EXHIBIT 10.3
ASSIGNMENT OF LEASE
-------------------
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, XAOS
TOOLS, INC. ("ASSIGNOR"), as Tenant under that certain Office Space Lease dated
as of August 1, 1997, as amended by the First Amendment to Lease dated as of
August 1, 1997 and the Second Amendment to Lease dated as of August 1, 1998
(said Office Space Lease and First Amendment to Lease and Second Amendment to
Lease hereinafter collectively referred to as the "Lease"), entered into by and
between ASSIGNOR as Tenant and 300 Montgomery Associates ("300 MONTGOMERY") as
Landlord, covering the premises commonly known as Suite 300, 300 Montgomery
Street, San Francisco, California (the "Premises"), hereby assigns and transfers
to Xoom, Inc. ("ASSIGNEE"), all of its right, title and interest in and to the
Lease and gives possession of the Premises to ASSIGNEE in a broom-clean
condition and otherwise ready for use, effective on August 1, 1998 (the
"Effective Date"), provided that Landlord consents thereto as evidenced by its
signature below. ASSIGNOR releases all claims to the security deposit in the
amount of One Hundred Thousand One Hundred Ninety-three and 25/100 Dollars
($100,193.25) which 300 MONTGOMERY now holds as Landlord, and ASSIGNOR agrees
that such security deposit shall be held by 300 MONTGOMERY and applied subject
to the provisions of the Lease and shall be returned to ASSIGNEE after the
expiration of the Term in accordance with the Lease, as such may be amended
and/or modified. ASSIGNOR agrees that 300 MONTGOMERY will in no event be
required to charge or credit or make any other adjustment as between ASSIGNOR
and ASSIGNEE on account of any other sums paid either before or after the
Effective Date under the Lease by ASSIGNOR or ASSIGNEE. ASSIGNOR hereby
represents and warrants to ASSIGNEE and 300 MONTGOMERY that, as of the Effective
Date, (a) the Lease is in full force and effect, and (b) there are no defaults
on the part of 300 MONTGOMERY. ASSIGNOR acknowledges that, notwithstanding this
assignment or any further assignments, ASSIGNOR continues to be bound by the
Lease and liable for the performance of each and every term, covenant,
condition, obligation and agreement of the Lease to be kept, performed and
fulfilled by the Tenant thereunder. ASSIGNOR further agrees to indemnify, defend
(with counsel reasonably acceptable to ASSIGNEE) and hold ASSIGNEE harmless from
and against any and all claims, costs, liabilities, losses, damages or expenses,
including, without limitation, reasonable attorneys's fees, which claims, costs,
liabilities, losses, damages or expenses originate on or prior to the Effective
Date and arise out of ASSIGNOR'S obligations under the Lease. ASSIGNEE agrees to
immediately notify ASSIGNOR of any actual or intended default under the terms of
the Lease. ASSIGNEE further agrees to indemnify, defend (with counsel reasonably
acceptable to ASSIGNOR) and hold ASSIGNOR harmless from and against any and all
claims, costs, liabilities, losses, damages or expenses, including, without
limitation, reasonable attorneys's fees, which claims, costs, liabilities,
losses, damages or expenses originate on or after the Effective Date and arise
out of ASSIGNEE'S obligations under the Lease. ASSIGNOR understands and agrees
that notwithstanding ASSIGNOR's continuing liability under the Lease subsequent
to this assignment, ASSIGNOR retains no right of reversion or re-entry under the
Lease and no right to cure any default of ASSIGNEE thereunder. ASSIGNOR waives
all presentments, demands for payment or performance under the Lease, and all
other notices, including those of nonperformance or
1
default, and further waives any right to require 300 MONTGOMERY to enforce its
rights or remedies against ASSIGNEE under the Lease or to proceed against
ASSIGNEE or any other person, to proceed against or exhaust any security held
from ASSIGNEE or any other person, or to pursue any other remedy in 300
MONTGOMERY's power whatsoever. ASSIGNOR represents that its current address is
300 Montgomery Street, Suite 300, California 94104 and promises that it will
immediately notify 300 MONTGOMERY in writing of any change in such address.
DATED: 7/31/98
"ASSIGNOR"
XAOS TOOLS, INC.
By: /s/ Robert L. Batty
--------------------
Name: Robert L. Batty Name:
--------------- -------------
Title: President Title:
--------- ------------
2
ACCEPTANCE OF ASSIGNMENT AND ASSUMPTION OF LEASE
------------------------------------------------
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
ASSIGNEE accepts the foregoing assignment of all of ASSIGNOR's right, title and
interest in and to the Lease and in addition expressly assumes and agrees, as a
direct obligation to 300 MONTGOMERY, from the date the assignment becomes
effective, to keep, perform and fulfill all the terms, covenants, conditions,
obligations and agreements required to be kept, performed, and fulfilled by
ASSIGNOR as Tenant thereunder, including, but not limited to, the timely making
of all payments due to or payable on behalf of 300 MONTGOMERY as Landlord under
the Lease when due and payable. ASSIGNEE acknowledges that it has inspected the
Premises and knows the present condition thereof and of the Office Building of
which the Premises are a part, and accepts the Premises in the condition
disclosed by such inspection. ASSIGNEE agrees that no representations or
agreements of any kind, express or implied, including respecting the Premises,
the Lease or the Office Building, have been made by 300 MONTGOMERY or any agent,
employee or representative of 300 MONTGOMERY, and ASSIGNEE is not accepting the
Premises or the Lease in reliance upon any representations or nondisclosures on
the part of 300 MONTGOMERY or 300 MONTGOMERY'S agents, employees or
representatives. ASSIGNEE acknowledges that a security deposit in the amount of
$100,193.25 is (or, as of the Effective Date, will be) held by 300 MONTGOMERY as
Landlord to be applied subject to the provisions of the Lease, and that no rent
has been prepaid under the Lease except for the current month. ASSIGNEE agrees
that 300 MONTGOMERY will in no event be required to charge or credit or make any
other adjustment as between ASSIGNOR and ASSIGNEE on account of any other sums
paid either before or after the Effective Date under the Lease by ASSIGNOR or
ASSIGNEE. ASSIGNEE further acknowledges that it has read the entire Lease and
fully understands its provisions, including, but not limited to, the provisions
of Article IX of the Lease dealing with assignment and subletting, and the
provisions of Article 14.7 of the Lease waiving right to trial by jury. Attached
hereto as Exhibit "A" and incorporated herein by reference are the most recent
financial statements (the "Financial Statements") of ASSIGNEE, consisting of a
balance sheet and related materials for the period ending June 30, 1998 and
December 31, 1997. ASSIGNEE represents, warrants and covenants to 300 MONTGOMERY
that the Financial Statements are in all material respects true and complete
statements of the financial condition of ASSIGNEE for the period therein
specified, contain and reflect all material adjustments so as to present a full,
accurate and complete statement of ASSIGNEE's current financial condition, and
do not fail to disclose any fact or facts which might materially and adversely
affect ASSIGNEE's financial condition. ASSIGNEE further represents, warrants and
covenants that since the last date covered by the Financial Statements, there
has not been any change in the financial condition of ASSIGNEE or any other
event or condition of any character that has had or might reasonably be expected
to have a materially adverse effect or impact on the financial condition of
ASSIGNEE. ASSIGNEE acknowledges that 300 MONTGOMERY is materially relying on the
truthfulness, accuracy and completeness of the Financial Statements and would
not consent to the within assignment of the Lease if it did not believe that
such Financial Statements were true, accurate and complete. ASSIGNEE
3
further agrees to immediately give 300 MONTGOMERY written notice of any material
adverse change in its financial condition occurring prior to the Effective Date,
including litigation commenced, tax liens filed, defaults claimed under its
indebtedness for borrowed money, or bankruptcy proceedings commenced by or
against it.
DATED: 7/31/98
"ASSIGNEE"
By: /s/ Laurent Massa By:
----------------- ------------------
Name: Laurent Massa Name:
--------------- ----------------
Title: C.E.O. Title:
-------------- ---------------
4
LANDLORD'S CONSENT TO ASSIGNMENT
--------------------------------
As Landlord under the Lease, 300 MONTGOMERY hereby consents to the
foregoing assignment and assumption without waiver of the restrictions in the
Lease concerning further assignment and without waiver of any of its rights or
remedies under the Lease as to ASSIGNOR or ASSIGNEE, and this consent shall not
in any respect release, relieve or discharge ASSIGNOR from liability for the
performance of any of the Tenant's responsibilities, obligations, covenants or
agreements under the Lease. This consent of 300 MONTGOMERY is further
conditioned upon its receipt of the payment to 300 MONTGOMERY of the sum of Five
Hundred Dollars ($500.00) pursuant to Article 9.1 (e) of the Lease. To the best
of its knowledge as of the Effective Date, 300 MONTGOMERY (a) is not aware of
any current defaults on the part of ASSIGNOR, (b) believes the Lease to be in
full force and effect, and (c) knows of no events which with the passage of time
or the giving of notice could become defaults on the part of ASSIGNOR.
DATED: 7/31/98
"LANDLORD"
300 MONTGOMERY ASSOCIATES
By: KENNEDY-WILSON MANAGEMENT GROUP, its Managing Agent
By: /s/ Eric M. Bender
------------------
By: Eric M. Bender
Its: Director of Property Management
5
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT to Lease ("Amendment") is dated as of the first day
of August, 1998, by and between 300 Montgomery Associates, a California
partnership ("Landlord"), and XAOS Tools, Inc., a California corporation
("Tenant").
A. Landlord and Tenant entered into that certain Office Space Lease dated
as of August 1, 1997 and the First Amendment to Lease dated as of August 1, 1997
(herein collectively the "Lease") for certain premises more particularly
described therein as Suite 300 ("Premises") in the building commonly known as
300 Montgomery Street, San Francisco, California ("Building").
B. Landlord and Tenant desire to amend the Lease in accordance with the
terms and conditions set forth in this Amendment.
C. All capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Lease.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein Landlord and Tenant hereby modify, amend and supplement the Lease
as follows:
1. Paragraph One of the First Amendment to Lease regarding the Security
Deposit is hereby deleted in its entirety.
2. The last sentence of Section 4.3 of the Lease is modified as follows:
"Provided Tenant has not been in default of any provision of this Lease
during the Term, twenty nine thousand nine hundred forty-seven and 51/100
dollars ($29,947.51) of the Security Deposit will be returned to the Tenant
during the twenty-fifth (25th) month of the Term and twenty nine thousand
nine hundred forty-seven and 51/100 dollars ($29,947.51) of the Security
Deposit will be returned to the Tenant during the thirty-seventh (37th)
month of the Term.
1
All other terms and conditions of the Lease shall remain in full force and
effect.
AGREED AND ACCEPTED BY:
TENANT: LANDLORD:
XAOS TOOLS, INC. 300 MONTGOMERY ASSOCIATES
GROUP,
By: /s/ Robert L. Batty By: KENNEDY-WILSON MANAGEMENT
-------------------
its Managing Agent
Its: President By: /s/ Eric M. Bender
------------------ ------------------
Date: 7/31/98 Its: Dir. Prop. Mgt.
----------------- -----------------
Date: 7/31/98
-----------------
By:
-------------------
Its:
-----------------
Date:
-----------------
2
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT to Lease ("Amendment") is dated as of the first day of
August, 1997, by and between 300 Montgomery Associates, a California partnership
("Landlord"), and XAOS Tools, Inc., a California corporation ("Tenant").
A. Landlord and Tenant entered into that certain Office Space Lease dated
as of August 1, 1997 (herein "Lease") for certain premises more particularly
described therein as Suite 300 ("Premises") in the building commonly known as
300 Montgomery Street, San Francisco, California ("Building").
B. Landlord and Tenant desire to amend the Lease in accordance with the
terms and conditions set forth in this Amendment.
C. All capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Lease.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein Landlord and Tenant hereby modify, amend and supplement the Lease
as follows:
1. SECURITY DEPOSIT.
The last sentence of Section 4.3 of the Lease is modified as follows:
"Provided Tenant has not been in default of any provision of this Lease
during the Term, Landlord agrees to credit $66,795.50 of the Security
Deposit towards Basic Rent upon Tenant providing acceptable documentation
to Landlord showing satisfaction of one of the following:
(a) Audited financial statements prepared by a CPA firm acceptable to
Landlord showing a net worth of Tenant of at least $6,000,000; or
(b) Completion of an Initial Public Offering of stock on either the
New York Stock Exchange, the American Stock Exchange, or the
NASDAQ market."
2. RIGHT OF FIRST OFFER.
Subject to the conditions set forth hereinbelow and any similar rights
granted any other tenants in the Building, Landlord agrees that in the
event any space in excess of 3,000 square feet in the Building becomes
available, during the initial term of the Lease, for releasing to third
parties after the expiration or other termination of the lease of the then
tenant of such space, and provided that such then-existing tenant elects to
vacate (or has already vacated) such space, Landlord shall notify Tenant of
the availability of such space and (if applicable) the anticipated date on
which such space will be vacated by the then-existing tenant. Landlord
shall further notify Tenant of the then-current scheduled rental rate
(including annual or other periodic escalations thereof) and other basic
terms and conditions for leasing available office space in the Building.
For a period of ten
3
(10) days following receipt of Landlord's written notice containing such
information, Tenant shall have the one-time only right of first offer to
lease such space at the rental rate and on the other terms and conditions
set forth in Landlord's notice. If Tenant fails to timely exercise the
right of first offer set forth herein, such right of first offer shall
expire and be of no further force or effect. In such an event, Landlord has
the right to lease any third party at such term and conditions as Landlord
deems appropriate. Notwithstanding any provision of this Paragraph 3 to the
contrary, the right granted herein shall be personal to Tenant and may not
be exercised or assigned voluntarily or involuntarily by or to any person
or entity other than the original Tenant, and shall not be assignable
separate and apart from this Lease. The right of first offer granted by
this Paragraph 3 shall be void and of no further force or effect if Tenant
shall at any time default in the performance or observance of any of the
terms, covenants, conditions or provisions of the Lease.
3. BASE BUILDING IMPROVEMENTS.
Notwithstanding anything to the contrary contained in this Amendment or the
Lease, Landlord agrees to complete certain improvements to the Building's
common areas on the third (3rd) floor of the Building. This work is limited
in scope to include certain work necessary to comply with the American With
Disabilities Act (ADA) for one (1) women's and one (1) men's common
restrooms on the third floor, building code requirements in the common
elevator lobby seismically securing the existing ceiling.
All other terms and conditions of the Lease shall remain in full force and
effect.
AGREED AND ACCEPTED BY:
TENANT: LANDLORD:
XAOS TOOLS, INC. 300 MONTGOMERY ASSOCIATES
By: /s/ Robert L. Batty By: /s/ 300 Montgomery Associates
------------------- -----------------------------
Its: President Its:
------------------ -----------------------------
Date: 9/3/97 Date: 9/4/97
----------------- ----------------------------
4
OFFICE SPACE LEASE
BETWEEN
300 MONTGOMERY ASSOCIATES
A CALIFORNIA PARTNERSHIP
AND
XAOS TOOLS, INC.
A CALIFORNIA CORPORATION
1
INDEX TO LEASE
ARTICLE I. BASIC LEASE PROVISIONS....................................... 1
ARTICLE II. PREMISES..................................................... 4
SECTION 2.1 LEASED PREMISES................................ 4
SECTION 2.2 ACCEPTANCE OF PREMISES......................... 4
SECTION 2.3 RELOCATION RIGHT............................... 4
ARTICLE III. TERM......................................................... 5
SECTION 3.1 GENERAL........................................ 5
SECTION 3.2 DELAY IN POSSESSION............................ 5
SECTION 3.3 OPTION TO RENEW................................ 5
ARTICLE IV. RENT AND OPERATING EXPENSES.................................. 7
SECTION 4.1 BASIC RENT..................................... 7
SECTION 4.2 OPERATING EXPENSE INCREASE..................... 8
SECTION 4.3 SECURITY DEPOSIT............................... 10
ARTICLE V. USES......................................................... 10
SECTION 5.1 USE............................................ 10
SECTION 5.2 SIGNS.......................................... 11
ARTICLE VI. LANDLORD SERVICES ARTICLE.................................... 12
SECTION 6.1 UTILITIES AND SERVICES......................... 12
SECTION 6.2 OPERATION AND MAINTENANCE OF COMMON FACILITIES. 12
SECTION 6.3 USE OF COMMON FACILITIES....................... 12
SECTION 6.4 CHANGES AND ADDITIONS BY LANDLORD.............. 13
ARTICLE VII. MAINTAINING THE PREMISES..................................... 13
SECTION 7.1 TENANT'S MAINTENANCE AND REPAIR................ 13
SECTION 7.2 LANDLORD'S MAINTENANCE AND REPAIR.............. 13
SECTION 7.3 ALTERATIONS.................................... 14
SECTION 7.4 MECHANIC'S LIENS............................... 15
SECTION 7.5 ENTRY AND INSPECTION........................... 15
SECTION 7.6 SPACE PLANNING AND SUBSTITUTION................ 15
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PREMISES................... 16
ARTICLE IX. ASSIGNMENT AND SUBLETTING.................................... 16
SECTION 9.1 RIGHTS OF PARTIES.............................. 16
SECTION 9.2 EFFECT OF TRANSFER............................. 18
SECTION 9.3 SUBLEASE REQUIREMENTS.......................... 18
ARTICLE X. INSURANCE AND INDEMNITY...................................... 19
SECTION 10.1 TENANT'S INSURANCE............................. 19
SECTION 10.2 LANDLORD'S INSURANCE........................... 19
SECTION 10.3 TENANT'S INDEMNITY............................. 20
SECTION 10.4 LANDLORD'S NONLIABILITY........................ 20
1
ARTICLE XI. DAMAGE OR DESTRUCTION........................................ 21
SECTION 11.1 RESTORATION.................................... 21
SECTION 11.2 LEASE GOVERNS.................................. 21
ARTICLE XII. EMINENT DOMAIN............................................... 22
SECTION 12.1 TOTAL OR PARTIAL TAKING........................ 22
SECTION 12.2 TEMPORARY TAKING............................... 22
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE.......................... 22
SECTION 13.1 SUBORDINATION SECTION.......................... 22
SECTION 13.2 ESTOPPEL CERTIFICATE........................... 23
ARTICLE XIV. DEFAULTS AND REMEDIES........................................ 23
SECTION 14.1 TENANT'S DEFAULTS.............................. 23
SECTION 14.2 LANDLORD'S REMEDIES............................ 25
SECTION 14.3 LATE PAYMENTS.................................. 27
SECTION 14.4 RIGHT OF LANDLORD TO PERFORM................... 27
SECTION 14.5 DEFAULT BY LANDLORD............................ 28
SECTION 14.6 EXPENSES AND LEGAL FEES........................ 28
SECTION 14.7 WAIVER OF JURY TRIAL........................... 28
ARTICLE XV. END OF TERM.................................................. 29
SECTION 15.1 HOLDING OVER................................... 29
SECTION 15.2 MERGER ON TERMINATION.......................... 29
SECTION 15.3 SURRENDER OF PREMISES; REMOVAL OF PROPERTY..... 29
ARTICLE XVI. PAYMENTS AND NOTICES......................................... 30
ARTICLE XVII. RULES AND REGULATIONS........................................ 30
ARTICLE XVIII. BROKER'S COMMISSION.......................................... 31
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST.............................. 31
ARTICLE XX. INTERPRETATION............................................... 31
SECTION 20.1 GENDER AND NUMBER.............................. 31
SECTION 20.2 HEADINGS....................................... 31
SECTION 20.3 JOINT AND SEVERAL LIABILITY.................... 32
SECTION 20.4 SUCCESSORS..................................... 32
SECTION 20.5 TIME OF ESSENCE................................ 32
SECTION 20.6 CONTROLLING LAW................................ 32
SECTION 20.7 SEVERABILITY................................... 32
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES................. 32
SECTION 20.9 INABILITY TO PERFORM........................... 33
SECTION 20.10 ENTIRE AGREEMENT............................... 33
SECTION 20.11 QUIET ENJOYMENT................................ 33
SECTION 20.12 SURVIVAL....................................... 33
ARTICLE XXI. EXECUTION AND RECORDING...................................... 33
SECTION 21.1 COUNTERPARTS................................... 33
SECTION 21.2 CORPORATE AND PARTNERSHIP AUTHORITY............ 34
2
SECTION 21.3 EXECUTION OF LEASE; NO OPTION OR OFFER......... 34
SECTION 21.4 RECORDING SECTION.............................. 34
SECTION 21.5 AMENDMENTS..................................... 34
ARTICLE XXII. MISCELLANEOUS................................................ 34
SECTION 22.1 NONDISCLOSURE OF LEASE TERMS................... 34
SECTION 22.2 REPRESENTATIONS BY TENANT...................... 35
SECTION 22.3 CHANGES REQUESTED BY LENDER.................... 35
SECTION 22.4 MORTGAGEE PROTECTION........................... 35
SECTION 22.5 COVENANTS AND CONDITIONS....................... 35
SECTION 22.6 TENANT SERVICES................................ 35
ARTICLE I. BASIC LEASE PROVISIONS....................................... 1
ARTICLE II. PREMISES..................................................... 4
SECTION 2.1 LEASED PREMISES................................ 4
SECTION 2.2 ACCEPTANCE OF PREMISES......................... 4
SECTION 2.3 RELOCATION RIGHT............................... 4
ARTICLE III. TERM......................................................... 5
SECTION 3.1 GENERAL........................................ 5
SECTION 3.2 DELAY IN POSSESSION............................ 5
SECTION 3.3 OPTION TO RENEW................................ 5
ARTICLE IV. RENT AND OPERATING EXPENSES.................................. 7
SECTION 4.1 BASIC RENT..................................... 7
SECTION 4.2 OPERATING EXPENSE INCREASE..................... 8
SECTION 4.3 SECURITY DEPOSIT............................... 10
ARTICLE V. USES......................................................... 10
SECTION 5.1 USE............................................ 10
SECTION 5.2 SIGNS.......................................... 11
ARTICLE VI. LANDLORD SERVICES ARTICLE.................................... 12
SECTION 6.1 UTILITIES AND SERVICES......................... 12
SECTION 6.2 OPERATION AND MAINTENANCE OF COMMON FACILITIES. 12
SECTION 6.3 USE OF COMMON FACILITIES....................... 12
SECTION 6.4 CHANGES AND ADDITIONS BY LANDLORD.............. 13
ARTICLE VII. MAINTAINING THE PREMISES..................................... 13
SECTION 7.1 TENANT'S MAINTENANCE AND REPAIR................ 13
SECTION 7.2 LANDLORD'S MAINTENANCE AND REPAIR.............. 13
SECTION 7.3 ALTERATIONS.................................... 14
SECTION 7.4 MECHANIC'S LIENS............................... 15
SECTION 7.5 ENTRY AND INSPECTION........................... 15
SECTION 7.6 SPACE PLANNING AND SUBSTITUTION................ 15
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PREMISES................... 16
ARTICLE IX. ASSIGNMENT AND SUBLETTING.................................... 16
3
SECTION 9.1 RIGHTS OF PARTIES.............................. 16
SECTION 9.2 EFFECT OF TRANSFER............................. 18
SECTION 9.3 SUBLEASE REQUIREMENTS.......................... 18
ARTICLE X. INSURANCE AND INDEMNITY...................................... 19
SECTION 10.1 TENANT'S INSURANCE............................. 19
SECTION 10.2 LANDLORD'S INSURANCE........................... 19
SECTION 10.3 TENANT'S INDEMNITY............................. 20
SECTION 10.4 LANDLORD'S NONLIABILITY........................ 20
ARTICLE XI. DAMAGE OR DESTRUCTION........................................ 21
SECTION 11.1 RESTORATION.................................... 21
SECTION 11.2 LEASE GOVERNS.................................. 21
ARTICLE XII. EMINENT DOMAIN............................................... 22
SECTION 12.1 TOTAL OR PARTIAL TAKING......................... 22
SECTION 12.2 TEMPORARY TAKING................................ 22
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE.......................... 22
SECTION 13.1 SUBORDINATION SECTION.......................... 22
SECTION 13.2 ESTOPPEL CERTIFICATE........................... 23
ARTICLE XIV. DEFAULTS AND REMEDIES........................................ 23
SECTION 14.1 TENANT'S DEFAULTS.............................. 23
SECTION 14.2 LANDLORD'S REMEDIES............................ 25
SECTION 14.3 LATE PAYMENTS.................................. 27
SECTION 14.4 RIGHT OF LANDLORD TO PERFORM................... 27
SECTION 14.5 DEFAULT BY LANDLORD............................ 28
SECTION 14.6 EXPENSES AND LEGAL FEES........................ 28
SECTION 14.7 WAIVER OF JURY TRIAL........................... 28
ARTICLE XV. END OF TERM.................................................. 29
SECTION 15.1 HOLDING OVER................................... 29
SECTION 15.2 MERGER ON TERMINATION.......................... 29
SECTION 15.3 SURRENDER OF PREMISES; REMOVAL OF PROPERTY..... 29
ARTICLE XVI. PAYMENTS AND NOTICES......................................... 30
ARTICLE XVII. RULES AND REGULATIONS........................................ 30
ARTICLE XVIII. BROKER'S COMMISSION.......................................... 31
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST.............................. 31
ARTICLE XX. INTERPRETATION............................................... 31
SECTION 20.1 GENDER AND NUMBER.............................. 31
SECTION 20.2 HEADINGS....................................... 31
SECTION 20.3 JOINT AND SEVERAL LIABILITY.................... 32
SECTION 20.4 SUCCESSORS..................................... 32
SECTION 20.5 TIME OF ESSENCE................................ 32
SECTION 20.6 CONTROLLING LAW................................ 32
4
SECTION 20.7 SEVERABILITY................................... 32
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES................. 32
SECTION 20.9 INABILITY TO PERFORM........................... 33
SECTION 20.10 ENTIRE AGREEMENT............................... 33
SECTION 20.11 QUIET ENJOYMENT................................ 33
SECTION 20.12 SURVIVAL....................................... 33
ARTICLE XXI. EXECUTION AND RECORDING...................................... 33
SECTION 21.1 COUNTERPARTS................................... 33
SECTION 21.2 CORPORATE AND PARTNERSHIP AUTHORITY............ 34
SECTION 21.3 EXECUTION OF LEASE; NO OPTION OR OFFER......... 34
SECTION 21.4 RECORDING SECTION.............................. 34
SECTION 21.5 AMENDMENTS..................................... 34
ARTICLE XXII. MISCELLANEOUS................................................ 34
SECTION 22.1 NONDISCLOSURE OF LEASE TERMS................... 34
SECTION 22.2 REPRESENTATIONS BY TENANT...................... 35
SECTION 22.3 CHANGES REQUESTED BY LENDER.................... 35
SECTION 22.4 MORTGAGEE PROTECTION........................... 35
SECTION 22.5 COVENANTS AND CONDITIONS....................... 35
SECTION 22.6 TENANT SERVICES................................ 35
EXHIBIT A 1
EXHIBIT B UTILITIES AND SERVICES FOR THE BUILDING ATTACHED TO AND MADE
A PART OF THIS LEASE............................................ 1
EXHIBIT C TENANT'S INSURANCE.............................................. 1
EXHIBIT D RULES AND REGULATIONS FOR THE BUILDING ATTACHED TO AND MADE
A PART OF THIS LEASE........................................... 1
EXHIBIT E WORK LETTER..................................................... 1
5
OFFICE SPACE LEASE
THIS LEASE is made as of the 1st day of August, 1997, by and between 300
Montgomery Associates, a California partnership, hereinafter called "Landlord,"
and Xaos Tools, Inc., a California corporation, herein after called "Tenant."
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.
1 Tenant's Name and Trade Name: Xaos Tools, Inc.
2 Premises: Suite No. 300 (the Premises are more
particularly described in Section 2.1).
Address of Office Building: 300 Montgomery Street
San Francisco, California 94104
3 Use of Premises: General Office Use
4 Estimated Commencement Date: October 1, 1997
5 Lease Term: Ten (10) years
6 Basic Rent per month, full service gross:
Months 1 - 12 $28,006.50 Months 61 - 72 $33,841.19
Months 13 - 24 $28,784.46 Months 73 - 84 $35,397.10
Months 25 - 36 $29,562.42 Months 85 - 96 $36,953.02
Months 37 - 48 $30,729.35 Months 97 - 108 $38,664.53
Months 49 - 60 $31,740.70 Months 109 - 120 $40,298.24
Other Rental Adjustments: Landlord shall abate one-half of the
Basic Rent during each of the first four
7 Operating Expense Base Year: Fiscal year 1997-1998, passthroughs
-----------------------------------
effective January 1, 1999.
-------------------------
Expense Recovery Period: Every 12-month period during the Term
(or portion thereof for the first and last
Lease years) immediately following the
1
Operating Expense Base Year
commencing January 1 and ending
December 31.
8 Floor Area of Premises: Approximately 18,671 rentable square feet.
9 Security Deposit: $100,193.25
10 Broker(s): Broker Representing Tenant: Whitney
Cressman Limited
Broker Representing Landlord: Whitney
Cressman Limited
11 Plan Approval Date: N/A
12. Address for Payments and Notices:
LANDLORD TENANT
300 Montgomery Associates Prior to the Commencement Date:
c/o Kennedy-Wilson Mgmt. Group Xaos Tools, Inc.
300 Montgomery Street, Suite 788 55 Hawthorne St.
San Francisco, California 94104 San Francisco, CA 94105
Attn: Building Manager Attn: Brian H. Jones
With a copy to: After the Commencement Date:
Kennedy-Wilson Management Group Xaos Tools, Inc.
818 West 7th Street, Suite 980 300 Montgomery Street, Suite 300
Los Angeles, CA 90017 San Francisco, CA 94104
Attention: Director of Property
Management Attn: Brian H. Jones
13. Parking: N/A
14. Tenant's Construction Representative: Brian H. Jones
15. Tenant's Percentage: 8.81% calculated by dividing the Floor Area of Premises
(numerator) by the rentable area of the Office Building
(denominator) and expressing the resulting quotient as a
percentage. Tenant's Percentage shall be increased
2
during the Term in proportion to any increase in the
area of the Premises in accordance with the formula
stated herein.
3
ARTICLE II. PREMISES
SECTION 2.1 LEASED PREMISES.
Landlord leases to Tenant and Tenant rents from Landlord the premises shown
in Exhibit A (the Premises) containing the floor area set forth in Item 8 of the
Basic Lease Provisions and known by the suite number identified in Item 2 of the
Basic Lease Provisions. The Premises are located in the office building
identified in Item 2 of the Basic Lease Provisions (which together with the
underlying real property is called the Office Building).
SECTION 2.2 ACCEPTANCE OF PREMISES.
Tenant acknowledges that neither Landlord nor any representative of
Landlord has made any representation or warranty with respect to the Premises or
the Office Building or the suitability or fitness of either for any purpose
except as set forth in this Lease. The taking of possession or use of the
Premises by Tenant for any purpose other than construction shall conclusively
establish that the Premises and the Office Building were in satisfactory
condition and in conformity with the provisions of this Lease in all respects
except for those matters which Tenant shall have brought to Landlord's attention
on a written punch list delivered to Landlord. The list shall be limited to any
items required to be accomplished by Landlord under the Work Letter (if any)
attached as Exhibit H and shall be delivered to Landlord within ten (10) days
after the term (Term) of this Lease commences as provided in Article III below.
If there is no Work Letter, or if no items are required of Landlord under the
Work Letter, by taking possession of the Premises Tenant accepts the
Improvements in their existing condition and waives any right or claim against
Landlord arising out of the condition of the Premises. Nothing contained in this
Section shall affect the commencement of the Term or the obligation of Tenant to
pay rent. Landlord shall diligently complete all punch list items of which it is
notified as provided above for which it is liable. Landlord to be responsible
for code compliance of the building standard drop ceiling and building light
fixtures.
SECTION 2.3 RELOCATION RIGHT.
If Landlord requires the Premises for use in conjunction with another suite
or for other reasons connected with Landlord's planning program for the Office
Building, upon notifying Tenant in writing, Landlord shall have the right to
move Tenant to other space in the Office Building, provided such space is not
more than ten percent (10%) larger or smaller than the Premises. Landlord shall
pay for (a) all direct, out of pocket reasonable expenses of Tenant in moving
from the Premises to the new space and (b) the cost of improving the new space
so that the level of improvements in the new space is comparable to the level of
improvements in the Premises. Landlord will also pay for reasonable costs to
change of stationery, telephones and business cards, but not to exceed
4
$5,000. All the terms and conditions of the original Lease shall remain in full
force and effect.
ARTICLE III. TERM
SECTION 3.1 GENERAL.
The term of this Lease ("Term") shall be for the period shown in Item 5 of
the Basic Lease Provisions. The Term shall commence (Commencement Date) on the
earlier of (a) subject to the provisions of Section 3.2, the Estimated
Commencement Date as set forth in Item 4 of the Basic Lease Provisions or (b)
the date Tenant acquires possession or commences use of the Premises for any
purpose other than construction. Within ten (10) days after the Commencement
Date, the parties shall memorialize on a form provided by Landlord the actual
Commencement Date and the expiration date (Expiration Date) of this Lease.
Tenant's failure to execute that form shall not affect the validity of
Landlord's determination of those dates.
SECTION 3.2 DELAY IN POSSESSION.
If Landlord, for any reason whatsoever, cannot deliver possession of the
Premises to Tenant on or before the Estimated Commencement Date, this Lease
shall not be void or voidable nor shall Landlord be liable to Tenant for any
resulting loss or damage. However, Tenant shall not be liable for any rent and
the Commencement Date shall not occur until Landlord delivers possession of the
Premises and the Premises are in fact ready for occupancy as defined below,
except that if Landlord's failure to so deliver possession on the Estimated
Commencement Date is attributable to any action or in-action by Tenant
(including without limitation any Tenant Delay described in the Work Letter, if
any, attached to this Lease), then the Commencement Date shall not be advanced
to the date on which possession of the Premises is tendered to Tenant, and
Landlord shall be entitled to full performance by Tenant (including the payment
of rent) from the date Landlord would have been able to deliver the Premises to
Tenant but for Tenant's delay(s).
SECTION 3.3 OPTION TO RENEW.
Tenant shall have one (1) option to renew (the "Option") the Lease for one
five (5) year term, at the Prevailing Market Rent (as hereinafter defined), plus
Tenant's Percentage of all Operating Costs and Taxes, and all other charges
pursuant to the Lease, provided that Tenant: (i) is not in currently in default;
and (ii) has not been in default of any term or provision of the Lease two or
more times during the initial Lease Term, regardless of whether any of the
defaults were cured (timely or otherwise) or remained uncured with or without
the acquiescence of Lessor with the exception of payment of Basic Rent or
Additional Rent which may not be more than five (5) days late twice within a
twelve (12) month period. The Option may be exercised only by Tenant delivering
to
5
Landlord written notice of Tenant's unconditional exercise of the Option;
provided, however, that the Option shall be exercised no later than nine (9)
months but not more than twelve (12) months prior to the expiration of the
original term. If Tenant fails to timely exercise the Option in the manner
herein specified, then the Option shall immediately and automatically terminate
and be of no further force or effect. Time is of the essence with respect to the
exercise of the Option. Except as otherwise specifically provided herein, all
provisions of the Lease, this Addendum and all other exhibits to the Lease shall
continue in full force and effect during the Option Period; provided, however,
that the Base Rent for the initial year of the Option Period shall be set at the
Prevailing Market Rent (as such term is defined below).
The Option is personal to Tenant and may not be exercised or assigned,
voluntarily or involuntarily, by, or to, any person or entity other than Tenant.
The Option is not assignable separate and apart from this Lease. In the event
that at the time the Option is exercisable by Tenant, this Lease has been
assigned, or a sublease exists as to twenty percent (20%) or more of the
Premises, the Option shall be deemed null and void and Tenant, any assignee, or
any sublessee, shall not have the right to exercise the Option.
Landlord and Tenant shall have 30 days following the exercise of the Option
in which to agree as to the Prevailing Market Rent for the Premises as of the
first month of the Option Period. In the event Landlord and Tenant are unable to
agree on the Prevailing Market Rent within such thirty (30) day period, the
Prevailing Market Rent shall be determined as follows:
a. Within 15 days following the expiration of such 30 day period for
Landlord and Tenant to agree on the Prevailing Market Rent for the
Premises, Landlord and Tenant shall each give written notice to the
other designating by name, address and telephone number an MAI
appraiser or commercial real estate broker with no less than ten (10)
years of retail leasing experience, collectively "the appraisers"
familiar with retail rentals in commercial high-rise properties in the
downtown San Francisco financial district (the "Comparison Area").
Within 15 days following the selection of the second appraiser to be
designated, the first two appraisers shall select a third MAI
appraiser. The employment of each appraiser shall be conditioned on
such appraiser's agreement to comply with the provisions of this
Section 3.3. Within 30 days after the selection of the third
appraiser, the three appraisers so selected shall determine the
Prevailing Market Rent for the Premises and shall each notify Landlord
and Tenant, in writing, within such 30 day period of the Prevailing
Market Rent for the Premises determined by such appraisal. The
Prevailing Market Rent for the Premises shall be determined by
applying the following criteria:
i. The Prevailing Market Rent shall be based on the gross monthly
rent projected to be paid by tenants which shall take into
consideration rental
6
increases, if any, for qualifying five (5) year lease
transactions similar in length to the Option Period, based on
leases executed not earlier than six months prior to the date the
appraisers shall meet, for retail space in commercial high-rise
properties in the downtown San Francisco financial district
comparable to the Building in size, quality, age and amenities,
for premises which are comparable to the Premises in size (plus
or minus 20%), height, location and cosmetic condition, and with
comparable tenant improvements as are in the Premises whether
paid for by Landlord or Tenant, and "free" rent, if any is then
generally being offered in the marketplace (other than free rent
given in substitution of other rent concessions such as, but not
limited to, tenant improvements) [collectively referred to herein
as "PMR Criteria"], for buildings in the Comparison Area.
ii. The two appraisals for the Prevailing Market Rent which
arithmetically are the closest shall be added together and
divided by two. The third appraisal shall be disregarded. The
quotient so derived shall be the initial monthly Base Rent for
the Option Period.
b. In addition to monthly Base Rent, Tenant shall be obligated to pay
Tenant's Share of Operating Expenses pursuant to Paragraph 4.2 of the
Lease.
c. Landlord and Tenant shall each pay the costs and fees of the appraiser
selected by it. Landlord and Tenant shall share equally the costs and
fees of the third appraiser. In the event that either Landlord or
Tenant does not identify an appraiser within the first fifteen day
(15) period set forth in this Section 3.3 above, the appraiser
appropriately and timely identified shall alone render the appraisal
based on the PMR Criteria.
d. The terms and conditions of the extension shall be negotiated directly
between Landlord and Tenant. If Tenant requires the service of an
agent, the payment of such service shall be the responsibility of
Tenant.
ARTICLE IV. RENT AND OPERATING EXPENSES
SECTION 4.1 BASIC RENT.
From and after the Commencement Date, Tenant shall pay to Landlord without
deduction or offset the Basic Rent for the Premises in the total amount shown
(including subsequent adjustments, if any) in Item 6 of the Basic Lease
Provisions. Any rental adjustment shown in Item 6 shall be deemed to occur on
the specified monthly anniversary of the Commencement Date whether or not that
date occurs at the end of a calendar month. The rent shall be due and payable in
advance commencing on the Commencement Date (as prorated for any partial month)
and continuing thereafter on the
7
first day of each successive calendar month of the Term. No demand notice or
invoice shall be required. An installment of rent in the amount of six (6)
month's Basic Rent at the initial rate specified in Item 6 of the Basic Lease
Provisions, as such Basic Rent may be abated as described below, shall be
delivered to Landlord concurrently with Tenant's execution of this Lease and
shall be applied against the Basic Rent first due hereunder. Notwithstanding the
foregoing, for each of months 1 - 4, so long as Tenant is not in default
hereunder, Tenant shall pay only 1/2 of the Basic Rent specified in Item 6 of
the Basic Lease Provisions (i.e. one half of the Basic Rent per month shall be
abated for the first four (4) months of the term of this Lease). In all events,
Tenant shall pay one hundred percent (100%) of all additional rent pursuant to
Section 4.2; provided, however, that in the event of a default by Tenant under
this Lease, the portion of the Basic Rent so abated shall be deemed to be not
abated, and shall become immediately due and payable by Tenant.
SECTION 4.2 OPERATING EXPENSE INCREASE.
(a) Tenant shall reimburse Landlord as additional rent for Tenant's
Percentage of Operating Expenses, for each year after the Operating Expense Base
Year, incurred by Landlord in the operation of the Office Building. Tenant
acknowledges Landlord's rights to make changes or additions to the Office
Building from time to time pursuant to Section 6.5 below, in which event the
total rentable square footage within the Office Building may be adjusted.
(b) Commencing prior to the start of the first full Expense Recovery Period
of the Lease (as set forth in Item 7 of the Basic Lease Provisions), and prior
to the start of each full or partial Expense Recovery Period thereafter,
Landlord shall give Tenant a written estimate of the amount of Tenant's
proportionate share of Operating Expenses for the Expense Recovery Period or
portion thereof. Tenant shall pay the estimated amount to Landlord in equal
monthly installments in advance with Basic Rent. If Landlord has not furnished
its written estimate for any Expense Recovery Period by the time set forth
above, Tenant shall continue to pay cost reimbursements at the rates established
for the prior Expense Recovery Period, if any; provided that when the new
estimate is delivered to Tenant, Tenant shall, at the next monthly payment date,
pay any accrued cost reimbursements based upon the new estimate.
(c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall endeavor to furnish to Tenant a statement
showing in reasonable detail the actual or prorated Operating Expenses incurred
by Landlord during the period and the parties shall, within thirty (30) days
thereafter, make any payment or allowance necessary to adjust Tenant's estimated
payments, if any, to Tenant's actual proportionate share as shown by the annual
statement. Any amount due Tenant shall be credited against installments next
coming due under this Section 4.2, and any deficiency shall be paid by Tenant
together with the next installment. If Tenant has not made estimated payments
during the Expense Recovery Period, any amount owing by Tenant
8
pursuant to subsection (a) above shall be paid to Landlord in accordance with
Article XVI. Should Tenant fail to object in writing to Landlord's determination
of actual Operating Expenses within thirty (30) days following delivery of
Landlord's expense statement, Landlord's determination of actual Operating
Expenses for the applicable Expense Recovery Period shall be conclusive and
binding on the parties within thirty days following delivery of Landlord's
expense statement.
(d) Even though the Lease has terminated and the Tenant has vacated the
Premises when the final determination is made of Tenant's share of Operating
Expenses for the Expense Recovery Period in which the Lease terminates, Tenant
shall, upon notice, pay the entire increase due over the estimated expenses
paid. Conversely, any overpayment made in the event expenses decrease shall be
rebated by Landlord to Tenant.
(e) If, at any time during any Expense Recovery Period, any one or more of
the Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated expenses for the year,
then Tenant's estimated share of Operating Expenses shall be increased for the
month in which the increase becomes effective and for all succeeding months by
an amount equal to Tenant's proportionate share of the increase. Landlord shall
give Tenant written notice of the amount or estimated amount of the increase,
the month in which the increase will become effective, Tenant's monthly share
thereof, and the months for which the payments are due. Tenant shall pay the
increase to Landlord as a part of Tenant's monthly payments of estimated
expenses, as provided in paragraph (b) above, commencing with the month in which
effective.
(f) The term Operating Expenses shall include all expenses of operation and
maintenance of the Office Building , together with all appurtenant Common
Facilities (as defined in Section 6.2), and shall include the following charges
by way of illustration but not limitation: water and sewer charges; taxes;
insurance premiums or reasonable premium equivalents, should Landlord elect to
self-insure any risk that Landlord is authorized to insure hereunder; license
permit and inspection fees; heat; light; power; janitorial services; air
conditioning; supplies; materials; equipment; tools; programs instituted to
comply with transportation management requirements; tenant services;
amortization of capital investments reasonably intended to produce a reduction
in operating charges or energy conservation; amortization of capital investments
necessary to bring the Office Building into compliance with applicable laws and
building codes enacted subsequent to the completion of construction of the
Office Building; labor; reasonably allocated wages and salaries fringe benefits
and payroll taxes for administrative and other personnel directly applicable to
the Office Building, including both Landlord's personnel and outside personnel
but exclusive of personnel above the level of building manager; any expense
incurred pursuant to Sections 6.1, 6.2, 7.2 and 10.2 and Exhibits B and C
below; and a reasonable overhead/management fee. It is understood that Operating
Expenses shall include competitive charges for direct services
9
provided by any subsidiary or division of Landlord. The term "taxes," as used
herein shall include the following: (i) all real estate taxes or personal
property taxes, as such property taxes may be reassessed from time to time; (ii)
other taxes, documentary transfer fees, charges and assessments which are levied
with respect to this Lease or to the Office Building, and any improvements,
fixtures and equipment and other property of Landlord located in the Office
Building except that general net income and franchise taxes imposed against
Landlord shall be excluded; (iii) any tax surcharge or assessment which shall be
levied in addition to or in lieu of real estate or personal property taxes other
than taxes covered by Article VIII; and (iv) costs and expenses incurred in
contesting the amount or validity of any tax by appropriate proceedings. A copy
of Landlord's unaudited statement of expenses shall be made available to Tenant
upon request. The Operating Expenses may be extrapolated by Landlord to reflect
at least ninety-five percent (95%) occupancy of the rentable area of the Office
Building during any Expense Recovery Period.
SECTION 4.3 SECURITY DEPOSIT.
Concurrently with Tenant's delivery of this Lease, Tenant shall deposit
with Landlord the sum, if any, stated in Item 9 of the Basic Lease Provisions to
be held by Landlord as security for the full and faithful performance of
Tenant's obligations under this Lease (the Security Deposit ). Upon any default
by Tenant, including specifically Tenant's failure to pay rent or to abide by
its obligations under Sections 7.1 and 15.3 below, Landlord may apply all or
part of the Security Deposit as full or partial compensation for that default.
If any portion of the Security Deposit is so applied, Tenant shall, within five
(5) days after written demand by Landlord, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep this Security Deposit separate from its
general funds and Tenant shall not be entitled to interest on the Security
Deposit. If Tenant fully performs its obligations under this Lease, the Security
Deposit or any balance thereof shall be returned to Tenant (or at Landlord's
option to the last assignee of Tenant's interest in this Lease) after the
expiration of the Term, provided that Landlord may retain the Security Deposit
until such time as all amounts due from Tenant in accordance with this Lease
have been determined and paid in full. Provided Tenant has not been in default
of any provision of this Lease during the Term, one-third (1/3) of the Security
Deposit will be returned to the Tenant during the twenty-fifth (25th) month of
the Term and one-third (1/3) of the Security Deposit will be returned to the
Tenant during the sixty-first (61st) month of the Term.
ARTICLE V. USES
SECTION 5.1 USE.
Tenant shall use the Premises only for the purposes stated in Item 3 of the
Basic Lease Provisions. The parties agree that any contrary use shall be deemed
to cause material and irreparable harm to Landlord and shall entitle Landlord to
injunctive relief,
10
in addition to any other available remedy. Tenant shall not do nor permit
anything to be done in or about the Premises which will in any way interfere
with the rights of other occupants of the Office Building or use, or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant permit any nuisance or commit any waste in the
Premises. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any insurance policy(ies) covering the Office
Building, and/or their contents, and shall comply with all applicable insurance
underwriters' rules and the requirements of the Pacific Fire Rating Bureau or
any other organization performing a similar function. Tenant shall comply, at
its expense, with all present and future laws, ordinances, and requirements of
all governmental authorities that pertain to Tenant or its use of the Premises,
including without limitation, all federal and state occupational, health and
safety requirements and all recorded covenants, conditions and restrictions
affecting the Office Building whether or not Tenant's compliance will
necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall not generate, handle, store or dispose of hazardous or
toxic materials, as such materials may be identified in any federal state or
local law or regulation, in the Premises or the Office Building without the
prior written consent of Landlord, which consent may be refused or conditioned
by Landlord in its discretion. Tenant agrees that it shall promptly complete and
deliver to Landlord any disclosure form regarding hazardous materials that may
be required by any governmental agency. Tenant shall promptly, upon demand,
reimburse Landlord for any additional insurance premium charged by reason of
Tenant's failure to comply with the provisions of this Section and shall
indemnify Landlord from any liability and/or expense resulting from Tenant's
noncompliance. Tenant acknowledges that: (a) the Office Building does not comply
in certain respects with the requirements of the Americans with Disabilities
Act; and (b) certain portions of the Office Building contain asbestos containing
materials. Landlord has been advised that these materials are non-friable and do
not represent a health risk. Tenant is invited to review reports concerning
these matters on file at the office of the Office Building.
SECTION 5.2 SIGNS.
Tenant, upon obtaining the approval of Landlord in writing, may affix a
sign (restricted solely to Tenant's name as set forth in Item 1 of the Basic
Lease Provisions or such other name as Landlord may consent to in writing)
adjacent to the entry door of the Premises and shall maintain the sign in good
condition and repair during the Term. The sign shall conform to the criteria for
signs established by Landlord and shall be ordered through Landlord at Tenant's
expense. Tenant shall not place or allow to be placed any other sign, decoration
or advertising matter of any kind that is visible from the exterior of the
Premises. Any violating sign or decoration may be immediately removed by
Landlord at Tenant's expense without notice and without the removal constituting
a breach of this Lease or entitling Tenant to claim damages.
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ARTICLE VI. LANDLORD SERVICES ARTICLE
SECTION 6.1 UTILITIES AND SERVICES.
Landlord shall furnish to the Premises the utilities and services described
in Exhibit B subject to the conditions and payment obligations and standards set
forth in this Lease. Landlord shall not be liable for any failure to furnish any
services or utilities when the failure is the result of any accident or other
cause beyond Landlord's reasonable control, nor shall Landlord be liable for
damage to Tenant's equipment resulting from power surges. Landlord's failure to
furnish any services or utilities shall not entitle Tenant to any damages,
relieve Tenant of the obligation to pay rent, or constitute a constructive or
other eviction of Tenant, except that Landlord shall diligently attempt to
restore the service or utility promptly. Tenant shall comply with all rules and
regulations which Landlord may reasonably establish for the provision of
services and utilities and shall cooperate with all reasonable conservation
practices established by Landlord. Landlord shall, at all reasonable times, have
free access to all electrical and mechanical installations of Landlord.
SECTION 6.2 OPERATION AND MAINTENANCE OF COMMON FACILITIES.
During the Term, Landlord shall operate all Common Facilities within the
Office Building. The term "Common Facilities" shall mean all areas within the
exterior boundaries of the Office Building which are not held for exclusive use
by persons entitled to occupy space, and all other appurtenant areas and
improvements provided by Landlord for the common use of Landlord and tenants and
their respective employees and invitees, including without limitation, parking
areas and structures, driveways, sidewalks, landscaped and planted areas,
hallways and interior stairwells not located within the premises of any tenant,
common entrances and lobbies, elevators and restrooms not located within the
premises of any tenant.
SECTION 6.3 USE OF COMMON FACILITIES.
The occupancy by Tenant of the Premises shall include the use of the Common
Facilities in common with Landlord and with all others for whose convenience and
use the Common Facilities may be provided by Landlord, subject, however, to
compliance with all rules and regulations as are prescribed from time to time by
Landlord. Landlord shall operate and maintain the Common Facilities in the
manner Landlord may determine to be appropriate. Landlord shall, at all times
during the Term, have exclusive control of the Common Facilities and may
restrain any use or occupancy, except as authorized by Landlord's rules and
regulations. Tenant shall keep the Common Facilities clear of any obstruction or
unauthorized use related to Tenant's operations. Nothing in this Lease shall be
deemed to impose liability upon Landlord for any damage to or loss of the
property of, or for any injury to Tenant, its invitees or employees. Landlord
may
12
temporarily close any portion of the Common Facilities for repairs, remodeling
and/or alterations to prevent a public dedication or the accrual of prescriptive
rights or for any other reason deemed sufficient by Landlord.
SECTION 6.4 CHANGES AND ADDITIONS BY LANDLORD.
Landlord reserves the right to make alterations or additions to the Office
Building or to the attendant fixtures, equipment and Common Facilities. Landlord
may, at any time, relocate or remove any of the various buildings, parking areas
and other Common Facilities, and may add buildings and areas from time to time.
No change shall entitle Tenant to any abatement of rent or other claim against
Landlord, provided that the change does not deprive Tenant of reasonable access
to or use of the Premises.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1 TENANT'S MAINTENANCE AND REPAIR.
When and if needed or whenever requested by Landlord, Tenant, at its sole
expense, shall make all repairs and replacements necessary to keep the Premises
in the condition as existed on the Commencement Date (or on any later date that
the improvements may have been installed), excepting ordinary wear and tear. All
repairs and replacements shall be at least equal in quality to the original
work, shall be made only by a licensed bonded contractor approved in writing in
advance by Landlord, and shall be made only at the time or times approved by
Landlord. Any contractor utilized by Tenant shall be subject to Landlord's
standard requirements for contractors, as modified from time to time. Landlord
may impose reasonable restrictions and requirements with respect to repairs, as
provided in Section 7.3, and the provisions of Section 7.4 shall apply to all
repairs. Alternatively, Landlord may elect to make any such repair on behalf of
Tenant and at Tenant's expense, and Tenant shall promptly reimburse Landlord for
all costs incurred upon submission of an invoice.
SECTION 7.2 LANDLORD'S MAINTENANCE AND REPAIR.
(a) Subject to Section 7.1 and Article XI, Landlord shall provide service,
maintenance and repair with respect to any air conditioning, ventilating or
heating equipment which serves the Premises and shall maintain in good repair
the roof, foundations, footings, the exterior surfaces of the exterior walls of
the Office Building, and the structural, electrical and mechanical systems,
except that Tenant, at its expense, shall make all repairs which Landlord deems
reasonably necessary as a result of the act or negligence of Tenant, its agents,
employees, invitees, subtenants or contractors. Landlord shall have the right to
employ or designate any reputable person or firm, including any employee or
agent of Landlord or any of Landlord's affiliates or divisions, to perform any
service, repair or maintenance function. Landlord need not make any other
improvements or repairs, except as specifically required under this Lease, and
nothing
13
contained in this Section shall limit Landlord's right to reimbursement from
Tenant for maintenance, repair costs and replacement costs as provided elsewhere
in this Lease. Tenant understands that it shall not make repairs at Landlord's
expense or by rental offset. Unless for an emergency, Landlord will provide
prior written notice to Tenant.
(b) Except as provided in Sections 11.1 and 12.1 below, there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements to any portion of the Office Building, including
repairs to the Premises, nor shall any related activity by Landlord constitute
an actual or constructive eviction; provided, however, that in making repairs,
alterations or improvements, Landlord shall interfere as little as reasonably
practicable with the conduct of Tenant's business in the Premises.
SECTION 7.3 ALTERATIONS.
Tenant shall make no alterations, additions or improvements to the Premises
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. If any such improvement requires approval by or notice to
the lessor of a superior lease or the holder of a mortgage, no work shall
proceed until such approval has been received or such notice has been given.
Landlord may impose, as a condition to its consent, any requirements that
Landlord, in its discretion, may deem reasonable or desirable, including but not
limited to a requirement that all work be covered by a lien and completion bond
satisfactory to Landlord and requirements as to the manner, time and contractor
for performance of the work. Landlord may require that Tenant enter into an
agreement with Landlord for the work to be performed by Landlord's contractor,
in which event Tenant shall pay to Landlord, the cost of construction as
incurred by Landlord. Should Landlord authorize Tenant to perform the work with
a contractor approved by Landlord, Tenant shall obtain all required permits for
the work and shall perform the work in `compliance with all applicable laws,
regulations and ordinances. of Under no circumstances shall Tenant make any
improvement which incorporates asbestos-containing construction materials into
the Premises. Any request for Landlord's consent shall be made in writing and
shall contain architectural plans describing the work in detail reasonably
satisfactory to Landlord. Unless Landlord otherwise agrees in writing, all
alterations, additions or improvements affixed to the Premises (excluding
moveable trade fixtures and furniture) shall become the property of Landlord and
shall be surrendered with the Premises at the end of the Term, except that
Landlord may, by notice to Tenant given at the time of Landlord's consent to the
alteration or improvement, require Tenant to remove by the Expiration Date or
sooner termination date of this Lease all or any alterations, decorations,
fixtures, additions, improvements and the like installed either by Tenant or by
Landlord at Tenant's request, and to repair any damage to the Premises arising
from that removal. Landlord may require Tenant to remove an improvement provided
its part of the initial build-out pursuant to Exhibit H, if any, if and only if
the improvement is a non-building standard item and Tenant is notified of the
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requirement prior to the build-out. Within thirty (30) days after completion of
Tenant's alterations requiring the submission of plans to Landlord, Tenant shall
furnish to Landlord a complete set of "as-built" plans and specifications.
SECTION 7.4 MECHANIC'S LIENS.
Tenant shall keep the Premises free from any liens arising out of any work
performed, materials furnished, or obligations incurred by or for Tenant. Upon
request by Landlord, Tenant shall promptly cause any such lien to be released by
posting a bond in accordance with California Civil Code Section 3143 or any
successor statute. In the event that Tenant shall not, within thirty (30) days
following the imposition of any lien, cause the lien to be released of record
by payment or posting of a proper bond, Landlord shall have, in addition to all
other available remedies, the right to cause the lien to be released by any
means it deems proper, including payment of or defense against the claim giving
rise to the lien. All expenses so incurred by Landlord, including Landlord's
attorneys' fees, shall be reimbursed by Tenant promptly following Landlord's
demand, together with interest from the date of payment by Landlord at the
maximum rate permitted by law until paid. Tenant shall give Landlord no less
than twenty (20) days prior notice in writing before commencing construction of
any kind on the Premises so that Landlord may post and maintain notices of
nonresponsibility on the Premises.
SECTION 7.5 ENTRY AND INSPECTION.
Landlord shall at all times have the right to enter the Premises to inspect
them, to supply services in accordance with this Lease, to protect the interests
of Landlord in the Premises, and to submit the Premises to prospective or actual
purchasers or encumbrance holders or to prospective tenants, all without being
deemed to have caused an eviction of Tenant and without abatement of rent,
except as provided elsewhere in this Lease. Landlord shall at all times have and
retain a key which unlocks all of the doors in the Premises, excluding Tenant's
vaults and safes, and Landlord shall have the right to use any and all means
which Landlord may deem proper to open the doors in an emergency in order to
obtain entry to the Premises, and any entry to the Premises obtained by Landlord
shall not, under any circumstances, be deemed to be a forcible or unlawful entry
into or a detainer of the Premises or any eviction of Tenant from the Premises.
SECTION 7.6 SPACE PLANNING AND SUBSTITUTION.
Landlord shall have the right, upon providing Tenant sixty (60) days
written notice, to move Tenant to other comparable space in the Office Building.
The new space shall be the same size as the Premises and provided with
comparable improvements. Landlord shall pay all of Tenant's reasonable moving
expenses following receipt of invoices from Tenant. If Landlord exercises this
right, this Lease shall remain in effect and be deemed applicable to the new
space except that the Lease shall be appropriately amended to reflect the new
space.
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ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PREMISES
Tenant shall be liable for and shall pay all taxes and assessments levied
against all personal property of Tenant located in the Premises. If any taxes on
Tenant's personal property are levied against Landlord or Landlord's property,
and if Landlord pays the same or if the assessed value of Landlord's property is
increased by the inclusion of a value placed upon the personal property of
Tenant, and if Landlord pays the taxes based upon the increased assessment,
Tenant shall pay to Landlord the taxes so levied against Landlord or the
proportion of the taxes resulting from the increase in the assessment. In
calculating what portion of any tax bill which is assessed against Landlord
separately or Landlord and Tenant Jointly is attributable to Tenant's fixtures
and personal property, Landlord's reasonable determination shall be conclusive.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1 RIGHTS OF PARTIES
(a) Notwithstanding any provision of this Lease to the contrary, Tenant
will neither voluntarily nor by operation of law assign, sublet, encumber or
otherwise transfer all or any part of Tenant's interest in this Lease or permit
the Premises to be occupied by anyone other than Tenant without Landlord's prior
written consent, which consent shall not unreasonably be withheld in accordance
with the provisions of Section 9.1.(c). No assignment (whether voluntary,
involuntary or by operation of law) and no subletting shall be valid or
effective without Landlord's prior written consent and at Landlord's election
shall constitute a material default of this Lease. Landlord shall not be deemed
to have given its consent to any assignment or subletting by any other course of
action, including its acceptance of any name for listing in the Office Building
directory. To the extent not prohibited by provisions of the Bankruptcy Code 11
U.S.C. Section 101 et seq. (the Bankruptcy Code), including Section 365(f)(1),
Tenant, on behalf of itself and its creditors, administrators and assigns,
waives the applicability of Section 365(e) of the Bankruptcy Code, unless the
proposed assignee of the Trustee for the estate of the bankrupt meets Landlord's
standard for consent, as set forth in Section 9.1 (c) of this Lease. If this
Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations to be delivered in
connection with the assignment, shall be delivered to Landlord, shall be and
remain the exclusive property of Landlord, and shall not constitute property of
Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed to have assumed all of the obligations
arising under this Lease on and after the date of the assignment and shall, upon
demand, execute and deliver to Landlord an instrument confirming that
assumption.
(b) If Tenant or any guarantor of Tenant ("Tenant's Guarantor") is a
corporation or is an unincorporated association or partnership, the transfer of
any stock or
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interest in the corporation, association or partnership, which results in a
change in the voting control of Tenant or Tenant's Guarantor, if any, shall be
deemed an assignment within the meaning and provisions of this Article. In
addition, any change in the status of the entity, such as but not limited to the
withdrawal of a general partner, shall be deemed an assignment within the
meaning of this Article.
This section 9.1(b) will not apply to (i) any change in ownership as a
result of any financing within sixty (60) days of the signing of this lease,
(ii) the closing of an underwritten public offering of shares of common stock of
the company; and (iii) the merger or consolidation of substantially all of the
company in which the shareholders of the company immediately prior to the merger
or consolidation hold substantially the same percentage of ownership as after
the merger or acquisition.
(c) If Tenant desires to transfer an interest in this Lease, it shall first
notify Landlord of its desire and shall submit in writing to Landlord: (i) the
name and address of the proposed transferee; (ii) the nature of any proposed
subtenant's or assignee's business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment; and (iv) any other
information requested by Landlord and reasonably related to the transfer. Except
as provided in Subsection (d) of this Section, Landlord shall not unreasonably
withhold its consent provided: (1) the use of the Premises will be consistent
with the provisions of this Lease and with Landlord's commitment to other
tenants of the Office Building; (2) fifty percent (50%) of any profit received
by the Tenant from the assignment or subletting, whether during or after the
Term of this Lease, shall be paid to Landlord when received; (3) at Landlord's
election, insurance requirements shall be brought into conformity with
Landlord's then current leasing practice; (4) any proposed subtenant or assignee
demonstrates that it is financially responsible by submission to Landlord of all
reasonable information as Landlord may request concerning the proposed subtenant
or assignee, including but not limited to a balance sheet of the proposed
subtenant or assignee as of a date within ninety (90) days of the request for
Landlord's consent and statements of income or profit and loss of the proposed
subtenant or assignee for the two-year period preceding the request for
Landlord's consent; (5) any proposed subtenant or assignee demonstrates to
Landlord's reasonable satisfaction a record of successful experience in
business; (6) the proposed assignee or subtenant is not an existing tenant of
the Office Building; and (7) the proposed transfer will not impose additional
burdens or adverse tax effects on Landlord. If Landlord consents to the proposed
transfer, Tenant may, within ninety (90) days after the date of the consent,
effect the transfer upon the terms described in the information furnished to
Landlord; provided that any material change in the terms shall be subject to
Landlord's consent as set forth in this Section. Landlord shall approve or
disapprove any requested transfer within thirty (30) days following receipt of
Tenant's written request and the information set forth above.
(d) Notwithstanding the provisions of Subsection (c) above, in lieu of
consenting to a proposed assignment or subletting, Landlord may elect to (i)
sublease the
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Premises (or the portion proposed to be subleased) or take an assignment of
Tenant's interest in this Lease upon the same terms as offered to the proposed
subtenant or assignee (excluding terms relating to the purchase of personal
property the use of Tenant's name or the continuation of Tenant's business); or
(ii) terminate this Lease as to the portion of the Premises proposed to be
subleased or assigned with a proportionate abatement in the rent payable under
this Lease, effective on the date that the proposed sublease or assignment would
have become effective. Landlord may, thereafter, at its option, assign or re-let
any space so recaptured to any third party, including without limitation the
proposed transferee of Tenant. Provision for 9.1(d) shall apply only to any
additional space to the initial premises.
(e) Tenant shall pay to Landlord a transfer fee of Five Hundred Dollars
($500.00) if and when any transfer requested by Tenant is approved. In addition,
should Landlord or its agents procure for Tenant a subtenant, assignee or new
tenant for all or part of the Premises, then Tenant shall pay to Landlord,
concurrently with the execution of the conveyancing documents, a leasing fee in
an amount to be agreed upon by both Landlord and Tenant.
SECTION 9.2 EFFECT OF TRANSFER.
No subletting or assignment, even with the consent of Landlord, shall
relieve Tenant of its obligation to pay rent and to perform all its other
obligations under this Lease. Each assignee or subtenant of 100% premises, other
than Landlord, shall be deemed to assume all obligations of Tenant under this
Lease and shall be liable, jointly and severally, with Tenant for the payment of
all rent and for the due performance of all of Tenant's obligations under this
Lease. No transfer shall be binding on Landlord unless any document
memorializing the transfer is delivered to Landlord and both the
assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements of
this Article. The acceptance by Landlord of any payment due under this Lease
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any transfer. Consent by Landlord
to one or more transfers shall not operate as a waiver or estoppel to the future
enforcement by Landlord of its rights under this Lease.
SECTION 9.3 SUBLEASE REQUIREMENTS.
The following terms and conditions shall apply to any subletting by Tenant
of all or any part of the Premises and shall be included in each sublease:
(a) Tenant hereby irrevocably assigns to Landlord all of Tenant's interest
in all rentals and income arising from any sublease of the Premises and Landlord
may collect such rent and income and apply same toward Tenant's obligations
under this Lease; provided, however, that until a default occurs in the
performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the
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sublease rentals. Landlord shall not, by reason of this assignment or the
collection of sublease rentals, be deemed liable to the subtenant for the
performance of any of Tenant's obligations under the sublease, Tenant hereby
irrevocably authorizes and directs any subtenant, upon receipt of a written
notice from Landlord stating that an uncured default exists in the performance
of Tenant's obligations under this Lease, to pay to Landlord all sums then and
thereafter due under the sublease. Tenant agrees that the subtenant may rely on
that notice without any duty of further inquiry and notwithstanding any notice
or claim by Tenant to the contrary. Tenant shall have no right or claim against
the subtenant or Landlord for any rentals so paid to Landlord.
(b) In the event of the termination of this Lease, Landlord may, at its
sole option, take over Tenant's entire interest in any sublease and, upon notice
from Landlord, the subtenant shall attorn to Landlord. In no event, however,
shall Landlord be liable for any previous act or omission by Tenant under the
sublease or for the return of any advance rental payments or deposits under the
sublease that have not been actually delivered to Landlord, nor shall Landlord
be bound by any sublease modification executed without Landlord's consent or for
any advance rental payment by the subtenant in excess of one month's rent. The
general provisions of this Lease, including without limitation those pertaining
to insurance and indemnification, shall be deemed incorporated by reference into
the sublease despite the termination of this Lease.
(c) Tenant agrees that Landlord may, at its sole option, authorize a
subtenant of the Premises to cure a default by Tenant under this Lease. Should
Landlord accept such cure, the subtenant shall have a right of reimbursement and
offset from and against Tenant under the applicable sublease.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1 TENANT'S INSURANCE.
Tenant, at its sole cost and expense, shall provide and maintain in effect
the insurance described in Exhibit D. Evidence of that insurance must be
delivered to Landlord prior to the Commencement Date.
SECTION 10.2 LANDLORD'S INSURANCE.
Landlord may, at its election, provide any or all of the following types of
insurance with or without deductible and in amounts and coverages as may be
determined by Landlord in its discretion: all risk property insurance subject to
standard exclusions covering the Office Building, and such other risks as
Landlord or its mortgagees may from time to time deem appropriate, including
leasehold improvements made by Landlord and comprehensive public liability
coverage. Landlord shall not be required to carry insurance of any kind on
Tenant's property, including leasehold improvements, trade fixtures,
furnishings, equipment plate glass, signs and all other items of personal
19
property, and shall not be obligated to repair or replace that property should
damage occur. All proceeds of insurance maintained by Landlord upon the Office
Building shall be the property of Landlord, whether or not Landlord is obligated
to or elects to make any repairs.
SECTION 10.3 TENANT'S INDEMNITY.
To the fullest extent permitted by law, Tenant shall defend, indemnify and
hold harmless Landlord, its agents and any and all affiliates of Landlord,
including without limitation any corporations or other entities controlling,
controlled by or under common control with Landlord, from and against any and
all claims, liabilities, costs or expenses arising either before or after the
Commencement Date from Tenant's use or occupancy of the Premises, the Office
Building or the Common Facilities, or from the conduct of its business or from
any activity, work or thing done, permitted or suffered by Tenant or its agents,
employees, invitees or licensees in or about the Premises, the office Building
or the Common Facilities, or from any default in the performance of any
obligation on Tenant's part to be performed under this Lease, or from any act or
negligence of Tenant or its agents, employees, visitors, patrons, guests,
invitees or licensees. Landlord may, at its option, require Tenant to assume
Landlord's defense in any action covered by this Section through legal counsel
satisfactory to Landlord in its reasonable discretion.
SECTION 10.4 LANDLORD'S NONLIABILITY.
Landlord shall not be liable to Tenant, its employees, agents and invitees,
and Tenant hereby assumes the risk of and waives all claims against Landlord for
loss of or damage to any property or any injury to any person or loss or
interruption of business or income resulting from, but not limited, to fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak or flow from or into any part of the Premises or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works, heating and
ventilation systems, mechanical equipment , lighting or other fixtures in the
Office Building whether the damage or injury results from conditions arising in
the Premises or in other portions of the Office Building. It is understood that
any such condition may require the temporary evacuation or closure of all or a
portion of the Office Building. Neither Landlord nor its agents shall be liable
for interference with light or other similar intangible interests. The liability
of Landlord to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Property or the
Premises shall be limited to the interest of Landlord in the Office Building and
the rental proceeds thereof and Tenant agrees to look solely to Landlord's
interest in the Property for the recovery of judgment against Landlord, and
Landlord shall not be personally liable for any such judgment or deficiency
after execution thereon. Under no circumstances shall Landlord ever be liable
for consequential or punitive damages, including damages for lost profits or for
business interruption.
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ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1 RESTORATION.
(a) If the Office Building of which the Premises are a part is damaged,
Landlord shall repair that damage as soon as reasonably possible at its expense
unless: (i) the damage is not covered by Landlord's fire and extended coverage
insurance; or (ii) Landlord reasonably determines that the cost of repair would
exceed twenty-five percent (25%) of the full replacement cost of the Office
Building (Replacement Cost); or (iii) Landlord reasonably determines that the
cost a repair would exceed ten percent (10%) of the Replacement Cost and the
damage occurs during the final twelve (12) months of the Term. Should Landlord
elect not to repair the damage for one of the preceding reasons, Landlord shall
so notify Tenant in writing within sixty (60) days after the damage occurs, and
this Lease shall terminate as of the date of notice;
(b) Unless Landlord elects to terminate this Lease in accordance with
subsection (a) above, this Lease shall continue in effect for the remainder of
the Term; provided that if the damage is so extensive as to reasonably prevent
Tenant's substantial use and enjoyment of the Premises for more than nine (9)
months, then Tenant may elect to terminate this Lease by written notice to
Landlord within the sixty-(60)-day period stated in subsection (a).
(c) Commencing on the date of any damage to the Office Building and ending
on the sooner of the date the damage is repaired or the date this Lease is
terminated, the rental to be paid under this Lease shall be abated in the same
proportion that the floor area of the Premises that is rendered unusable by the
damage from time to time bears to the total floor area of the Premises.
(d) Notwithstanding the provisions of subsections (a) (b) and (c) of this
Section, the cost of any repairs shall be borne by Tenant and Tenant shall not
be entitled to rental abatement or termination rights if the damage is due to
the fault or neglect of Tenant or its employees, subtenants, invitees or
representatives. In addition, the provisions of this Section shall not be deemed
to require Landlord to repair any improvements or fixtures that Tenant is
obligated to repair or insure pursuant to any other provision of this Lease.
SECTION 11.2 LEASE GOVERNS.
Tenant agrees that the provisions of this Lease, including without
limitation Section 11.1, shall govern any damage or destruction and shall
accordingly supersede any contrary statute or rule of law. Tenant irrevocably
waives and releases Tenant's rights under California Civil Code Sections
1932(2), 1933(4) and 1942 as the same may be modified or replaced hereafter.
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ARTICLE XII. EMINENT DOMAIN
SECTION 12.1 TOTAL OR PARTIAL TAKING.
If all or a material portion of the Premises is taken by any lawful
authority by exercise of the right of eminent domain or sold to prevent a
taking, either Tenant or Landlord may terminate this Lease effective as of the
date possession is required to be surrendered to the authority. In the event
title to a portion of the Office Building, other than the Premises, is taken or
sold in lieu of taking, and if Landlord elects to restore the Office Building in
such a way as to alter the Premises materially, either party may terminate this
Lease by written notice to the other party effective on the date of vesting of
title. In the event neither party has elected to terminate this Lease as
provided above, then Landlord shall promptly, after receipt of a sufficient
condemnation award, proceed to restore the Premises to substantially their
condition prior to the taking and a proportionate allowance shall be made to
Tenant for the rent corresponding to the time during which and to the part of
the Premises of which Tenant is deprived on account of the taking and
restoration. In the event of a taking, Landlord shall be entitled to the entire
amount of the condemnation award without deduction for any estate or interest of
Tenant; provided that nothing in this Section shall be deemed to give Landlord
any interest in or prevent Tenant from seeking any award against the taking
authority for the taking of personal property and fixtures belonging to Tenant
or for relocation or business interruption expenses recoverable from the taking
authority.
SECTION 12.2 TEMPORARY TAKING.
No temporary taking of the Premises shall terminate this Lease or give
Tenant any right to abatement of rent, and any award specifically attributable
to a temporary taking of the Premises shall belong entirely to Tenant. A
temporary taking shall be deemed to be a taking of the use or occupancy of the
Premises for a period not to exceed ninety (90) days.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE
SECTION 13.1 SUBORDINATION SECTION
(a) At the option of Landlord this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust, if
any, which may hereafter affect the Office Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant's quiet enjoyment of the Premises disturbed in the event
of termination of any such ground or underlying lease or the foreclosure of any
such mortgage or deed of trust to which Tenant has subordinated this Lease
pursuant to this Section. In the event of a termination or foreclosure, Tenant
shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same
22
terms and conditions as are contained in this Lease and shall execute any
instrument reasonably required by Landlord's successor for that purpose. Tenant
shall also, upon written request of Landlord, execute and deliver all
instruments as may be required from time to time to subordinate the rights of
Tenant under this Lease to any ground or underlying lease or to the lien of any
mortgage or deed of trust or, if requested by Landlord, to subordinate in whole
or in part any ground or underlying lease or the lien of any mortgage or deed of
trust to this Lease.
(b) Failure of Tenant to execute any statements or instruments necessary or
desirable to effectuate the provisions of this Article within ten (10) days
after written request by Landlord, in any form that Landlord may reasonably
require (including one substantially in the form of Exhibit F hereto), shall
constitute a material default under this Lease. In that event, Landlord, in
addition to any other rights or remedies it might have, shall have the right by
written notice to Tenant to terminate this Lease as of a date not less than
twenty (20) days after the date of Landlord's notice. Landlord's election to
terminate shall not relieve Tenant of any liability for its default.
SECTION 13.2 ESTOPPEL CERTIFICATE
(a) Tenant shall, at any time upon not less than ten (10) days' prior
written notice from Landlord, execute, acknowledge and deliver to Landlord, in
any form that Landlord may reasonably require, a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect (or if
modified stating the nature of the modification and certifying that this Lease
as modified is in full force and effect), and the dates to which the rental,
additional rent and other charges have been paid in advance, if any; and (ii)
acknowledging that to Tenant's knowledge there are no uncured defaults on the
part of Landlord or specifying each default, if any are claimed; and (iii)
setting forth all further information that Landlord may reasonably require.
Tenant's statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the Office Building.
(b) Tenant's failure to deliver any estoppel statement within the provided
time shall constitute a default under this Lease and shall be conclusive upon
Tenant that (i) this Lease is in full force and effect without modification,
except as may be represented by Landlord; (ii) there are no uncured defaults in
Landlord's performance; and (iii) not more than one month's rental has been paid
in advance.
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1 TENANT'S DEFAULTS.
In addition to any other event of default set forth in this Lease. the
occurrence of any one or more of the following events shall constitute a default
by Tenant:
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(a) The failure by Tenant to make any payment of rent or additional rent
required to be made by Tenant, as and when due. For purposes of these default
and remedy provisions, the term additional rent shall be deemed to include all
amounts of any type whatsoever other than Basic Rent to be paid by Tenant
pursuant to the terms of this Lease.
(b) Assignment, sublease, encumbrance or other transfer of the Lease by
Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means without the prior
written consent of Landlord.
(c) The discovery by Landlord that any financial statement provided by
Tenant or by any affiliate, successor or guarantor of Tenant was materially
false.
(d) The failure or inability by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant; provided, however, that any such notice
shall be in lieu of and not in addition to any notice required under California
Code of Civil Procedure Sections 1161 and 1161(a), as amended. However, if the
nature of the failure is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant commences the cure within thirty (30) days and thereafter diligently
pursues the cure to completion.
(e) (i) The making by Tenant of any general assignment for the benefit of
creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within sixty [60] days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event described
in this subsection unless notification in writing is received by Landlord, nor
shall there be any presumption attributable to Landlord of Tenant's insolvency.
In the event that any provision of this subsection is contrary to applicable
law, the provision shall be of no force or effect.
(f) The Tenant's failure to take possession of the Premises or to occupy
same within sixty days after the Commencement Date.
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SECTION 14.2 LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant or in the event of the
abandonment of the Premises by Tenant, then, in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:
(i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means in which case this Lease shall terminate and Tenant
shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:
(1) The worth at the time of award of the unpaid rent and
additional 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 and additional rent, which would have been earned after termination
until the time of award, exceeds the amount of such loss that Tenant proves
could have been reasonably avoided;
(3) The worth at the time of award of the amount by which the
unpaid rent and additional rent for the balance of the Term after the time of
award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;
(4) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which, in the ordinary course of things, would be likely to
result from Tenant's default, including but not limited to the cost of
recovering possession of the Premises, commissions and other expenses of
reletting, including necessary repair, renovation, improvement and alteration of
the Premises for a new tenant, the unamortized portion of any tenant
improvements and brokerage commission funded by Landlord in connection with this
Lease, the value of any free rent or other rental and monetary concessions made
or extended for or on behalf of Tenant (including, without limitation, moving
allowances and lease termination payments), reasonable attorneys' fees and any
other reasonable costs; and
(5) At Landlord's election all other amounts in addition to or in
lieu of the foregoing as may be permitted by law. The term rent, as used in this
Lease, shall be deemed to mean the Basic Rent and all other sums required to be
paid by Tenant to Landlord pursuant to the terms of this Lease. Any sum other
than Basic Rent shall be computed on the basis of the average monthly amount
accruing during the twenty-four (24) month period immediately prior to default,
except that if it becomes necessary to compute such rental before the twenty-
four (24) month period has occurred, then the
25
computation shall be on the basis of the average monthly amount during the
shorter period. As used in subparagraphs (1) and (2) above, the worth at the
time of award shall be computed by allowing interest at the rate of ten percent
(10%) per annum. As used in subparagraph (3) above, the worth at the time of
award shall be computed by discounting the amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
(ii) Landlord may elect not to terminate Tenant's right to possession
of the Premises in which event Landlord may continue to enforce all of its
rights and remedies under this Lease, including the right to collect all rent as
it becomes due. Efforts by the Landlord to maintain, preserve or relet the
Premises, or the appointment of a receiver to protect the Landlord's interests
under this Lease, shall not constitute a termination of the Tenant's right to
possession of the Premises. In the event that Landlord elects to avail itself of
the remedy provided by this subsection (ii), Landlord shall not unreasonably
withhold its consent to an assignment or subletting of the Premises subject to
the reasonable standards for Landlord's consent as are contained in this Lease.
(f) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any default by Tenant unless and until the default is cured by
Tenant. The various rights and remedies reserved to Landlord in this Lease or
otherwise shall be cumulative and, except as otherwise provided by California
law, Landlord may pursue any or all of its rights and remedies at the same time.
(g) No delay or omission of Landlord to exercise any right or remedy shall
be construed as a waiver of the right or remedy or of any default by Tenant,
except as provided herein. The acceptance by Landlord of rent shall not be a (i)
waiver of any preceding breach or default by Tenant of any provision of this
Lease, other than the failure of Tenant to pay the particular rent accepted
regardless of Landlord's knowledge of the preceding breach or default at the
time of acceptance of rent; or (ii) a waiver of Landlord's right to exercise any
remedy available to Landlord by virtue of the breach or default. The acceptance
of any payment from a debtor-in-possession, a trustee, a receiver or any other
person acting on behalf of Tenant or Tenant's estate, shall not waive or cure a
default under Section 14.1. No payment by Tenant or receipt by Landlord of a
lesser amount than the rent required by this Lease shall be deemed to be other
than a partial payment on account of the earliest due stipulated rent, nor shall
any endorsement or statement on any check or letter be deemed an accord and
satisfaction, and Landlord shall accept the check or payment without prejudice
to Landlord's right to recover the balance of the rent or pursue any other
remedy available to it. No act or thing done by Landlord or Landlord's agents
during the Term shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in writing and
signed by Landlord. No employee of Landlord or of Landlord's agents shall have
any power to accept the keys to the Premises prior to the termination of this
Lease and the
26
delivery of the keys to any employee shall not operate as a termination of the
Lease or a surrender of the Premises.
SECTION 14.3 LATE PAYMENTS
(a) Any rent due under this Lease that is not paid to Landlord within five
(5) days of the date when due shall bear interest at the maximum rate permitted
by law from the date due until fully paid. The payment of interest shall not
cure any default by Tenant under this Lease. In addition, Tenant acknowledges
that the late payment by Tenant to Landlord of rent will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Those costs may include, but
are not limited to, administrative, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any ground lease
mortgage or trust deed covering the Premises. Accordingly, if any rent due from
Tenant shall not be received by Landlord or Landlord's designee within five (5)
days after the date due, then Tenant shall pay to Landlord, in addition to the
interest provided above, a late charge in an amount equal to ten percent (10%)
of each delinquent payment. Acceptance of a late charge by Landlord shall not
constitute a waiver of Tenant's default with respect to the overdue amount nor
shall it prevent Landlord from exercising any of its other rights and remedies.
Should Tenant deliver to Landlord, at any time during the Term, two (2) or
more insufficient checks, the Landlord may require that all monies then and
thereafter due from Tenant be paid to Landlord by cashier's check.
SECTION 14.4 RIGHT OF LANDLORD TO PERFORM.
All covenants and agreements to be performed by Tenant under this Lease
shall be performed at Tenant's sole cost and expense and without any abatement
of rent or right of set-off. If Tenant fails to pay any sum of money other than
rent or fails to perform any other act on its part to be performed under this
Lease, and the failure continues beyond any applicable grace period set forth in
Section 14.1, then, in addition to any other available remedies, Landlord may,
at its election, make the payment or perform the other act on Tenant's part.
Landlord's election to make the payment or perform the act on Tenant's part
shall not give rise to any responsibility of Landlord to continue making the
same or similar payments or performing the same or similar acts. Tenant shall
promptly, upon demand by Landlord, reimburse Landlord for all sums paid by
Landlord and all necessary incidental costs together with interest at the
maximum rate permitted by law from the date of the payment by Landlord. Landlord
shall have the same rights and remedies if Tenant fails to pay those amounts as
Landlord would have in the event of a default by Tenant in the payment of rent.
27
SECTION 14.5 DEFAULT BY LANDLORD.
Landlord shall not be deemed to be in default in the performance of any
obligation under this Lease unless and until it has failed to perform the
obligation within thirty (30) days after written notice by Tenant to Landlord
specifying in reasonable detail the nature and extent of the failure; provided,
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for its performance, then Landlord shall not be
deemed to be in default if it commences performance within the thirty-(30)-day
period and thereafter diligently pursues the cure to completion. The directors,
officers, shareholders and employees of Landlord shall not be personally liable
for any claim or judgment against Landlord under any circumstances. If Landlord
is in default under this Lease, then Tenant shall seek only a money judgment
against Landlord and shall not attempt to seize or attach any asset of Landlord
except as otherwise provided herein. If Tenant recovers a money judgment against
Landlord, then such judgment shall be satisfied only out of the proceeds of the
sale received on execution of the judgment levied against the right, title and
interest of the Landlord in the Building or out of rent or other income from the
Building received or to be received by the Landlord. Tenant shall not attempt to
satisfy any such judgment from any other asset of Landlord under any
circumstances. Tenant acknowledges that this limitation on Landlord's liability
has been separately bargained for and that Landlord would not enter into this
Lease in the absence of this provision.
SECTION 14.6 EXPENSES AND LEGAL FEES.
Should either Landlord or Tenant bring any action in connection with this
Lease, the prevailing party shall be entitled to recover, as a part of the
action, its reasonable attorneys' fees and all other costs. The prevailing
party, for the purpose of this paragraph, shall be determined by the trier of
the facts.
SECTION 14.7 WAIVER OF JURY TRIAL.
LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE
ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY AND
EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
PARTY HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES
AND/OR ANY CLAIM OF INJURY OR DAMAGE.
28
ARTICLE XV. END OF TERM
SECTION 15.1 HOLDING OVER.
This Lease shall terminate without further notice upon the expiration of
the Term, and any holding over by Tenant after the expiration shall not
constitute a renewal or extension of this Lease or give Tenant any rights under
this Lease, except when in writing signed by both parties. If Tenant holds over
for any period after the expiration (or earlier termination) of the Term,
Landlord may, at its option, treat Tenant as a tenant at sufferance only
commencing on the first (1st) day following the termination of this Lease and
subject to all of the terms of this Lease, except that the monthly rental shall
be the greater of (a) one hundred twenty-five percent (125%) of the total
monthly rental for the month immediately preceding the date of termination, or
(b) the then currently scheduled rent for comparable space in the Office
Building. If Tenant fails to surrender the Premises upon the expiration of this
Lease, despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation any
claims made by any succeeding tenant relating to such failure to surrender.
Acceptance by Landlord of rent after the termination shall not constitute a
consent to a holdover or result in a renewal of this Lease. The foregoing
provisions of this Section are in addition to and do not affect Landlord's right
of re-entry or any other rights of Landlord under this Lease or at law.
SECTION 15.2 MERGER ON TERMINATION.
The voluntary or other surrender of this Lease by Tenant or a mutual
termination of this Lease shall terminate any or all existing subleases unless
Landlord, at its option, elects in writing to treat the surrender or termination
as an assignment to it of any or all subleases affecting the Premises.
SECTION 15.3 SURRENDER OF PREMISES; REMOVAL OF PROPERTY.
Upon the Expiration Date or upon any earlier termination of this Lease,
Tenant shall quit and surrender possession of the Premises to Landlord in as
good order, condition and repair as when received or as hereafter may be
improved by Landlord or Tenant, reasonable wear and tear and repairs which are
Landlord's obligation excepted, and shall, without expense to Landlord, remove
or cause to be removed from the Premises all personal property and debris,
except for any items that Landlord may by written authorization allow to remain.
Tenant shall repair all damage to the Premises resulting from the removal, which
repair shall include the patching and filling of holes and repair of structural
damage, provided that Landlord may instead elect to repair any structural damage
at Tenant's expense. If Tenant shall fail to comply with the provisions of this
Section, Landlord may effect the removal and/or make any repairs, and the cost
to Landlord shall be additional rent payable by Tenant upon demand. If requested
by
29
Landlord, Tenant shall execute, acknowledge and deliver to Landlord an
instrument in writing releasing and quitclaiming to Landlord all right, title
and interest of Tenant in the Premises.
ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid without deduction or
offset in lawful money of the United States to Landlord at its address set forth
in Item 12 of the Basic Lease Provisions or at any other place as Landlord may
designate in writing. Unless this Lease expressly provides otherwise, as for
example in the payment of rent pursuant to Section 4.1, all payments shall be
due and payable within five (5) days after demand. All payments requiring
proration shall be prorated on the basis of a thirty-(30)-day month and a three
hundred sixty(360)-day year. Any notice, election, demand, consent, approval, or
other communication to be given or other document to be delivered by either
party to the other may be delivered in person or by courier to the other party
or may be deposited in the United States mail, duly registered or certified
postage prepaid return receipt requested, and addressed to the other party at
the address set forth in Item 12 of the Basic Lease Provisions, or if to Tenant
at that address or from and after the Commencement Date at the Premises (whether
or not Tenant has departed from, abandoned or vacated the Premises). Either
party may, by written notice to the other served in the manner provided in this
Article, designate a different address. If any notice or other document is sent
by mail it shall be deemed served or delivered twenty-four (24) hours after
mailing. If more than one person or entity is named as Tenant under this Lease
service of any notice upon any one of them shall be deemed as service upon all
of them.
ARTICLE XVII. RULES AND REGULATIONS
Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit H, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good order
or cleanliness of the Premises, Office Building, and Common Facilities. Landlord
shall not be liable to Tenant for any violation of the Rules and Regulations or
the breach of any covenant or condition in any lease by any other tenant. One or
more waivers by Landlord of any breach of the Rules and Regulations by Tenant or
by any other tenant(s) shall not be a waiver of any subsequent breach of that
rule or any other. Tenant's failure to keep and observe the Rules and
Regulations shall constitute a default under this Lease. In the case of any
conflict between the Rules and Regulations and this Lease, this Lease shall be
controlling.
30
ARTICLE XVIII. BROKER'S COMMISSION
The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s). Tenant warrants that it has had no
dealings with any other real estate broker or agent in connection with the
negotiation of this Lease and Tenant agrees to indemnify and hold Landlord
harmless from any cost expense or liability (including reasonable attorneys'
fees) for any compensation, commissions or charges claimed by any other real
estate broker or agent employed or claiming to represent or to have been
employed by Tenant in connection with the negotiation of this Lease, The
foregoing agreement shall survive the termination of this lease.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's Interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor, in which Tenant has an interest,
shall be turned over, subject to that interest to the transferee, and Tenant is
notified of the transfer as required by law. No holder of a mortgage and/or deed
of trust to which this Lease is or may be subordinate, and no landlord under a
so-called sale-leaseback, shall be responsible in connection with the Security
Deposit unless the mortgagee or holder of the deed of trust or the landlord
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall subject to the
foregoing, be binding on Landlord, its successors and assigns only during and in
respect to their respective successive periods of ownership.
ARTICLE XX. INTERPRETATION
SECTION 20.1 GENDER AND NUMBER.
Whenever the context of this Lease requires, the words "Landlord" and
"Tenant" shall include the plural as well as the singular, and words used in
neuter, masculine or feminine genders shall include the others.
SECTION 20.2 HEADINGS.
The captions and headings of the articles and sections of this Lease are
for convenience only are not a part of this Lease and shall have no effect upon
its construction or interpretation.
31
SECTION 20.3 JOINT AND SEVERAL LIABILITY.
If more than one person or entity is named as Tenant, the obligations
imposed upon each shall be joint and several, and the act of or notice from or
notice or refund to or the signature of any one or more of them shall be binding
on all of them with respect to the tenancy of this Lease, including but not
limited to any renewal extension, termination or modification of this Lease.
SECTION 20.4 SUCCESSORS.
Subject to Articles IX and XIX, all rights and liabilities given to or
imposed upon Landlord and Tenant shall extend to and bind their respective
heirs, executors, administrators, successors and assigns. Nothing contained in
this Section is intended or shall be construed to grant to any person other than
Landlord and Tenant and their successors and assigns any rights or remedies
under this Lease.
SECTION 20.5 TIME OF ESSENCE.
Time is of the essence with respect to the performance of every provision
of this Lease in which time of performance is a factor,
SECTION 20.6 CONTROLLING LAW.
This Lease shall be governed by and interpreted in accordance with the laws
of the State of California.
SECTION 20.7 SEVERABILITY.
If any term or provision of this Lease, the deletion of which would not
adversely affect the receipt of any material benefit by either party or the
deletion of which is consented to by the party adversely affected, shall be held
invalid or unenforceable to any extent, the remainder of this Lease shall not
be affected and each term. and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES.
One or more waivers by Landlord or Tenant of any breach of any term,
covenant or condition contained in this Lease shall not be a waiver of any
subsequent breach of the same or any other term, covenant or condition. Consent
to any act by one of the parties shall not be deemed to render unnecessary the
obtaining of that party's consent to any subsequent act. No breach by Tenant of
this Lease shall be deemed to have been waived by Landlord unless the waiver is
in a writing signed by Landlord. The rights and remedies of Landlord under this
Lease shall be cumulative and in addition to any and all other rights and
remedies which Landlord may have.
32
SECTION 20.9 INABILITY TO PERFORM.
In the event that either party shall be delayed or hindered in or prevented
from the performance of any work or in performing any act required under this
Lease by reason of any cause beyond the reasonable control of that party, then
the performance of the work or the doing of the act shall be excused for the
period of the delay and the time for performance shall be extended for a period
equivalent to the period of the delay. The provisions of this Section shall not
operate to excuse Tenant from the prompt payment of rent or from the timely
performance of any other obligation under this Lease within Tenant's reasonable
control.
SECTION 20.10 ENTIRE AGREEMENT.
This Lease, and its exhibits and other attachments, cover in full each and
every agreement of every kind between the parties concerning the Premises, the
Office Building,, and all preliminary negotiations, oral agreements,
understandings and/or practices, except those contained in this Lease, are
superseded and of no further effect. Tenant waives its rights to rely on any
representations or promises made by Landlord or others which are not contained
in this Lease. No verbal agreement or implied covenant shall be held to modify
the provisions of this Lease, any statute, law or custom to the contrary
notwithstanding.
SECTION 20.11 QUIET ENJOYMENT.
Upon the observance and performance of all the covenants, terms and
conditions on Tenant's part to be observed and performed and subject to the
other provisions of this Lease, Tenant shall peaceably and quietly hold and
enjoy the Premises for the Term without hindrance or interruption by Landlord or
any other person claiming by or through Landlord.
SECTION 20.12 SURVIVAL.
All covenants of Landlord or Tenant which reasonably would be intended to
survive the expiration or sooner termination of this Lease, including without
limitation any warranty or indemnity hereunder, shall so survive and continue to
be binding upon and inure to the benefit of the respective parties and their
successors and assigns.
ARTICLE XXI. EXECUTION AND RECORDING
SECTION 21.1 COUNTERPARTS.
This Lease may be executed in one or more counterparts, each of which shall
constitute an original and all of which shall be one and the same agreement.
33
SECTION 21.2 CORPORATE AND PARTNERSHIP AUTHORITY.
If Tenant is a corporation or partnership, each individual executing this
Lease on behalf of the corporation or partnership represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of the
corporation or partnership and that this Lease is binding upon the corporation
or partnership in accordance with its terms. Tenant shall at Landlord's request,
deliver a certified copy of its board of directors' resolution or partnership
agreement or certificate authorizing or evidencing the execution of this Lease.
SECTION 21.3 EXECUTION OF LEASE; NO OPTION OR OFFER.
The submission of this Lease to Tenant shall be for examination purposes
only and shall not constitute an offer to or option for Tenant to lease the
Premises. Execution of this Lease by Tenant and its return to Landlord shall not
be binding upon Landlord, notwithstanding any time interval until Landlord has,
in fact, executed and delivered this Lease to Tenant, it being intended that
this Lease shall only become effective upon execution by Landlord and delivery
of a fully executed counterpart to Tenant.
SECTION 21.4 RECORDING SECTION.
Tenant shall not record this Lease without the prior written consent of
Landlord. Tenant, upon the request of Landlord, shall execute and acknowledge a
short form memorandum of this Lease for recording purposes.
SECTION 21.5 AMENDMENTS.
No amendment or termination of this Lease shall be effective unless in
writing signed by authorized signatories of Tenant and Landlord, or by their
respective successors-in-interest. No actions, policies, oral or informal
arrangements, business dealings or other course of conduct by or between the
parties shall be deemed to modify this Lease in any respect.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1 NONDISCLOSURE OF LEASE TERMS.
Tenant acknowledges and agrees that the terms of this Lease are
confidential and constitute proprietary information of Landlord. Disclosure of
the terms could adversely affect the ability of Landlord to negotiate other
leases and impair Landlord's relationship with other tenants. Accordingly,
Tenant agrees that it and its partners, officers, directors, employees and
attorneys shall not intentionally and voluntarily disclose the terms and
conditions of this Lease to any other tenant or apparent prospective tenant of
the Office Building, either directly or indirectly, without the prior written
consent of Landlord;
34
provided, however, that Tenant may disclose the terms to prospective subtenants
or assignees under this Lease, unless or required by public agency.
SECTION 22.2 REPRESENTATIONS BY TENANT.
The application, financial statements, and tax returns, if any, submitted
and certified to by Tenant as an accurate representation of its financial
condition have been prepared, certified and submitted to Landlord as an
inducement and consideration to Landlord to enter into this Lease. The
application and statements are represented and warranted by Tenant to be correct
and to accurately and fully reflect Tenant's true financial condition as of the
date of execution of this Lease by Tenant. Tenant shall, during the Term,
promptly furnish Landlord with annual financial statements reflecting Tenant's
financial condition upon written request from Landlord.
SECTION 22.3 CHANGES REQUESTED BY LENDER.
If, in connection with obtaining financing for the Office Building, the
lender shall request reasonable modifications in this Lease as a condition to
the financing, Tenant will not unreasonably withhold or delay its consent,
provided that the modifications do not materially increase the obligations of
Tenant or materially and adversely affect the leasehold interest created by this
Lease.
SECTION 22.4 MORTGAGEE PROTECTION.
No act or failure to act on the part of Landlord, which would otherwise
entitle Tenant to be relieved of its obligations hereunder or to terminate this
Lease, shall result in such a release or termination, unless (a) Tenant has
given notice by registered or certified mail to any beneficiary of a deed of
trust or mortgage covering the Office Building whose address has been furnished
to Tenant, and (b) such beneficiary is afforded a reasonable opportunity to cure
the default by Landlord, including, if necessary, to effect the cure time to
obtain possession of the Office Building by power of sale or judicial
foreclosure, provided that such foreclosure remedy is diligently pursued.
SECTION 22.5 COVENANTS AND CONDITIONS.
All of the provisions of this Lease shall be construed to be conditions as
well as covenants as though the words specifically expressing or imparting
covenants and conditions were used in each separate provision.
SECTION 22.6 TENANT SERVICES.
In the event certain tenant services, including without limitation child
care services, health club facilities, valet parking and concierge services are
made available to tenants of the Office Building by a concessionaire under
contract to Landlord or by a tenant under lease with Landlord (collectively,
"Provider"), then Tenant acknowledges
35
and agrees that Landlord shall not be deemed to have made any representation
regarding the availability, quality or reliability of such service and Tenant
shall have no recourse or claim against Landlord whether by abatement of rent or
otherwise for any default or liability on the part of the Provider in furnishing
the service.
CONDITIONS TO LANDLORD'S OBLIGATIONS
LANDLORD'S OBLIGATIONS UNDER THIS LEASE ARE EXPRESSLY CONTINGENT UPON THE
COMPLETE EXECUTION OF A LEASE TERMINATION AGREEMENT WITH THE EXISTING TENANT
OCCUPYING THE PREMISES, SANWA BANK, ON TERMS AND CONDITIONS ACCEPTABLE TO
LANDLORD ON OR BEFORE MONDAY, SEPTEMBER 8,1997 AT 5.00 PM PACIFIC TIME. IF SUCH
LEASE TERMINATION AGREEMENT HAS NOT BEEN SO EXECUTED BY SUCH DATE, THEN LANDLORD
SHALL HAVE THE RIGHT TO TERMINATE THIS LEASE AGREEMENT BY WRITTEN NOTICE GIVEN
TO TENANT ON OR BEFORE TUESDAY, SEPTEMBER 9,1997 AT 5:00 PM PACIFIC TIME, IN
WHICH EVENT THIS LEASE AGREEMENT SHALL BE TERMINATED AND OF NO FURTHER FORCE OR
EFFECT.
CONDITIONS TO TENANT'S OBLIGATIONS
TENANT'S OBLIGATIONS UNDER THIS LEASE ARE EXPRESSLY CONTINGENT UPON THE
COMPLETE EXECUTION OF A LEASE TERMINATION AGREEMENT OF TENANT'S PRESENT LEASE ON
TERMS AND CONDITIONS ACCEPTABLE TO TENANT ON OR BEFORE WEDNESDAY, SEPTEMBER 10,
1997 AT 5:00 PM PACIFIC TIME. IF SUCH LEASE TERMINATION AGREEMENT HAS NOT BEEN
SO EXECUTED BY SUCH DATE, THEN TENANT SHALL HAVE THE RIGHT TO TERMINATE THIS
LEASE AGREEMENT BY WRITTEN NOTICE GIVEN TO LANDLORD ON OR BEFORE THURSDAY,
SEPTEMBER 11, 1997 AT 5:00 PM PACIFIC TIME, IN WHICH EVENT THIS LEASE AGREEMENT
SHALL BE TERMINATED AND OF NO FURTHER FORCE OR EFFECT.
LANDLORD: TENANT:
300 Montgomery Associates Xaos Tools, Inc.
a California partnership a California corporation
By: /s/ Goodwin Gaw By: /s/ Robert L. Batty
--------------- -------------------
Its: Goodwin Gaw Its: Robert L. Batty
-------------- -------------------
Date: Date: President
--------------- ----------------
36
EXHIBIT A
[diagram of leased space]
EXHIBIT A-1
EXHIBIT B
UTILITIES AND SERVICES FOR THE BUILDING
ATTACHED TO AND MADE A PART OF
THIS LEASE
The following standards for utilities and services shall be in effect at
the Office Building. Landlord reserves the right to adopt nondiscriminatory
modifications and additions to these standards. In the case of any conflict
between these standards and the Lease, the Lease shall be controlling. Subject
to all of the provisions of the Lease, including but not limited to the
restrictions contained in Section 6.1, the following shall apply:
1. Landlord shall furnish to the Premises during the hours of 8:00 a.m. to
6:00 p.m., Monday through Friday, generally recognized national holidays and
Sundays excepted, reasonable air conditioning, heating and ventilation services.
Subject to the provisions set forth below, Landlord shall also furnish the
Office Building with elevator service (if applicable), reasonable amounts of
electric current for normal lighting by Landlord's standard, overhead
fluorescent and incandescent fixtures and for fractional horsepower office
machines, and water for lavatory and drinking purposes. Tenant will not without
the prior written consent of Landlord, consume electricity in the Premises at a
level in excess of 5 watts per square foot or otherwise increase the amount of
electricity, gas or water usually furnished or supplied for use of the Premises
as general office space; nor shall Tenant connect any apparatus machine or
device with water pipes or electric current (except through existing electrical
outlets in the Premises) for the purpose of using electric current or water.
This paragraph shall, at all times, be subject to applicable governmental
regulations.
2. Upon written request from Tenant delivered to Landlord at least 72
hours prior to the period for which service is requested, but during normal
business hours, Landlord will provide any of the foregoing building services to
Tenant at such times when such services are not otherwise available. Tenant
agrees to pay Landlord for those after-hour services at rates that Landlord may
establish from time to time. In addition, Landlord may impose a reasonable
charge for any excessive use of any utilities or services or for any substantial
recurrent use of the Premises at any time other than generally recognized
business hours of generally recognized business days. If Tenant requires
electric current in excess of that which Landlord is obligated to furnish under
this Exhibit B, Tenant shall first obtain the consent of Landlord and Landlord
may cause an electric current meter to be installed in the Premises to measure
the amount of electric current consumed. The cost of installation, maintenance
and repair of the meter shall be paid for by Tenant and Tenant shall reimburse
Landlord promptly upon demand for all electric current consumed for any special
power use as shown by the meter. The reimbursement shall be at the rates charged
for electrical power by the local public utility furnishing the current plus any
additional expense incurred in keeping account of the electric current consumed.
Landlord's Initials ____
Tenant's Initials ____
EXHIBIT B-1
3. If any lights, machines or equipment (including without limitation
electronic data processing machines) are used by Tenant in the Premises which
materially affect the temperature otherwise maintained by the air conditioning
system or generate substantially more heat in the Premises than would be
generated by the building standard lights and usual fractional horsepower office
equipment Landlord shall have the right, at its election, to install or modify
any machinery and equipment to the extent Landlord reasonably deems necessary to
restore temperature balance. The cost of installation and any additional cost of
operation and maintenance shall be paid by Tenant to Landlord promptly upon
demand.
4. Landlord shall furnish water for personal hygiene, and lavatory
purposes only. If Tenant requires or uses water for any purposes in addition to
ordinary cleaning and lavatory purposes, Landlord may, in its discretion,
install a water meter to measure Tenant's water consumption. Tenant shall pay
Landlord for the cost of the meter and the cost of its installation and for
consumption throughout the duration of Tenant's occupancy. Tenant shall keep the
meter and installed equipment in good working order and repair at Tenant's own
cost and expense, in default of which Landlord may cause the meter to be
replaced or repaired at Tenant's expense. Tenant agrees to pay for water
consumed as shown on the meter and when bills are rendered, and on Tenant's
default in making that payment, Landlord may pay the charges on behalf of
Tenant. Any costs or expenses or payments made by Landlord for any of the
reasons or purposes stated above shall be deemed to be additional rent payable
by Tenant to Landlord upon demand.
5. In the event that any utility service to the Premises is separately
metered or billed to Tenant, Tenant shall pay all charges for that utility
service to the Premises and the cost of furnishing the utility to tenant suites
shall be excluded from the Operating Expenses as to which reimbursement from
Tenant is required in the Lease. If any utility charges are not paid when due
Landlord may pay them, and any amounts paid by Landlord shall immediately become
due to Landlord from Tenant as additional rent. If Landlord elects to furnish
any utility service to the Premises, Tenant shall purchase its requirements of
that utility from Landlord as long as the rates charged by Landlord do not
exceed those which Tenant would be required to pay if the utility service were
furnished it directly by a public utility.
6. Landlord shall provide janitorial services Monday through Friday,
generally recognized national holidays excepted equivalent to that furnished in
comparable office buildings and window washing as reasonably required; provided,
however, that Tenant shall pay for any additional or unusual janitorial services
required by reason of any nonstandard improvements in this.
Premises, including without limitation wall coverings and floor coverings
installed by or for Tenant or by reason of any use of Premises other than
exclusively as offices. The cleaning services provided by Landlord shall also
exclude refrigerators, eating utensils (plates, drinking containers, and
silverware) and interior glass partitions. Tenant shall pay to Landlord the cost
of removal of any of Tenant's refuse and rubbish to the extent that they exceed
the refuse and rubbish usually attendant with general office usage. Landlord
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EXHIBIT B-2
shall not be responsible for any disposal of Tenant's equipment/furniture of any
condition.
7. Tenant shall have access to the Office Building 24 hours per day 7 days
per week 52 weeks per year; provided that Landlord may install access control
systems as it deems advisable for the Office Building. Such systems may, but
need not, include full or part-time lobby supervision, the use of a sign-
in/sign-out log, a card identification access system, building parking and
access pass system, closing hours procedures, access control stations, fire
stairwell exit door alarm system, electronic guard system, mobile paging system,
elevator control system, or any other access controls, In the event that
Landlord elects to provide any or all of those services, Landlord may
discontinue providing them at any time with or without notice. Landlord may
impose a reasonable charge for access control cards and/or keys issued to
Tenant. Landlord shall have no liability to Tenant for the provision by Landlord
of improper access control services for any breakdown in service or for the
failure by Landlord to provide access control services. Tenant further
acknowledges that Landlord's access systems may be temporarily inoperative
during building emergency and system repair periods. Tenant agrees to assume
responsibility for compliance by its employees with any regulations established
by Landlord with respect to any card key access or any other system of building
access as Landlord may establish. Tenant shall be liable to Landlord for any
loss or damage resulting from its or its employees use/misuse of any access
system.
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EXHIBIT B-3
EXHIBIT C
TENANT'S INSURANCE
The following standards for Tenant's insurance shall be in effect at the
Office Building. Landlord reserves the right to adopt reasonable,
nondiscriminatory modifications and additions to those standards. Tenant agrees
to obtain and present evidence to Landlord that it has fully complied with the
insurance requirements.
1. Tenant shall, at its sole cost and expense commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term procure, pay for and keep in full force and effect: (i) comprehensive
general liability insurance with respect to the Premises and the operations of
or on behalf of Tenant in on or about the Premises, including but not limited to
personal injury, non-owned automobile, blanket contractual, independent
contractors, broad form property damage, fire legal liability, products
liability (if a product is sold from the Premises), liquor law liability (if
alcoholic beverages are sold served or consumed within the Premises), and cross
liability and severability of interest clauses, which policy(ies) shall be
written on an occurrence basis and for not less than $1,000,000 combined single
limit (with a $50,000 minimum limit on fire legal liability) per occurrence for
bodily injury, death and property damage liability, or the current limit of
liability carried by Tenant, whichever is greater, and subject to such increases
in amounts as Landlord may determine from time to time; (ii) workers
compensation insurance coverage as required by law, together with employers
liability insurance coverage; (iii) with respect to improvements, alterations
and the like required or permitted to be made by Tenant under this Lease
builder's all-risk insurance in amounts satisfactory to Landlord; (iv) insurance
against fire, vandalism, malicious mischief; and such other additional perils,
as may be included in a standard all risk form in general use in San Francisco,
California, insuring Tenant's leasehold improvements, trade fixtures,
furnishings, equipment and items of personal property of Tenant located in the
Premises in an amount equal to not less than ninety percent (90%) of their
actual replacement cost (with replacement cost endorsement); and (v) business
interruption insurance in amounts satisfactory to Landlord. In no event shall
the limits of any policy be considered as limiting the liability of Tenant under
this Lease.
2. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D shall be written by responsible insurance companies authorized to
do business in the State of California and with a Best's policyholder rating of
not less than "A" subject to final acceptance and approval by Landlord. Any
insurance required of Tenant may be furnished by Tenant under any blanket policy
carried by it or under a separate policy. A true and exact copy of each paid up
policy evidencing the insurance (appropriately authenticated by the insurer), or
a certificate of insurance certifying that the policy has been issued, provides
the coverage required by this Exhibit C, and contains the required provisions
shall be delivered to Landlord prior to the date Tenant is given the right of
possession of the Premises. Proper evidence of the renewal of any insurance
coverage shall also be delivered to Landlord not less than thirty (30) days
prior to the
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EXHIBIT C-1
expiration of the coverage. Landlord may, at any time, and from time to time,
inspect and/or copy any and all insurance policies required by this Lease.
3. Each policy evidencing insurance required to be carried by Tenant,
pursuant to this Exhibit C, shall contain the following provisions and/or
clauses satisfactory to Landlord: (i) a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be noncontributory with respect to any policies carried by Tenant; (ii) a
provision including Landlord and any other parties in interest designated by
Landlord as an additional insured, except as to workers compensation insurance;
(iii) a waiver by the insurer of any right to subrogation against Landlord, its
agents, employees, contractors, and representatives which arises or might arise
by reason of any payment under the policy or by reason of any act or omission of
Landlord, its agents, employees, contractors or representatives; and (iv) a
provision that the insurer will not cancel or change the coverage provided by
the policy without first giving Landlord thirty (30) days prior written notice.
4. In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Exhibit C, any insurance
required by this Exhibit C or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord within ten (10) days following
Landlord's written demand to Tenant.
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EXHIBIT C-2
EXHIBIT D
RULES AND REGULATIONS FOR THE BUILDING
ATTACHED TO AND MADE A PART OF
THIS LEASE
Except as provided or required by Landlord in accordance with Building
standards, no sign, placard, picture, advertisement name or notice shall be
inscribed, displayed, printed, painted or affixed by Tenant on or to any part of
the Building or exterior of the Promises leased to tenants or to the door or
doors thereof without the written consent of Landlord first obtained and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of Tenant
2. Except as provided or required by Landlord in accordance with Building
standards, no draperies, curtains, blinds, shades, screens or other devices
shall be hung at or used in connection with any window or exterior door or doors
of the Premises.
3. The bulletin board or directory of the Building shall be used primarily
for display of the name and location of Tenants and Landlord reserves the right
to exclude any other names therefrom, to limit the number of names associated
with tenants to be placed thereon and to charge for names associated with
Tenants to be placed thereon at rates applicable to all Tenants.
4. The sidewalks, halls, passages, exits, enhances, elevators and
stairways of the Building shall not be obstructed by Tenants or used by them for
any purposes other than for ingress to and egress from their respective
Premises. The halls, passages, exits, entrances, elevators, stairways, balconies
and roof of the Building are not for the use of the general public and Landlord
in all cases reserves the right to control the same and prevent access thereto
by all persons whose presence, in the judgment of the Landlord, is or may be
prejudicial to the safety, character, reputation or interests of the Building
and its Tenants; provided however, that Landlord shall not prevent such access
to persons with whom Tenants deal in the ordinary course of business unless such
persons are engaged in illegal activities. No person shall go upon the roof of
the Building unless expressly so authorized by Landlord.
5. Tenants shall not alter any lock nor install any new or additional
locks or any bolts on any interior or exterior door of any Premises leased to
Tenant.
6. The doors, windows, light fixtures and any lights or skylights that
reflect or admit light into halls or other places of the Building shall not be
covered or obstructed. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown or
placed therein. The expense of any breakage, stoppage or damage resulting from
the violation of this rule shall be borne by the Tenant who, or whose employees
or invitees, cause such expense.
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EXHIBIT D-1
7. Tenants shall not mark, drive nails, screw or drill into the walls,
woodwork or plaster or in any way deface the Building or any Premises leased to
Tenant. Normal picture hanging excluded.
8. Furniture, freight or equipment of every kind shall be moved into or
out of the Building only at such times and in such manner as Landlord shall
designate. Landlord may prescribe and limit the weight size and position of all
equipment to be used by Tenants, other than standard office desks, chairs, and
tables and portable office machines. Safes and other heavy equipment shall, if
considered necessary by Landlord, stand on wood strips of such thickness as
Landlord deems necessary to distribute properly the weight thereof. Landlord, at
its own discretion may require an elevator technician to attend to the move at
the sole cost of the Tenant. All damage to the Building or Premises occupied by
Tenants caused by moving or maintaining any property of a Tenant shall be
repaired at the expense of such Tenant.
9. No Tenant shall employ any person, other than the janitor provided by
Landlord, for the purpose of cleaning the Premises occupied by such Tenant
unless otherwise agreed to by Landlord. Except with the written consent of
Landlord, no person shall be permitted to enter the Building for the purpose of
cleaning the same. Tenants shall not cause any unnecessary labor by carelessness
or indifference in the preservation of good order and cleanliness. Landlord
shall not be responsible to any Tenant for loss of property on the Premises,
however occurring, or for any damage to the property of my Tenant caused by the
employees or independent contractors of Landlord or by any other person. Janitor
service will not be furnished when rooms are occupied during the regular hours
when janitor service is provided. Window cleaning shall be done only at the
regular and customary times determined by Landlord for such services.
10. No Tenant shall sweep or throw or permit to be swept or thrown any
dirt or other substance into any of the corridors, halls or elevators or out of
the doors or stairways of the Building; use or keep or permit to be used or kept
any foul or noxious gas or substance; permit or suffer the Premises occupied by
such Tenant to be occupied or used in a manner offensive or objectionable to
Landlord or other Tenants by reason of noise, odors or vibrations; interfere in
any way with the other Tenants or persons having business in the Building; or
bring or keep or permit to be brought or kept in the Building any animal life
form, other than human, except seeing-eye dogs when in the company of their
masters.
11. No cooking shall be done or permitted by Tenants in their respective
Premises, nor shall Premises occupied by Tenants be used for storage or
merchandise, washing clothes, lodging or any improper, objectionable or immoral
purposes.
12. No Tenant shall use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material other than
limited quantities thereof reasonably necessary for the operation or maintenance
of customary office equipment or, without Landlord's prior written approval, use
any method of heating or air-conditioning other than the supplied by Landlord.
No Tenant shall use or keep or
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EXHIBIT D-2
permit to be used or keep any foul or noxious gas or substance in the Premises,
or permit or suffer the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors, or vibrations, or interfere in any way with other Tenants or those having
business therein. Tenant must comply with any government imposed codes and
regulations concerning the use or storage of any substances on the Premises.
13. No boring or cutting for telephone or electric wires shall be allowed
without the consent of Landlord and any such wires permitted shall be introduced
at the place and in the manner described by Landlord. The location of
telephones, speakers, fire extinguisher and all other office equipment affixed
to Premises occupied by tenants shall be sub subject to the approval of
Landlord. Each Tenant shall pay all expenses incurred in connection with the
installation of its equipment including any telephone and electricity
distribution equipment.
14. Upon termination of occupancy of the Building each Tenant shall
deliver to Landlord all keys furnished by Landlord, end any reproductions
thereof made by or at the direction of such Tenant and in the event of loss of
any keys so furnished shall pay Landlord thereof
15. No tenant shall affix any floor covering in any manner except as
approved by the Landlord. The expense for repairing any damage caused by removal
of any such floor covering shall be borne by the Tenant by whom, or by whose
contractors, employees or invitees, the damage shall have been caused.
16. No mail, furniture, packages, supplies, equipment, merchandise or
deliveries of any kind will be received in the Building or carried up or down in
the elevators except between such hours and in such elevators as shall be
designated by Landlord.
17. On Saturdays, Sundays and legal holidays and between the hours of 6:00
p.m. and 8:00 a.m., access to the Building may be refused unless the person
seeking access is known to the person charged with responsibility for the safety
and protection of the Building and has a pass or is properly identified. In no
case shall Landlord be liable for any loss or damage for any error with respect
to the admission to or exclusion from the Building of any person. In case of
invasion, mob, riot, public excitement or other commotion and at such times as
Landlord deems necessary for the safety and protection of the Building, its
tenants and all property located therein, Landlord may prohibit and prevent
access to the Building by all persons by any means Landlord deems appropriate.
18. Each Tenant shall see that the exterior doors of its Premises are
closed and securely locked on Sundays and legal holidays and not later than 6:00
p.m. of each other day. Each tenant shall exercise extraordinary care and
caution that all water faucets or water apparatus are entirely shut off each day
before its Premises are left unoccupied and that all electricity or gas shall
likewise be carefully shut off so as to prevent waste or damage to Landlord or
to other Tenants of the Building.
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EXHIBIT D-3
19. Landlord may exclude or expel from the Building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs,
or who shall in any manner do any act in violation of any of the rules and
regulations of the Building.
20. The requirements of Tenants will be attended to only upon application
to Landlord at the office of the Building. Employees of Landlord shall not
perform any work outside of their regular duties unless under special
instructions from Landlord, and no employee of Landlord shall be required to
admit any person (Tenant or otherwise) to any premises in the Building.
21. No vending or food or beverage dispensing machine or machines of any
description shall be installed, maintained or operated upon any premises in the
Building without the written permission of the Landlord.
22. Landlord, without notice and without liability to any Tenant, at any
time may change the name or the street address of the Building.
23. The word "Building" as used in these rules and regulations means the
Building of which a part of the Premises are leased pursuant to the Lease to
which these rules and regulations are attached. Each Tenant shall be liable to
Landlord and to each other Tenant of the Building for any loss, cost expense,
damage or liability, including attorneys fees, caused or occasioned by the
failure of such first named Tenant to comply with these rules, but Landlord
shall have no liability for such failure or for failing or being unable to
enforce compliance therewith by any tenant and such failure by Landlord or
noncompliance by any Other Tenant shall not be a ground for termination of the
Lease to which these rules and regulations are attached by the Tenant
thereunder.
24. Carpet protector pads shall be used at all desk stations.
25. Each Tenant shall maintain the portions of its Premises which are
visible from the outside of the Building or from hallways or other public areas
of the Building, in a neat, clean and orderly condition.
26. No Tenant shall temper with or attempt to adjust the temperature
control thermostats in its premises. Landlord shall adjust such thermostats as
required to maintain heat and air-conditioning at the Building standard
temperature.
27. No Tenant shall place any items whatsoever on the roof or balcony
areas of the Building without prior written consent of Landlord.
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EXHIBIT D-4
EXHIBIT E
WORK LETTER
1. Tenant Improvements; Permits and Licenses; Landlord's Allowance.
Tenant has advised Landlord that Tenant intends to make certain renovations
and improvements to, within and upon the Premises, at Tenant's sole cost and
expense (except as set forth herein). Within twenty (20) days after execution of
the Lease by both parties, Tenant shall deliver to Landlord complete and
detailed plans and specifications for the construction of improvements,
alterations and renovations to the Premises for Tenant's business. Such plans
and specifications shall be subject to the written approval of Landlord prior to
the commencement of any work by Tenant, and Landlord agrees that such approval
shall not be unreasonably withheld. There shall be no material deviations from
or changes in such plans and specifications without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Tenant understands
and agrees that Landlord's review of plans and specifications as provided herein
is solely to protect the interests of Landlord in the Premises and the Office
Building and that Landlord shall not be deemed the guarantor of, or responsible
for, the correctness or accuracy of any such plans and specifications or the
compliance of such plans and specifications with applicable laws, ordinances, or
regulations. Upon approval of such plans and specifications and delivery of
possession of the Promises to Tenant, Tenant shall commence to construct such
improvements and shall thereafter prosecute such construction to completion in a
diligent, competent, workmanlike and expeditious manner, at Tenant's sole cost
and expense (except as set forth herein). Tenant's failure to complete such
construction and renovation work shall in no way delay the Commencement Date or
affect the rental or other obligations of Tenant under the Lease, but Tenant
shall not be deemed to be in breach of Section 14.1 of the Lease for failure to
operate the Premises if such failure is attributable to the construction and
renovation work described in this paragraph, provided that Tenant prosecutes
such construction to completion in a diligent, competent, workmanlike and
expeditious manner.
Tenant agrees that all such work will be performed and completed in
compliance with all applicable laws, building codes, ordinances, and rules and
regulations of all governmental or public authorities having jurisdiction
thereof (including, but not limited to, the Americans with Disabilities Act and
any applicable environmental protection/ hazardous materials laws). Tenant shall
also, at its sole cost and expense (including, but not limited to, the amount of
any special fees or assessments resulting from the requirements of Tenant's
operations), obtain any and all necessary building, occupancy and business
permits and licenses in connection with Tenant's construction of improvements or
the operation of Tenant's business at the Premises. Tenant shall give Landlord
at least ten (10) days' written notice prior to the commencement of any
construction on or at the Premises, in order to allow Landlord to post and
record an
appropriate notice of non-responsibility pursuant to Section 3094 of the
California Civil Code.
Landlord agrees to reimburse to Tenant up to Fifty Six Thousand Thirteen
and 00/100 Dollars ($56,013.00) of the cost of such improvements and renovations
to the Premises (the "Tenant Improvements Allowance")', provided that such
Tenant Improvements Allowance shall not be used as reimbursement for the
purchase or installation of furniture, trade fixtures or equipment. (If the cost
of such Premises renovation is a sum less than $56,013.00, then the Tenant
Improvements Allowance shall be such lesser sum.) Landlord's obligation to pay
any portion of the Tenant Improvements Allowance shall be conditioned upon
Tenant's furnishing written evidence satisfactory to Landlord regarding the
amount and appropriateness of the expense for which reimbursement is being
sought, including but not limited to original invoices, receipts, vouchers,
material and labor lien releases and other documents reasonably requested by
Landlord. Payment of such Tenant Improvements Allowance shall be due within
thirty (30) days after Landlord receives an appropriate application for payment,
certified by Tenant's contractor, along with the other documents referred to
hereinabove. The Tenant Improvements Allowance shall in no way render Landlord
responsible to any contractor, suppliers, subcontractor or other third party,
and all materialmen, contractors, subcontractors, artisans, mechanics, laborers
and any other persons contracting with Tenant for the furnishing of any labor,
services, materials, supplies or equipment with respect to any portion of the
Premises and/or the office building shall be notified by Tenant (and are hereby
charged with such notice) that they must look exclusively to Tenant to obtain
payment for same.
All work in the Premises is conditioned upon the compliance by Tenant's
contractors with all requirements imposed by Landlord on third party
contractors, including without limitation the maintenance by Tenant and its
contractors and subcontractors of workers' compensation and public liability and
property damage insurance in amounts and with companies and on forms
satisfactory to Landlord, with certificates of such insurance being furnished to
Landlord prior to proceeding with any such entry. Entry to the Premises shall be
deemed to be under all of the provisions of the Lease except as to the covenants
to pay rent. Landlord shall not be liable in any way for any injury, loss or
damage which may occur to any such work being performed by Tenant, the same
being solely at Tenant's risk. In no event shall the failure of Tenant's
contractors to complete any work in the Premises extend the Commencement Date of
this Lease beyond the date that Landlord has completed its tenant improvement
work and tendered the Premises to Tenant. All materials and finishes utilized in
constructing the tenant improvements shall be Landlord's building standard.