NET LEASE
BASIC LEASE INFORMATION
DATE: October 30, 1998
LANDLORD: The Multi-Employer Property Trust, a trust organized under 12
C.F.R. Section 9.18
TENANT: Certicom Corp., a Delaware corporation
PREMISES: All of the Building located at 25801 Industrial Blvd.,
Hayward, California
PROPERTY: Mt. Eden Business Park, Hayward, California
USE: General Office and Administrative Purposes, including
computer hardware and software development
TERM: Approximately Seven (7) Years
ESTIMATED COMMENCEMENT DATE: January 15, 1999
INITIAL BASE RENT: $53,568.75
TENANT'S PERCENTAGE SHARE: 100%
SECURITY DEPOSIT: $75,000 & Letter of Credit
described in Section 17
GUARANTOR: Certicom Corp. an Ontario corporation
BROKERS: CB Commercial Real Estate Group Inc.; Colliers Parish
International Inc; Presco
ADDRESS FOR NOTICES: Landlord: The Multi-Employer Property Trust
c/o Riggs & Company
808 17th Street N.W.
Washington, D.C. 20006
Attn: Patrick O. Mayberry
Tenant: Certicom Corp.
200 Matheson Blvd. W
Mississauga, Ontario
Canada L5R 3L7
After Commencement Date: To Tenant at the Premises
LANDLORD'S CONTRIBUTION
TO TENANT IMPROVEMENTS: $857,100.00
LANDLORD'S INITIALS: TENANT'S INITIALS:
M?? BM
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TABLE OF CONTENTS
Page
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1. Premises. 1
2. Term. 1
3. Rent 1
4. Base Rent 2
5. Operating Expenses 2
6. Proration of Rent 4
7. Tenant Improvements 4
8. Use of the Premises 5
9. Alterations 7
10. Repairs 8
11. Damage or Destruction 8
12. Eminent Domain 9
13. Indemnity and Insurance 10
14. Assignment or Sublet 12
15. Default 15
16. Landlord's Right to Perform Tenant's Covenants 16
17. Security Deposit; Letter of Credit 16
18. Surrender of Premises 18
19. Holding Over 18
20. Access to Premises 19
21. Signs 19
22. Subordination 20
23. Transfer of the Property 20
24. Estoppel Certificates; Financial Statements 21
25. Mortgagee Protection 21
26. Attorney's Fees 21
27. Brokers 21
28. Parking 22
29. Utilities and Services 22
30. Intentionally Deleted 22
31. Acceptance 22
32. Use of Building Name 22
33. Recording 23
34. Quitclaim 23
35. Notices 23
36. Landlord's Exculpation 23
37. Additional Structures 23
38. Consents and Approvals 24
39. General 24
40. Renewal Option 25
EXHIBIT "A": Premises and Business Park Site Plan
EXHIBIT "B": Tenant Improvements
EXHIBIT "C": Commencement Date Memorandum
EXHIBIT "D": Rules and Regulations
EXHIBIT "E": Form of Tenant Estoppel Certificate
EXHIBIT "F": Appraisal Procedure
NET LEASE
THIS LEASE, which is effective as of the date set forth in the Basic Lease
Information, is entered by Landlord and Tenant, as set forth in the Basic Lease
Information. Terms which are capitalized in this Lease shall have the meanings
set forth in the Basic Lease Information.
1. Premises.
Landlord leases to Tenant, and Tenant leases from Landlord, the Premises
described in the Basic Lease Information (as shown on Exhibit A), together with
the right in common to use the Common Areas. The Common Areas shall mean the
areas and facilities within the land shown on Exhibit A (the "Land") and within
the Building identified in the Basic Lease Information (the "Building") and
within all other buildings and improvements now or hereafter located on the
Land, provided and designated by Landlord for the general use, convenience or
benefit of Tenant and other tenants and occupants of the Property (e.g.,
restrooms; janitorial, telephone and electrical closets; sidewalks; driveways,
public lobbies, entrances and stairs; and unreserved parking areas). The Common
Areas shall include the Cultural Center delineated on Exhibit A (the "Cultural
Center"); provided, however, that Landlord may from time to time prescribe rules
and regulations for use of and access to the Cultural Center by Tenant and other
tenants of the Property. Without limitation of the provisions of any such rules
and regulations, Tenant acknowledges that (i) no tenant of the Property
(including Tenant) shall have exclusive rights to use the Cultural Center, (ii)
on up to ten (10) occasions each calendar year some or all of the tenants of the
Property (including Tenant) may be excluded from use of the Cultural Center,
(iii) access to the Cultural Center shall be restricted by means of a locked
gate or other apparatus daily from 6:00 p.m. to 8:00 a.m. Landlord reserves the
right to make changes to the Common Areas. The Building and such other buildings
and improvements now or hereafter located on the Land are collectively referred
to in this Lease as the "Buildings". The Land, the Buildings and the Common
Areas are collectively referred to in this Lease as the "Property" or the "Real
Property".
2. Term.
a. Lease Term. The term of this Lease (the "Term") shall commence on the
date (the "Commencement Date") which is the later to occur of (x) January 15,
1999, or (y) Substantial Completion of the Tenant Improvements. "Substantial
Completion of the Tenant Improvements" shall be deemed to have occurred when the
Tenant Improvements (as defined in Exhibit B) have been completed in accordance
with Final Plans (as defined in Exhibit B), subject only to the completion or
correction of Punch List Items. "Punch List Items" shall mean incomplete or
defective work or materials in the Tenant Improvements which do not materially
impair Tenant's use of the Premises for the conduct of Tenant's business
therein. The Term shall end on the last day of the calendar month in which the
seventh (7th) annual anniversary of the Commencement Date occurs (the
"Expiration Date"). Notwithstanding the foregoing, if the Commencement Date is
delayed due to Tenant Delay (as defined in Exhibit B), then for purposes of
determining the commencement of Tenant's obligation to pay Base Rent and
Operating Expenses pursuant to Sections 4 and 5 below, the Commencement Date
shall be deemed accelerated by the period of Tenant Delay.
b. Premises Not Delivered. If, for any reason, the Commencement Date does
not occur by the Estimated Commencement Date, the failure shall not affect the
validity of this Lease, or the obligations of Tenant under this Lease, and
Landlord shall not be subject to any liability.
c. Commencement Date Memorandum. When the Commencement Date is determined,
the parties shall execute a Commencement Date Memorandum, in the form attached
hereto as Exhibit C, setting forth the Commencement Date and the Expiration
Date.
d. Early Entry. If Tenant is permitted by Landlord to enter the Premises
prior to the Commencement Date for the purpose of fixturing or any purpose other
than the conduct of Tenant's business, the entry shall
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be subject to all the terms and provisions of this Lease, except that Tenant's
obligation to pay Base Rent and Operating Expenses shall not commence until the
Commencement Date. Without limitation, in no event will Landlord consent to such
early access if Landlord shall reasonably determine that the same might delay or
interfere with Landlord's construction of the Tenant Improvements, or increase
the cost of the Tenant Improvements.
3. Rent.
As used in this Lease, the term "Rent" shall include: (i) the Base Rent;
(ii) Operating Expenses payable by Tenant pursuant to Section 5 below; and (iii)
all other amounts which Tenant is obligated to pay under the terms of this
Lease. All amounts of money payable by Tenant to Landlord shall be paid without
prior notice or demand, deduction or offset. If any installment of Base Rent is
not paid by Tenant by the fifth (5th) day of the month, or if any payment of
Operating Expenses or any other amount payable by Tenant is not paid within five
(5) days of the due date thereof, Tenant shall pay to Landlord a late payment
charge equal to five percent (5%) of the amount of the delinquent amount, in
addition to the amount of Rent then owing, regardless of whether a notice of
default or notice of termination has been given by Landlord. In addition to the
five percent (5%) late charge, any Base Rent, Operating Expenses or other
amounts owing hereunder which are not paid within five (5) days after the date
they are due shall thereafter bear interest at the rate ("Interest Rate") which
is the lesser of eighteen percent (18%) per annum or the maximum rate permitted
by applicable law. Notwithstanding the foregoing, Landlord shall give Tenant
notice of non-payment and three (3) days from receipt of such notice to cure
such non-payment twice in any calendar year before assessing such late fees
and/or interest in such calendar year.
4. Base Rent.
a. Initial Base Rent. Commencing on the Commencement Date, and thereafter
on the first day of each calendar month of the Term, Tenant shall pay Base Rent
to Landlord (or other entity designated by Landlord), in advance, at Landlord's
address for notices (as set forth in the Basic Lease Information) or at such
other address as Landlord may designate. The Initial Base Rent shall be the
amount set forth in the Basic Lease Information. Base Rent payable hereunder for
the first full calendar month after Tenant's obligation to pay Base Rent
commences shall be paid upon Tenant's execution of this Lease.
b. Base Rent Adjustment. Commencing on the first day of the 37th full
calendar month of the Term, the Base Rent shall increase to $56,831.09 per
month, and shall be payable in such amount through the end of the 60th full
calendar month of the Term. Commencing on the first day of the 61st full
calendar month of the Term, the Base Rent shall increase to $60,292.10 per
month, and shall be payable in such amount through the Expiration Date.
5. Operating Expenses.
a. Operating Expenses. Tenant shall pay Tenant's Percentage Share of
Operating Expenses incurred by Landlord during each calendar year falling in
whole or in part during the Term.
b. Operating Expenses. The term "Operating Expenses" shall include all
reasonable expenses and costs of every kind and nature, except as provided in
the next paragraph, which Landlord shall pay or become obligated to pay because
of or in connection with the ownership, management, administration, maintenance,
repair and operation of the Premises, the Buildings, the Common Areas and the
balance of the Property, to the extent allocable to the Building in which the
Premises is located. The allocation of Operating Expenses to the Building shall
be made on the same ratio that the rentable square footage of the Building bears
to the aggregate rentable square footage of all buildings in the Business Park
(assuming for such purpose that all buildings in the Business Park, as shown on
Exhibit A attached hereto, are fully constructed); except where Landlord shall
reasonably determine, for good cause, that the nature of any given
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Operating Expense requires that it be allocated in another reasonable manner.
Operating Expenses shall include, without limitation, the following: (i) all
impositions relating to the Real Property, including Real Property Taxes (as
defined in Section 5.d.); (ii) premiums for insurance relating to the Real
Property, including as set forth in Sections 13.b., 13.d. and 13.i., and
insurance deductibles paid by Landlord; (iii) wages, salaries, bonuses and
expenses and benefits (including hospitalization, medical, surgical, retirement
plan, pension plan, union dues, life insurance, including group life insurance,
welfare and other fringe benefits, and vacation, holidays and other paid absence
benefits, and costs of uniforms) of all on-site and off-site employees of
Landlord or its agents, a the rank of property manager or below, engaged in
operation, management, administration, maintenance, repair and security of the
Real Property, including, without limitation, administrative, management and
accounting personnel and the individual(s) responsible for management of the
Property, and payroll, social security, workers' compensation, unemployment and
similar taxes with respect to such employees of Landlord or its agents, and the
cost of providing disability or other benefits imposed by law or otherwise, with
respect to such employees; (iv) costs of all supplies, materials and equipment
rentals used in operations; (v) all maintenance, janitorial, security and
service costs; (vi) a management fee not to exceed 4% of all gross revenues from
the Real Property, including revenues attributable to Tenant's and other
tenants' payments of Operating Expenses; (vii) legal and accounting expenses,
including the cost of audits by certified public accountants; (viii) all repair,
painting and maintenance costs relating to the Real Property and its Common
Areas, including sidewalks, landscaping, service areas, mechanical rooms,
parking areas, Building exterior and driveways; (ix) all charges for heat,
water, gas, steam, fuel, electricity and other utilities used or consumed in the
Buildings and Common Areas; (x) costs of repairs, replacements, and general
maintenance to and of the Building Systems and the Base Building Components (as
such terms are defined in Sections 9.a. and 10.a.; respectively, below); (xi)
the costs of capital improvements, capital replacements, capital repairs,
capital equipment, and capital tools and devices installed or paid for by
Landlord and intended to reduce other Operating Expenses or required to comply
with Legal Requirements (as defined in Section 8.c. below) or intended for the
protection of the health and safety of the occupants of the Property; and (xii)
Landlord's costs of maintaining the Cultural Center, which costs shall be
deemed, for purposes of this Lease, the sum of $60,000.00, as such sum shall be
increased on January 30, 1999 and each January 30th thereafter (each, an
"Adjustment Date"), by the percentage increase in the Index over the one (1)
year period ending on the date on which the Index is published in the month
immediately preceding the Adjustment Date. With respect to any costs included in
Operating Expenses under clause (x) which are capital expenditures, as
determined by Landlord in accordance with generally accepted accounting
principles consistently applied, and with respect to the costs of items included
in Operating Expenses under clause (xi), such costs shall be amortized over a
period determined by Landlord, together with interest on the unamortized balance
at a rate per annum equal to three (3) percentage points over the Treasury Rate
charged at the time such item is constructed or acquired, or at such higher rate
as may have been paid by Landlord on funds borrowed for the purpose of acquiring
or constructing such item, but in either case not more than the maximum rate
permitted by law at the time such item is acquired or constructed. As used
herein, "Treasury Rate" means the six-month United States treasury bill rate in
effect from time to time by the San Francisco Main Office of Bank of America,
NT&SA (or any successor bank thereto), or if there is no such rate, the rate
quoted by such bank in pricing ninety day commercial loans to substantial
commercial borrowers.
The term "Index" as used herein shall mean the Consumer Price Index for
All Urban Consumers (1982-84 = 100) San Francisco-Oakland-San Jose, California,
All Items, published by the Bureau of Labor Statistics of the U.S. Department of
Labor. If the Bureau of Labor Statistics ceases to publish the above Index, or
if the above Index is otherwise renamed, discontinued or superseded, the parties
agree that the Bureau of Labor Statistics or any successor governmental agency
thereto will be the sole judge of the comparability of successive indexes, but
if no succeeding index is published, the calculations under this Lease based on
the Index shall be made using the most closely comparable statistics on the
purchasing power of the consumer dollar as published by a responsible financial
authority and selected by Landlord.
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Operating Expenses shall not include the following: (i) depreciation on
the Buildings or equipment or systems therein; (ii) debt service; (iii) rental
under any ground or underlying lease; (iv) attorneys' fees and expenses incurred
in connection with lease negotiations or disputes with past, current or
prospective Building tenants; (v) the cost of decorating, improving for tenant
occupancy, painting or redecorating portions of the Buildings to be demised to
tenants; (vi) advertising expenses; (vii) costs reimbursed by insurance
proceeds; or (viii) real estate broker's or other leasing commissions.
The parties agree that statements in this Lease to the effect that
Landlord is to perform certain of its obligations hereunder at its own or sole
cost and/or expense shall not be interpreted as excluding any cost from
Operating Expenses if such cost is an Operating Expense pursuant to the terms of
this Section 5.b.
c. Monthly Increments; Adjustment. Promptly following the commencement of the
Term and prior to the commencement of each subsequent calendar year (or as soon
thereafter as practicable), Landlord shall estimate the Operating Expenses
payable by Tenant for such calendar year pursuant to this Section. Tenant shall
pay to Landlord, on the first day of each month, in advance, one-twelfth (1/12)
of Landlord's estimated amount. If at any time during the course of the year
Landlord determines that the Operating Expenses payable by Tenant will vary from
the then estimated amount, by notice to Tenant Landlord may revise the amount
payable by Tenant during the balance of the calendar year such that the total
estimated additional amount due from Tenant for such calendar year is paid by
Tenant during the balance of the calendar year in equal monthly amounts. Within
ninety (90) days (or as soon thereafter as practicable) after the close of each
calendar year, Landlord shall provide Tenant with a statement to account for any
difference between the actual and the estimated Operating Expenses for the
previous year. Landlord's annual statement shall be final and binding upon
Landlord and Tenant unless, within ninety (90) days after delivery thereof to
Tenant, Landlord shall revise or Tenant shall contest any item therein by
written notice to the other, specifying each item revised or contested and the
reason therefor. Notwithstanding the foregoing, the Real Property Taxes included
in any such annual statement may be modified by any subsequent adjustment or
retroactive application of Real Property Taxes affecting the calculation of
Operating Expenses. If Tenant has overpaid the amount of Operating Expenses
owing pursuant to this Section, Landlord shall credit the overpayment against
Tenant's next payments due under this Section 5. If Tenant has underpaid the
amount of Operating Expenses owing pursuant to this Section, Tenant shall pay
the amount of the underpayment to Landlord within thirty (30) days after
Tenant's receipt of Landlord's statement. If all of the buildings in the
Business Park shown on Exhibit A attached hereto are not fully constructed
during any calendar year, or if the rentable area of all such buildings or of
the Building is not fully occupied during any calendar year, Operating Expenses
for such calendar year shall be adjusted to equal Landlord's reasonable estimate
of the Operating Expenses which would have been incurred during such calendar
year if all buildings in the Business Park were constructed and the total
rentable area of all such buildings and the Building were occupied, and such
adjusted Operating Expenses shall be allocated to the Building as provided in
Section 5.b. above.
d. Definition of Real Property Taxes. The term "Real Property Taxes" shall
mean any ordinary or extraordinary form of assessment or special assessment,
license fee, rent tax, levy, penalty (if a result of Tenant's delinquency), or
tax (other than net income, estate, succession, inheritance, transfer or
franchise taxes), imposed by any authority having the direct or indirect power
to tax, or by any city, county, state or federal govermnent for any maintenance
or improvement or other district or division thereof. The term shall include all
transit charges, housing fund assessments, real estate taxes and all other taxes
relating to the Premises, Building and/or Property, all other taxes which may be
levied in lieu of real estate taxes, all assessments, assessment bonds, levies,
fees, and other governmental charges (including, but not limited to, charges for
traffic facilities, improvements, child care, water services studies and
improvements, and fire services studies and improvements) for amounts necessary
to be expended because of govemmental orders, whether general or special,
ordinary or extraordinary, unforeseen as well as foreseen, of any kind and
nature for public improvement, services, benefits or any other purposes which
are assessed, levied, confirmed, imposed or become a lien upon the Premises,
Building or Property or become payable during the Term.
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e. Acknowledgment of Parties. It is acknowledged by Landlord and Tenant
that Proposition 13 was adopted by the voters of the State of California in the
June, 1978 election, and that assessments, taxes, fees, levies and charges may
be imposed by governmental agencies for such purposes as fire protection,
street, sidewalk, road, utility construction and maintenance, refuse removal and
for other governmental services which formerly may have been provided without
charge to property owners or occupants. It is the intention of the parties that
all new and increased assessments, taxes, fees, levies and charges due to
Proposition 13 or any other cause are to be included within the definition of
Real Property Taxes for purposes of this Lease.
f. Taxes on Tenant Improvements and Personal Property. Notwithstanding any
other provision hereof, Tenant shall pay the full amount of any increase in Real
Property Taxes during the Term resulting from any and all Alterations (as
defined in Section 9.a. below) of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant shall pay,
prior to delinquency, all taxes assessed or levied against Tenant's personal
property, equipment, furniture or fixtures (collectively, "Personal Property")
in, on or about the Premises. When possible, Tenant shall cause its Personal
Property to be assessed and billed separately from the real or personal property
of Landlord. Tenant recognizes that pursuant to Section 107.6 of the California
Revenue and Taxation Code Tenant's possessory interest under this Lease may be
subject to property taxation based on the full cash value, as defined in
Sections 110 and 110.1 of the California Revenue and Taxation Code.
g. Fiscal Year. Landlord shall have the right to account and bill for
Operating Expenses on the basis of a fiscal year, rather than a calendar year as
set forth above, and to revise such fiscal year from time to time, provided that
Landlord follows generally accepted accounting principles consistently applied
in connection therewith.
h. Net Lease. This shall be a Net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses except as expressly herein
provided. The provisions for Tenant's payment of Tenant's Percentage Share of
Operating Expenses are intended to pass on to Tenant and reimburse Landlord for
Tenant's Percentage Share of all costs and expenses associated with the Real
Property, except as expressly provided in this Lease.
6. Proration of Rent. If the Commencement Date is not the first day of a
calendar month, or if the end of the Term is not the last day of a calendar
month, Base Rent payable by Tenant pursuant to Section 4, and Operating Expenses
payable by Tenant pursuant to Section 5, shall be prorated on a daily basis
(based upon a thirty (30) day month) for such fractional month. The termination
of this Lease shall not affect the obligations of Landlord and Tenant pursuant
to Section 5.c. which are to be performed after the termination.
7. Tenant Improvements. Landlord agrees to construct within the Premises certain
improvements to the Premises ("Tenant Improvements") pursuant to the terms of
Exhibit B. Subject to completion of the Tenant Improvements (including, without
limitation, the Punch List Items with respect thereto), the Premises shall be
delivered to Tenant in its then "as-is" condition, and Landlord shall not have
any obligation to make or pay for any alterations, additions, improvements or
repairs to prepare the Premises for Tenant's occupancy. The foregoing shall not
relieve Landlord from responsibility for correcting any latent defects in the
construction of the Tenant Improvements, provided that written notice thereof is
given by Tenant to Landlord within one (1) year from the Commencement Date.
8. Use of the Premises.
a. Use. The Premises shall be used solely for the use set forth in the
Basic Lease Information and for no other use or purpose. Tenant shall not do or
suffer or permit anything to be done in or about the Premises or the Real
Property which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or injure or annoy them, or use or suffer
or permit the Premises to be used for any immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain, suffer or permit any nuisance
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in, on or about the Premises or the Real Property. Without limiting the
foregoing, Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibration to emanate from the Premises, and no loudspeakers or other
similar device which can be heard outside the Premises shall, without the prior
written approval of Landlord, be used in or about the Premises. Tenant shall not
commit or suffer to be committed any waste in, to or about the Premises. Tenant
agrees not to employ any person, entity or contractor for any work in the
Premises (including moving Tenant's equipment and furnishings in, out or around
the Premises) whose presence may give rise to a labor or other disturbance in
the Building and, if necessary to prevent such a disturbance in a particular
situation, Landlord may require Tenant to employ union labor for the work.
b. Rules and Regulations: CC&R's. Tenant shall comply with the Rules and
Regulations attached hereto as Exhibit D, as the same may be modified from time
to time by Landlord upon prior notice to Tenant (the "Rules"), to the extent
Landlord the Rules are not in conflict with the other provisions of this Lease.
In addition, Tenant shall comply with any covenants, conditions and restrictions
("CC&R's") applicable to the Real Property, and all rules, regulations and
restrictions imposed by any association formed pursuant to the CC&R's, in each
case to the extent Landlord has delivered a copy thereof to Tenant and the same
are not in conflict with the provisions of this Lease.
c. Compliance. Tenant shall not permit the Premises to be used in violation
of or in conflict with, and at its sole cost and expense shall promptly comply
with, all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which hereinafter may be in force, with the
requirements of any board of fire underwriters or other similar board now or
hereafter constituted, with any direction or occupancy certificate issued
pursuant to any law by any public officer or officers, as well as the provisions
of all recorded documents affecting the Premises (all of the foregoing,
collectively, "Legal Requirements"), insofar as any thereof relate to or affect
the condition, use or occupancy of the Premises, and Tenant shall perform all
work to the Premises and other portions of the Real Property required to effect
such compliance (or, at Landlord's election, Landlord may perform such work at
Tenant's expense). The judgement of any court of competent jurisdiction or the
admission of Tenant in any actions against Tenant, whether Landlord be a party
thereto or not, that Tenant has so violated any such law, statute, ordinance,
rule, regulation or requirement, shall be conclusive of such violation as
between Landlord or Tenant.
In no event shall the foregoing, or any other provisions of this Lease,
impose any obligation or liability upon Tenant to perform any work or otherwise
remedy any non-compliant condition to the extent that such work or condition
arises by reason of Landlord's failure to construct the Tenant Improvements and
Landlord's Work (as defined in Exhibit B) in compliance with all Legal
Requirements.
d. Hazardous Materials. Tenant shall not cause or permit the storage, use,
generation, release, handling or disposal (collectively, "Handling") of any
Hazardous Materials (as defined below), in, on, or about the Premises or the
Real Property by Tenant or any agents, employees, contractors, licensees,
subtenants, customers guests or invitees of Tenant (collectively with Tenant,
"Tenant Parties"), except that Tenant shall be permitted to use in the Premises
in a normal and customary manner normal quantities of office supplies or
products (such as copier fluids or cleaning supplies) customarily used in the
conduct of general business office activities ("Common Office Chemicals"),
provided that the Handling of such Common Office Chemicals shall comply at all
times with all Legal Requirements, including Hazardous Materials Laws (as
defined below). Upon Landlord's request from time to time, Tenant shall provide
to Landlord a complete written inventory of all Hazardous Materials which Tenant
anticipates using or storing on, or discharging from , the Premises along with
copies of all reports, permits and business plans filed with any federal, state,
local or other governmental agency. Tenant shall update the inventory as
frequently as required to reflect any material changes to the items required to
be disclosed therein. Tenant shall be solely responsible for and shall
indemnify, defend and hold Landlord and all other Indemnitees (as defined in
Section 13.a. below), harmless from and against all Claims (as defined in
Section 13.a. below), arising out of or in connection with, or otherwise
relating to (i) any Handling of Hazardous Materials by any Tenant Party or
Tenant's breach of its obligations hereunder, or (ii) any removal, cleanup, or
restoration work and
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materials necessary to return the Real Property or any other property of
whatever nature located on the Real Property to their condition existing prior
to the Handling of Hazardous Materials in, on or about the Premises by any
Tenant Party. Tenant shall promptly provide Landlord with copies of all notices
received by it, including, without limitation, any notice of violations, notice
of responsibility or demand for action from any federal, state or local
authority or official in connection with the presence of Hazardous Materials in
or about the Premises or any other portion of the Property. In the event of any
release of Hazardous Materials upon the Premises or any other portion of the
Property, or upon adjacent lands, if caused by Tenant or any other Tenant Party,
Tenant shall promptly remedy the problem in accordance with all applicable Legal
Requirements. For purposes of this Lease, "Hazardous Materials" means any
explosive, radioactive materials, hazardous wastes, or hazardous substances,
including without limitation asbestos containing materials, PCB's, CFC's, or
substances defined as "hazardous substances" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601-9657; the Hazardous Materials Transportation Act of 1975, 49 U.S.C. Section
1801-1812; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901-6987; or any other Legal Requirement regulating, relating to or imposing
liability or standards of conduct concerning any such materials or substances
now or at any time hereafter in effect (collectively, "Hazardous Materials
Laws"). Tenant's obligations under this Section 8.d. shall survive the
expiration or other termination of this Lease.
9. Alterations.
a. Alterations. Tenant shall not make any alteration, addition or
improvement in, to or upon the Premises ("Alteration") without the prior written
consent of Landlord in each instance, which consent shall not be unreasonably
withheld with respect to proposed Alterations which (i) are not structural in
nature, (ii) do not affect the Base Building Components, (iii) are, in
Landlord's opinion, compatible with the Building and the balance of the Real
Property and the Building's mechanical, plumbing, electrical,
heating/ventilation/air conditioning, communication, security and fire and other
life safety systems (collectively, the "Building Systems"), and (iv) in
Landlord's opinion will not interfere with the use and occupancy of any other
portion of the Building or the Real Property by any other tenant or permitted
occupant thereof. Tenant shall give Landlord not less than ten (10) days' prior
written notice of any Alteration Tenant desires to make. Any Alterations as to
which Landlord shall consent shall be made only by contractors approved in
advance, in writing by Landlord, which approval shall not be unreasonably
withheld; provided, however, that Landlord may, in its sole discretion, specify
the engineers and contractors to perform any work relating to or affecting the
Building Systems or the Base Building Components. Tenant shall comply with all
Legal Requirements applicable to each Alteration and shall deliver to Landlord a
complete set of "as built" plans and specifications for each Alteration. Any
work to the balance of the Building or Real Property related to or affected or
triggered by Tenant's Alterations shall be performed by Tenant at Tenant's
expense (or, at Landlord's election, Landlord may perform such work at Tenant's
expense). Tenant shall be solely responsible for maintenance and repair of all
Alterations made by Tenant. Tenant shall pay Landlord on demand (whether prior
to or during the course of construction) an amount (the "Alteration Fee") equal
to five percent (5%) of the total cost of each Alteration (and for purposes of
calculating the Alteration Fee, such cost shall include architectural and
engineering fees, but shall not include permit fees) as compensation to Landlord
for miscellaneous costs incurred by Landlord in connection with the Alteration.
In addition, Tenant shall reimburse Landlord for all third party fees paid by
Landlord in connection with reviewing the proposed Alterations (whether or not
the proposed Alterations are ultimately approved by Landlord or made by Tenant),
including, without limitation, Landlord's architectural and engineering fees.
All Alterations shall be performed diligently and in a first-class workmanlike
manner and in accordance with plans and specifications approved by Landlord,
and shall comply with Landlord's construction procedures and requirements for
the Building (including Landlord's requirements relating to insurance and
contractor qualifications and scheduling of the work).
b. Liens. If, because of any act or omission of Tenant or anyone claiming
by, through, or under Tenant, any mechanic's lien or other lien is filed against
the Premises or any other portion of the Real
7
Property or against other property of Landlord (whether or not the lien is valid
or enforceable), Tenant shall, at its own expense, cause it to be discharged of
record within a reasonable time, not to exceed ten (10) days, after the date of
the filing. In addition, Tenant shall defend and indemnify Landlord and hold it
harmless from any and all Claims resulting from the lien. Without limitation of
Landlord's other remedies, Landlord shall have the rights under Section 16 below
if any such lien is not timely discharged by Tenant.
c. Ownership of Alterations. All Alterations shall immediately become
Landlord's property. Except as provided in Section 9.d., Landlord may require
Tenant, at Tenant's sole expense and by the end of the Term, to remove any
Alterations and to restore the Premises to its condition prior to the
Alteration.
d. Request Regarding Removal Obligation. At the time that Tenant requests
Landlord's consent to any Alteration, Tenant may request that Landlord notify
Tenant if Landlord will require Tenant, at Tenant's sole expense, to remove any
or all of the Alteration by the end of the Term, and to restore the Premises to
its condition prior to the Alteration. Unless Landlord shall have expressly
agreed in writing not to require such removal and restoration, Landlord's
election right under Section 9.c. shall continue through the end of the Term as
to such Alterations.
10. Repairs.
a. Landlord's Repairs. Landlord shall maintain the roof, foundations, floor
slabs and exterior walls of the Building (collectively, the "Base Building
Components") in good condition and repair, reasonable wear and tear excepted.
The term walls as used herein shall not include windows, glass or plate glass,
doors, special store fronts or office entries. The term roof as used herein
shall not include skylights, smoke hatches or roof vents. Landlord shall also
maintain in good condition and repair, reasonable wear and tear excepted, the
Common Areas, including, but not limited to, the landscaped areas, parking areas
and driveways. Tenant shall reimburse Landlord for Landlord's costs of complying
with its obligations under this Section 10 in accordance with Section 5 above,
provided, however, that any damage caused by or repairs necessitated by any act
of Tenant or any other Tenant Party may be repaired by Landlord at Landlord's
option and at Tenant's expense. Tenant shall give Landlord prompt written notice
of any repairs required of Landlord pursuant to this Section 10, after which
notice Landlord shall have reasonable opportunity to perform the same.
b. Tenant's Repairs. Tenant shall, at Tenant's expense, maintain all parts
of the Premises in a good, clean and secure condition, promptly making all
necessary repairs and replacements including, but not limited to, all windows,
glass or plate glass, doors and any special store fronts or office entries,
walls and wall finishes, floor covering, Building Systems, truck doors, dock
bumpers, dock plates and levelers, plumbing work and fixtures, downspouts,
skylights, smoke hatches, roof vents and utility equipment, in each case to the
extent the same are located within or exclusively serve the Premises. Tenant
shall, at Tenant's expense, also perform necessary pest extermination and
regular removal of trash and debris. Landlord shall, at Tenant's expense, enter
into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all hot water, heating and air conditioning
systems and equipment within or serving the Premises. Tenant shall not damage
any demising wall or disturb the integrity and support provided by any demising
wall and shall, at its sole expense, immediately repair any damage to any
demising wall caused by Tenant or its employees, agents or invitees or any other
Tenant Party. Tenant hereby waives all right to make repairs at the expense of
Landlord or in lieu thereof to vacate the Premises and its other similar rights
as provided in Califomia Civil Code Sections 1932(1), 1941 and 1942 or any other
Legal Requirement (whether now or hereafter in effect).
11. Damage or Destruction.
a. Landlord's Obligation to Rebuild. If the Premises are damaged or
destroyed, Landlord shall promptly and diligently repair the Premises unless
Landlord has the option to terminate this Lease as
8
provided herein, and Landlord elects to terminate.
b. Right to Terminate. Landlord shall have the option to terminate this
Lease if the Premises or the Building is destroyed or damaged by fire or other
casualty, regardless of whether the casualty is insured against under this
Lease, if Landlord reasonably estimates that the repair of the Premises or the
Building cannot be completed within one hundred eighty (180) days after the
casualty. Landlord shall also have the right to terminate this Lease if the
repair is not fully covered by insurance maintained (or required to be
maintained) by the Landlord pursuant to this Lease other than by reason of the
deductible amounts under Landlord's insurance policies. Tenant shall have the
option to terminate this Lease if the Premises is damaged or destroyed by fire
or other casualty, and Landlord reasonably estimates that the repair of the
Premises cannot be completed within one (1) year after the casualty. Landlord
shall notify Tenant of Landlord's reasonable repair period estimate within (60)
days after the casualty. If a party desires to exercise the right to terminate
this Lease as a result of a casualty, the party shall exercise the right by
giving the other party written notice of its election to terminate within thirty
(30) days after delivery of Landlord's repair period estimate, in which event
this Lease shall terminate fifteen (15) days after the date of the terminating
party's notice. If neither Landlord nor Tenant exercises the right to terminate
this Lease, this Lease shall continue in full force and effect and Landlord
shall promptly commence the process of obtaining necessary permits and
approvals, and shall commence repair of the Premises or the Building as soon as
practicable and thereafter prosecute the repair diligently to completion.
c. Limited Obligation to Repair. Landlord's obligation, should Landlord
elect or be obligated to repair or rebuild, shall be limited to the Building
shell and any tenant improvements in the Premises which are constructed and paid
for by Landlord pursuant to Exhibit B. Tenant, at its option and expense, shall
replace or fully repair all trade fixtures, equipment, Alterations and other
improvements installed by Tenant and existing at the time of the damage or
destruction.
d. Abatement of Rent. In the event of any damage or destruction to the
Premises which does not result in termination of this Lease, the Base Rent shall
be temporarily abated proportionately to the degree the Premises are
untenantable as a result of the damage or destruction, commencing from the date
of the damage or destruction and continuing during the period required by
Landlord to substantially complete its repair and restoration of the Premises;
provided, however, that nothing herein shall preclude Landlord from being
entitled to collect the full amount of any rent loss insurance proceeds. Tenant
shall not be entitled to any compensation or damages from Landlord for loss of
the use of the Premises, damage to Tenant's Personal Property or any
inconvenience occasioned by any damage, repair or restoration. Tenant hereby
waives the provisions of Section 1932, Subdivision 2, and Section 1933,
Subdivision 4, and Sections 1941 and 1942 of the California Civil Code, and the
provisions of any similar Legal Requirement (whether now or hereafter in
effect).
e. Insurance Proceeds. If this Lease is terminated, Landlord may keep all
the insurance proceeds resulting from the damage payable pursuant to insurance
coverage maintained by Landlord, and Tenant shall have no claims thereto.
12. Eminent Domain. If all or any material part of the Premises or balance of
the Real Property is taken for public or quasi-public use by a governmental
authority under the power of eminent domain or is conveyed to a governmental
authority in lieu of such taking (a "taking"), Landlord may terminate this Lease
by written notice to Tenant within thirty (30) days after the taking. If all or
any material part of the Premises is taken, and if the taking causes the
remaining part of the Premises to be untenantable and inadequate for use by
Tenant for the purpose for which they were leased, then Tenant, at its option
and by giving notice within fifteen (15) days after the taking, may terminate
this Lease as of the date Tenant is required to surrender possession of the
Premises. If part of the Premises is taken but the remaining part is tenantable
and adequate for Tenant's use, then this Lease shall be terminated as to the
part taken as of the date Tenant is required to surrender possession, and,
unless Landlord shall have terminated this Lease
9
pursuant to the foregoing provisions, Landlord shall make such repairs,
alterations and improvements as may be necessary to render the part not taken
tenantable, and the Base Rent shall be reduced in proportion to the part of the
Premises taken. All compensation awarded for the taking shall be the property of
Landlord without any deduction therefrom for any estate of Tenant, and Tenant
hereby assigns to Landlord all its right, title and interest in and to the
award. Tenant shall have the right, however, to recover from the governmental
authority, but not from Landlord, such compensation as may be awarded to Tenant
on account of the interruption of Tenant's business, moving and relocation
expenses and removal of Tenant's Personal Property, provided that any such award
to Tenant will not reduce the award which would otherwise be made to Landlord.
13. Indemnity and Insurance.
a. Indemnity. Tenant shall hold Landlord and its constituent shareholders,
partners, members or other owners, and all of their agents, contractors,
servants, officers, directors, employees and licensees (collectively with
Landlord, the "Indemnitees") harmless from and indemnify the Indemnitees
against any and all claims, liabilities, damages, costs and expenses, including
reasonable attorneys' fees and costs incurred in defending against the same
(collectively, "Claims"), to the extent arising from (a) the acts or omissions
of Tenant or any other Tenant Party in, on or about the Real Property, or (b)
any construction or other work undertaken by or on behalf of Tenant in, on or
about the Premises, whether prior to or during the Term, or (c) any accident,
injury or damage, howsoever and by whomsoever caused, to any person or property,
occurring in, on or about the Premises; except to the extent such Claims are
caused by the negligence or willful misconduct of Landlord or its authorized
representatives. In case any action or proceeding be brought against any of the
Indemnitees by reason of any such Claim, Tenant, upon notice from Landlord,
covenants to resist and defend at Tenant's sole expense such action or
proceeding by counsel reasonably satisfactory to Landlord. The provisions of
this Section 13.a. shall survive the expiration or earlier termination of this
Lease with respect to any injury, illness, death or damage occurring prior to
such expiration or termination.
b. Fire and Extended Coverage. Landlord shall procure and maintain in full
force and effect with respect to the Building (including any tenant improvements
in the Premises constructed and paid for by Landlord pursuant to Exhibit B) a
policy or policies of all risk insurance (including sprinkler, vandalism and
malicious mischief coverage, and any other endorsements desired by the Landlord
or required by the holder of any fee or leasehold mortgage on the Real Property,
but excluding, at Landlord's option, the insurance described in Section 13.i.
below) in such amount as Landlord shall determine, but in an amount at least
equal to eighty percent (80%) (or such greater percentage as shall be required
to preclude Landlord from being deemed a coinsurer)) of the full replacement
cost (including debris removal, and demolition, but excluding the land and the
footings, foundations and installations below the basement level) thereof. Such
insurance, and all other insurance maintained by Landlord under this Lease,
shall be for the sole benefit of Landlord, and the proceeds therefrom shall be
under Landlord's sole control.
c. Public Liability. Tenant, at its own cost and expense, shall keep and
maintain in full force and effect during the Term the following insurance
coverages, written by an insurance company licensed by and admitted to issue
insurance in the State of California, with a general policyholders' rating of
"A" or better and a financial size ranking of "Class X" or higher, in the most
recent edition of Best's Insurance Guide, in the form customary to the locality,
(i) commercial general liability insurance, including contractual liability
coverage, insuring Tenant's activities with respect to the Premises and/or the
Building against loss, damage or liability for personal injury or death of any
person or loss or damage to property occurring in, upon or about the Premises,
with a minimum coverage of One Million Dollars ($1,000,000) per occurrence/Two
Million Dollars ($2,000,000) general aggregate, plus a Five Million Dollar
($5,000,000) per occurrence/general aggregate umbrella, (ii) fire damage legal
liability insurance and personal/advertising injury insurance (which shall not
be subject to the contractual liability exclusion), each in the minimum amount
of One Million Dollars ($1,000,000), (iii) medical payments insurance in the
minimum amount of
10
Five Thousand Dollars ($5,000), (iv) worker's compensation insurance in
statutory amounts, and (v) if Tenant operates owned, leased or non-owned
vehicles on the Property, comprehensive automobile liability insurance with a
minimum coverage of $1,000,000 per occurrence, Two Million Dollars ($2,000,000)
general aggregate; provided, however, that if, at any time during the Term,
Tenant shall have in full force and effect a blanket policy of public liability
insurance with the same coverage for the Premises as described above, as well as
coverage of other premises and properties of Tenant, or in which Tenant has some
interest, the blanket insurance shall satisfy the requirement hereof and be
endorsed to separately apply to the Premises.
d. Rental Abatement Insurance. Landlord may keep and maintain in full force
and effect during the Term rental abatement insurance against abatement or loss
of rents with respect to the Real Property in such amount as determined by
Landlord.
e. Insurance Certificates. Tenant shall furnish to Landlord, on or before
the Commencement Date and thereafter within thirty (30) days prior to the
expiration of each policy, an original certificate of insurance issued by the
insurance carrier of each policy of insurance carried by Tenant pursuant to this
Section 13. The certificates shall expressly provide that the policies shall not
be cancelable or subject to reduction of coverage or otherwise be subject to
modification except after thirty (30) days' prior written notice to the parties
named as insureds. Landlord, its successors and assigns, and any nominee of
Landlord holding any interest in the Premises, including, without limitation,
any ground lessor or the holder of any fee or leasehold mortgage, shall be named
as an additional insured under each policy of insurance maintained by Tenant
pursuant to this Lease. The policies and certificates shall further provide that
the coverage shall be primary, and that any coverage carried by Landlord shall
be secondary and noncontributory with respect to Tenant's policy.
f. Tenant's Failure. If Tenant fails to maintain any insurance required by
this Lease, Tenant shall be liable for any loss or cost resulting from the
failure. This Section shall not be deemed to be a waiver of any of Landlord's
rights and remedies under any other provision of this Lease.
g. Waiver of Subrogation. Any policy or policies of fire, extended coverage
or similar casualty insurance which either party obtains in connection with the
Building, the Premises, or Tenant's Personal Property shall include a clause or
endorsement denying the insurer any rights of subrogation against the other
party (and the other parties named as additional insureds pursuant to Section
13.e. above) to the extent rights have been waived by the insured prior to the
occurrence of injury or loss. Landlord and Tenant each waives any rights of
recovery against the other (and the other parties named as additional insureds
pursuant to Section 13.e. above) for injury or loss due to hazards insurable by
policies of fire, extended coverage or similar casualty insurance, regardless of
whether such insurance policies or coverage shall actually have been obtained by
the party granting such waiver, and regardless of the cause of such fire or
casualty, including the negligence of the party benefiting from such waiver.
Because this Section 13.g will preclude the assigmnent of any claim mentioned in
it by way of subrogation or otherwise to an insurance company or any other
person, each party to this Lease agrees immediately to give to each of its
insurance companies written notice of the terms of the mutual waivers contained
in this Section 13.g and to have the insurance policies properly endorsed, if
necessary, to prevent the invalidation of the insurance coverages by reason of
the mutual waivers contained in this Section 13.g.
h. Tenant's Property and Fixtures. Tenant shall assume the risk of damage
to any of Tenant's furniture, equipment, machinery, goods, supplies or fixtures
or other Personal Property, and to any Alterations which Tenant may make to the
Premises, and shall insure the same throughout the Term, for their full
replacement cost, under insurance policies reasonably satisfactory to Landlord
(certificates of which shall be delivered to Landlord as set forth above in
Section 13.e). Tenant hereby releases Landlord from any obligation to insure the
foregoing items and from any liability for loss of or damage to such items,
regardless of cause.
11
i. Earthquake and Flood Insurance. In addition to any other insurance
policies carried by Landlord in connection with the Building, Landlord may elect
to procure and maintain in full force and effect during the Term with respect to
the Building a policy of earthquake/volcanic action and flood and/or surface
water insurance, including rental value insurance against abatement or loss of
rent in the case of damage or loss covered under the earthquake/volcanic and
flood and/or surface water insurance, in an amount up to one hundred percent
(100%) of the full replacement cost (including debris removal and demolition) of
the Building.
14. Assignment or Sublet.
a. Tenant shall not assign this Lease or sublet the Premises or any portion
thereof without the prior written consent of Landlord in each instance, which
consent shall not, subject to Landlord's rights under clause (i) below, be
unreasonably withheld. If Tenant desires to assign this Lease or to sublet the
Premises, or any part thereof, Tenant shall give to Landlord written notice of
its intent at least sixty (60) days in advance of the date on which Tenant
desires to assign or sublet the Premises, which notice shall designate the terms
of the proposed assignment or sublet, the identity of the proposed assignee or
sublessee, and shall be accompanied by financial statements of such proposed
assignee or sublessee and such other information regarding such party and its
business and reputation as shall be required by Landlord to evaluate the
proposed assignment or sublet. Landlord shall have thirty (30) days after
receipt of Tenant's written notice and the above specified information within
which to notify Tenant in writing that Landlord elects to (i) terminate this
Lease, in the case of a proposed assignment, or to terminate this Lease as to
that portion of the Premises to be sublet, in the case of a proposed sublet,
(ii) consent to the proposed assignment or sublet as described in Tenant's
notice, or (iii) reasonably refuse to consent to Tenant's proposed assignment or
sublet, stating the reasons for such refusal. If Landlord fails to notify Tenant
in writing of its election within the thirty (30) day period, Landlord shall be
deemed to have made the election in clause (iii) above. No consent by Landlord
to any assignment or sublet shall be deemed to be a consent to a use not
permitted under this Lease, to any act in violation of this Lease or to any
subsequent assignment or sublet. No assignment or sublet by Tenant shall relieve
Tenant of any liability theretofore or thereafter arising under this Lease. Any
attempted assignment or sublet by Tenant in violation of the terms and covenants
of this Section shall be void.
During the first six (6) months of the Term, the sixty (60) and thirty (30)
day periods in the preceding paragraph shall each be reduced to ten (10) days.
Notwithstanding the provisions of the foregoing paragraph, Landlord shall
not have the termination option described in clause (i) of the preceding
paragraph as to any sublease proposed by Tenant which will terminate three (3)
years or earlier from the Commencement Date, unless the space subject to such
sublease, taken together with all other portions of the Premises subject to any
sublease, would exceed fifty percent (50%) of the total Premises then demised
under this Lease. In addition, Landlord shall not have the termination option
described in clause (i) of the preceding paragraph as to any sublease proposed
by Tenant if, within ten (10) days after Tenant's receipt of notice from
Landlord that Landlord is exercising such termination right, Tenant withdraws
its request for Landlord's consent to such sublease.
If Tenant shall propose to assign this Lease effective as of a date which
is during the first two (2) years of the Term, or if Tenant shall propose to
sublease any portion of the Premises effective as of a date which is during the
first two (2) years of the Term and the term of such sublease is for more than
three (3) years, due to the potential material adverse affect such proposed
transaction would have on Landlord's ability to lease the balance of the Real
Property, Landlord's refusal to consent to any such proposed transaction shall
be deemed reasonable (without limitation of any other reasonable grounds
Landlord may have for refusing to consent to any assignment or subletting).
b. Processing Expenses. Tenant shall pay to Landlord, as Landlord's cost of
processing each
12
proposed assignment or subletting (whether or not the same is ultimately
approved by Landlord or consummated by Tenant), an amount equal to the sum of
(i) Landlord's reasonable attorneys' and other professional fees, plus (ii) the
sum of $1000.00 for the cost of Landlord's administrative, accounting and
clerical time (collectively, "Processing Costs"). Notwithstanding anything to
the contrary herein, Landlord shall not be required to process any request for
Landlord's consent to an assignment or subletting until Tenant has paid to
Landlord the amount of Landlord's estimate of the Processing Costs. When the
actual amount of the Processing Costs is determined, it shall be reconciled with
Landlord's estimate, and any payments or refunds required as a result thereof
shall promptly thereafter be made by the parties.
c. Consideration to Landlord. In the event of any assignment or sublease,
whether or not requiring Landlord's consent, Landlord shall be entitled to
receive, as additional rent hereunder, seventy-five percent (75%) of any
consideration (including, without limitation, payment for leasehold improvements
and any "Leasehold Profit" as defined below) paid by the assignee or subtenant
for the assignment or sublease and, in the case of a sublease, the excess of the
amount of rent paid for the sublet space by the subtenant over the amount of
Monthly Base Rent under Section 4 above and Operating Expenses under Section 5
above attributable to the sublet space for the corresponding month; except that
Tenant may recapture, on an amortized basis over the term of the sublease or
assignment, any brokerage commissions paid by Tenant in connection with the
subletting or assignment (not to exceed commissions typically paid in the market
at the time of such subletting or assignment), Tenant's reasonable costs of
advertising the space for sublease or assignment, any improvement allowance paid
by Tenant to the subtenant or assignee, and any improvement costs paid by Tenant
solely to prepare the space for the assignment or sublet.. "Leasehold Profit"
shall be the value allocated to the leasehold between the parties to the
assignment or sublease, but in no event less than the excess of the present
value of the fair market rent of the Premises for the remaining term of this
Lease after such assignment or sublease, over the Base Rent payable hereunder
for such remaining term, as reasonably determined by Landlord. Upon Landlords
request, Tenant shall direct any subtenant or assignee to pay the directly to
Landlord the amounts due to it pursuant to this Section 14.c. on account of
such sublease or assignment. If there is more than one sublease under this
Lease, the amounts (if any) to be paid by Tenant to Landlord pursuant to this
Section 14.c. shall be separately calculated for each sublease and amounts due
Landlord with regard to any one sublease may not be offset against rental and
other consideration pertaining to or due under any other sublease.
d. Documentation. No permitted assignment or subletting by Tenant shall be
effective until there has been delivered to Landlord a fully executed
counterpart of the assignment or sublease which expressly provides that (i) in
the case of a sublease, the subtenant may not assign its sublease or further
sublet the sublet space without Landlord's prior written consent, (ii) in the
case of an assignment, the assignee assumes all of Tenant's obligations under
this Lease arising on or after the date of the assignment, and (iii) in the case
of a sublease, the subtenant agrees to be and remain jointly and severally
liable with Tenant to Landlord for the payment of Rent pertaining to the sublet
space in the amount set forth in the sublease, and for the performance of all of
the terms and provisions of this Lease pertaining to the sublet space. In
addition to the foregoing, no assignment or sublease by Tenant shall be
effective until there has been delivered to Landlord a fully executed
counterpart of Landlord's consent to assignment or sublease form, as applicable.
The failure or refusal of a subtenant or assignee to execute any such
instrument shall not release or discharge the subtenant or assignee from its
liability as set forth above. Notwithstanding the foregoing, no subtenant or
assignee shall be permitted to occupy the Premises unless and until such
subtenant or assignee provides Landlord with certificates evidencing that such
subtenant or assignee is carrying all insurance coverage required of it under
this Lease.
e. No Merger. Without limiting any of the provisions of this Section 14,
the voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation by Landlord and Tenant, shall not work a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or subtenancies or,
at the option of Landlord, operate as an assignment to Landlord of any or all
such subleases or subtenancies. If Landlord does elect that such surrender or
cancellation operate as an assignment of such subleases or subtenancies,
13
Landlord shall in no way be liable for any previous act or omission by Tenant
under the subleases or for the return of any deposit(s) under the subleases that
have not been actually delivered to Landlord, nor shall Landlord be bound by any
sublease modification(s) executed without Landlord's consent or for any advance
rental payment by the subtenant in excess of one month's rent.
f. Indirect Assignments. For purposes of this Section 14, the following
events shall be deemed an assignment or sublease, as appropriate: (i) the
issuance of equity interests (whether stock, partnership interests or otherwise)
in Tenant or any subtenant or assignee, or any entity controlling any of them,
to any person or group of related persons, in a single transaction or a series
of related or unrelated transactions, such that, following such issuance, such
person or group shall have Control (as defined below) of Tenant or any subtenant
or assignee; (ii) a transfer of Control of Tenant or any subtenant or assignee,
or any entity controlling any of them, in a single transaction or a series of
related or unrelated transactions (including, without limitation, by
consolidation, merger, acquisition or reorganization), except that the transfer
of outstanding capital stock or other listed equity interests by persons or
parties other than "insiders" within the meaning of the Securities Exchange Act
of 1934, as amended, through the "over-the-counter" market or any recognized
national or intemational securities exchange, shall not be included in
determining whether Control has been transferred; (iii) a reduction of Tenant's
assets to the point that this Lease and/or other leases are substantially
Tenant's only asset(s); or (iv) a change or conversion in the form of entity of
Tenant, any subtenant or assignee, or any entity controlling any of them, which
has the effect of limiting the liability of any of the partners, members or
other owners of such entity. "Control" shall mean direct or indirect ownership
of 50% or more of all of the voting stock of a corporation or 50% or more of the
voting legal or equitable interest in any other business entity, or the power to
direct the management and operations of any entity (by equity ownership,
contract or otherwise).
g. Affiliates; Successors. Notwithstanding anything to the contrary in
Section 14.a or Section 14.c., but subject to the other provisions of this
Section 14, Tenant may assign this Lease or sublet the Premises or any portion
thereof, without Landlord's consent, to any partnership, corporation or other
entity which controls, is controlled by, or is under common control with Tenant
(control being defined for such purposes as ownership of 50% or more of all of
the voting stock of a corporation or 50% or more of the voting legal or
equitable interest in any other business entity, and the power to direct the
management and operations of, the relevant entity) (an "Affiliate") or to any
partnership, corporation or other entity resulting from a merger or
consolidation with Tenant or which acquires all or substantially all of Tenant's
assets (through a transfer of assets or equity interests in Tenant) as a going
concern and such assets include substantial assets other than this Lease (a
"Successor"), provided that (i) Landlord receives at least ten (10) days' prior
written notice of the assignment or subletting, in which Tenant shall expressly
confirm that Tenant remains primarily liable (together with the assignee in the
event of an assignment) for all of the obligations of the Tenant under this
Lease, (ii) in the case of an assignment to a Successor, the Successor's net
worth is not less than Tenant's net worth immediately prior to such assignment
(or series of transactions of which such assignment is a part), (iii) in the
case of a subletting or assignment to an Affiliate, the Affiliate remains an
Affiliate for the duration of the subletting or the balance of the term in the
event of an assignment, (iv) Landlord receives a fully executed copy of the
assignment or sublease agreement between Tenant and the Affiliate or Successor
at least ten (10) days prior to the effective date of such assignment or
sublease, in which the Affiliate or Successor, as the case may be, assumes (in
the event of an assignment) all of Tenant's obligations under this Lease, and
agrees (in the event of a sublease) that such subtenant will, at Landlord's
election, attorn directly to Landlord in the event that this Lease is terminated
for any reason, and (v) in the case of an assignment, the essential purpose of
such assignment is to transfer an active, ongoing business with substantial
assets in addition to this Lease, and in the case of an assignment or sublease
the transaction is for legitimate business purposes unrelated to this lease and
the transaction is not a subterfuge by Tenant to avoid it obligations under this
Lease or the restrictions on assignment and subletting contained herein.
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15. Default.
a. Tenant's Default. A material breach of this Lease by Tenant shall exist
if any of the following events (severally, "Event of Default"; collectively,
"Events of Default") shall occur: (i) if Tenant shall have failed to pay Base
Rent, Tenant's Percentage Share of increased Operating Expenses, or any other
sum required to be paid hereunder when due, including any interest due under
Section 3; (ii) if Tenant shall have failed to perform any term, covenant or
condition of this Lease except those requiring the payment of money, and Tenant
shall have failed to cure the breach within fifteen (15) days after written
notice from Landlord if the breach could reasonably be cured within the fifteen
(15) day period; provided, however, if the failure could not reasonably be cured
within the fifteen (15) day period, then Tenant shall not be in default unless
it has failed to promptly commence and thereafter continue to make diligent and
reasonable efforts to cure the failure as soon as practicable as reasonably
determined by Landlord; (iii) if Tenant shall have assigned its assets for the
benefit of its creditors; (iv) if the sequestration of, attachment of, or
execution on, any material part of the property of Tenant or on any property
essential to the conduct of Tenant's business shall have occurred, and Tenant
shall have failed to obtain a return or release of the property within thirty
(30) days thereafter, or prior to sale pursuant to any sequestration, attachment
or levy, whichever is earlier; (v) if Tenant shall have failed to continuously
and uninterruptedly conduct its business in the Premises, or shall have
abandoned or vacated the Premises; (vi) if a court shall have made or entered
any decree or order adjudging Tenant to be insolvent, or approving as properly
filed a petition seeking reorganization of Tenant, or directing the winding up
or liquidation of Tenant, and the decree or order shall have continued for a
period of thirty (30) days; (vii) if Tenant shall make or suffer any transfer
which constitutes a fraudulent or otherwise avoidable transfer under any
provision of the federal Bankruptcy Laws or any applicable state law; or (viii)
if Tenant shall have failed to comply with the provisions of Sections 23 or 25
of this Lease within the time periods stated therein. An Event of Default shall
constitute a default under this Lease.
b. Remedies Upon Tenant's Default. Upon an Event of Default, Landlord shall
have the following remedies, in addition to all other rights and remedies
provided by law, equity, statute or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
(i) Landlord has the remedy described in California Civil Code Section
1951.4 (a landlord may continue the lease in effect after the tenant's breach
and abandonment and recover rent as it becomes due, if the tenant has the right
to sublet and assign subject only to reasonable limitations), and may continue
this Lease in full force and effect, and this Lease shall continue in full force
and effect as long as Landlord does not terminate Tenant's right to possession,
and Landlord shall have the right to collect Rent when due. During the period
Tenant is in default, Landlord may enter the Premises and relet it, or any part
of it, to third parties for Tenant's account, provided that any Rent in excess
of the Rent due hereunder shall be payable to Landlord. Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the Premises,
including, without limitation, brokers' commissions, expenses of cleaning and
redecorating the Premises required by the reletting and like costs. Reletting
may be for a period shorter or longer than the remaining Term of this Lease.
Tenant shall pay to Landlord the Rent and other sums due under this Lease on the
dates the Rent is due, less the Rent and other sums Landlord receives from any
reletting. No act by Landlord allowed by this Subsection (i) shall terminate
this Lease unless Landlord notifies Tenant in writing that Landlord elects to
terminate this Lease.
(ii) Landlord may terminate Tenant's right to possession of the
Premises at any time by giving written notice to that effect. No act by Landlord
other than giving written notice to Tenant of such termination shall terminate
this Lease. Acts of maintenance, efforts to relet the Premises or the
appointment of a receiver on Landlord's initiative to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's right
to possession. On termination, Landlord shall have the right to remove all
personal property of Tenant and store it at Tenant's cost and to recover from
Tenant as damages: (a) the worth at the time of award of unpaid Rent and other
sums due and payable which had been earned at the
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time of termination; plus (b) the worth at the time of award of the amount by
which the unpaid Rent and other sums due and payable which would have been
payable after termination until the time of award exceeds the amount of the Rent
loss that Tenant proves could have been reasonably avoided; plus (c) the worth
at the time of award of the amount by which the unpaid Rent and other sums due
and payable for the balance of the Term after the time of award exceeds the
amount of the Rent loss that Tenant proves could be reasonably avoided; plus (d)
any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform Tenant's obligations under
this Lease, or which, in the ordinary course of things, would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord: (1) in retaking possession of the Premises, including reasonable
attorneys' fees and costs therefor; (2) maintaining or preserving the Premises
for reletting to a new tenant, including repairs or alterations to the Premises
for the reletting; (3) leasing commissions; (4) any other costs necessary or
appropriate to relet the Premises; and (5) at Landlord's election! such other
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by California Civil Code Section 1951.2 or any other laws of the State
of California.
The "worth at the time of award" of the amounts referred to in Subsections
(ii)(a) and (ii)(b) is computed by allowing interest at the lesser of eighteen
percent (18%) per annum or the maximum rate permitted by law, on the unpaid Rent
and other sums due and payable from the date due through the date of award. The
"worth at the time of award" of the amount referred to in Subsection (ii)(c) is
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%). Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, if Tenant is
evicted or Landlord takes possession of the Premises by reason of any default of
Tenant hereunder.
c. Landlord's Default. Landlord shall not be deemed to be in default in the
performance of any obligation required to be performed by Landlord hereunder
unless and until Landlord has failed to perform the obligation within thirty
(30) days after receipt of written notice by Tenant to Landlord specifying the
obligation Landlord has failed to perform; 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
Landlord shall commence the performance of such obligation within the thirty
(30) day period and thereafter shall diligently prosecute the same to
completion.
16. Landlord's Right to Perform Tenant's Covenants.
If Tenant shall at any time fail to make any payment or perform any other
act on its part to be made or performed under this Lease, Landlord may, but
shall not be obligated to, make the payment or perform any other act to the
extent Landlord may deem desirable and, in connection therewith, pay expenses
and employ counsel. Any payment or performance by Landlord shall not waive or
release Tenant from any obligations of Tenant under this Lease. All sums so paid
by Landlord, and all penalties, interest and costs in connection therewith,
shall be due and payable by Tenant on the next day after any payment by
Landlord, together with interest thereon at the Interest Rate, from that date to
the date of payment thereof by Tenant to Landlord, plus collection costs and
attorneys' fees. Landlord shall have the same rights and remedies for the
nonpayment thereof as in the case of default in the payment of Base Rent.
17. Security Deposit;: Letter of Credit.
a. Security Deposit. Tenant has deposited with Landlord the Security
Deposit, in the amount specified in the Basic Lease Information, as security for
the full and faithful performance of every provision of this Lease to be
performed by Tenant. If Tenant defaults with respect to any provision of this
Lease, Landlord may use, apply or retain all or any part of the Security Deposit
for the payment of any Rent or other sum in default, for the payment of any
amount which Landlord may expend or become obligated to expend by reason of
Tenant's default, or for any loss or damage which Landlord may suffer by reason
of
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Tenant's default; provided, however, that the Security Deposit shall not be
deemed an advance rent deposit or an advance payment of any kind, or a measure
or limitation of Landlord's damages or constitute a bar or defense to any of the
Landlord's other remedies under this Lease or at law upon Tenant's default. If
any portion of the Security Deposit is used or applied, Tenant shall deposit
with Landlord, within ten (10) days after written demand therefor, cash in an
amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep the Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on the Security
Deposit. Upon the expiration or earlier termination of this Lease, and Tenant's
fulfillment of all of its obligations hereunder (including any obligations which
survive such expiration or earlier termination), Landlord shall return the
Security Deposit (or the balance thereof after application as aforesaid) to
Tenant.
b. Letter of Credit. In addition to the Security Deposit made by Tenant
pursuant to Section 17.a., concurrently with Tenant's execution and delivery of
this Lease to Landlord, Tenant has delivered to Landlord the Letter of Credit
described below as security for Tenant's performance of all of Tenant's
covenants and obligations under this Lease; provided, however, that neither the
Letter of Credit nor any proceeds therefrom (the "Letter of Credit Proceeds")
shall be deemed an advance rent deposit or an advance payment of any other kind,
or a measure or limitation of Landlord's damages or constitute a bar or defense
to any of the Landlord's other remedies under this Lease or at law upon Tenant's
default. The Letter of Credit shall be maintained in effect from the date of
this Lease through ninety (90) days after the expiration or earlier termination
of the Term, and on or prior to the expiration of such ninety (90) day period,
Landlord shall return to Tenant the Letter of Credit (unless presented for
payment as provided herein) and any Letter of Credit Proceeds then held by
Landlord (other than those held for application by Landlord as provided below,
including application to cure any failure by Tenant to restore the Premises as
required by this Lease upon the surrender thereof); provided, however, that in
no event shall any such return be construed as an admission by Landlord that
Tenant has performed all of its obligations hereunder. Landlord shall not be
required to segregate the Letter of Credit Proceeds from its other funds and no
interest shall accrue or be payable to Tenant with respect thereto. Landlord may
(but shall not be required to) draw upon the Letter of Credit and use the Letter
of Credit Proceeds or any portion thereof to cure any Event of Default by Tenant
under this Lease or to compensate Landlord for any damage Landlord incurs as a
result of Tenant's failure to perform any of its obligations hereunder, it being
understood that any use of the Letter of Credit Proceeds shall not constitute a
bar or defense to any of Landlord's other remedies under this Lease. In such
event and upon written notice from Landlord to Tenant specifying the amount of
the Letter of Credit Proceeds so utilized by Landlord and the particular purpose
for which such amount was applied, Tenant shall immediately deliver to Landlord
an amendment to the Letter of Credit or a replacement thereof in an amount equal
to one hundred percent (100%) of the amount specified below for the applicable
period. Tenant's failure to deliver such amendment or replacement to Landlord
within five (5) days of Landlord's notice shall constitute an Event of Default
hereunder. No lessor under any ground or underlying lease or holder of or
beneficiary under a mortgage or deed of trust, nor any purchaser at any judicial
or private foreclosure sale of the Property or any portion thereof, shall be
responsible to Tenant for such Letter of Credit or any Letter of Credit Proceeds
unless such lessor, holder or purchaser shall have actually received the same.
c. As used herein, Letter of Credit shall mean an unconditional,
irrevocable letter of credit (hereinafter referred to as the "Letter of Credit")
issued at Tenant's sole expense by the San Francisco or New York office of a
major national bank satisfactory to Landlord (the "Bank"), naming Landlord as
beneficiary, and in form and substance satisfactory to Landlord, in the amount
of One Million Dollars ($1,000,000.00) (subject to increase by the amount of the
Improvement Advance as described below) for the during the period from the date
of this Lease through the first annual anniversary of the Commencement Date, and
reducing in amount on the first annual anniversary of the Commencement Date and
on each subsequent annual anniversary of the Commencement Date by twenty percent
(20%) of the original amount of the Letter of Credit; provided, however, that if
on the date the Letter of Credit amount would otherwise reduce, an Event of
Default, or default that with notice or the passage of time or both could mature
into an Event of Default, shall have occurred and be continuing, the Letter of
Credit amount shall not reduce on such date and shall not thereafter
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reduce until the later of the next scheduled reduction date or the date such
Event of Default or default shall have been cured. The Letter of Credit shall be
for a one-year or, at Tenant's election, longer, term and shall provide: (i)
that Landlord may make partial and multiple draws thereunder, up to the face
amount thereof, (ii) that Landlord may draw upon the Letter of Credit up to the
full amount thereof, as determined by Landlord, and the Bank will pay to
Landlord the amount of such draw upon receipt by the Bank of a sight draft
signed by Landlord and accompanied by a written certification from Landlord to
the Bank stating either: (a) that an Event of Default has occurred and is
continuing under this Lease, or (b) that Landlord has not received notice from
the Bank that the Letter of Credit will be renewed by the Bank for at least one
(1), year beyond the then relevant expiration date and Tenant has not furnished
Landlord with a replacement Letter of Credit as hereinafter provided, or (c)
that Bank no longer meets the requirements set forth above and Tenant has not
furnished Landlord with a replacement Letter of Credit as required hereunder
from a Bank meeting such requirements; and (iii) that, in the event of
Landlord's assignment or other transfer of its interest in this Lease, the
Letter of Credit shall be freely transferable by Landlord, without charge and
without recourse, to the assignee or transferee of such interest and the Bank
shall confirm the same to Landlord and such assignee or transferee. The Letter
of Credit shall further provide that a draw thereon pursuant to clause (ii)(b)
above may only be made during the thirty (30) day period preceding the then
applicable expiration date of the Letter of Credit. In the event that the Bank
shall fail to notify Landlord that the Letter of Credit will be renewed for at
least one (1) year beyond the then applicable expiration date, and Tenant shall
not have delivered to Landlord, at least thirty (30) days prior to the relevant
annual expiration date, a replacement Letter of Credit in the amount required
hereunder and otherwise meeting the requirements set forth above, then Landlord
shall be entitled to draw on the Letter of Credit as provided above, and shall
hold and apply the proceeds of such draw as Letter of Credit Proceeds pursuant
to Paragraph 17.b above.
Notwithstanding the foregoing, in the event that Landlord shall make an
Improvement Advance as described in Exhibit B attached hereto, within thirty
(30) days of the determination of the total amount of the Improvement Advance
Tenant shall increase the initial amount of the Letter of Credit by the amount
of the Improvement Advance.
18. Surrender of Premises.
By taking possession of the Premises, Tenant shall be deemed to have
accepted the Premises and the Property in good, clean and completed condition
and repair, subiect to all applicable laws, codes and ordinances. On the
Expiration Date or earlier termination of this Lease, Tenant shall surrender the
Premises to Landlord in its condition as of the Commencement Date, normal wear
and tear excepted. Tenant shall remove from the Premises all of Tenant's
Personal Property and any Alterations required to be removed pursuant to Section
9 of this Lease. Tenant shall repair any damage or perform any restoration work
required by the removal. If Tenant fails to timely remove any Personal Property
or Alterations as aforesaid, Landlord may remove the property and store and/or
dispose of the same at Tenant's expense, including interest at the Interest
Rate. If the Premises are not so surrendered at the termination of this Lease,
Tenant shall indemnify Landlord against all Claims resulting from delay by
Tenant in so surrendering the Premises, including, without limitation, any
claims made by any succeeding tenant, losses to Landlord due to lost
opportunities to lease to succeeding tenants, and attorneys' fees and costs.
Tenant shall give written notice to Landlord at least thirty (30) days prior to
vacating the Premises and shall meet with Landlord for a joint inspection of the
Premises at the time of vacating. In the event of Tenant's failure to give such
notice or participate in such joint inspection, Landlord's inspection at or
after Tenant's vacating the Premises shall conclusively be deemed correct for
purposes of determining Tenant's responsibility for removal of Alterations and
repairs and restoration of the Premises.
19. Holding Over.
If Tenant remains in possession of all or any part of the Premises after
the expiration of the Term or the
18
earlier termination of this Lease without Landlord's prior written consent, the
tenancy shall be a tenancy at sufferance only and shall not constitute a renewal
or extension for any further term, regardless of whether Landlord shall accept
Rent for any such period. In such event, Base Rent shall be increased in an
amount equal to two hundred percent (200%) of the Base Rent during the last
month of the Term (including any extensions), and any other sums due under this
Lease shall be payable in the amount, and at the times, specified in this Lease.
The tenancy shall be subject to every other term, condition, covenant and
agreement contained in this Lease, except that any renewal or extension option
in favor of Tenant shall not be applicable. No such increase shall impair
Landlord's other rights and remedies against Tenant by reason of such holding
over by Tenant, and Tenant shall vacate the Premises immediately upon Landlord's
request.
20. Access to Premises.
Tenant shall permit Landlord and its agents to enter the Premises at all
reasonable times upon reasonable notice, except in the case of an emergency (in
which event entry may be made when necessary and without notice), to inspect the
Premises, to post Notices of Nonresponsibility and similar notices, to show the
Premises to interested parties such as prospective mortgagees, purchasers and
tenants to provide any services required of Landlord hereunder, to make
necessary alterations, additions, improvements or repairs either to the
Premises, the Building, or other premises within the Building, and to discharge
Tenant's obligations hereunder when Tenant has failed to do so within a
reasonable time after written notice from Landlord. No such entry shall
constitute a constructive eviction or give rise to an abatement of Rent
hereunder, constitute a constructive eviction, or otherwise diminish Tenant's
obligations under this Lease. In exercising its rights under this Section 20,
Landlord shall at all times endeavor to minimize interference with Tenant's
operations, to the extent practicable. During the last year of the Term,
Landlord shall have the right to erect on the exterior of the Premises and/or on
the exterior or in the Common Areas of the Building and the Property suitable
signs indicating that the Premises are available for lease.
21. Signs
a. The size, design, color, location and other physical aspects of any sign
in or on the Premises shall be subject to the CC&R's, Rules, Landlord's approval
prior to installation, and to all Legal Requirements. The costs df any permitted
sign, and the costs of its installation, maintenance and removal, shall be at
Tenant's sole expense and shall be paid within ten (10) days of Tenant's receipt
of a bill from Landlord for the costs. In no event shall Tenant be permitted to
place any sign, logo or other identification on the exterior of the Building, in
the Building's Common Areas (other than on a Building directory maintained to
identify the Building's tenants), or upon the Property, or which is inside the
Premises but visible from outside of the Premises (other than upon the door(s)
to the Premises).
b. Exterior Building Signage. Notwithstanding Section 21.a., so long as the
Tenant under this Lease (i) is the Tenant originally named under this Lease in
the Basic Lease information, or any Affiliate or Successor of such original
Tenant, (ii) is in occupancy pursuant to this Lease of at least seventy-five
percent (75%) of the entire Premises originally demised under this Lease, and
(iii) is not in default of any of its obligations hereunder beyond the
expiration of any applicable grace or cure period, Tenant shall be permitted to
maintain identification signage at the top of one exterior side of the Building
in a location reasonably approved by Landlord. The installation, maintenance and
removal of Tenant's signage pursuant to this Section 21.b. shall be performed
by Tenant at Tenants expense, but in coordination with Landlord and its
reasonable installation procedures and requirements, or at Landlord's option, by
Landlord at Tenant's expense. Such signage of Tenant shall be subject to
Landlord's prior approval and all Legal Requirements, and shall be limited to
Tenant's name and/or logo. If Tenant shall fail to meet the signage conditions
specified herein, Landlord may immediately remove Tenant's signage at Tenant's
expense, and Tenant's signage rights pursuant to this Section 21.b. shall
thereafter forever cease and terminate; provided, however, that if applicable
Legal Requirements do not require removal of such signage prior to the
expiration of the thirty (30) day period hereinafter provided, Landlord shall
not remove such signage unless it shall have
19
given Tenant thirty (30) days' prior notice of the signage conditions Tenant has
failed to meet, and such failure continues after the expiration of such thirty
(30) day period. Upon the expiration or earlier termination of this Lease,
Tenant shall, at Tenant's expense, or at Landlord's option Landlord shall, at
Tenant's expense, remove Tenant's signage and repair any damage to the Building
caused by such removal.
22. Subordination.
a. Subordinate Nature. Except as provided in Subsections b. and c., this
Lease is subject and subordinate to all ground and underlying leases, mortgages
and deeds of trust which now or may hereafter affect the Real Property or any
portion thereof, to the CC&R's, and to all renewals, modifications,
consolidations, replacements and extensions of the foregoing, without the
necessity of any further documentation evidencing such subordination.
Notwithstanding such self-operative subordination, within ten (10) days after
Landlord's written request therefor, Tenant shall execute any and all documents
required by Landlord, the lessor under any ground or underlying lease ("Ground
Lessor"), or the holder or holders of any mortgage or deed of trust ("Holder"),
evidencing this Lease to be subordinate to the lien of any such lease, mortgage
or deed of trust, as the case may be. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact to execute and deliver any such instrument
in the name of Tenant if Tenant fails to do so within such time. If the interest
of Landlord in the Real Property or the Building is transferred to any Ground
Lessor or Holder pursuant to or in lieu of proceedings for enforcement of any
such lease, mortgage, or deed of trust, Tenant shall immediately and
automatically attorn to the Ground Lessor or Holder, and this Lease shall
continue in full force and effect as a direct lease between the Ground Lessor or
Holder and Tenant on the terms and conditions set forth herein.
b. Possible Priority of Lease. If a Ground Lessor or a Holder advises
Landlord that it desires or requires this Lease to be prior and superior to a
lease, mortgage or deed of trust, Landlord may notify Tenant. Within seven (7)
days of Landlord's notice, Tenant shall execute, have acknowledged and deliver
to Landlord any and all documents or instruments, in the reasonable form
presented to Tenant, which Landlord, Ground Lessor or Holder deems necessary or
desirable to make this Lease prior and superior to the lease, mortgage or deed
of trust.
c. Lease Modification. If, in connection with obtaining financing for the
Real Property or any portion thereof, any Holder or Ground Lessor shall request
reasonable modification to this Lease as a condition to such ground lease or
financing, Tenant shall execute and deliver to Landlord, within ten (10) days of
Landlord's request, any such modification agreement so requested, provided such
modifications do not adversely affect Tenant's rights or increase Tenant's
obligations hereunder (other than additional obligations requiring Tenant to
send such Holder or Ground Lessor copies of notices given to Landlord).
d. Nondisturbance Agreement. It shall be a condition to the subordination
of this Lease to any Superior Interest created after the date of this Lease (as
distinguished from any Superior Interest in effect as of the date of this Lease,
or any amendment or modification thereto), that Tenant shall receive from the
Ground Lessor or Holder, as applicable, of such Superior Interest a so-called
non-disturbance agreement in the form reasonably required by such Ground Lessor
or Holder.
23. Transfer of the Property.
Upon transfer of the Real Property and assignment of this Lease, Landlord
shall be entirely freed and relieved of all liability under any and all of its
covenants and obligations contained in or derived from this Lease occurring
after the consummation of the transfer and assignment, and if Landlord shall
transfer the Security Deposit to the transferee of Landlord's interest in the
Real Property, Landlord shall be released from all liability for the Security
Deposit. Tenant shall attorn to any entity purchasing or otherwise acquiring the
Premises at any sale or other proceeding.
20
24. Estoppel Certificates; Financial Statements.
Within ten (10) days following written request by Landlord from time to
time throughout the Term, Tenant shall execute and deliver to Landlord an
estoppel certificate in the form attached hereto as Exhibit E, duly completed by
Tenant. At the request of Landlord from time to time during the Term, Tenant
shall provide to Landlord its current financial statements or other information
setting forth Tenant's financial condition and net worth. Landlord shall use
such documentation solely for purposes of this Lease and in connection with the
ownership, financing, management and disposition of the Real Property.
25. Mortgagee Protection.
In the event of any default on the part of Landlord, Tenant will give
notice by registered or certified mail to each Ground Lessor and Holder whose
identity has been disclosed to Tenant, and shall offer the Ground Lessor or
Holder a reasonable opportunity after such notice (but in no event less than
thirty (30) days) to cure the default, including time to obtain possession of
the Property or the Premises by lease termination, power of sale or a judicial
foreclosure (as applicable), if such should prove necessary to effect a cure. In
no event shall any Ground Lessor or Holder in any way or to any extent be: (a)
liable for any act or omission of any prior Landlord in contravention of any
provision of this Lease; or (b) subject to any offsets, claims or defenses which
Tenant might have against any prior Landlord; or (c) bound by any Rent which
Tenant might have paid for more than thirty (30) days in advance to any prior
Landlord; or (d) bound by any agreement or modification of this Lease made
without such Ground Lessor's or Holder's written consent. Tenant agrees that if
any Ground Lessor or Holder acquires possession of the Premises or title to the
Real Property as a result of termination of its ground lease or foreclosure of
such Holder's deed of trust or other security instrument, as applicable, the
acceptance of a lease surrender or deed in lieu of such foreclosure, or
otherwise, the provisions of Section 36 below shall be applicable to liability
of such Ground Lessor or Holder as successor Landlord under this Lease.
26. Attorneys' Fees.
If either party shall bring any action or legal proceeding for damages for
an alleged breach of any provision of this Lease, to recover rent or other sums
due, to terminate the tenancy of the Premises or to enforce, protect or
establish any term, condition or covenant of this Lease or right of either
party, the prevailing party shall be entitled to recover, as a part of the
action or proceedings, or in a separate action brought for that purpose,
reasonable attorneys' fees and court costs as may be fixed by the court or jury.
The prevailing party shall be the party which secures a final judgment in its
favor, provided that if the party bringing any action shall dismiss the same
without the consent of the other party, the other party shall be deemed the
prevailing party.
27. Brokers.
Tenant warrants and represents that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this Lease, except
for the brokers(s) specified in the Basic Lease Information (the "Brokers"), and
that it knows of no other real estate broker or agent who is or might be
entitled to a fee, commission or other compensation in connection with this
Lease. Tenant shall indemnify and hold harmless Landlord from and against any
and all liabilities or expenses (including reasonable attorneys' fees and costs)
arising out of claims made by any broker or individual (other than the Brokers)
for a fee, commission or other compensation resulting from this Lease. Pursuant
to the terms of separate agreement(s) between Landlord and the Brokers, Landlord
shall pay the Brokers any fee, commission or other compensation to which they
are entitled from Landlord by reason of this Lease. Tenant shall have no
liability to the Brokers for any fee, commission or other compensation.
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28. Parking
Tenant shall have the right to park in the Building's parking facilities,
in common with other tenants of the Building, upon such terms and conditions as
may from time to time be established by Landlord. There shall be no charge for
any portion of the parking facilities which is not reserved. Tenant agrees not
to use in excess of its proportionate share (i.e. the rentable square footage of
the Premises in proportion to the rentable square footage of the Building or
Buildings served by such parking facilities) of parking facilities and agrees to
cooperate with Landlord and other tenants in the use of the parking facilities.
Landlord reserves the right in its absolute discretion, to determine whether the
parking facilities are becoming crowded and to allocate and assign parking
spaces among Tenant and the other tenants. Landlord shall not be liable to
Tenant, nor shall this Lease be affected, if any parking is impaired by
moratorium, initiative, referendum, law, ordinance, regulation or order
passed, issued or made by any governmental or quasi-governmental body or by fire
or other casualty.
29. Utilities and Services.
Tenant shall arrange for all telephone, water, gas, electricity and other
power and utilities which it shall require in connection with its use or
occupancy of the Premises and shall pay for the same, together with any taxes,
penalties, surcharges or the like pertaining thereto. Landlord shall have no
obligation to furnish any utilities or services to the Premises or any equipment
providing for the same. Without limitation, Tenant shall be solely responsible
for providing such heating, ventilation and air conditioning ("HVAC") to the
Premises as Tenant shall require for the comfortable occupancy thereof. Any
equipment or systems which Tenant shall require in order to supply HVAC shall be
subject to the provisions of Section 9 above. Tenant shall obtain, at its
expense all electric light bulbs, ballasts and tubes as it shall require for the
Premises. If any of the foregoing utilities or services are not separately
metered to Tenant, Tenant shall pay a reasonable proportion, as determined by
Landlord, of all charges jointly serving the Premises and other premises.
Landlord shall not be liable for any damages directly or indirectly resulting
from nor shall the Base Rent, Operating Expenses or any other monies owed by
Tenant to Landlord under this Lease be abated or reduced by reason of (a) the
installation, use or interruption of use of any equipment used in connection
with the furnishing of any of the foregoing utilities and services, (b) failure
to furnish or delay in furnishing any such utilities or services for any reason
whatsoever, or (c) the limitation, curtailment, rationing or restriction on use
of water, electricity, gas or any other form of energy or any other service or
utility whatsoever serving the Premises or the Real Property. Landlord shall be
entitled to cooperate voluntarily and in a reasonable manner with the efforts of
national, state or local government agencies or utility suppliers in reducing
energy or other resource consumption. The obligation to make services available
hereunder shall be subject to the limitations of any such voluntary, reasonable
program.
30. Intentionally Deleted.
31. Acceptance.
Delivery of this Lease, duly executed by Tenant, constitutes Tenant's offer
to lease the Premises as set forth herein, and under no circumstances shall such
delivery be deemed to create an option or reservation to lease the Premises for
the benefit of Tenant. This Lease shall become effective and binding only upon
execution hereof by Landlord and delivery of a signed copy to Tenant. If
Landlord does not accept the Tenant's offer, any sums delivered by Tenant with
its offer shall be returned to Tenant.
32. Use of Building Name.
Tenant shall not employ the name of the Building in the name or title of
its business or occupation, or for any other purpose, except to identify the
address of the Building, without Landlord's prior written consent, which consent
Landlord may withhold in its sole discretion. Landlord reserves the right to
change the name
22
of the Building without Tenant's consent and without any liability to Tenant.
33. Recording.
Neither Landlord nor Tenant shall record this Lease, nor a short form
memorandum of this Lease, without the prior written consent of the other.
34. Quitclaim.
Upon any termination or expiration of this Lease pursuant to its terms,
Tenant, at Landlord's request, shall execute, have acknowledged and deliver to
Landlord a quitclaim deed of all Tenant's interest in the Premises, Building and
Property created by this Lease.
35. Notices.
Any notice, demand or request required or desired to be given under this
Lease shall be in writing sent to the address of the party specified in this
Lease, and shall be given by hand delivery, electronic mail (e.g., telecopy),
overnight courier service (e.g. Federal Express), or the United States mail,
registered or certified, the postage prepaid. All notices shall be deemed to
have been given when received at the address of the party to which it has been
sent (or when such receipt is refused). As of the date of execution of this
Lease, the addresses of Landlord and Tenant are as specified in the Basic Lease
Information. Either party may change its address by giving notice of the change
in accordance with this Section.
36. Landlord's Exculpation.
The term "Landlord," as used in this Lease, shall mean only the owner or
owners of the Real Property at the time in question. Notwithstanding any other
provision of this Lease, the liability of Landlord for its obligations under
this Lease is limited solely to Landlord's interest in the Real Property as the
same may from time to time be encumbered, and no personal liability shall at
any time be asserted or enforceable against any other assets of Landlord or
against the constituent shareholders, partners or other owners of Landlord, or
the directors, officers, employees and agents of Landlord or such constituent
shareholder, partner or other owner, on account of any of Landlord's obligations
or actions under this Lease. Notwithstanding any other provision of this Lease,
Landlord shall not be liable for any consequential damages or interruption or
loss of business, income or profits, nor shall Landlord be liable for loss of or
damage to artwork, currency, jewelry, bullion, unique or valuable documents,
securities or other valuables, or for other property not in the nature of
ordinary fixtures, furnishings and equipment. Wherever in this Lease Tenant (a)
releases Landlord from any claim or liability, (b) waives or limits any right of
Tenant to assert any claim against Landlord or to seek recourse against any
property of Landlord or (c) agrees to indemnify Landlord against any matters,
the relevant release, waiver, limitation or indemnity shall run in favor of and
apply to Landlord, the constituent shareholders, partners or other owners of
Landlord, and the directors, officers, employees and agents of Landlord and each
such constituent shareholder, partner or other owner. In no event shall any
shareholder, partner, member, officer, director or other constituent of Landlord
or its direct or indirect constituents ever be personally liable for Landlord's
obligations or liability under this Lease.
37. Additional Structures.
Any diminution or interference with light, air or view by any structure
which may be erected on land adjacent to the Building shall in no way alter this
Lease or impose any liability on Landlord.
23
38. Consents and Approvals.
Wherever the consent, approval, judgment or determination of Landlord is
required or permitted under this Lease, except as expressly provided herein
Landlord may exercise its sole discretion in granting or withholding such
consent or approval or in making such judgment or determination. Whenever Tenant
requests Landlord to take any action or give any consent or approval, Tenant
shall reimburse Landlord for all of Landlord's costs incurred in reviewing the
proposed action or consent (whether or not Landlord consents to any such
proposed action), including, without limitation, reasonable attorneys' or
consultants' fees and expenses, within ten (10) days after Landlord's delivery
to Tenant of a statement of such costs. If it is determined that Landlord failed
to give its consent or approval where it was required to do so under this Lease,
Tenant's sole remedy will be an order of specific performance or mandatory
injunction of the Landlord's agreement to give its consent or approval. The
review and/or approval by Landlord of any item shall not impose upon Landlord
any liability for accuracy or sufficiency of any such item or the quality or
suitability of such item for its intended use. Any such review or approval is
for the sole purpose of protecting Landlord's interest in the Real Property, and
neither Tenant nor any Tenant Party nor any person or entity claiming by,
through or under Tenant, nor any other third party shall have any rights
hereunder by virtue of such review and/or approval by Landlord.
39. General.
a. Captions. The captions and headings used in this Lease are for the
purpose of convenience only and shall not be construed to limit or extend the
meaning of any part of this Lease.
b. Time. Time is of the essence for the performance of each term, condition
and covenant of this Lease.
c. Severability. If any provision of this Lease is held to be invalid,
illegal or unenforceable, the invalidity, illegality, or unenforceability shall
not affect any other provision of this Lease, but this Lease shall be construed
as if the invalid, illegal or unenforceable provision had not been contained
herein.
d. Choice of Law; Construction. This Lease shall be construed and enforced
in accordance with the laws of the State of California. The language in all
parts of this Lease shall in all cases be construed as a whole according to its
fair meaning and not strictly for or against either Landlord or Tenant.
e. Gender; Singular, Plural. When the context of this Lease requires, the
neuter gender includes the masculine, the feminine, a partnership or corporation
or joint venture, and the singular includes the plural.
f. Binding Effect. The covenants and agreements contained in this Lease
shall be binding on the parties hereto and, subject to Section 14 above, on
their respective successors and assigns.
g. Waiver. The waiver of Landlord of any breach of any term, condition or
covenant of this Lease shall not be deemed to be a waiver of the provision or
any subsequent breach of the same or any other term, condition or covenant of
this Lease. The subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach at the time of acceptance of the
payment. No covenant, term or condition of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in writing signed by Landlord.
h. Entire Agreement. This Lease is the entire agreement between the
parties, and supersedes all prior agreements, including letters of intent,
between them, and there are no agreements or representations between the parties
except as expressly set forth herein. Except as otherwise provided herein, no
subsequent change or addition to this Lease shall be binding unless in writing
and signed by the parties hereto.
24
i. Waiver of Jury. Tenant hereby waives any right it may have to a jury
trial in the event of litigation between Tenant and Landlord pertaining to this
Lease. Landlord and Tenant agree that this paragraph constitutes a written
consent to waiver of trial by jury within the meaning of Califomia Code of Civil
Procedure Section 631 (a)(2), and Tenant does hereby authorize and empower
Landlord to file this paragraph and or this Lease, as required, with the clerk
or judge of any court of competent jurisdiction as a written consent to waiver
of jury trial.
j. Counterparts. This Lease may be executed in counterparts, each of which
shall be an original, and all of which together shall constitute but one
instrument.
k. Exhibits. The Basic Lease Information and all exhibits attached hereto
are hereby incorporated herein and made an integral part hereof.
l. Addendum. The Addendum, if any, attached hereto is hereby incorporated
herein and made an integral part hereof.
m. Other Leases. Tenant represents and warrants to Landlord that, with the
exception of this Lease, neither Tenant nor any affiliate of Tenant is a tenant
under a lease or any other tenancy agreement (1) with (a) Riggs & Company; a
division of Riggs Bank N.A., as trustee of the Multi-Employer Property Trust,
(b) Riggs Bank N.A., as trustee of the Multi-Employer Property Trust, (c) the
Multi-Employer Property Trust, (d) the National Bank of Washington
Multi-Employer Property Trust, the previous name of the Multi-Employer Property
Trust, (e) The Riggs National Bank of Washington, D.C., as trustee of the
Multi-Employer Property Trust, (f) North-ridge Business Center LLC, (g) the
Corporate Drive Corporation, as trustee of the Corporate Drive Nominee Realty
Trust, (h) Arboretum Lakes-I, L,L.C., a Delaware limited liability company, (i)
Village Green at Seven Bridges, L.L.C., (j) Pine Street Development, L.L.C., (k)
MEPT Realty LLC, a New York limited liability company, (1) MIEPT, L.L.C., a
Delaware limited liability company, (m) Cabrillo Properties LLC, (n) Valencia
LLC, (o) Mission Trails LLC, or (p) Centrepointe Distribution Center LLC, or (2)
involving any property in which any one or more of the entities named in clauses
(1)(a) through (e) are known by Tenant to have an ownership interest.
40. Renewal Option.
a. Tenant shall have the option to renew this Lease for one (1) additional
term of five (5) years, commencing upon expiration of the initial Term. Such
renewal option must be exercised, if at all, by written notice given by Tenant
to Landlord not later than nine (9) months prior to expiration of the initial
Term. Notwithstanding the foregoing, this renewal option shall be null and void
and Tenant shall have no right to renew this Lease if (i) as of the date
immediately preceding the commencement of the renewal period the original Tenant
named under this Lease in the Basic Lease Information is not in occupancy of the
entire Premises then demised hereunder or such Tenant does not intend to
continue to occupy the entire Premises then demised hereunder (but intends to
assign this Lease or sublet the Premises in whole or in part), or (ii) on the
date Tenant exercises such renewal option or on the date immediately preceding
the commencement date of the renewal period Tenant is in default of any of its
obligations under this Lease.
If Tenant exercises such renewal option, then during the renewal period the
Base Rent payable by Tenant shall be the then fair market rent for the Premises
based upon the terms of this Lease, as renewed. For purposes of this Section 40,
the term "fair market rent" shall mean the rental rate for comparable space
under primary lease (and not sublease) to new tenants, taking into consideration
such amenities as existing improvements, view, floor on which the Premises are
situated and the like, situated in comparable first-class office buildings in
comparable business parks in a fifteen (15) mile radius of the Property, taking
into consideration the then-prevailing ordinary rental market practices with
respect to tenant concessions (if any) (e.g. not offering extraordinary rental,
promotional deals and other concessions to tenants which deviate from what is
the then-prevailing ordinary practice in an effort to alleviate cash flow
problems, difficulties
25
in meeting loan obligations or other financial distress, or in response to a
greater than average vacancy rate). Fair market rent shall include the periodic
rental increases, if any, that would be included for space leased for the
renewal period. The fair market rent shall be mutually agreed upon by Landlord
and Tenant in writing within the thirty (30) calendar day period commencing
three (3) months prior to commencement of the renewal period. If Landlord and
Tenant do not agree upon the fair market rent within said thirty (30) day
period, then the fair market rent shall be established by appraisal in
accordance with the procedures set forth in Exhibit F attached hereto.
b. Notwithstanding anything in the foregoing or in Exhibit F to the
contrary, in no event shall the Base Rent during the renewal period be less than
the Base Rent payable by Tenant for the month immediately preceding the
commencement of the renewal period (without regard to any temporary abatement of
rental then in effect pursuant to the provisions of this Lease).
IN WITNESS WHEREOF, the parties have executed this Lease on the dates
set forth below, effective as of the date first above wntten.
Landlord: Tenant:
THE MULTI-EMPLOYER CERTICOM CORP.,
PROPERTY TRUST, A TRUST a Delaware corporation
ORGANIZED UNDER 12 C.F.R.
SECTION 9.18, by its trustee By: /s/ Philip C. Deck
Riggs & Company, a division of --------------------------
Riggs Bank N.A.
Its: Chairman + CEO
--------------------------
By: /s/ Mary Anne Martins By: /s/ B. MacInnis
--------------------------- ---------------------------
Mary Anne Martins
Its: Managing Director Its: Vice President + CFO
-------------------------- --------------------------
26
EXHIBIT A
---------
Mt. Eden Business Park
Hayward, CA
Graphic Omitted
EXHIBIT B
---------
TENANT IMPROVEMENTS
-------------------
1. Tenant Improvements.
a. Plans. Improvements shall be constructed in the Premises in
accordance with this Paragraph 1. On or before October 27, 1998, Tenant shall
furnish to Landlord for Landlord's review and approval (which approval shall not
be unreasonably withheld) detailed layout plans and finish specifications (the
"Space Plans") prepared by an architect approved by Landlord. The Space Plans
shall show all of the improvements which Tenant desires to be constructed in the
Premises, and all such improvements shall comply with all applicable building
codes and other Legal Requirements. The Space Plans shall separately note any
proposed structural work or extraordinary or supplemental electrical, plumbing
or HVAC requirements, and shall contain such detail and specifications as would
permit a general contractor to obtain preliminary estimates of the cost of
performing all work shown thereon. Tenant shall respond promptly to any
reasonable objections of Landlord to the Space Plans and shall resubmit
appropriately revised Space Plans prepared by Tenant's architect within three
(3) Business Days of Tenant's receipt of Landlord's objections. The Space Plans,
as finally approved in writing by Landlord, shall be referred to herein as the
"Final Space Plans." Landlord shall furnsh to Tenant for Tenant's written
approval (which shall not be unreasonably withheld) working plans and
specifications (the "Working Drawings") prepared by Landlord's architect for the
improvements which Tenant desires to be constructed in the Premises. The Working
Drawings shall show improvements that conform to the Final Space Plans (except
to the extent specifically noted therein or in accompanying specifications).
Tenant shall respond to the Working Drawings within three (3) Business Days of
its receipt thereof. Landlord shall respond promptly to any reasonable
objections of Tenant to the Working Drawings and shall resubmit to Tenant for
Tenant's approval (which shall not be unreasonably withheld) appropriately
revised Working Drawings prepared by Landlord's architect. Tenant shall respond
to the revised Working Drawings within three (3) Business Days of its receipt
thereof. If Tenant falls to respond to the Working Drawings or the revised
Working Drawings within the periods described above, Tenant shall be deemed to
have approved the Working Drawings or revised Working Drawings, as applicable.
The Working Drawings, as approved in writing by Landlord and Tenant, as revised
in accordance with the following provisions of this Paragraph 1, are hereinafter
called the "Final Plans", and the improvements to be performed in accordance
with the Final Plans are hereinafter called the "Tenant Improvements". Any delay
in Substantial Completion of the Tenant Improvements or increased cost of the
Tenant Improvements caused directly or indirectly by any revision to the Space
Plans or the Working Drawings requested by Tenant shall constitute a Tenant
Delay under Paragraph 1.e. below.
b. Construction. Upon approval of the Final Plans, Landlord shall
submit the same for pricing to a contractor selected by Landlord ("Landlord's
Contractor"), and thereafter provide Tenant with an estimated budget for the
Tenant Improvements, including Landlord's Construction Operations Fee (as
defined in Paragraph 1.f.iii.B. below). Tenant shall have five (5) Business
Days after the receipt of Landlord's estimated budget to approve or reasonably
disapprove of the same. If Tenant disapproves of the budget within such five (5)
Business Day period, Tenant shall so notify Landlord and the Final Plans shall
promptly be modified by Landlord's architect in order to satisfactorily reduce
the amount of the estimated budget, as requested by Tenant. Any and all
revisions to the Final Plans shall be subject to Landlord's and Tenant's
reasonable approval. Upon Landlord's revision of the Final Plans, Landlord shall
cause Landlord's Contractor to promptly issue new pricing and upon receipt of
such pricing Landlord shall prepare and submit to Tenant a revised estimated
budget. Tenant shall respond to the revised estimated budget in the manner
described above. Any delay in Substantial Completion of the Tenant Improvements
or increased cost of the
1
Tenant Improvements caused directly or indirectly by any revision to the Final
Plans or the estimated budget to address Tenant's disapproval of the estimated
budget shall constitute a Tenant Delay under Paragraph 1.e. below. If Tenant
fails to raise any objections to the budget within the five (5) Business Day
period(s) described above, Tenant shall be deemed to have approved Landlord's
proposed budget. Landlord shall commence construction of the Tenant Improvements
promptly after approval of the Final Plans, and thereafter diligently pursue
such construction to completion (but in no event shall Landlord be required to
pursue a construction schedule which would cause Substantial Completion to occur
prior to January 15, 1999). Landlord shall use reasonable care in preparing the
budget, but it shall be a good faith estimate only and will not limit Tenant's
obligation to pay for its share of the costs of the Tenant Improvements as set
forth below in this Paragraph 1.
c. Changes. In the event that Tenant shall request any change in or to
the Final Plans (a "Change"), Landlord's architect shall prepare for Landlord's
and Tenant's review and written approval a change order with respect to such
Change (the "Change Order"), together with, if appropriate, revised Working
Drawings incorporating the requested Change and clearly identifying the same as
such on the revised Working Drawings. Landlord shall not unreasonably withhold
or delay its approval of the Change Order or revised Working Drawings, provided,
however, that Landlord shall have at least three (3) Business Days after receipt
thereof to review any proposed Change. In the event that Landlord shall approve
any proposed Change, together with such approval, if practicable, and if not
practicable as soon thereafter as is practicable, Landlord shall give Tenant
Landlord's estimated increase or decrease in the cost of the Tenant Improvements
which would result from incorporating such Change and Landlord's estimate of the
delay, if any, in the commencement or completion of the Tenant Improvements
which would result from incorporating such Change. Landlord will use reasonable
care in preparing the estimates, but they shall be good faith estimates only and
will not limit Tenant's obligation to pay for the actual increase in the cost of
the Tenant Improvements or Tenant's responsibility for the actual construction
delay resulting from the Change. Within two (2) Business Days after receipt of
such cost and delay estimates, Tenant shall notify Landlord in writing whether
Tenant approves the Change. If Tenant fails to approve the change within such
two (2) Business Day period, construction of the Tenant Improvements shall
proceed as provided in accordance with the Final Plans as they existed prior to
the requested Change. If, following Tenant's review of the estimated costs and
delays, Tenant desires Landlord to incorporate the Change into the Tenant
Improvements, then Tenant and Landlord shall execute a change order for such
Change on Landlord's standard form therefor, and the term "Final Plans" shall
thereafter be deemed to refer to the Working Drawings as so revised and
approved.
d. Landlord's Work. In addition to construction of the Tenant
Improvements, Landlord shall construct the Building as a watertight shell, with
all utilities brought to the Building, in accordance with plans prepared by
Landlord's architect and previously delivered to Tenant (collectively,
"Landlord's Work"). Landlord's Work shall be performed at Landlord's sole cost
and expense (except for any costs resulting from Tenant Delays, including any
Changes) by such general contractor as Landlord shall determine.
e. Tenant Delays. Tenant shall be responsible for, and shall pay to
Landlord, any and all costs and expenses (including lost rent) incurred by
Landlord in connection with the following, or by reason of any delay in the
commencement or completion of Landlord's Work or the Tenant Improvements or in
Landlord's timely delivery of the Premises caused by the following: (i) the
failure of Tenant to submit the Space Plans or Final Space Plans to Landlord by
the dates or within the time periods set forth in Paragraph l.a. above, or the
failure of the Space Plans or Final Space Plans to meet the applicable
requirements of Paragraph l.a. above, (ii) Tenant's failure to respond to the
Working Drawings within the time period(s) set forth in Paragraph l.a. above,
(iii) any changes in the Space Plans requested by Tenant, or any changes in the
Working Drawings requested by Tenant (including any costs or delays resulting
from proposed changes that are not ultimately
2
made), (iv) any failure by Tenant to promptly respond to inquiries regarding the
construction of the Tenant Improvements or Landlord's Work or to promptly grant
Tenant's approval of materials or finishes for the Tenant Improvements or
Landlord's Work, (v) any failure by Tenant to timely pay any amounts due from
Tenant hereunder (it being acknowledged that if Tenant fails to make or
otherwise delays making such payments, Landlord may stop Landlord's Work rather
than incur costs which Tenant is obligated to fund but has not yet done so and
any delay from such a work stoppage will be a Tenant Delay), (vi) any
interference by Tenant with the construction of the Tenant Improvements or
Landlord's Work, or (vii) any other delay requested or caused by Tenant,
including, without limitation, any delay caused by Tenant's early entry into any
portion of the Premises pursuant to Section 2.d. of the Lease. Each of the
foregoing is referred to herein and in the Lease as a "Tenant Delay".
Landlord shall notify Tenant in writing of any Tenant Delay
(identifying the nature of the Tenant Delay) as soon as reasonably practicable
after Landlord becomes actually aware of such Tenant Delay, together with
Landlord's then good faith estimate of the probable duration of such Tenant
Delay. Without limitation, Landlord will use its good faith efforts to notify
Tenant of "long lead items" as soon as reasonably practicable after actually
being advised of the delay by the suppliers involved, or otherwise actually
becoming aware of the delay. Landlord will suggest alternative products to
alleviate the delay, if possible, and may substitute reasonably equivalent
products as deemed reasonably necessary by Landlord.
f. Cost of Improvements. The cost of the construction and installation
of the Tenant Improvements shall be borne as follows:
1. Landlord shall pay the entire cost of Landlord's Work (as
described in Paragraph 1.d. above), including costs of obtaining
permits for the same.
ii. Landlord's architectural, engineering and other consultant
fees in connection with the design and construction of the Tenant
Improvements, including the costs of producing the Working Drawings and
Final Plans, shall be paid by Tenant upon Landlord's demand, subject to
Tenant's right to use a portion of Landlord's Contribution towards the
amount of such costs as provided below.
iii. Landlord shall contribute toward the cost of the
construction and installation of the Tenant Improvements an amount not
to exceed $857,100.00 (which is the product of $20.00 times the
stipulated number of rentable square feet of the Premises as set forth
in the Basic Lease Information) ("Landlord's Contribution"). The
following provisions shall govern the payment of Landlord's
Contribution:
A. Excess Cost; Share of Costs. If the total cost of
construction of the Tenant Improvements (including the Construction
Operations Fee described below and the City of Hayward Interim
Supplemental Building Construction and Improvement Tax) exceeds the
funds available therefor from Landlord's Contribution, then Tenant
shall pay all such excess (the "Excess Cost"). Based on the estimated
cost (the "Estimated Costs") of the construction of the Tenant
Improvements, the prorata share of the Estimated Costs payable by
Landlord and Tenant shall be determined and an appropriate percentage
share established for each (a "Share of Costs"). Tenant and Landlord
shall fund the cost of such work as the same is performed, in
accordance with their respective Share of Costs for such work. At such
time as Landlord's Contribution has been entirely disbursed, Tenant
shall pay the remaining Excess Cost, if any, which payments shall be
made in installments as
3
construction progresses in the same manner as Tenant's payments of
Tenant's Share of Costs were paid.
B. Construction Operations Fee. Landlord shall retain
from the amount of Landlord's Contribution, in the manner described
below, an aggregate sum equal to four percent (4%) of the total cost of
the construction and installation of the Tenant Improvements (which
cost of the construction and installation shall include architectural
and engineering fees but shall not include permit fees) (the
"Construction Operations Fee") as compensation to Landlord for review
of plans, specifications and budgets, coordinating the schedule for
construction of the Tenant Improvements, and for other miscellaneous
costs incurred by Landlord as a result of the construction work. At the
time Landlord makes any disbursement of Landlord's Contribution,
Landlord shall retain from Landlord's Contribution, as a partial
payment of the Construction Operations Fee, a proportionate amount of
the Construction Operations Fee based upon Landlord's reasonable
estimate of the amount required to be withheld from such disbursement
in order to ensure that the entire Construction Operations Fee is
retained over the course of construction on a prorata basis. At such
time as Landlord's Contribution has been entirely disbursed, if the
entire Construction Operations Fee has not yet been paid to Landlord,
Tenant shall pay to Landlord a prorata portion of each payment made by
Tenant on account of the Tenant Improvements in order to ensure that
the balance of the Construction Operations Fee is paid to Landlord over
the course of construction on a prorata basis.
C. Certain Costs. Portions of Landlord's Contribution
may, at Tenant's election, be applied toward Tenant's architectural
fees in connection with the production of the Space Plans and Final
Space Plans, and Landlord's architectural, engineering and other
consultant fees in connection with the design and construction of the
Tenant Improvements, including the costs of producing the Working
Drawings and Final Plans; provided, however, that the portion of
Landlord's Contribution applied to such fees may not exceed One Dollar
($1.00) per rentable square foot of the Premises and any excess shall
be paid directly by Tenant to Landlord from Tenant's own funds. In no
event may any portions of Landlord's Contribution be applied towards
the costs of Tenants engineering fees (if any), trade fixtures,
personal property, equipment or furniture, or towards rent due under
this Lease.
D. Entire Premises to be Improved. Tenant
acknowledges that Landlord's Contribution is to be applied to the
Tenant Improvements (and the costs permitted under Paragraph
1 .f.iii.C. above) covering the entire Premises. If Tenant does not
improve the entire Premises, then, without limitation of any other
rights or remedies of Landlord hereunder, Landlord's Contribution shall
be adjusted on a prorata per rentable square foot basis to reflect the
number of rentable square feet actually being improved.
E. Provisions Applicable to Phases. Landlord and
Tenant acknowledge that the Premises may be improved by Tenant in two
phases based on Tenant's anticipated occupancy schedule for the
Premises. Accordingly, the foregoing provisions shall apply separately
as to each phase of the Premises, and where the foregoing provisions
refer to the "Premises", such reference shall be deemed a reference to
the applicable phase of the Premises.
iv. Improvement Advance. Notwithstanding the foregoing
provisions, if the cost of the Tenant Improvements shall exceed
Landlord's Contribution, upon Tenant's request Landlord shall advance
to Tenant the Excess Cost, up to a total
4
advance of $299,985.00 (which is $7.00 per rentable square foot of the
Premises). The amount of the total Excess Cost advanced by Landlord
(the "Improvement Advance") shall be repaid by Tenant, together with
interest on amounts thereof from time to time unpaid at the rate of
eleven percent (11%) per annum, in equal monthly installments of
principal and interest, as additional rent hereunder, payable with the
monthly Basic Rent. Such installments shall be in such amount as will
fully amortize the amount of the Improvement Advance, together with
such interest, over the initial Term. Upon the determination of the
amount of the Improvement Advance, Landlord and Tenant shall promptly
execute a written memorandum of the amount of such installments.
Notwithstanding anything in the foregoing to the contrary, in the event
this Lease is terminated prior to the originally scheduled Expiration
Date, for any reason whatsoever, the then-outstanding balance of
Improvement Advance, together with accrued and unpaid interest thereon,
but without any prepayment penalty, shall become immediately due and
payable in full by Tenant.
5
EXHIBIT C
---------
COMMENCEMENT DATE MEMORANDUM
----------------------------
LANDLORD: __________________________
__________________________
TENANT: __________________________
__________________________
LEASE DATE: __________________________
PREMISES: __________________________
__________________________
__________________________
Pursuant to Section 2.d. of the above-referenced Lease, the Commencement Date
hereby is established as ___________________, and the Expiration Date hereby is
established as ___________________.
LANDLORD:
__________________________
a ________________________
By _______________________
Its ___________________
TENANT:
__________________________
a ________________________
By _______________________
Its ___________________
EXHIBIT D
---------
RULES AND REGULATIONS
---------------------
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building without the
prior written consent of Landlord. Landlord shall have the right to remove, at
Tenant's expense and without notice, any sign installed or displayed in
violation of this rule. All approved signs or lettering on doors, windows and
walls shall be printed, painted, affixed or inscribed at the expense of Tenant
by a person chosen by Landlord, using materials of Landlord's choice and in a
style and format approved by Landlord.
2. The directory of the Building will be provided exclusively for the display of
the name and location of tenants, and Landlord reserves the right to exclude any
other names therefrom. Tenant shall pay Landlord's standard charge for Tenant's
listing thereon and for any changes by Tenant.
3. Except as consented to in writing by Landlord or in accordance with Building
standard improvements, 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. No awning shall be permitted on any part of the
Premises. Tenant shall not place anything against or near glass partitions or
doors or windows which may appear unsightly from outside the Premises.
4. Tenant shall not obstruct any sidewalks, halls, lobbies, passages, exits,
entrances, elevators or stairways of the Building. No tenant and no employee or
invitee of any tenant shall go upon the roof of the Building or make any roof or
terrace penetrations. Tenant shall not allow anything to be placed on the
outside terraces or balconies without the prior written consent of Landlord.
5. No Tenant shall invite to the Premises, or permit the visit of, persons in
such numbers or under such conditions as to interfere with the use and enjoyment
of the Common Areas of the Building by other tenants.
6. Intentionally Deleted.
7. Landlord will furnish Tenant, free of charge, two (2) keys to Tenant's suite
entrance. Landlord may make a reasonable charge for any additional keys and for
having any locks changed. Tenant shall not make or have made additional keys
without Landlord's prior written consent, and Tenant shall not alter any lock or
install a new additional lock or bolt on any door of its Premises without
Landlord's prior written consent. Tenant shall deliver to Landlord, upon the
termination of its tenancy, the keys to all locks for doors on the Premises. If
Tenant loses any keys furnished by Landlord, Tenant shall pay Landlord the cost
of rekeying the Premises.
Landlord will furnish Tenant, free of charge, two (2) building access
cards. A reasonable charge will be assessed for any additional cards and lost or
stolen cards. Tenant shall deliver to Landlord, upon the termination of its
tenancy, all access cards.
8. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions for
their installation.
9. Intentionally Deleted.
10. Tenant shall not place a load upon any floor of the Premises which exceeds
the maximum load per square foot which the floor was designed to carry and which
is allowed by law. Tenant's business machines and mechanical equipment which
cause noise or vibration which may be transmitted to the structure of the
Building or to any space therein, and which is objectionable to Landlord or to
any tenants in the Building, shall be placed and maintained by Tenant, at
Tenant's expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration.
11. Tenant shall not use or keep in the Premises any toxic or hazardous
materials or any kerosene, gasoline or inflammable or combustible fluid or
material other than those limited quantities necessary for the operation or
maintenance of office equipment. Tenant shall not use or permit to be used in
the Premises any foul or noxious gas or substance, or permit or allow 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. No animal, except seeing eye dogs when in the company of their
masters, may be brought into or kept in the Building.
12. Tenant shall not use any method of heating or air-conditioning other than
that supplied by Landlord, unless Tenant receives the prior written consent of
Landlord.
13. Tenant shall cooperate fully with Landlord to assure the most effective
operation of the Building's heating and air-conditioning and to comply with any
governmental energy-saving rules, laws or regulations of which Tenant has actual
notice. Tenant shall refrain from attempting to adjust controls other than room
thermostats installed for Tenant's use.
14. All entrance doors to the Premises shall be left locked when the Premises
are not in use, and all doors opening to public corridors shall be kept closed
except for normal ingress and egress to and from the Premises.
15. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
16. Landlord reserves the right to prevent access to the Building by closing the
doors or by other appropriate action in case of invasion, mob, riot, public
excitement or other commotion.
17. Tenant shall close and lock the doors of its Premises, shut off all water
faucets or other water apparatus and turn off all lights and other equipment
which is not required to be continuously run. Tenant shall be responsible for
any damage or injuries sustained by other tenants or occupants of the Building
or Landlord for noncompliance with this Rule.
18. 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 placed therein. The expense of
any breakage, stoppage or damage resulting from any violation of this rule shall
be borne by the tenant who, or whose employees or invitees, shall have caused
it.
19. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building, except as part of
Alterations approved by Landlord pursuant to Section 9 of the Lease. Tenant
shall not interfere with radio or television broadcasting or reception from or
in the Building or elsewhere.
20. Intentionally Deleted.
21. Tenant shall not install, maintain or operate upon the Premises any vending
machine (other than vending machines for use by Tenant's employees) without the
prior written consent of Landlord.
22. Canvassing, soliciting and distributing handbills or any other written
material and peddling in the Building are prohibited, and each tenant shall
cooperate to prevent these activities.
23. Landlord reserves the right to exclude or expel from the Building any person
who, in Landlord's
judgment, is intoxicated or under the influence of liquor or drugs, or who is in
violation of any of the Rules and Regulations of the Building.
24. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage disposal
within the Building. All garbage and refuse disposal shall be made in accordance
with directions issued from time to time by Landlord.
25. Use by Tenant of Underwriters' Laboratory approved equipment for brewing
coffee, tea, hot chocolate and similar beverages and microwaving food shall be
permitted, provided that the equipment and use is in accordance with all
applicable federal, state, county and city laws, codes, ordinances, rules and
regulations.
26. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant, except as Tenant's address,
without the written consent of Landlord.
27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
Tenant shall be responsible for any increased insurance premiums attributable to
Tenant's use of the Premises, Building or Property.
28. Tenant assumes any and all responsibility for protecting its Premises from
theft and robbery, which responsibility includes keeping doors locked and other
means of entry to the Premises closed.
29. Tenant shall not use the Premises, or suffer or permit anything to be done
on, in or about the Premises, which may result in an increase to Landlord in the
cost of insurance maintained by Landlord on the Building and Common Areas.
30. Tenant's requests for assistance will be attended to only upon appropriate
application to the office of the Building by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord, and no employee of
Landlord will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.
31. Tenant shall not park its vehicles in any parking areas designated by
Landlord as areas for parking by visitors to the Building or other reserved
parking spaces. Tenant shall not leave vehicles in the Building parking areas
overnight, nor park any vehicles in the Building parking areas other than
automobiles, motorcycles, motor driven or non-motor driven bicycles or
four-wheeled trucks. Tenant, its agents, employees and invitees shall not park
any one (1) vehicle in more than one (1) parking space.
32. The scheduling and manner of all Tenant move-ins and move-outs shall be
subject to the discretion and approval of Landlord, and move-ins and move-outs
shall take place only after 6:00 p.m. on weekdays, on weekends, or at other
times as Landlord may designate. Landlord shall have the right to approve or
disapprove the movers or moving company employed by Tenant, and Tenant shall
cause the movers to use only the entry doors and elevators designated by
Landlord. If Tenant's movers damage the elevator or any other part of the
Property, Tenant shall pay to Landlord the amount required to repair the damage.
33. No cooking shall be permitted on the Premises, except with a microwave oven
or using facilities constructed as Alterations approved by Landlord pursuant to
Section 9 of the Lease, nor shall the Premises be used for washing clothes, for
lodging or for any improper, objectionable or immoral purpose.
34. Tenant shall not use in any space or in the public halls of the Building,
any hand trucks except those equipped with rubber tires and side guards or such
other material-handling equipment as Landlord may approve. Tenant shall not
bring any bicycles or other vehicles of any kind into the building.
35. Landlord shall have the right to control and operate the public portions of
the Building, and the public facilities, heating and air conditioning, as well
as facilities furnished for the common use of the tenants, in such manner as it
deems best for the benefit of the tenants generally.
36. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no waiver by Landlord shall be
construed as a waiver of the Rules and Regulations in favor of Tenant or any
other tenant, nor prevent Landlord from thereafter enforcing the Rules and
Regulations against any or all of the tenants of the Building.
37. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of premises in the Building.
38. Landlord reserves the right to make other reasonable Rules and Regulations
as, in its judgment, may from time to time be needed for safety and security,
for care and cleanliness of the Building and for the preservation of good order
therein. Tenant agrees to abide by all Rules and Regulations hereinabove stated
and any additional rules and regulations which are adopted.
39. Tenant shall be responsible for the observance of all of the foregoing rules
by Tenant's employees, agents, clients, customers, invitees and guests.
EXHIBIT E
TO DEVELOPMENT SERVICES AGREEMENT
Tenant Estoppel Certificate
---------------------------
TO: The Multi-Employer Property Trust, a trust organized under 12 C.F.R.
Section 9.18 ("Landlord")
c/o Kennedy Associates Real Estate Counsel, Inc.
2400 Financial Center Building
1215 Fourth Avenue
Seattle, Washington 98161
THIS IS TO CERTIFY:
1. That the undersigned is the Tenant under that certain Lease dated
_________________ and, if applicable, amended on ___________________, by and
between The Multi-Employer Property Trust by its trustee Riggs & Company, a
division of Riggs Bank N.A. ("Landlord"), and the undersigned ("Tenant")
covering those certain premises located as shown on the drawing made part of the
Lease (the "Premises").
2. That said Lease is in full force and effect and, except as noted in
paragraph 1 above, has not been modified, changed, altered or amended in any
respect, and is the only lease or agreement between the Tenant and the Landlord
affecting the Premises.
3. To the best of Tenant's knowledge, the information set forth below
is true and correct:
3.1 Square footage of the Premises:________________________________
3.2 Annual rent as of the commencement of Lease:$___________________
3.3 Current annual rent (if different than at commencement): $______
3.4 Commencement date of Lease:_____________________________________
3.5 Lease termination date:_________________________________________
3.6 Rent paid to and including:_____________________________________
3.7 Security deposit: ___________________________________________
3.8 Prepaid rent for and in amount of:$_____________________________
3.9 Free Rent Period:_________________________ to __________________
3.10 Amount of current monthly escrow payment obligations with
respect to taxes, insurance, and Common Area Maintenance
charges under the Lease:
Taxes: $_____________
Insurance: $_____________
Common Area Maintenance Charges: $_____________
3.11 Dates through which Tenant has paid monthly escrow payments and
Common Area Maintenance charges:
Escrow Payment for Taxes: $_____________
Escrow Payment for Insurance: $_____________
Common Area Maintenance charge: $_____________
3.12 Base Amounts (stops) established in leases for monthly escrow
payments:
Base Amount Taxes: $_____________
Base Amount Insurance: $_____________
Base Amount Maintenance Charge: $_____________
4. Tenant now occupies the Premises, accepts the Premises in their
current condition subject only to those punch list items listed in Exhibit A, if
any, and is not aware of any defect in the Premises except as described in
Exhibit A, if any.
5. No rent has been paid in the current month other than as disclosed
in paragraph 3. No free rent or other concessions, benefits, or inducements
other than as specified in the Lease have been granted to Tenant or undertaken
by the Landlord.
6. Tenant has not been granted any renewal, expansion or purchase
options and has not been granted any rights of first refusal except as disclosed
in writing in the Lease.
7. Neither Tenant nor to the best of Tenant's knowledge, Landlord is in
breach of the Lease and there has not occurred any event, act, omission or
condition which by notice or lapse of time or both or otherwise, will result in
any breach by Tenant or to the best of Tenant's knowledge, by Landlord. As of
the date hereof, and except as set forth in the Lease, the undersigned is
entitled to no credit, offset or deduction in rent. Tenant knows of no
liabilities or obligations of Landlord which have accrued but are unsatisfied
under the Lease as of the date of this Certificate.
8. To the best of Tenant's knowledge, there are no actions, whether
voluntary or otherwise, pending against the undersigned under the bankruptcy
laws or other laws for the relief of debtors of the United States or any state
thereof.
9. With the exception of this Lease, neither the Tenant nor any
affiliate of the Tenant is a tenant under a lease or any other tenancy
arrangement (1) with (a) Riggs & Company, a division of Riggs Bank N.A., as
trustee of the Multi-Employer Property Trust; (b) Riggs Bank N.A., as trustee of
the Multi-Employer Property Trust, (c) the Multi-Employer Property Trust; (d)
the National Bank of Washington Multi-Employer Property Trust, the previous name
of the Multi-Employer Property Trust; (e) The Riggs National Bank of Washington,
D.C., as trustee of the Multi-Employer Property Trust; (f) the Corporate Drive
Corporation as trustee of the Corporate Drive Nominee Realty Trust; (g)
-2-
Arboretum Lakes-I, L.L.C., a Delaware limited liability company; (h) Village
Green at Seven Bridges, L.L.C.; (i) Pine Street Development, L.L.C.; (j) MEPT
Realty L.L.C.; (k) MEPT, L.L.C.; (l) Cabrillo Properties LLC; (m) Valencia LLC;
(n) Centrepointe Distribution Center LLC; (o) Mission Trails LLC; or (p)
Northridge Business Center LLC; or (2) involving any property in which any one
or more of the entities named in clauses (1) (a) through (e) are known by the
Tenant to have an ownership interest. [This paragraph will be updated from time
to time.]
DATED this ___ day of ______________, 19__.
TENANT:
___________________________________
a _________________________________
By:________________________________
Name: _______________________
Its: ________________________
-3-
EXHIBIT A to Tenant Estoppel Certificate
List of Defects
---------------
-4-
CONTINUING GUARANTY OF LEASE
This Continuing Guaranty of Lease, dated as of October 30, 1998, is
executed by Certicom Corp., an Ontario corporation ("Guarantor"), in favor of
The Multi-Employer Property Trust, a trust organized under 12 C.F.R. Section
9.18 ("Landlord").
RECITAL
As a condition to Landlord's entering into that certain lease dated on
or about the date hereof (as the same may be amended or otherwise modified from
time to time, the "Lease"), between Landlord and Certicom Corp., a Delaware
corporation, as tenant ("Tenant," which term shall include its successors and
assigns), for premises (the "Premises") in the building known as 25801
Industrial Blvd., Hayward, California, in the business park known as Mt. Eden
Business Park, Landlord is requiring Guarantor to guarantee Tenant's obligations
under the Lease. Guarantor will derive substantial benefit from the Lease by
virtue of Tenant being a wholly owned subsidiary of Guarantors.
NOW, THEREFORE, as a material inducement to Landlord's agreement to
enter into the Lease, Guarantor agrees as follows:
1. Guaranty. Guarantor hereby irrevocably and unconditionally
guarantees to Landlord the prompt, full and complete performance of all of the
obligations of Tenant under the Lease as and when due. If Tenant at any time
fails to make any payment under the Lease when due or fails to perform or comply
with any covenant, condition or term of the Lease, Guarantor will, upon written
notice from Landlord and without further demand, pay, perform or comply with the
same in the same manner and to the same extent as is required of Tenant.
2. Covenants and Acknowledgments.
(a) Guarantor agrees that, regardless of whether Landlord
gives notice thereof or obtains the consent of Guarantor thereto, Guarantor's
liability hereunder shall not be released, extinguished or otherwise reduced in
any way by reason of:
(i) Any amendment, modification, renewal, extension,
substitution or replacement of the Lease or any of the guaranteed
obligations, in whole or in part;
(ii) Any acceptance, enforcement or release by
Landlord of any security for the Lease or any of the guaranteed
obligations, any addition, substitution or release of any guarantor, or
any enforcement, waiver, surrender, impairment, release, compromise or
settlement of any matter with respect to the Lease or any of the
guaranteed obligations or any security therefor;
(iii) Any assignment of this Guaranty in whole or in
part by Landlord, or any assignment or transfer of the Lease by
Landlord or Tenant, or any sublease by Tenant of the Premises;
(iv) The invalidity or unenforceability of any
provision of the Lease or any of the guaranteed obligations; or
(v) Any failure, omission or delay of Landlord in
enforcing the Lease, any of the guaranteed obligations, or this
Guaranty, any refund of payments received by Landlord with respect to
any of the guaranteed obligations, or any other action which
1
Landlord may take or omit to take in connection with the Lease, any of
the guaranteed obligations, or this Guaranty.
(b) Landlord has no duty to disclose to Guarantor any
information it receives regarding the financial status of Tenant, whether or not
such information indicates that the risk of Guarantor under this Guaranty has
been or may be increased. Guarantor assumes full responsibility for being and
keeping informed of Tenant's financial condition, Tenant's performance under the
Lease, and Tenant's use and operation of the Premises.
(c) Guarantor hereby subordinates all its claims for payment
or liens securing indebtedness of Tenant to Guarantor, if any, to Landlord's
right to receive payment from Tenant of all sums due under the Lease.
(d) The obligations of Guarantor under this Guaranty are
primary and are independent of the obligations of Tenant, and Landlord may
directly enforce its rights under this Guaranty without proceeding against or
joining Tenant or any other person or entity, or applying or enforcing any
security for the Lease.
(e) Guarantor's obligations hereunder shall not be affected by
any bankruptcy, insolvency, or reorganization of Tenant, by any disaffirmance or
abandonment by a trustee of Tenant, or any termination, rejection, modification
of the Lease or any of the guaranteed obligations in connection with the
bankruptcy, insolvency or reorganization of Tenant. If any payments made to
Landlord by Tenant or any other guarantor of the Lease are deemed to be a
fraudulent, preferential or voidable transfer, then Guarantor's liability
hereunder shall automatically be revived, reinstated and restored as to the
amount of any such transfer plus all costs and expenses (including court costs
and attorneys' fees) of Landlord related thereto.
3. Waivers. Guarantor waives (a) any right to the benefit of, or to
direct the application of, any security held by Landlord, (b) any right to
require Landlord to proceed against Tenant or any other person or entity for
enforcement of the Lease or the guaranteed obligations, (c) any defense arising
out of any alteration of the Lease or the guaranteed obligations, (d) any right
of subrogation to any rights of Landlord, and any right of reimbursement,
indemnity or contribution against any person or entity with direct or contingent
liability for any of the guaranteed obligations, (e) any defense to Landlord's
recovery of any deficiency after Landlord has exercised any right or remedy,
even if such exercise results in any impairment of Guarantor's rights of
reimbursement or subrogation or any other rights of Guarantor against Tenant,
(f) any defense arising out of the absence, impairment or loss of any right of
reimbursement or subrogation or other right or remedy of Guarantor against
Tenant or any security held by Landlord, (g) any defense arising by reason of
any legal disability or other defense of Tenant to the enforcement of this
Guaranty, or the cessation or reduction of the liability of Tenant from any
cause whatsoever other than full payment, performance and discharge of the
obligations under the Lease, (h) notice of acceptance of this Guaranty, (i)
notice of Tenant's default in the payment or performance of any of the
guaranteed obligations, and (j) presentment, demand, protest and notice of any
other kind.
4. Miscellaneous.
(a) This Guaranty shall inure to the benefit of any person or
entity who at any time may be entitled to the benefits of, or obligated to
perform the duties of, Landlord under the Lease, and shall be binding upon the
heirs, administrators, successors and assigns of Guarantor.
(b) Guarantor agrees to pay on demand all costs and expenses,
including court costs and attorneys' fees, incurred or paid by Landlord in
enforcing this Guaranty or collecting any sums due hereunder, together with
interest on all such amounts at the maximum interest rate allowed by law.
2
(c) This Guaranty may not be changed orally, and no obligation
of Guarantor can be released or waived except by a writing signed by Landlord.
(d) If any term or provision of this Guaranty is ever
determined to be illegal or unenforceable, all other terms and provisions of
this Guaranty shall remain effective and enforceable to the fullest extent
permitted by law.
(e) This Guaranty and the rights and obligations of Guarantor
and Landlord under this Guaranty shall be governed by and construed in
accordance with the laws of the State of California, and the venue of any action
or proceeding under this Guaranty shall be the City and County of San Francisco,
California. Guarantor hereby submits to personal jurisdiction in the State of
California for the enforcement of this Guaranty, waives any and all personal
rights under the laws of the State of California to object to jurisdiction
within that state for the purposes of any action or proceeding to enforce this
Guaranty, and agrees that service of process may be made, and personal
jurisdiction over Guarantor obtained, by service of process upon Guarantor at
the address set forth below or by any other means of obtaining personal
jurisdiction and perfecting service of process as now or hereafter provided by
the laws of the State of California.
(f) IF ANY ACTION OR PROCEEDING BETWEEN LANDLORD AND GUARANTOR
TO ENFORCE THE PROVISIONS OF THIS GUARANTY PROCEEDS TO TRIAL, LANDLORD AND
GUARANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY IN SUCH TRIAL. Landlord
and Guarantor agree that this paragraph constitutes a written consent to waiver
of trial by jury within the meaning of California Code of Civil Procedure
Section 631(a)(2), and Guarantor does hereby authorize and empower Landlord to
file this paragraph and or Guaranty, as required, with the clerk or judge of any
court of competent jurisdiction as a written consent to waiver of jury trial.
(g) Any notices to be sent by either party hereto to the other
party shall be in writing and delivered personally, sent by reputable overnight
or same-day courier, or sent by United States certified or registered mail,
postage prepaid, and addressed, if the notice is from Guarantor to Landlord, to
Landlord, c/o Simeon Commercial Properties, 655 Montgomery Street; Suite 1190,
San Francisco, California 94111, and if the notice is from Landlord to
Guarantor, to Guarantor at Certicom Corp., 200 Matheson Blvd. W, Mississauga,
Ontario, Canada L5R 3L7. Either party may change the address to which notice to
such party shall be sent hereunder by providing the other party with notice of
such address in accordance with the provisions of this paragraph.
(h) If this Guaranty is signed by more than one party, the
term "Guarantor" shall mean each of the parties signing as Guarantor, and each
obligation under this Guaranty shall be their joint and several obligation.
IN WITNESS WHEREOF, this Guaranty has been executed by Guarantor,
effective as of the date first set forth above.
Guarantor
CERTICOM CORP., an Ontario corporation
By: /s/ B. MacInnis
--------------------------
Name: /s/ Bruce MacInnis
----------------------
Title: Vice President + CFO
---------------------
3
SIMEON
[GRAPHIC OMITTED]
655 Montgomery Street
Suite 1190
San Francisco, CA
94111-2630
ph: 415/986-2002
fax: 415/986-2130
May 21, 1999
Mr. Bruce MacInnis
Certicom Corp.
200 Matheson Blvd., West, Suite 103
Mississauga, Onatrio - CANADA
RE: Mt. Eden Business Park-Operating Expenses
Dear Bruce:
In accordance with Paragraph 5 of your lease dated October 30, 1998 enclosed
please find Invoice #05-09 which represents the 1999 Estimated Operating
Expenses for your offices at the above referenced property, effective March 1,
1999.
The total due June 1, 1999 is outlined below:
Invoice #05-09 $21,536.00
Base Rent $53,568.75
Monthly Operating Expenses $ 7,718.67
----------
Total Due June 1, 1999 $82,823.42
The revised monthly rent due July 1, 1999 and each month thereafter shall be:
Base Rent $53,568.75
Monthly Operating Expenses $ 7,718.67
----------
Total $61,287.42
Please remit all payments to the address below:
Riggs Bank - MEPT
Mt. Eden Business Park
Dept. 05899-05
P.O. Box 39000
San Francisco CA 94139-5899
Please feel free to contact me if you have any questions. Thank you for your
patience in receiving this document.
Sincerely,
SIMEON Commercial Properties
/s/ Barbara Mondani
Barbara Mondani
Property Manager
Enclosures
cc: Starla Ackley
A Family
of Real Estate
Companies
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "Amendment"), is made as
of the 17th day of November, 1998, by and between THE MULTI-EMPLOYER PROPERTY
TRUST, A TRUST ORGANIZED UNDER 12 C.F.R. SECTION 9.18 ("Landlord"), and CERTICOM
CORP., a Delaware corporation ("Tenant").
WHEREAS, Landlord and Tenant entered into that certain lease
dated October 30, 1998 (the "Lease"), with respect to certain premises (the
"Premises") located at 25801 Industrial Blvd. in the Mt. Eden Business Park in
Hayward, California;
WHEREAS, the lease incorrectly sets forth the agreement of
Landlord and Tenant regarding Base Rent adjustments, and the parties desire to
amend the Lease to correct such error. Unless otherwise defined herein,
capitalized terms are used herein as defined in the Lease.
NOW, THEREFORE, the parties hereto do hereby agree as
follows:
1. Base Rent Adjustment. Section 4.b. of the Lease is hereby
amended to read in its entirety as follows:
"b. Base Rent Adjustment. Commencing on the first day of the 37th full calendar
month of the Term, the Base Rent shall increase to $58,536.00 per month, and
shall be payable in such amount through the end of the 72nd full calendar month
of the Term. Commencing on the first day of the 73rd full calendar month of the
Term, the Base Rent shall increase to $63,964.00 per month, and shall be payable
in such amount through the Expiration Date."
2. Ratification. Except as amended hereby, the Lease remains
unmodified and in full force and effect.
3. Entire Understanding. This Amendment represents the entire
understanding between of the parties concerning the subject matter hereof, and
there are no understandings or agreements between them relating to the Lease or
the leased premises not set forth in writing and signed by the parties hereto.
No party hereto has relied upon any representation, warranty or understanding
not set forth herein, either oral or written, as an inducement to enter into
this Amendment.
4. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first above written.
Landlord: Tenant:
THE MULTI-EMPLOYER CERTICOM CORP.,
PROPERTY TRUST, A TRUST a Delaware corporation
ORGANIZED UNDER 12 C.F.R.
SECTION 9.18, by its trustee
Riggs & Company, a division of By: /s/ Philip C. Deck
Riggs Bank N.A. -------------------------
Its: Chairman & CEO
-------------------------
By: Illegible By: /s/ Bruce MacInnis
------------------------- -------------------------
Its: Illegible Its: VP Finance & CFO
------------------------- -------------------------
The undersigned, as Guarantor of the Lease pursuant to that
certain Continuing Guaranty of Lease dated as of October 30, 1998 (the
"Guaranty"), hereby consents to the foregoing Amendment and agrees that the
Guaranty shall remain in full force and effect and shall apply to the foregoing
Amendment and to the Lease as amended thereby.
Guarantor
CERTICOM CORP., an Ontario
corporation
By: /s/ Bruce MacInnis
--------------------------
Name: Bruce MacInnis
------------------------
Title: VP Finance & CFO
-----------------------
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SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (this "Amendment"), is made as
of the 15 day of March, 2000, by and between THE MULTI-EMPLOYER PROPERTY TRUST,
A TRUST ORGANIZED UNDER 12 C.F.R. SECTION 9.18 ("Landlord"), and CERTICOM CORP.,
a Delaware corporation ("Tenant").
WHEREAS, Landlord and Tenant entered into that certain lease
dated October 30, 1998, as amended by First Amendment to Lease dated as of
November 17, 1998 (as so amended, the "Lease"), with respect to certain premises
(the "Original Premises") located at 25801 Industrial Blvd. in the Mt. Eden
Business Park in Hayward, California (the "Business Park");
WHEREAS, the parties desire to amend the Lease to add
additional space in the Business Park to the premises demised thereunder and to
make certain changes to the Lease in connection therewith. Unless otherwise
defined herein, capitalized terms are used herein as defined in the Lease.
NOW, THEREFORE, the parties hereto do hereby agree as
follows:
1. Additional Premises.
a. Effective as of April 1, 2000 (the "Additional Premises
Commencement Date"), the Additional Premises shall be added to the premises
demised to Tenant under the Lease. The term of the Lease, as applicable to the
Additional Premises, shall expire on the date (the "Additional Premises
Expiration Date") that is seven (7) years from the Additional Premises Rent
Commencement Date (as defined in Paragraph 3 below). The "Additional Premises"
shall mean that portion of the building known as 25821 Industrial Boulevard,
located in the Business Park, as shown on Exhibit A attached hereto. The parties
hereby stipulate that for all purposes of this Amendment and the Lease, the
Additional Premises consist of 68,182 rentable square feet. From and after the
Additional Premises Commencement Date, the term "Premises" used in the Lease
shall be deemed to refer to the Original Premises and the Additional Premises,
and all of the terms, covenants and conditions of the Lease applicable to the
Original Premises shall be applicable to the Additional Premises, except as
hereinafter set forth or to the extent in conflict with the provisions of this
Amendment.
b. The Additional Premises shall be delivered to Tenant in
their then "as-is" condition, and Landlord shall not have any obligation to make
or, except as provided in Paragraph 2 below, pay for any alterations, additions
or improvements to prepare the Additional Premises for Tenant's occupancy.
c. If, for any reason, Landlord cannot deliver possession of
the Additional Premises to Tenant on the Additional Premises Commencement Date,
(i) Tenant's obligations hereunder with respect to the Additional Premises shall
not commence, and the Additional Premises Commencement Date shall not be deemed
to have occurred, until possession of the Additional Premises is delivered to
Tenant, (ii) the failure shall not affect the validity of this Amendment or the
Lease, or, except as provided in clause (i), the obligations of Tenant
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hereunder or under the Lease, (ii) such failure shall not serve to extend the
Additional Premises Expiration Date, and (iii) Landlord shall not be subject to
any liability.
2. Tenant Improvements. Any alterations, additions or
improvements which Tenant desires to make to the Additional Premises to prepare
the same for Tenant's initial occupancy (the "Tenant Improvements") shall be
performed in accordance with, and be subject to all provisions of, Section 9 of
the Lease. Landlord shall contribute toward the cost of the construction of the
Tenant Improvements an amount not to exceed $681,820.00 (which is the product of
$10.00 times the stipulated number of rentable square feet of the Additional
Premises) ("Landlord's Contribution"). The following provisions shall govern the
payment of Landlord's Contribution:
A. Excess Cost: Share of Costs. If the total cost of
construction of the Tenant Improvements (including the Alteration Fee described
in Section 9 of the Lease and the City of Hayward Interim Supplemental Building
Construction and Improvement Tax) exceeds the funds available therefor from
Landlord's Contribution, then Tenant shall pay all such excess (the "Excess
Cost"). Based on the estimated cost (the "Estimated Costs") of the construction
of the Tenant Improvements, the prorata share of the Estimated Costs payable by
Landlord and Tenant shall be determined and an appropriate percentage share
established for each (a "Share of Costs"). Tenant and Landlord shall fund the
cost of such work as the same is performed, in accordance with their respective
Share of Costs for such work. At such time as Landlord's Contribution has been
entirely disbursed, Tenant shall pay the remaming Excess Cost, if any, which
payments shall be made in installments as construction progresses in the same
manner as Tenant's payments of Tenant's Share of Costs were paid. At the time
Landlord makes any disbursement of Landlord's Contribution, Landlord shall
retain from Landlord's Contribution, as a partial payment of the Alteration Fee,
a proportionate amount of the Alteration Fee based upon Landlord's reasonable
estimate of the amount required to be withheld from such disbursement in order
to ensure that the entire Alteration Fee is retained over the course of
construction on a prorata basis. At such time as Landlord's Contribution has
been entirely disbursed, if the entire Alteration Fee has not yet been paid to
Landlord, Tenant shall pay to Landlord a prorata portion of each payment made by
Tenant on account of the Tenant Improvements in order to ensure that the balance
of the Alteration Fee is paid to Landlord over the course of construction on a
prorata basis. Notwithstanding anything to the contrary in this Paragraph 2,
Landlord's Contribution shall be available for disbursement pursuant to the
terms hereof only during the calendar year 2000. Accordingly, if any portion of
Landlord's Contribution is not utilized prior to December 31, 2000, such unused
portion shall be forfeited by Tenant.
B. Certain Costs. Portions of Landlord's Contribution may, at
Tenant's election, be applied toward Tenant's architectural fees in connection
with the design and construction of the Tenant Improvements; provided, however,
that the portion of Landlord's Contribution applied to such fees may not exceed
One Dollar ($1.00) per rentable square foot of the Additional Premises and any
excess shall be paid directly by Tenant to Landlord from Tenant's own funds. In
no event may any portions of Landlord's Contribution be applied towards the
costs of Tenant's engineering fees (if any), trade fixtures, personal property,
equipment or furniture, or towards rent due under this Lease.
C. Entire Additional Premises to be Improved. Tenant
acknowledges that Landlord's Contribution is to be applied to the Tenant
Improvements (and the costs permitted under Paragraph 2.B. above) covering the
entire Additional Premises. If Tenant does not
2
improve the entire Additional Premises, then, without limitation of any other
rights or remedies of Landlord hereunder, Landlord's Contribution shall be
adjusted on a prorata per rentable square foot basis to reflect the number of
rentable square feet actually being improved.
3. Base Rent. Commencing as of the date (the "Additional
Premises Rent Commencement Date") that is the earlier of (i) one-hundred twenty
(120) days after the Additional Premises Commencement Date, or (ii) Tenant's
occupancy of the Additional Premises or any portion thereof for the conduct of
business, and thereafter on the first day of each calendar month of the Term,
Tenant shall pay to Landlord (or other entity designated by Landlord) Base Rent
for the Additional Premises, in advance, at Landlord's address for notices (as
set forth in the Basic Lease Information in the Lease) or at such other address
as Landlord may designate. The initial Base Rent for the Additional Premises
shall be Sixty-One Thousand Three Hundred Sixty-Four Dollars ($61,364.00).
Effective as of each annual anniversary of the Additional Premises Rent
Commencement Date, the Base Rent payable by Tenant for the Additional Premises
shall increase to one-hundred three percent (103%) of the Base Rent then in
effect for the Additional Premises. From and after the Additional Premises Rent
Commencement Date, the term "Base Rent" as used in the Lease shall mean the Base
Rent payable for the Original Premises and the Base Rent payable for the
Additional Premises, collectively. The Base Rent for the Additional Premises
shall be payable by Tenant in addition to the Base Rent payable by Tenant for
the Original Premises, as set for the in the Lease.
4. Operating Expenses. Commencing as of the Additional
Premises Rent Commencement Date, and continuing thereafter during the balance of
the Term, the provisions of Section 5 of the Lease shall be applicable to the
Additional Premises. As so applied to the Additional Premises, the term
"Tenant's Percentage Share" shall mean seventy-five percent (75%), and the term
"Building" shall mean the building in which the Additional Premises are located.
The Operating Expenses for the Additional Premises shall be payable by Tenant in
addition to the Operating Expenses payable by Tenant for the Original Premises,
as set forth in the Lease.
5. Security Deposit: Letter of Credit.
a. Concurrently with Tenant's execution and delivery of this
Amendment to Landlord, Tenant shall increase the Security Deposit delivered to
Landlord pursuant to Section 17 of the Lease to the amount of One Hundred Fifty
Thousand Dollars ($150,000.00), and the term "Security Deposit", as used in the
Lease, shall thereafter refer to the Security Deposit in such amount.
b. In addition to the increase in the Security Deposit
required pursuant to Paragraph 5 .a. above, and in addition to the Letter of
Credit previously delivered by Tenant pursuant to the Lease (the "Original
Letter of Credit"), on or prior to the Additional Premises Commencement Date,
Tenant shall deliver an additional Letter of Credit to Landlord as further
security for Tenant's performance of all of Tenant's covenants and obligations
under the Lease. Such additional Letter of Credit (the "Additional Letter of
Credit"), and any proceeds therefrom, shall be subject to all of the terms,
covenants and conditions applicable to the Original Letter of Credit, as set
forth in Section 17 of the Lease, except that the Additional Letter of Credit
shall be in the original amount of One Million Two Hundred Thousand Dollars
($1,200,000.00) during the period from the Additional Premises Commencement Date
through the third annual anniversary of the Additional Premises Rent
Commencement Date, and reducing in amount on
3
the third annual anniversary of the Additional Premises Rent Commencement Date
and on each subsequent annual anniversary of the Additional Premises Rent
Commencement Date by twenty percent (20%) of the original amount of the
Additional Letter of Credit; provided, however, that if on the date the
Additional Letter of Credit amount would otherwise reduce, an Event of Default,
or default that with notice or the passage of time or both could mature into an
Event of Default, shall have occurred and be continuing, the Additional Letter
of Credit amount shall not reduce on such date and shall not thereafter reduce
until the later of the next scheduled reduction date or the date such Event of
Default or default shall have been cured. Where reference is made in Section 17
of the Lease to the Term of the Lease (for purposes of determining the period
during which the Original Letter of Credit or the Additional Letter of Credit,
as applicable, must be maintained in effect), as respects the Original Letter of
Credit such reference shall mean the Term of the Lease as respects the Original
Premises, and as respects the Additional Letter of Credit such reference shall
mean the Term of the Lease as respects the Additional Premises.
6. Lease Term. Effective as of the Additional Premises
Commencement Date, the expiration date of the term of the Lease, as applicable
to the Original Premises, shall be deemed extended from February 28, 2006 (which
the parties acknowledge to be the current expiration date of the term of the
Lease as respects the Original Premises) to the Additional Premises Expiration
Date. All of the terms, covenants and conditions of the Lease shall apply during
such extension period (the "Extension Period"), except the Base Rent payable by
Tenant for the Original Premises shall be the "fair market rent" for the
Original Premises for the Extension Period. "Fair market rent" shall have the
meaning given in Section 40 of the Lease, with all references to the "renewal
period" being deemed references to the "Extension Period". The "rent floor"
specified in Section 40.b. of the Lease shall be fully applicable as respects
the Extension Period.
7. Renewal Option. Pursuant to Section 40 of the Lease, as of
the date of this Amendment Tenant has the option to renew the Lease for one (1)
additional term of five (5) years. In the event that Tenant validly exercises
its option to renew the Lease for such additional five (5) year term, the
parties hereby agree that such exercise shall apply to the entire premises then
demised hereunder (i.e. both the Original Premises and the Additional Premises),
and such option may not be exercised as to less than all of the premises then
demised hereunder. The "rent floor" specified in Section 40.b. of the Lease
shall be determined, for purposes of such renewal, by reference to the average
Base Rent, per rentable square foot, payable by Tenant for all of the premises
then demised hereunder.
8. Building Definition. The definition of the "Building"
contained in the Lease is hereby modified to mean, collectively, the buildings
in which the Original Premises and the Additional Premises are located, unless
the context expressly requires otherwise. As used in Section 11 and Section 12
of the Lease, the term "Building" means only the building in which the Original
Premises or Additional Premises are located which has been damaged or destroyed
or the subject of the taking by eminent domain (or conveyance in lieu thereof),
as applicable, and notwithstanding anything to the contrary contained in Section
11 or Section 12 of the Lease, where Landlord or Tenant is granted in any such
Section a right or option to terminate this Lease by reason of damage or
destruction to, or a taking by eminent domain (or conveyance in lieu thereof),
of the Premises or the Building, such right or option shall only permit
termination of the Lease as to the space demised thereunder in the building
which has been damaged or destroyed or subject to the taking by eminent domain
(or conveyance in lieu thereof).
4
9. Ratification. Except as amended hereby, the Lease remains
unmodified and in full force and effect.
10. Brokers. Each party hereto represents and warrants to the
other party hereto that it has dealt with no broker or finder who can properly
claim a commission, fee or other compensation by reason of this Amendment or
Tenant's lease of the Additional Premises, except that Landlord acknowledges
that it has dealt with Colliers Parish International, Inc. ("Landlord's Broker")
in connection with this Amendment. Each party hereto shall indemnify, protect
and hold harmless the other party hereto from and against any and all loss,
cost, damage, liability and expense (including attorneys' fees and costs)
arising out of any breach or alleged breach of its foregoing representation and
warranty. In addition, Landlord shall pay any commission due to Landlord's
Broker by reason of this Amendment pursuant to the terms of a separate
agreement.
11. Entire Understanding. This Amendment represents the
entire understanding between of the parties concerning the subject matter
hereof, and there are no understandings or agreements between them relating to
the Lease or the leased premises not set forth in writing and signed by the
parties hereto. No party hereto has relied upon any representation, warranty or
understanding not set forth herein, either oral or written, as an inducement to
enter into this Amendment.
12. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first above written.
Landlord: Tenant:
THE MULTI-EMPLOYER CERTICOM CORP.,
PROPERTY TRUST, A TRUST a Delaware corporation
ORGANIZED UNDER 12 C.F.R.
SECTION 9.18, by its trustee
Riggs & Company, a division of By: /s/ Richard P. Dalmazzi
Riggs Bank N.A. ----------------------------
Richard P. Dalmazzi
President and CEO
By: /s/ Name Illegible By: /s/ Richard D. Brounstein
---------------------------- ----------------------------
Richard D. Brounstein
Its: Managing Director Chief Financial Officer
----------------------------
5
The undersigned, as Guarantor of the Lease pursuant to that
certain Continuing Guaranty of Lease dated as of October 30, 1998 (the
"Guaranty"), hereby consents to the foregoing Amendment and agrees that the
Guaranty shall remain in full force and effect and shall apply to the foregoing
Amendment and to the Lease as amended thereby. The undersigned represents and
warrants to Landlord that it is the successor entity to the entity which
originally executed the Guaranty and the confirmation of the Guaranty contained
at the end of the First Amendment to the Lease.
Guarantor:
CERTICOM CORP a Yukon corporation
By: /s/ Richard P. Dalmazzi
----------------------------
Richard P. Dalmazzi
President and CEO
By: /s/ Richard D. Brounstein
----------------------------
Richard D. Brounstein
Chief Financial Officer
6