMENT REGARDING INITIAL CONSTRUCTION OF OFFICE BUILDING PROJECT
This EXHIBIT D is made part of that certain lease between Heffernan Family
Trust("Lessor") and Coast Commercial Bank ("Lessee") dated May __, 1989 (the
"Lease").
1. CONSTRUCTION OF PROJECT. Lessor, at its cost, shall construct and
substantially complete the Office Building Project in accordance with the final
plans and specifications and working drawings prepared by Ifland Engineers,
Inc., Lessor's architect, dated [November 29, 1988], consisting of 26 sheets
("Lessor's Plans").
2. CONSTRUCTION OF LESSEE'S SPECIAL IMPROVEMENTS. As soon as possible,
but no later than thirty (30) days after commencement of construction, Lessee
shall provide Lessor with all information necessary for the coordination of
construction of Lessee's special improvements, including the bank vault, special
security devices and the private entries to the ground floor bathrooms. Any
redesigned building plans and specifications may be subject to the approval of
Santa Cruz County. Lessee shall pay the entire costs incurred by Lessor as a
result of such redesign, and Lessee shall pay the entire costs incurred by
Lessor in obtaining any additional County approvals. Lessor shall install the
vault, but all Costs of such installation, and any additional construction costs
for the redesigned bathrooms shall be borne by the Lessee. At Lessor's election,
an the end of the Lease Term (as defined in the Lease) or upon earlier
termination of the Lease, Lessee shall at its expense remove the vault and
restore the Premises (including but not limited to the vault and bathroom
areas).
3. CHANGE ORDERS. Lessee may request change orders ("Change Orders') to
Lessor's Plans with regard to the Premises. If Lessor approves the Change
Orders, Lessor shall construct the Office Building Project in accordance with
the Lessor's Plans, as modified by the Change Orders. Lessee shall pay the
entire increased amount of the costs of constructing the Office Building Project
resulting from or related to the Change Orders.
4. DATE OF SUBSTANTIAL COMPLETION; DELAYS. Lessor shall use good faith
efforts to substantially complete the construction required by this EXHIBIT D
within six (6) months after the final plans and specifications and working
drawings have been approved by all appropriate government agencies,
environmental testing and remedial work (if any) is complete, and Lessor's
lender has approved the Lease, whichever date is later. The period for
substantial completion of construction shall be extended by the time needed to
perform the additional construction covered by any Change Orders requested by
Lessee and authorized by Lessor, and by any delay due to causes beyond the
reasonable control of Lessor or Lessor's contractor.
5. FINANCING.
5.1 The effectiveness of the Lease shall be conditioned on Lessor's
obtaining commitments for construction financing and permanent financing for the
construction required by this Exhibit. Lessor shall use reasonable efforts to
obtain such commitments. If Lessor, after reasonable efforts, has not been able
to obtain such commitments by _July 1_, 19 89_, after that date either party
can terminate the Lease at any time before the commitments are obtained, by
giving notice to the other party.
5.2 Lessee recognizes that the provisions of the Lease must be
approved by the institutional lender that finances the construction of the
Office Building Project. if, as a condition to financing, the institutional
lender requires modification of the provisions of the Lease, Lessee shall
approve and execute the required modification, other than a modification that
substantially changes the size, dimensions, or location of the Building and
other improvements that are a part of the Premises, increases the rent Lessee is
obligated to pay under the Lease, or changes any of Lessee's obligations in a
material and adverse manner.
6. DEFINITION OF SUBSTANTIAL COMPLETION. The term "substantial
completion" for purposes of this EXHIBIT D shall mean the date the Santa Cruz
building department shall have made [an inspection of the Lessor's
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Exhibits
Standard Improvements] and the same are in a broom-clean condition, and service
lines for water, gas and electric have been brought to and "stubbed off" inside
the Building.
7. EARLY ENTRY; TAKING POSSESSION OF PREMISES.
7.1 Lessor shall notify Lessee of the estimated date of substantial
completion of the construction as provided in this EXHIBIT D at least thirty
(30) days before such date. After Lessor notifies Lessee of the date, and after
Lessee provides to Lessor the certificates of insurance or copies of insurance
policies as required by paragraph 8.6 of the Lease, Lessee shall have the right
to enter the Premises to commence its construction obligations and to commence
equipping and fixturing the Premises, as long as the entry does not interfere
with Lessor or Lessor's contractor.
7.2 If Lessee enters the Premises prior to their substantial
completion as provided in paragraph 6 of this EXHIBIT D, all the provisions of
the Lease, including but not limited to Lessee's obligation to provide
insurance, shall be in full force and effect, except the rent provisions. Lessee
shall take possession of the Premises under the tender thereof as provided in
paragraph 3.3.1 of the Lease.
8. ACCEPTANCE OF PREMISES. Within five (5) days after Lessor has
notified Lessee that the construction of Lessor's construction obligations
required under this EXHIBIT D has been substantially completed (whether or not
Lessee has entered the Premises earlier as allowed by paragraph 6 of this
EXHIBIT D), Lessee shall deliver to Lessor a list of items that Lessee deems it
necessary that Lessor complete or correct in order for the Premises to be
acceptable. Lessor shall immediately commence to complete or correct the items,
except those that it contends are not justified. If Lessee does not deliver the
list to Lessor within the five (5) day period, Lessee shall be deemed to have
accepted the Premises and approved the construction.
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Exhibits