EXHIBIT 10.5
LEASE AGREEMENT
By And Between
AETNA LIFE INSURANCE COMPANY,
A Connecticut Corporation
As Landlord
And
INTERNATIONAL NETWORK SERVICES, INC.,
A California corporation
As Tenant
Dated may 8, 1996
TABLE OF CONTENTS
Page
Basic Lease Information...................................................... iv
1. Demise......................................................................1
2. Premises....................................................................1
3. Term........................................................................1
4. Rent........................................................................2
5. Late Charge.................................................................5
6. Security for Tenants Obligations............................................5
7. Possession..................................................................6
8. Use Of Premises.............................................................7
9. Acceptance Of Premises......................................................8
10. Surrender..................................................................8
11. Alterations And Additions..................................................9
12. Maintenance Of Premises....................................................9
13. Landlords Insurance.......................................................11
14. Tenants Insurance.........................................................11
15. Indemnification...........................................................12
16. Subrogation...............................................................12
17. Abandonment...............................................................13
18. Free From Liens...........................................................13
19. Advertisements And Signs..................................................13
20. Utilities.................................................................14
21. Entry By Landlord.........................................................14
22. Destruction And Damage....................................................14
23. Condemnation..............................................................16
24. Assignment And Subletting.................................................17
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25. Tenants Default...........................................................19
26. Landlords Remedies........................................................21
27. Attorneys Fees............................................................23
28. Taxes.....................................................................24
29. Effect Of Conveyance......................................................24
30. Tenants Estoppel Certificate..............................................24
31. Subordination.............................................................25
32. Environmental Covenants...................................................25
33. Notices...................................................................28
34. Waiver....................................................................28
35. Holding Over..............................................................28
36. Successors And Assigns....................................................29
37. Time......................................................................29
38. Brokers...................................................................29
39. Limitation Of Liability...................................................29
40. Financial Statements......................................................29
41. Rules And Regulations.....................................................30
42. Mortgagee Protection......................................................30
43. Entire Agreement..........................................................31
44. Interest..................................................................31
45. Construction..............................................................31
46. Representations And Warranties Of Tenant..................................31
ii
Exhibit
A Diagram of the Premises
B Tenant Improvements
B-1 Final Plans and Specifications for Tenant Improvements
C Commencement Date Memorandum
iii
Lease Agreement
BASIC LEASE INFORMATION
Lease Date: May 8, 1996
Landlord: Aetna Life Insurance Company, a Connecticut
corporation
Landlords Address: c/o Aetna Realty Investors, Inc.
Kodak Center
1740 Technology Drive, Suite 600
San Jose, California 95110
Tenant: International Network Services, Inc.,
a California corporation
Tenants Address: 1213 Innsbruck Drive
Sunnyvale, California 94089
Attention: Manager of Corporate Services
Copies of all notices sent to Tenant under this
-----------------------------------------------
Lease shall also be delivered to:
--------------------------------
1213 Innsbruck Drive
Sunnyvale, California 94089
Attention: Director of Legal Services
Premises: The building commonly known as 1213 Innsbruck Drive,
Sunnyvale, California, containing approximately
Thirty-one Thousand Two Hundred Ninety-three
(31,293) rentable square feet
Anticipated
Commencement Date: July 26, 1996
Months of Term: Sixty (60) months
Monthly Base Rent:
Monthly Monthly Rent
Months Sq. Ft. Rate
1-30 31,293 $1.05 $32,857.65
31-60 31,293 $1.15 $35,986.95
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Prepaid Rent: Thirty-two Thousand Eight Hundred Fifty-seven and
65/100 Dollars ($32,857.65)
Month To Which Prepaid First (1st) month of the Term
Rent Applied:
Security Deposit: Thirty-five Thousand Nine Hundred Eighty-six and
95/100 Dollars ($35,986.95)
Permitted Use: General office, engineering and warehouse uses
Brokers: CPS
Cornish & Carey Commercial
Tenant Improvements Six Hundred Twenty-five Thousand Eight Hundred Sixty
Allowance: Dollars ($625,860.00)
Tenant Improvements Loan: Up to Ninety-three Thousand Eight Hundred Seventy-
nine Dollars ($93,879.00)
Architect: DES
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LEASE AGREEMENT
This Lease Agreement is made and entered into by and between Landlord and
Tenant on the Lease Date. The defined terms used in this Lease which are
defined in the Basic Lease Information attached to this Lease Agreement ("Basic
Lease Information") shall have the meaning and definition given them in the
Basic Lease Information. The Basic Lease Information, the exhibits, and this
Lease Agreement are and shall be construed as a single instrument and are
referred to herein as the "Lease".
1. DEMISE
In consideration for the rents and all other charges and payments payable
by Tenant, and for the agreements, terms and conditions to be performed by
Tenant in this Lease, Landlord does hereby lease to Tenant, and Tenant does
hereby hire and take from Landlord, the Premises described below (the
"Premises"), upon the agreements, terms and conditions of this Lease for the
Term hereinafter stated.
2. PREMISES
The Premises demised by this Lease is the building specified in the Basic
Lease Information. The Premises contains the square footage specified in the
Basic Lease Information. The location and dimensions of the Premises are
depicted on Exhibit A, which is attached hereto and incorporated herein by this
reference. Tenant shall have the non-exclusive right to use the parking and
other common areas on the real property on which the Premises is situated (the
"Property"). No easement for light or air is incorporated in the Premises.
The Premises demised by this Lease shall also include the Tenant
Improvements (as that term is defined in Exhibit B, attached hereto and
incorporated herein by this reference) to be constructed by Landlord within the
interior of the Premises. Landlord shall construct the Tenant Improvements on
the terms and conditions set forth in Exhibit B. Landlord and Tenant agree to
and shall be bound by the terms and conditions of Exhibit B.
3. TERM
The term of this Lease (the "Term") shall be for the period of months
specified in the Basic Lease Information, commencing on the earliest to occur of
the following dates (the "Commencement Date"):
(a) The date (i) the Tenant Improvements are approved by the appropriate
governmental agency as being in accordance with its building code and the
building permit issued for such improvements, as evidenced by the issuance of a
final building inspection approval, and (ii) Landlords architect and general
contractor have both certified in writing
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to Tenant that the Tenant Improvements have been substantially completed in
accordance with the plans and specifications therefor; or
(b) The date Tenant commences occupancy of the Premises; provided,
however, that Tenant shall not be deemed to have commenced occupancy in the
Premises for purposes of this Section 3(b) if Tenant enters upon the Premises
for the sole purpose of installing its fixtures and equipment and preparing the
Premises for Tenants business operations in accordance with Section 7(c) below.
When the Commencement Date has been determined pursuant to the foregoing,
Landlord and Tenant shall promptly execute a Commencement Date Memorandum in the
form attached hereto as Exhibit C.
4. RENT
(a) BASE RENT. Tenant shall pay to Landlord, in advance on the first day
of each month, without further notice or demand and without offset or deduction,
the monthly installments of rent specified in the Basic Lease Information (the
"Base Rent").
Upon execution of this Lease, Tenant shall pay to Landlord the Prepaid
Rent specified in the Basic Lease Information to be applied toward Base Rent for
the month of the Term specified in the Basic Lease Information.
(b) ADDITIONAL RENT. This Lease is intended to be a net Lease; and
subject to Paragraph 12(c) below and any specific exclusions set forth herein,
the Rent owing hereunder is to be paid by Tenant absolutely net of all costs and
expenses relating to Landlord's ownership of the Property and the Premises. The
provisions of this Paragraph 4(b) for the payment of Expenses (as hereinafter
defined) are intended to pass on to Tenant all such costs and expenses. In
addition to the Base Rent, Tenant shall pay to Landlord, in accordance with this
Paragraph 4, all costs and expenses paid or incurred by Landlord in connection
with the management, operation, maintenance and repair of the Property and the
Premises (the "Expenses"), including, without limitation, all the following
items related to the Premises, the Property, and/or the Outside Areas (as
defined in Paragraph 4(b)(3)) (the "Additional Rent"):
(1) Taxes and Assessments. All real estate taxes and assessments.
Real estate taxes and assessments shall include any form of assessment, license,
fee, 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 government or any improvement or other district
or division thereof, whether such tax is (i) determined by the area of the
Premises or the Property, or any part thereof, or the Rent and other sums
payable hereunder by Tenant or by other tenants, including, but not limited to,
any gross income or excise tax levied by any of the foregoing authorities with
respect to receipt of Rent or other sums due under this Lease; (ii) upon any
legal or equitable interest of
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Landlord in the Premises or the Property, or any part thereof; (iii) upon this
transaction or any document to which Tenant is a party creating or transferring
any interest in the Premises or the Property; (iv) levied or assessed in lieu
of, in substitution for, or in addition to, existing or additional taxes against
the Premises or the Property, whether or not now customary or within the
contemplation of the parties; or (v) surcharged against the parking area. Tenant
and Landlord acknowledge 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 may
formerly 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.
(2) Insurance. All insurance premiums, including premiums for "all
risk" fire and extended coverage (including earthquake endorsements) insurance
for the Premises, commercial general liability insurance, other insurance as
Landlord deems necessary, and any deductibles paid under policies of any such
insurance.
(3) Outside Areas Expenses. All costs to maintain, repair, replace,
supervise, insure (including provision of commercial general liability
insurance) and administer the areas outside of the Premises ("Outside Areas"),
including parking areas, landscaping (including maintenance contracts),
sprinkler systems, sidewalks, driveways, curbs, lighting systems, and utilities
for Outside Areas.
(4) Parking Charges. Any parking charges or other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any governmental
authority or insurer in connection with the use or occupancy of the Premises,
the Outside Areas and/or the Property.
(5) Maintenance and Repair of Premises. Except for costs which are
the responsibility of Landlord pursuant to Section 12(c) below, all costs to
maintain, repair, and replace the Premises, including without limitation, the
roof coverings of the Premises, the heating, ventilation, and air conditioning
("HVAC") systems serving the Premises (including the cost of maintenance
contracts), and all utility and plumbing systems, fixtures and equipment serving
the Premises but which are located in the Outside Areas. Notwithstanding
anything in this Section 4(b)(5) to the contrary, with respect to all sums
payable by Tenant as Additional Rent under this Section 4(b)(5) for the repair
or replacement of any item or the construction of any new item in connection
with the physical operation of the Premises (i.e., HVAC, roof membrane or
coverings, plumbing, electrical and utility systems and parking area) which is a
capital item the repair or replacement of which properly would be capitalized
under generally accepted accounting principles, Tenant shall be required to pay
only the prorata share of the cost of the item
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falling due within the Term (including any Renewal Term) based upon the
amortization of the same over the useful life of such item, as reasonably
determined by Landlord.
(6) Management and Administration. All costs for management and
administration of the Premises and the Property, including a property management
fee, accounting, auditing, billing, postage, employee benefits, payroll taxes,
etc.
(c) EXCLUSIONS FROM ADDITIONAL RENT. Notwithstanding anything to the
contrary contained in Section 4(b) above, the following items shall be
specifically excluded from the definition of "Expenses":
(1) Costs occasioned by fire, acts of God or other casualties or by
the exercise of the power of eminent domain; and
(2) Costs incurred by Landlord in remediating Hazardous Materials
from the Premises or the Property.
Nothing contained in this Section 4(c) shall be deemed to restrict or limit the
obligations and liabilities of Tenant under Sections 15, 22, 23 or 32 below or
any other applicable provisions of this Lease.
(d) PAYMENT OF ADDITIONAL RENT.
(1) Upon commencement of this Lease, Landlord shall submit to Tenant
an estimate of monthly Additional Rent for the period between the Commencement
Date and the following December 31 and Tenant shall pay such estimated
Additional Rent on a monthly basis concurrently with the payment of the Base
Rent. Tenant shall continue to make said monthly payments until notified by
Landlord of a change therein. By March 1 of each calendar year, Landlord shall
endeavor to provide to Tenant a statement showing the actual Additional Rent due
to Landlord for the prior calendar year, prorated from the Commencement Date
during the first year. If the total of the monthly payments of Additional Rent
that Tenant has made for the prior calendar year is less than the actual
Additional Rent chargeable to Tenant for such prior calendar year, then Tenant
shall pay the difference in a lump sum within ten (10) days after receipt of
such statement from Landlord. Any overpayment by Tenant of Additional Rent for
the prior calendar year shall be credited towards the Additional Rent next due.
(2) The actual Additional Rent for the prior calendar year shall be
used for purposes of calculating Tenant's monthly payment of estimated
Additional Rent for the current year, subject to adjustment as provided above,
except that in any year in which resurfacing of the parking area or material
roof repairs are planned, the cost of which is not required to be borne by
Landlord as explicitly set forth elsewhere herein, Landlord may include the
estimated cost of such work in the estimated monthly Additional Rent. Landlord
shall make the final determination of Additional Rent for the year in which this
Lease terminates as soon as possible after termination of such year. Tenant
shall remain
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liable for payment of any amount due to Landlord in excess of the estimated
Additional Rent previously paid by Tenant, and, conversely, Landlord shall
promptly return to Tenant any overpayment, even though the Term has expired and
Tenant has vacated the Premises. Failure of Landlord to submit statements as
called for herein shall not be deemed a waiver of Tenants obligation to pay
Additional Rent as herein provided.
(e) GENERAL PAYMENT TERMS. The Base Rent, Additional Rent and all other
sums payable by Tenant to Landlord hereunder (including without limitation,
installments of principal and interest due under the Tenant Improvements Loan,
as defined in Exhibit B hereto) are referred to as the "Rent". All Rent shall
be paid without deduction, offset or abatement in lawful money of the United
States of America. Checks are to be made payable to ALIC SA87 IODCG AAF REI 3261
and shall be mailed to: Moffett Park, 27102 100 2, Dept. 66268, El Monte,
California 91735-6268, or to such other person or place as Landlord may, from
time to time, designate to Tenant in writing. Rent for any partial month during
the Term shall be prorated for the portion thereof falling due within the Term.
5. LATE CHARGE
Notwithstanding any other provision of this Lease, Tenant hereby
acknowledges that late payment to Landlord of Rent, or other amounts due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. If any Rent or
other sums due from Tenant are not received by Landlord or by Landlords
designated agent within ten (10) days after their due date, then Tenant shall
pay to Landlord a late charge equal to ten percent (10%) of such overdue amount,
plus any attorneys' fees incurred by Landlord by reason of Tenants failure to
pay Rent and/or other charges when due hereunder. Landlord and Tenant hereby
agree that such late charges represent a fair and reasonable estimate of the
cost that Landlord will incur by reason of Tenants late payment. Landlords
acceptance of such late charges shall not constitute a waiver of Tenants default
with respect to such overdue amount or estop Landlord from exercising any of the
other rights and remedies granted under this Lease.
Initials: Landlord _______ Tenant _______
6. SECURITY FOR TENANTS OBLIGATIONS
(a) SECURITY DEPOSIT. Concurrently with Tenants execution of the Lease,
Tenant shall deposit with Landlord the Security Deposit specified in the Basic
Lease Information as security for the full and faithful performance of each and
every term, covenant and condition of this Lease. Landlord may use, apply or
retain the whole or any part of the Security Deposit as may be reasonably
necessary (a) to remedy Tenant's default in the payment of any Rent, (b) to
repair damage to the Premises caused by Tenant, (c) to clean the Premises upon
termination of this Lease, (d) to reimburse Landlord for the payment of any
amount which Landlord may reasonably spend or be required to spend by reason of
5
Tenant's default, or (e) to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant's default. Within thirty (30) days
following the expiration of the Term and the performance of Tenant's obligations
with respect to the surrender of the Premises, the Security Deposit or any
balance thereof shall be returned to Tenant or, at the option of Landlord, to
the last assignee of Tenant's interest in this Lease. Landlord shall not be
required to keep the Security Deposit separate from its general funds and Tenant
shall not be entitled to any interest on such deposit. If Landlord so uses or
applies all or any portion of said deposit, within five (5) days after written
demand therefor Tenant shall deposit cash with Landlord in an amount sufficient
to restore the Security Deposit to the full extent of the above amount, and
Tenant's failure to do so shall be a default under this Lease. In the event
Landlord transfers its interest in this Lease, Landlord shall transfer the then
remaining amount of the Security Deposit to Landlord's successor in interest,
and thereafter Landlord shall have no further liability to Tenant with respect
to such Security Deposit, provided that Landlords successor assumes Landlords
obligations hereunder in writing.
7. POSSESSION
(a) TENANT'S RIGHT OF POSSESSION. Subject to Paragraphs 7(b) and (c)
below, Tenant shall be entitled to possession of the Premises upon commencement
of the Term.
(b) DELAY IN DELIVERING POSSESSION. If for any reason whatsoever, Landlord
cannot deliver possession of the Premises to Tenant on or before the Anticipated
Commencement Date specified in the Basic Lease Information, then subject to
Section 7(c) below, this Lease shall not be void or voidable, nor shall
Landlord, or Landlord's agents, be liable to Tenant for any loss or damage
resulting therefrom. Tenant shall not be liable for Rent until Landlord
delivers possession of the Premises to Tenant. The expiration date of the Term
shall be extended by the same number of days that Tenants possession of the
Premises was delayed.
(c) EARLY OCCUPANCY. Notwithstanding anything to the contrary contained in
Section 7(a), Tenant shall have the right to enter upon the Premises at such
times as shall be acceptable to Landlord during the fourteen (14) day period
prior to the Commencement Date for the sole purpose of installing Tenants
fixtures and equipment and preparing the Premises for its business operations,
provided, however, that such entry shall be subject to all of the terms and
provisions of this Lease, excepting only the obligation to pay Rent and,
provided further, that Tenant shall not conduct business in the Premises during
such period. Tenant understands and agrees that Landlord shall not be liable to
Tenant or its Agents (as hereinafter defined) for any loss or damage to
property, or injury to person, arising from or related to construction of the
Tenant Improvements. Tenant shall take all reasonable precautions to protect
against such loss, damage or injury during construction of the Tenant
Improvements, and shall not interfere with the conduct of the Tenant Improvement
work. Tenant shall cooperate with all reasonable directives of
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Landlord and Landlord's contractor in order to minimize any disruption or delay
in completion of the Tenant Improvements work.
(d) TENANT'S RIGHT TO TERMINATE. Notwithstanding anything herein to the
contrary, in the event Landlord fails to deliver possession of the Premises to
Tenant on or before December 31, 1996, then Tenant shall have the right as its
sole remedy for such failure to terminate this Lease upon ten (10) days' notice
to Landlord, which notice shall be given, if at all, on or before January 5,
1997.
8. USE OF PREMISES
(a) PERMITTED USES. The Premises shall be used for the Permitted Uses
specified in the Basic Lease Information and for no other use without the prior
written consent of Landlord, which consent may be given or withheld in
Landlord's sole discretion. The Premises shall not be used to create any
nuisance or trespass, for any illegal purpose, for any purpose not permitted by
applicable laws and regulations, or for any purpose that would vitiate the
insurance or increase the premiums for insurance on the Premises. Tenant agrees
not to overload the floor(s) of the Premises.
(b) COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Tenant shall, at Tenant's
expense, faithfully observe and comply with all municipal, state and federal
statutes, rules, regulations, ordinances, requirements, and orders, now in force
or which may hereafter be in force pertaining to the Premises or Tenant's use
thereof, whether substantial in cost or otherwise, and all recorded covenants,
conditions and restrictions affecting the Property ("Private Restrictions") now
in force or which may hereafter be in force; provided, however, that Tenant
shall not be required to make or, except as provided in Section 4 above or any
other provision of this Lease, pay for, structural changes to the Premises,
including, without limitation, the installation of fire sprinkler systems,
seismic reinforcement and related alterations, and the removal of asbestos, not
related to Tenant's specific use of the Premises unless the requirement for such
changes is imposed as a result of any improvements or additions made or proposed
to be made at Tenant's request. The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such rule, regulation, ordinance, statute or Private Restrictions, shall be
conclusive of that fact as between Landlord and Tenant, but shall not be
conclusive as to whether Tenant had an obligation to comply with such law under
this Lease, although if such court makes a determination as to which party is
responsible for compliance with the law in question, then such determination
shall be conclusive of that issue as between Landlord and Tenant.
9. ACCEPTANCE OF PREMISES
Subject to Landlord's completion of any "punch-list" items agreed to by
Landlord and Tenant in writing within thirty (30) days after the Commencement
Date, by entry hereunder, Tenant accepts the Premises as suitable for Tenants
intended use and as being
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in good and sanitary operating order, condition and repair, AS IS, and without
representation or warranty by Landlord as to the condition, use or occupancy
which may be made thereof; provided, however, that Landlord shall cause the
HVAC, electrical and plumbing systems serving the Premises to be in good working
order and the roof on the Premises to be in good condition on the Commencement
Date. Any exceptions to the foregoing must be by written agreement executed by
Landlord and Tenant. Nothing contained in this Section 9 shall limit or restrict
Landlords repair and maintenance obligations under Section 12 below.
10. SURRENDER
Tenant agrees that on the last day of the Term, or on the sooner
termination of this Lease, Tenant shall surrender the Premises to Landlord (a)
in good condition and repair (damage by Acts of God, fire, condemnation,
Hazardous Materials (except to the extent Tenant is responsible for the removal
or remediation of such Hazardous Materials pursuant to Section 32 below), and
normal wear and tear excepted), but with all interior walls cleaned, any carpets
cleaned, and with all floors cleaned and waxed, together with all alterations,
additions and improvements which may have been made in or on the Premises;
except that Tenant shall remove any alterations, additions and improvements as
to which Landlord has, prior to the date of surrender, consented to or requested
removal; and (b) otherwise in accordance with Paragraph 32(f). Tenant shall
repair all damage caused by such removal and otherwise restore the Premises in
accordance with the preceding sentence at Tenant's sole cost and expense. On or
before the expiration or sooner termination of this Lease, Tenant shall remove
all of Tenant's trade fixtures and personal property from the Premises. All
property of Tenant not so removed, unless such non-removal is consented to by
Landlord, shall be deemed abandoned by Tenant, provided that in such event
Tenant shall remain liable to Landlord for all costs incurred in storing and
disposing of such abandoned property of Tenant. If the Premises are not
surrendered at the end of the Term or sooner termination of this Lease, and in
accordance with the provisions of this Paragraph 10 and of Paragraph 32(f),
Tenant shall indemnify, defend and hold Landlord harmless from and against any
and all loss or liability resulting from delay by Tenant in so surrendering the
Premises including, without limitation, any loss or liability resulting from any
claim against Landlord made by any succeeding tenant founded on or resulting
from such delay and losses to Landlord due to lost opportunities to lease any
portion of the Premises to succeeding tenants, together with, in each case,
reasonable attorneys fees and costs.
11. ALTERATIONS AND ADDITIONS
(a) Tenant shall not make, or permit to be made, any alteration or
addition to the Premises, or any part thereof, without the prior written consent
of Landlord, such consent not to be unreasonably withheld.
(b) Any alteration or addition to the Premises undertaken by or on behalf
of Tenant shall be at Tenants sole cost and expense, in compliance with all
applicable laws and
8
requirements requested by Landlord, and in accordance with plans and
specifications approved in writing by Landlord, and shall be constructed and
installed by a contractor approved in writing by Landlord.
(c) In the event Landlord consents to a proposed alteration or addition,
such consent shall include Landlords advice whether or not such proposed
alteration or addition shall be required to be removed at the expiration or
termination of this Lease. If Landlord fails so to advise Tenant regarding
whether or not a proposed alteration or addition may be removed at the
expiration or termination of this Lease, then Tenant shall be required to
surrender the alteration or addition to Landlord with the Premises, without
compensation to Tenant, at the expiration or termination of this Lease. Subject
to the foregoing, all additions, alterations or improvements, including, but not
limited to, heating, lighting, electrical, air conditioning, fixed partitioning,
drapery, wall covering and paneling, built-in cabinet work and carpeting
installations made by Tenant, together with all property that has become an
integral part of the Premises, shall become the property of Landlord upon the
expiration or sooner termination of this Lease, and shall not be deemed trade
fixtures.
(d) Tenant agrees not to proceed to make such alterations or additions,
notwithstanding consent from Landlord to do so, until five (5) days after
Tenants receipt of such consent, in order that Landlord may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Tenants improvements. Tenant will at all times permit such notices to be
posted and to remain posted until the completion of work.
12. MAINTENANCE OF PREMISES
(a) MAINTENANCE BY TENANT. Throughout the Term, Tenant shall, at its sole
expense, (1) keep and maintain in good order and condition, repair, and replace
the Premises, and every part thereof, including glass, windows, window frames,
skylights, interior and exterior doors and door frames, and the interior of the
Premises, (excepting only those portions of the Premises to be maintained by
Landlord, as provided in Paragraph 12(c) below), (2) keep and maintain in good
order and condition, repair, and replace all utility and plumbing systems,
fixtures and equipment, including without limitation, electricity, gas, water,
and sewer, located in or on the Premises, and furnish all expendables, including
light bulbs, paper goods and soaps, used in the Premises, (3) repair all damage
to the Premises or the Outside Areas caused by the negligence or willful
misconduct of Tenant or its agents, employees, contractors or invitees. Tenant
shall not do anything to cause any damage, deterioration or unsightliness to the
Premises and the Outside Areas.
(b) LANDLORD'S RIGHT TO MAINTAIN AND REPAIR AT TENANT'S EXPENSE.
Notwithstanding the foregoing, in the event of a Default by Tenant under this
Lease, Landlord shall have the right, but not the obligation, at Tenants
expense, to enter the Premises and perform Tenant's maintenance, repair and
replacement work. Within ten
9
(10) days after invoice therefor from Landlord, Tenant shall pay all costs and
expenses incurred by Landlord in connection with such maintenance, repair and
replacement work.
(c) MAINTENANCE BY LANDLORD. Subject to the provisions of Paragraphs
12(a), 22 and 23, and further subject to Tenant's obligation under Paragraph 4
to reimburse Landlord, in the form of Additional Rent, for the cost and expense
of the following items, Landlord agrees to repair and maintain the following
items: the roof coverings (provided that Tenant installs no additional air
conditioning or other equipment on the roof that damages the roof coverings);
the HVAC systems serving the Premises; the utility and plumbing systems,
fixtures, and equipment located outside the Premises; and the parking areas,
pavement, landscaping, sprinkler systems, sidewalks, driveways, curbs, and
lighting systems in the Outside Areas. Subject to the provisions of Paragraphs
12(a), 22 and 23, Landlord, at its own cost and expense, agrees to repair and
maintain the following items: the structural portions of the roof, provided that
Tenant installs no additional air conditioning or other equipment on the roof
that damages structural portions of the roof (and specifically excluding the
roof coverings), the foundation, the footings, the floor slab, the load bearing
walls, and the exterior walls (excluding any glass therein) of the Premises.
Except to the extent specifically set forth in Paragraph 22 below, Landlord
shall not be required to repair or maintain conditions created due to any act,
negligence or omission of Tenant or its agents, contractors, employees or
invitees. Landlords obligation hereunder to repair and maintain is subject to
the condition precedent that Landlord shall have received written notice of the
need for such repairs and maintenance. Tenant shall promptly report in writing
to Landlord any defective condition known to it which Landlord is required to
repair, and failure to so report such defects shall make Tenant responsible to
Landlord for any liability incurred by Landlord by reason of such condition.
Tenant shall promptly report in writing to Landlord any defective condition
which Landlord is required to repair, and failure to so report such defects
shall make Tenant responsible to Landlord for the costs and expenses of
repairing any additional damage or deterioration occurring after the date Tenant
obtains knowledge of such defective condition and any liability incurred by
Landlord by reason of Tenants failure to notify Landlord of such defective
condition in a timely manner as provided herein.
(d) TENANT'S WAIVER OF RIGHTS. Tenant hereby expressly waives all rights
to make repairs at the expense of Landlord or to terminate this Lease, as
provided for in California Civil Code Sections 1941 and 1942, and 1932(1),
respectively, and any similar or successor statute or law in effect or any
amendment thereof during the Term.
13. LANDLORD'S INSURANCE
Landlord shall purchase and keep in force fire, extended coverage and "all
risk" insurance covering the Premises to the extent of the full replacement cost
thereof. Tenant shall, at its sole cost and expense, comply with any and all
reasonable requirements pertaining to the Premises of any insurer necessary for
the maintenance of reasonable fire and commercial general liability insurance,
covering the Premises and the appurtenances. Landlord, at Tenants cost, may
maintain "Loss of Rents" insurance, insuring that the Rent
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will be paid in a timely manner to Landlord for a period of at least twelve (12)
months if the Premises are destroyed or rendered unusable or inaccessible by any
cause insured against under this Lease.
14. TENANT'S INSURANCE
(a) COMMERCIAL GENERAL LIABILITY INSURANCE. Tenant shall, at Tenants
expense, secure and keep in force a commercial general liability insurance and a
property damage policy covering the Premises, insuring Tenant, and naming
Landlord and its lenders as additional insureds, against any liability arising
out of the ownership, use, occupancy or maintenance of the Premises to the
extent such coverage is available in a standard tenants form of commercial
general policy without special endorsement. The minimum limit of coverage of
such policy shall be in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of one person in any one accident or
occurrence and in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of more than one person in any one accident
or occurrence, shall include an extended liability endorsement providing
contractual liability coverage (which shall include coverage for Tenants
indemnification obligations in this Lease), and shall contain a severability of
interest clause or a cross liability endorsement. Such insurance shall further
insure Landlord and Tenant against liability for property damage of at least
Three Million Dollars ($3,000,000.00). The limit of any insurance shall not
limit the liability of Tenant hereunder. No policy shall be cancelable or
subject to reduction of coverage, and loss payable clauses shall be subject to
Landlords approval. Such policies of insurance shall be issued as primary
policies and not contributing with or in excess of coverage that Landlord may
carry, by an insurance company authorized to do business in the State of
California for the issuance of such type of insurance coverage and rated A:XIII
or better in Best's Key Rating Guide. A copy of said policy or a certificate
evidencing to Landlords reasonable satisfaction that such insurance is in effect
shall be delivered to Landlord upon commencement of the Term, and thereafter
whenever Landlord shall reasonably request.
(b) PERSONAL PROPERTY INSURANCE. Tenant shall maintain in full force and
effect on all of its fixtures and equipment on the Premises, a policy or
policies of fire and extended coverage insurance with standard coverage
endorsement to the extent of the full replacement cost thereof. During the term
of this Lease the proceeds from any such policy or policies of insurance shall
be used for the repair or replacement of the fixtures and equipment so insured.
Landlord shall have no interest in the insurance upon Tenants equipment and
fixtures and will sign all documents reasonably necessary in connection with the
settlement of any claim or loss by Tenant. Landlord will not carry insurance on
Tenant's possessions. Tenant shall furnish Landlord with a certificate
evidencing to Landlords reasonable satisfaction that such insurance is in
effect, and whenever required, shall satisfy Landlord that such policy is in
full force and effect.
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15. INDEMNIFICATION
(a) OF LANDLORD. Except to the extent caused by the negligence or willful
misconduct of Landlord or Landlord's Agents, Tenant shall indemnify and hold
harmless Landlord and agents, employees, partners, shareholders, directors,
invitees, and independent contractors (collectively "Agents") of Landlord
against and from any and all claims, liabilities, judgments, costs, demands,
causes of action and expenses (including, without limitation, reasonable
attorney's fees) arising from (1) Tenant's use of the Premises or from any
activity done, permitted or suffered by Tenant in or about the Premises or the
Property, and (2) any act, neglect, fault, willful misconduct or omission of
Tenant, or Tenant's Agents or from any breach or default in the terms of this
Lease by Tenant, and (3) any action or proceeding brought on account of any
matter in items (1) or (2). If any action or proceeding is brought against
Landlord by reason of any such claim, upon notice from Landlord, Tenant shall
defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord. As a material part of the consideration to Landlord, Tenant hereby
assumes all risk of damage to property or injury to persons in or about the
Premises from any cause whatsoever (except that which is caused by the gross
negligence or willful misconduct by Landlord or its Agents or by the failure of
Landlord to observe any of the terms and conditions of this Lease, if such
failure has persisted for an unreasonable period of time after written notice of
such failure), and Tenant hereby waives all claims in respect thereof against
Landlord. The obligations of Tenant under this Paragraph 15 shall survive any
termination of this Lease.
(b) NO IMPAIRMENT OF INSURANCE. The foregoing indemnity shall not relieve
any insurance carrier of its obligations under any policies required to be
carried by either party pursuant to this Lease, to the extent that such policies
cover the peril or occurrence that results in the claim that is subject to the
foregoing indemnity.
16. SUBROGATION
Landlord and Tenant hereby mutually waive any claim against the other
during the Term for any injury to person or loss or damage to any of their
property located on or about the Premises or the Property that is caused by or
results from perils covered by insurance carried by the respective parties or
required to be carried by the respective parties under the terms of this Lease,
to the extent of the proceeds of such insurance actually received with respect
to such injury, loss or damage (or, with respect to insurance required to be
carried under this Lease but not actually carried, the proceeds of such
insurance which would have been received had the party required to carry such
insurance actually maintained such coverage), whether or not due to the
negligence of the other party or its agents. Because the foregoing waivers will
preclude the assignment of any claim by way of subrogation to an insurance
company or any other person, each party now agrees to immediately give to its
insurer written notice of the terms of these mutual waivers and shall have their
insurance policies endorsed to prevent the invalidation of the insurance
coverage because of these waivers. Nothing in this Paragraph shall relieve a
party of liability to the other for failure to carry insurance required by this
Lease.
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17. ABANDONMENT
Tenant shall not abandon the Premises at any time during the Term for a
period in excess of thirty (30) days, whether consecutive or nonconsecutive. In
the event of abandonment in excess of thirty (30) days, the rights and remedies
of Tenant and Landlord shall be determined in accordance with the applicable
California statutes in effect at the time of abandonment.
18. FREE FROM LIENS
Tenant shall keep the Premises and the Property free from any liens arising
out of any work performed, materials furnished, or obligations incurred by or
for Tenant.
19. ADVERTISEMENTS AND SIGNS
Tenant shall not place or permit to be placed in, upon, or about the
Premises or the Property any signs, advertisements or notices without obtaining
Landlord's prior written consent or without complying with applicable laws and
will not conduct, or permit to be conducted, any sale by auction on the Premises
or otherwise on the Property. Tenant shall remove any sign, advertisement or
notice placed on the Premises by Tenant upon the expiration of the Term or
sooner termination of this Lease, and Tenant shall repair any damage or injury
to the Premises or the Property caused thereby, all at Tenant's expense. If any
signs are not removed, or necessary repairs not made, Landlord shall have the
right to remove the signs and repair any damage or injury to the Premises or the
Property at Tenants sole cost and expense.
20. UTILITIES
Tenant shall pay for all water, gas, heat, light, power, telephone service
and all other materials and services supplied to the Premises. If Tenant fails
to pay for any of the foregoing when due, Landlord may pay the same and add such
amount to the Rent.
21. ENTRY BY LANDLORD
Tenant shall permit Landlord and its Agents to enter into and upon the
Premises at all reasonable times, upon reasonable notice (except in the case of
an emergency, for which no notice shall be required), and subject to Tenant's
reasonable security arrangements, for the purpose of inspecting the same or
showing the Premises to prospective purchasers, lenders or tenants or to alter,
improve, maintain and repair the Premises as required or permitted of Landlord
under the terms hereof, without any rebate of Rent and without any liability to
Tenant for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned (except for actual damages resulting from the negligence or willful
misconduct of Landlord or its agents); and Tenant shall permit Landlord to post
notices of non-responsibility and ordinary "for sale" or "for lease" signs,
provided that Landlord may post such for lease signs and exhibit the Premises to
prospective tenants only during the six
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(6) months prior to termination of this Lease. No such entry shall be construed
to be a forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction of Tenant from the Premises.
22. DESTRUCTION AND DAMAGE
(a) If the Premises is damaged by fire or other perils covered by extended
coverage insurance, Landlord shall, at Landlord's option:
(1) In the event of total destruction (which shall mean destruction
or damage in excess of twenty-five percent (25%) of the full insurable value
thereof) of the Premises, elect either to commence promptly to repair and
restore the Premises and prosecute the same diligently to completion, in which
event this Lease shall remain in full force and effect; or not to repair or
restore the Premises, in which event this Lease shall terminate. Landlord shall
give Tenant written notice of its intention and, if Landlord elects to repair
and restore the Premises, of the length of time Landlord reasonably anticipates
such repair will take, within sixty (60) days after the occurrence of such
destruction. If Landlord elects not to restore the Premises, this Lease shall be
deemed to have terminated as of the date of such total destruction.
(2) In the event of a partial destruction (which shall mean
destruction or damage to an extent not exceeding twenty-five percent (25%) of
the full insurable value thereof) of the Premises for which Landlord will
receive insurance proceeds (including as insurance proceeds the amount of any
deductible included within the definition of Expenses and paid by Tenant as
Additional Rent pursuant to Paragraph 4(b)(2) above) sufficient to cover the
cost to repair and restore such partial destruction and, if the damage thereto
is such that the Premises may be substantially repaired or restored to its
condition existing immediately prior to such damage or destruction within one
hundred eighty (180) days from the date of such destruction, Landlord shall
commence and proceed diligently with the work of repair and restoration, in
which event the Lease shall continue in full force and effect. If such repair
and restoration requires longer than one hundred eighty (180) days or if the
insurance proceeds therefor (including as insurance proceeds the amount of any
deductible included within the definition of Expenses and paid by Tenant as
Additional Rent pursuant to Paragraph 4(b)(2) above), plus any amounts Tenant
may elect or is obligated to contribute, are not sufficient to cover the cost of
such repair and restoration, Landlord may elect either to so repair and restore,
in which event the Lease shall continue in full force and effect, or not to
repair or restore, in which event the Lease shall terminate. In either case,
Landlord shall give written notice to Tenant of its intention and, if Landlord
elects to repair and restore the Premises, of the length of time Landlord
reasonably anticipates such repair will take, within sixty (60) days after the
destruction occurs. If Landlord elects not to restore the Premises, this Lease
shall be deemed to have terminated as of the date of such partial destruction.
(b) If the Premises are damaged by any peril not covered by extended
coverage insurance, and the cost to repair such damage exceeds any amount Tenant
may agree to
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contribute, Landlord may elect either to commence promptly to repair and restore
the Premises and prosecute the same diligently to completion, in which event
this Lease shall remain in full force and effect; or not to repair or restore
the Premises, in which event this Lease shall terminate. Landlord shall give
Tenant written notice of its intention and, if Landlord elects to repair and
restore the Premises, of the length of time Landlord reasonably anticipates such
repair will take, within sixty (60) days after the occurrence of such damage. If
Landlord elects not to restore the Premises, this Lease shall be deemed to have
terminated as of the date on which Tenant surrenders possession of the Premises
to Landlord, except that if the damage to the Premises materially impairs
Tenant's ability to continue its business operations in the Premises and if
Tenant ceases its operations in the Premises as of the date of such damage, then
this Lease shall be deemed to have terminated as of the date such damage
occurred.
(c) Notwithstanding anything to the contrary contained in this Paragraph
22, in the event of damage to the Premises occurring during the last twelve (12)
months of the Term, Landlord and Tenant shall each have the right to terminate
this Lease by written notice of such election given to the other within thirty
(30) days after the damage occurs; provided, however, that Tenant shall have the
right to terminate this Lease under this Section 22(c) only if the Premises
shall be untenantable for the conduct of Tenant's business operations after such
damage. In the event either party elects to terminate this Lease under this
Section 22(c), this Lease shall be deemed to have terminated as of the date on
which Tenant surrenders possession of the Premises to Landlord, except that if
the damage to the Premises materially impairs Tenant's ability to continue its
business operations in the Premises and if Tenant ceases its operations in the
Premises as of the date of such damage, then this Lease shall be deemed to have
terminated as of the date such damage occurred.
(d) Notwithstanding anything to the contrary contained in this Paragraph
22, if the Premises are damaged by any peril and if the damage thereto is such
that the Premises may not be substantially repaired or restored to its condition
existing immediately prior to such damage or destruction within one hundred
eighty (180) days from the date of such destruction, Tenant shall have the right
to terminate this Lease by written notice to Landlord, which notice shall be
given, if at all, within fifteen (15) days after Landlord informs Tenant of the
expected duration of the period of repair or restoration. In the event Tenant
elects to terminate this Lease under this Paragraph 22(d), this Lease shall be
deemed to have terminated as of the date on which Tenant surrenders possession
of the Premises to Landlord, except that if the damage to the Premises
materially impairs Tenant's ability to continue its business operations in the
Premises and if Tenant ceases its operations in the Premises as of the date of
such damage, then this Lease shall be deemed to have terminated as of the date
such damage occurred.
(e) In the event of repair and restoration as herein provided, the monthly
installments of Base Rent shall be abated proportionately in the ratio which
Tenant's use of the Premises is impaired during the period of such repair or
restoration, to the extent of rental abatement insurance proceeds received by
Landlord. Tenant shall not be entitled to
15
any compensation or damages for loss of use of the whole or any part of the
Premises and/or any inconvenience or annoyance occasioned by such damage, repair
or restoration.
(f) If Landlord is obligated to or elects to repair or restore as herein
provided, and provided that Tenant does not exercise its right to terminate as
set forth above, Landlord shall repair or restore only those portions of the
Premises which were originally provided at Landlord's expense, substantially to
their condition existing immediately prior to the occurrence of the damage or
destruction; and Tenant shall promptly repair and restore, at Tenant's expense,
Tenant's fixtures, improvements, alterations and additions in and to the
Premises which were not provided at Landlord's expense.
(g) Tenant hereby waives the provisions of California Civil Code Section
1932(2) and Section 1933(4) which permit termination of a lease upon destruction
of the leased premises, and the provisions of any similar law now or hereinafter
in effect, and the provisions of this Paragraph 22 shall govern exclusively in
case of such destruction.
23. CONDEMNATION
If twenty-five percent (25%) or more of the Premises is taken for any
public or quasi-public purpose by any lawful governmental power or authority, by
exercise of the right of appropriation, inverse condemnation, condemnation or
eminent domain, or sold to prevent such taking (each such event being referred
to as a "Condemnation"), Landlord may, at its option, terminate this Lease as of
the date title vests in the condemning party. If the Premises after any
Condemnation and any repairs by Landlord would be untenantable for the conduct
of Tenant's business operations, Tenant shall have the right to terminate this
Lease as of the date title vests in the condemning party. If either party elects
to terminate this Lease as provided herein, such election shall be made by
written notice to the other party given within thirty (30) days after the nature
and extent of such Condemnation have been finally determined. Tenant shall not
because of such taking assert any claim against Landlord. Landlord shall be
entitled to receive the proceeds of all Condemnation awards, and Tenant hereby
assigns to Landlord all of its interest in such awards. If twenty-five percent
(25%) or more of the parking area for the Premises is taken, Landlord at its
option may terminate this Lease. If neither Landlord nor Tenant elects to
terminate this Lease to the extent permitted above, Landlord shall promptly
proceed to restore the Premises to the extent of any Condemnation award received
by Landlord, to substantially the same condition as existed prior to such
Condemnation, allowing for the reasonable effects of such Condemnation, and a
proportionate abatement shall be made to the Rent corresponding to the time
during which, and to the portion of the floor area of the Premises (adjusted for
any increase thereto resulting from any reconstruction) of which, Tenant is
deprived on account of such Condemnation and restoration. The provisions of
California Code of Civil Procedure Section 1265.130, which allows either party
to petition the Superior Court to terminate the Lease in the event of a partial
taking of the Premises, and any other applicable law now or hereafter enacted,
are hereby waived by Landlord and Tenant.
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24. ASSIGNMENT AND SUBLETTING
(a) Tenant shall not voluntarily or by operation of law, (1) mortgage,
pledge, hypothecate or encumber this Lease or any interest herein, (2) assign or
transfer this Lease or any interest herein, sublease the Premises or any part
thereof, or any right or privilege appurtenant thereto, or allow any other
person (the employees, agents and invitees of Tenant excepted) to occupy or use
the Premises, or any portion thereof, without first obtaining the written
consent of Landlord, which consent shall not be withheld unreasonably. When
Tenant requests Landlord's consent to such assignment or subletting, it shall
notify Landlord in writing of the name and address of the proposed assignee or
subtenant and the nature and character of the business of the proposed assignee
or subtenant and shall provide current financial statements for the proposed
assignee or subtenant prepared in accordance with generally accepted accounting
principles. Tenant shall also provide Landlord with a copy of the proposed
sublease or assignment agreement, including all material terms and conditions
thereof. Except in the case of an assignment or sublease to a Tenant Affiliate
(as hereinafter defined), Landlord shall have the option, to be exercised within
thirty (30) days of receipt of the foregoing, to (1) terminate this Lease as of
the commencement date stated in the proposed sublease or assignment; provided,
however, that if Tenant proposes to sublease twenty-five percent (25%) or less
of the Premises, then Landlord shall only have the right under this subsection
(1) to terminate this Lease as to the portion of the Premises proposed to be
covered by such sublease, (2) sublease or take an assignment, as the case may
be, from Tenant of the interest, or any portion thereof, in this Lease and/or
the Premises that Tenant proposes to assign or sublease, on the same terms and
conditions as stated in the proposed sublet or assignment agreement, (3) consent
to the proposed assignment or sublease, or (4) refuse its consent to the
proposed assignment or sublease, providing that such consent shall not be
unreasonably withheld.
(b) Notwithstanding anything to the contrary contained in Section 24(a)
above, Tenant shall have the right with the consent of Landlord, which consent
shall not be unreasonably withheld, to assign this Lease or to sublease the
Premises or any part thereof to a Tenant Affiliate. In the event Tenant proposes
to enter into an assignment or sublease with a Tenant Affiliate, then Tenant
shall provide Landlord with the information required to be delivered pursuant to
said Section 24(a). Landlord shall have the option, to be exercised within
thirty (30) days of receipt of the foregoing, to (1) consent to the proposed
assignment or sublease, or (2) refuse its consent to the proposed assignment or
sublease, providing that such consent shall not be unreasonably withheld. For
purposes of this Section 24, a "Tenant Affiliate" shall mean an entity that
controls, is controlled by or is under common control with, Tenant; and a party
shall be deemed to "control" another party for purposes of the aforesaid
definition only if the first party owns more than fifty percent (50%) of the
stock or other beneficial interests of the second party.
(c) Without otherwise limiting the criteria upon which Landlord may
withhold its consent under Sections 24(a) and (b) above, Landlord shall be
entitled to consider all reasonable criteria including, but not limited to, the
following: (i) whether or not the
17
proposed subtenant or assignee is engaged in a business which, and the use of
the Premises will be in an manner which, is in keeping with the then character
and nature of all other tenancies in the Project, (ii) whether the use to be
made of the Premises by the proposed subtenant or assignee will conflict with
any so-called "exclusive" use then in favor of any other tenant of the Building,
and whether such use would be prohibited by any other portion of this Lease,
including, but not limited to, any rules and regulations then in effect, or
under applicable Laws, and whether such use imposes a greater load upon the
Premises and the Building and Project services then imposed by Tenant, (iii) the
business reputation of the proposed individuals who will be managing and
operating the business operations of the assignee or subtenant, and the long-
term financial and competitive business prospects of the proposed assignee or
subtenant, (iv) the creditworthiness and financial stability of the proposed
assignee or subtenant in light of the responsibilities involved, and (v) that
the sublease or assignment agreement requires payment of the rent and other
amounts as required of Tenant hereunder with respect to the space being
subleased or assigned which are in no event less than that being offered by
Landlord for similar space in the Building under leases then being negotiated.
In any event, Landlord may withhold its consent to any assignment or sublease,
if (1) the actual use proposed to be conducted in the Premises or portion
thereof conflicts with the provisions of Paragraph 8(a) or (b) above or with any
other lease which restricts the use to which any space in the Building may be
put, or (2) the proposed assignment or sublease requires alterations,
improvements or additions to the Premises or portions thereof with a cost in
excess of one thousand dollars ($1,000.00).
(d) If Landlord approves an assignment or subletting as herein provided,
Tenant shall pay to Landlord, as Additional Rent, the difference, if any,
between (1) the Base Rent plus Additional Rent allocable to that part of the
Premises affected by such assignment or sublease pursuant to the provisions of
this Lease, and (2) the rent and any additional rent payable by the assignee or
sublessee to Tenant, after deducting the costs incurred by Tenant in connection
with any such assignment or sublease. The assignment or sublease agreement, as
the case may be, after approval by Landlord, shall not be amended without
Landlord's prior written consent, and shall contain a provision directing the
assignee or subtenant to pay the rent and other sums due thereunder directly to
Landlord upon receiving written notice from Landlord that Tenant is in default
under this Lease with respect to the payment of Rent. Landlord's collection of
such rent and other sums shall not constitute an acceptance by Landlord of
attornment by such assignee or subtenant. A consent to one assignment,
subletting, occupation or use shall not be deemed to be a consent to any other
or subsequent assignment, subletting, occupation or use, and consent to any
assignment or subletting shall in no way relieve Tenant of any liability under
this Lease. Any assignment or subletting without Landlord's consent shall be
void, and shall, at the option of Landlord, constitute a Default under this
Lease.
(e) Tenant shall pay Landlord's reasonable fees (including, without
limitation, the fees of Landlord's counsel), incurred in connection with
Landlord's review and processing of documents regarding any proposed assignment
or sublease.
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(f) Tenant acknowledges and agrees that the restrictions, conditions and
limitations imposed by this Paragraph 24 on Tenant's ability to assign or
transfer this Lease or any interest herein, to sublet the Premises or any part
thereof, to transfer or assign any right or privilege appurtenant to the
Premises, or to allow any other person to occupy or use the Premises or any
portion thereof, are, for the purposes of California Civil Code Section 1951.4,
as amended from time to time, and for all other purposes, reasonable at the time
that the Lease was entered into, and shall be deemed to be reasonable at the
time that Tenant seeks to assign or transfer this Lease or any interest herein,
to sublet the Premises or any part thereof, to transfer or assign any right or
privilege appurtenant to the Premises, or to allow any other person to occupy or
use the Premises or any portion thereof.
25. TENANT'S DEFAULT
The occurrence of any one of the following events shall constitute an event
of default on the part of Tenant ("Default"):
(a) The abandonment of the Premises by Tenant for a period in excess of
thirty (30) days, whether consecutive or nonconsecutive;
(b) Failure to pay any installment of Rent or any other monies due and
payable hereunder, said failure continuing for a period of three (3) business
days after notice from Landlord given in accordance with the terms of this
Lease;
(c) A general assignment by Tenant for the benefit of creditors;
(d) The filing of a voluntary petition in bankruptcy by Tenant, the filing
of a voluntary petition for an arrangement, the filing of a petition, voluntary
or involuntary, for reorganization, or the filing of an involuntary petition by
Tenant's creditors, said involuntary petition remaining undischarged for a
period of sixty (60) days;
(e) Receivership, attachment, or other judicial seizure of substantially
all of Tenant's assets on the Premises, such attachment or other seizure
remaining undismissed or undischarged for a period of sixty (60) days after the
levy thereof;
(f) Failure of Tenant to execute and deliver to Landlord any estoppel
certificate, subordination agreement, or lease amendment within the time periods
and in the manner required by Paragraph 30 or 31 or 42;
(g) An assignment or sublease, or attempted assignment or sublease, of
this Lease or the Premises by Tenant contrary to the provision of Paragraph 24,
unless such assignment or sublease is expressly conditioned upon Tenant having
received Landlord's consent thereto;
(h) Failure of Tenant to restore the Security Deposit to the amount and
within the time period provided in Paragraph 6 above;
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(i) Failure in the performance of any of Tenant's covenants, agreements or
obligations hereunder (except those failures specified as events of Default in
other Paragraphs of this Paragraph 25, which shall be governed by such other
Paragraphs), which failure continues for ten (10) days after written notice
thereof from Landlord to Tenant provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such ten (10) day period despite reasonable diligence, Tenant shall not
be in default under this subparagraph unless Tenant fails thereafter diligently
and continuously to prosecute the cure to completion; and
(j) Chronic delinquency by Tenant in the payment of Rent, or any other
periodic payments required to be paid by Tenant under this Lease. "Chronic
delinquency" shall mean failure by Tenant to pay Rent, or any other payments
required to be paid by Tenant under this Lease within three (3) business days
after written notice thereof for any three (3) months (consecutive or
nonconsecutive) during any twelve (12) month period. In the event of a Chronic
Delinquency, in addition to Landlord's other remedies for Default provided in
this Lease, at Landlord's option, Landlord shall have the right to require that
Rent be paid by Tenant quarterly, in advance.
Tenant agrees that any notice given by Landlord pursuant to Paragraph 25(b)
or (i) above and the third notice given by Landlord pursuant to Paragraph 25(j)
above shall satisfy the requirements for notice under California Code of Civil
Procedure Section 1161, and Landlord shall not be required to give any
additional notice in order to be entitled to commence an unlawful detainer
proceeding.
26. LANDLORD'S REMEDIES
(a) TERMINATION. In the event of any Default by Tenant, then in addition
to any other remedies available to Landlord at law or in equity and under this
Lease, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In the event that Landlord shall elect to so terminate this Lease
then Landlord may recover from Tenant:
(1) the worth at the time of award of any unpaid Rent and any other
sums due and payable which have been earned at the time of such termination;
plus
(2) the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable which would have been earned after
termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus
(3) the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable for the balance of the term of this
Lease after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus
20
(4) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom, including, without limitation, any costs or expenses incurred by
Landlord (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering or
rehabilitating the Premises or any portion thereof, including such acts for
reletting to a new tenant or tenants; (iii) for leasing commissions; or (iv) for
any other costs necessary or appropriate to relet the Premises; plus
(5) such reasonable attorneys' fees incurred by Landlord as a result
of a Default, and costs in the event suit is filed by Landlord to enforce such
remedy; and plus
(6) 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 applicable law.
As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award, plus one percent (1%). 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, in the event Tenant is
evicted or Landlord takes possession of the Premises by reason of any Default of
Tenant hereunder.
(b) CONTINUATION OF LEASE. In the event of any Default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant's
Default and abandonment and recover Rent as it becomes due, provided Tenant has
the right to sublet or assign, subject only to reasonable limitations).
(c) RE-ENTRY. In the event of any Default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.
(d) RELETTING. In the event of the abandonment of the Premises by Tenant
or in the event that Landlord shall elect to re-enter as provided in Paragraph
26(c) or shall take possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to
terminate this Lease as provided in Paragraph 26(a), Landlord may from time to
time, without terminating this Lease, relet the Premises or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable with
21
the right to make alterations and repairs to the Premises. In the event that
Landlord shall elect to so relet, then rentals received by Landlord from such
reletting shall be applied in the following order: (1) to reasonable attorneys'
fees incurred by Landlord as a result of a Default and costs in the event suit
is filed by Landlord to enforce such remedies; (2) to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; (3) to the
payment of any costs of such reletting; (4) to the payment of the costs of any
alterations and repairs to the Premises; (5) to the payment of Rent due and
unpaid hereunder; and (6) the residue, if any, shall be held by Landlord and
applied in payment of future Rent and other sums payable by Tenant hereunder as
the same may become due and payable hereunder. Should that portion of such
rentals received from such reletting during any month, which is applied to the
payment of Rent hereunder, be less than the Rent payable during the month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting. Notwithstanding any provision to the
contrary in this Lease, this Lease shall terminate, as set forth in California
Civil Code Section 1951.2(a), if Landlord terminates Tenant's right to
possession of the Premises.
(e) TERMINATION. No re-entry or taking of possession of the Premises by
Landlord pursuant to this Paragraph 26 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default. Notwithstanding any
provision to the contrary in this Lease, this Lease shall terminate, as set
forth in California Civil Code Section 1951.2(a), if Landlord terminates
Tenant's right to possession of the Premises.
(f) CUMULATIVE REMEDIES. The remedies herein provided are not exclusive
and Landlord shall have any and all other remedies provided herein or by law or
in equity.
(g) NO SURRENDER. No act or conduct of Landlord, whether consisting of
the acceptance of the keys to the Premises, or otherwise, shall be deemed to be
or constitute an acceptance of the surrender of the Premises by Tenant prior to
the expiration of the Term, and such acceptance by Landlord of surrender by
Tenant shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its option,
elect in writing to treat such surrender as a merger terminating Tenant's estate
under this Lease, and thereupon Landlord may terminate any or all such subleases
by notifying the sublessee of its election so to do within five (5) days after
such surrender.
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27. ATTORNEY'S FEES
If either party hereto fails to perform any of its obligations under this
Lease or if any dispute arises between the parties hereto concerning the meaning
or interpretation of any provision of this Lease, then the defaulting party or
the party not prevailing in such dispute, as the case may be, shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and reasonable attorneys' fees and disbursements. Any
such attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Lease shall be recoverable separately from and
in addition to any other amount included in such judgment, and such attorneys'
fees obligation is intended to be severable from the other provisions of this
Lease and to survive and not be merged into any such judgment.
28. TAXES
Tenant shall be liable for and shall pay, prior to delinquency, all taxes
levied against personal property and trade or business fixtures of Tenant. If
any alteration, addition or improvement installed by Tenant pursuant to
Paragraph 11, or any personal property, trade fixture or other property of
Tenant, is assessed and taxed with the Property, Tenant shall pay such taxes to
Landlord within ten (10) days after delivery to Tenant of a statement therefor.
29. EFFECT OF CONVEYANCE
The term "Landlord" as used in this Lease, means only the owner for the
time being of the Property containing the Premises, so that, in the event of any
sale of the Property or the Premises, Landlord shall be and hereby is entirely
freed and relieved of all covenants and obligations of Landlord hereunder
accruing from and after the transfer, provided that the purchaser at any such
sale has assumed and agreed in writing to carry out any and all covenants and
obligations of Landlord hereunder and Landlord has delivered any advance rentals
and any remaining balance of the Security Deposit to such purchaser.
30. TENANT'S ESTOPPEL CERTIFICATE
From time to time, upon written request of Landlord, Tenant shall execute,
acknowledge and deliver to Landlord or its designee, a written certificate
stating (a) the date this Lease was executed, the Commencement Date of the Term
and the date the Term expires; (b) the date Tenant entered into occupancy of the
Premises; (c) the amount of Rent and the date to which such Rent has been paid;
(d) that this Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way (or, if assigned, modified,
supplemented or amended, specifying the date and terms of any agreement so
affecting this Lease); (e) that this Lease represents the entire agreement
between the parties with respect to Tenant's right to use and occupy the
Premises (or specifying such other agreements, if any); (f) that all obligations
under this Lease to be
23
performed by Landlord as of the date of such certificate have been satisfied (or
specifying those as to which Tenant claims that Landlord has yet to perform);
(g) that all required contributions by Landlord to Tenant on account of Tenant's
improvements have been received (or stating exceptions thereto); (h) that on
such date there exist no defenses or offsets that Tenant has against the
enforcement of this Lease by Landlord (or stating exceptions thereto); (i) that
no Rent or other sum payable by Tenant hereunder has been paid more than one (1)
month in advance (or stating exceptions thereto); (j) that security has been
deposited with Landlord, stating the amount thereof; and (k) any other matters
evidencing the status of this Lease that may be required either by a lender
making a loan to Landlord to be secured by a deed of trust covering the Premises
or by a purchaser of the Premises. Any such certificate delivered pursuant to
this Paragraph 30 may be relied upon by a prospective purchaser of Landlord's
interest or a mortgagee of Landlord's interest or assignee of any mortgage upon
Landlord's interest in the Premises. If Tenant shall fail to provide such
certificate within ten (10) days after receipt by Tenant of a written request by
Landlord as herein provided, such failure shall, at Landlord's election,
constitute a Default under this Lease, and Tenant shall be deemed to have given
such certificate as above provided without modification and shall be deemed to
have admitted the accuracy of any information supplied by Landlord to a
prospective purchaser or mortgagee.
31. SUBORDINATION
Landlord shall have the right to cause this Lease to be and remain subject
and subordinate to any and all mortgages, deeds of trust and ground leases, if
any ("Encumbrances") that are now or may hereafter be executed covering the
Premises, or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof; provided only, that in the event of termination of any such ground
lease or upon the foreclosure of any such mortgage or deed of trust, so long as
Tenant is not in default, the holder thereof ("Holder") shall agree in writing
to recognize Tenant's rights under this Lease as long as Tenant shall pay the
Rent and observe and perform all the provisions of this Lease to be observed and
performed by Tenant. Within ten (10) days after Landlord's written request,
Tenant shall execute, acknowledge and deliver any and all reasonable documents
required by Landlord or the Holder to effectuate such subordination, provided
that such Holder shall concurrently execute, acknowledge and deliver a
nondisturbance agreement in favor of Tenant. If Tenant fails to do so, such
failure shall constitute a Default by Tenant under this Lease. Notwithstanding
anything to the contrary set forth in this Paragraph 31, Tenant hereby attorns
and agrees to attorn to any person or entity purchasing or otherwise acquiring
the Premises at any sale or other proceeding or pursuant to the exercise of any
other rights, powers or remedies under such Encumbrance.
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32. ENVIRONMENTAL COVENANTS
(a) As used in this Lease, the term "Hazardous Materials" shall mean and
include any substance that is or contains (a) any "hazardous substance" as now
or hereafter defined in (S) 101(14) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA") (42 U.S.C. (S)
9601 et seq.) or any regulations promulgated under CERCLA; (b) any "hazardous
waste" as now or hereafter defined in the Resource Conservation and Recovery
Act, as amended ("RCRA") (42 U.S.C. (S) 6901 et seq.) or any regulations
promulgated under RCRA; (c) any substance now or hereafter regulated by the
Toxic Substances Control Act, as amended ("TSCA") (15 U.S.C. (S) 2601 et seq.)
or any regulations promulgated under TSCA; (d) petroleum, petroleum by-products,
gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and
asbestos-containing material, in any form, whether friable or non-friable; (f)
polychlorinated biphenyls; (g) lead and lead-containing materials; or (h) any
additional substance, material or waste (A) the presence of which on or about
the Premises (i) requires reporting, investigation or remediation under any
Environmental Laws (as hereinafter defined), (ii) causes or threatens to cause a
nuisance on the Premises or any adjacent property or poses or threatens to pose
a hazard to the health or safety of persons on the Premises or any adjacent
property, or (iii) which, if it emanated or migrated from the Premises, could
constitute a trespass, or (B) which is now or is hereafter classified or
considered to be hazardous or toxic under any Environmental Laws.
(b) As used in this Lease, the term "Environmental Laws" shall mean and
include (a) CERCLA, RCRA and TSCA; and (b) any other federal, state or local
laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or
hereinafter in effect relating to (i) pollution, (ii) the protection or
regulation of human health, natural resources or the environment, (iii) the
treatment, storage or disposal of Hazardous Materials, or (iv) the emission,
discharge, release or threatened release of Hazardous Materials into the
environment.
(c) Tenant agrees that during its use and occupancy of the Premises it
will (a) not (i) permit Hazardous Materials to be present on or about the
Premises except in a manner and quantity necessary for the ordinary performance
of Tenant's business or (ii) release, discharge or dispose of any Hazardous
Materials on, in, at, under, or emanating from, the Premises or the Property;
provided, however, that Tenant shall have the right to use and dispose of de
minimis amounts of cleaning materials, toner fluids and other office and
janitorial supplies, provided that the same are necessary for the conduct of
Tenant's business operators in the Premises and are used and disposed of at all
times in full compliance with all Environmental Laws; (b) comply with all
Environmental Laws relating to the Premises and the use of Hazardous Materials
on or about the Premises and not engage in or permit others to engage in any
activity at the Premises in violation of any Environmental Laws; and (c)
immediately notify Landlord of (i) any inquiry, test, investigation or
enforcement proceeding by any governmental agency or authority against Tenant,
Landlord (to the extent Tenant has knowledge thereof) or the Premises (to the
extent Tenant has knowledge thereof) relating to any Hazardous Materials or
under any
25
Environmental Laws or (ii) the occurrence of any event or existence of any
condition that would cause a breach of any of Tenant's covenants set forth in
this Section 32.
(d) If Tenant's use of Hazardous Materials on or about the Premises
results in a release, discharge or disposal of Hazardous Materials on, in, at,
under, or emanating from, the Premises or the Property, Tenant agrees to
investigate, clean up, remove or remediate such Hazardous Materials in full
compliance with (a) the requirements of (i) all Environmental Laws and (ii) any
governmental agency or authority responsible for the enforcement of any
Environmental Laws; and (b) any additional requirements of Landlord that are
reasonably necessary to protect the value of the Premises or the Property.
(e) Upon reasonable notice to Tenant, Landlord may inspect the Premises
for the purpose of determining whether there exists on the Premises any
Hazardous Material or other condition or activity that is in violation of the
requirements of this Lease or of any Environmental Laws. Tenant will supply to
Landlord such historical and operational information regarding the Premises as
may be reasonably requested to facilitate any such inspection and will make
available for meetings appropriate personnel having knowledge of such matters.
Tenant agrees to give Landlord at least sixty (60) days' prior notice of its
intention to vacate the Premises so that Landlord will have an opportunity to
perform such an inspection prior to such vacation. The right granted to Landlord
herein to perform inspections shall not create a duty on Landlord's part to
inspect the Premises, or liability on the part of Landlord for Tenant's use,
storage or disposal of Hazardous Materials, it being understood that Tenant
shall be solely responsible for all liability in connection therewith.
(f) Landlord shall have the right, but not the obligation, prior or
subsequent to an event of default, without in any way limiting Landlord's other
rights and remedies under this Lease, to enter upon the Premises, or to take
such other actions as it deems necessary or advisable, to investigate, clean up,
remove or remediate any Hazardous Materials or contamination by Hazardous
Materials present on, in, at, under, or emanating from, the Premises or the
Property in violation of Tenant's obligations under this Lease or under any
Environmental Laws. Notwithstanding any other provision of this Lease, Landlord
shall also have the right, at its election, in its own name or as Tenant's
agent, to negotiate, defend, approve and appeal any action taken or order issued
by any governmental agency or authority with regard to any such Hazardous
Materials or contamination by Hazardous Materials. Subject to Subsection 32(i)
below, all costs and expenses paid or incurred by Landlord in the exercise of
the rights set forth in this Subsection 32(f) shall be payable by Tenant upon
demand.
(g) Tenant shall surrender the Premises to Landlord upon the expiration or
earlier termination of this Lease free of debris, waste or Hazardous Materials
placed on or about the Premises by Tenant or its agents, employees, contractors
or invitees, and in a condition which complies with all Environmental Laws.
26
(h) Tenant agrees to indemnify and hold harmless Landlord from and against
any and all claims, losses (including, without limitation, loss in value of the
Premises or the Property, liabilities and expenses (including attorney's fees)
sustained by Landlord attributable to (i) any Hazardous Materials placed on or
about the Premises by Tenant or its agents, employees, contractors or invitees
or (ii) Tenant's breach of any provision of this Section 32.
(i) Notwithstanding anything in this Section 32 to the contrary, Tenant
shall not be responsible for the clean up or remediation of, and shall not
required to indemnify Landlord against, any costs or liabilities attributable
to, Hazardous Materials placed on or about the Premises (i) prior to the
Commencement Date by third parties not related to Tenant or its Agents, or (ii)
by Landlord at any time, except in either case to the extent that Tenant or its
Agents have contributed to or exacerbated the presence of such Hazardous
Materials.
(j) The provisions of this Section 32 shall survive the expiration or
earlier termination of this Lease.
33. NOTICES
All notices and demands which may or are to be required or permitted to be
given to either party by the other hereunder shall be in writing and shall be
sent (i) by United States mail, postage prepaid, certified, or (ii) by personal
delivery or (iii) by overnight courier, addressed to the addressee at the
address for such addressee as specified in the Basic Lease Information, or to
such other place as such party may from time to time designate in a notice to
the other party given as provided herein, or by telex or telecopy at the number
therefor designated by the addressee in a written notice given as provided
herein. Notice shall be deemed given upon actual receipt (or attempted delivery
if delivery is refused).
34. WAIVER
The waiver of any breach of any term, covenant or condition of this Lease
shall not be deemed to be a waiver of such term, covenant or condition or any
subsequent breach of the same or any other term, covenant or condition herein
contained. The subsequent acceptance of Rent by Landlord shall not be deemed to
be a waiver of any preceding breach by Tenant, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such Rent. No delay or
omission in the exercise of any right or remedy of Landlord on any Default by
Tenant shall impair such a right or remedy or be construed as a waiver. Any
waiver by Landlord of any Default must be in writing and shall not be a waiver
of any other Default concerning the same or any other provisions of this Lease.
27
35. HOLDING OVER
Any holding over after the expiration of the Term, without the express
written consent of Landlord, shall constitute a Default and, without limiting
Landlord's remedies provided in this Lease, such holding over shall be construed
to be a tenancy at sufferance, at a rental rate of one hundred fifty percent
(150%) of the Base Rent last due in this Lease, plus Additional Rent, and shall
otherwise be on the terms and conditions herein specified, so far as applicable.
36. SUCCESSORS AND ASSIGNS
The terms, covenants and conditions of this Lease shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto. If Tenant shall consist
of more than one entity or person, the obligations of Tenant under this Lease
shall be joint and several.
37. TIME
Time is of the essence of this Lease and each and every term, condition and
provision herein.
38. BROKERS
Landlord and Tenant each represents and warrants to the other that neither
it nor its officers or agents nor anyone acting on its behalf has dealt with any
real estate broker except the Broker(s) specified in the Basic Lease Information
in the negotiating or making of this Lease, and each party agrees to indemnify
and hold harmless the other from any claim or claims, and costs and expenses,
including attorneys' fees, incurred by the indemnified party in conjunction with
any such claim or claims of any other broker or brokers to a commission in
connection with this Lease as a result of the actions of the indemnifying party.
39. LIMITATION OF LIABILITY
Tenant agrees that, in the event of any default or breach by Landlord with
respect to any of the terms of the Lease to be observed and performed by
Landlord (a) Tenant shall look solely to the estate and property of Landlord or
any successor in interest in the Property and the Premises, for the satisfaction
of Tenant's remedies for the collection of a judgment (or other judicial
process) requiring the payment of money by Landlord; (b) no other property or
assets of Landlord, its partners, shareholder, officers, directors or any
successor in interest shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies; (c) no personal liability
shall at any time be asserted or enforceable against Landlord's partners or
successors in interest (except to the extent permitted in (a) above), or against
Landlord's shareholders, officers or directors, or their respective partners,
shareholders, officers, directors or successors in interest; and (d) no
28
judgment will be taken against any partner, shareholder, officer or director of
Landlord. The provisions of this section shall apply only to the Landlord and
the parties herein described, and shall not be for the benefit of any insurer
nor any other third party.
40. FINANCIAL STATEMENTS
Within thirty (30) days after Landlord's request, Tenant shall deliver to
Landlord the then current financial statements of Tenant (including interim
periods following the end of the last fiscal year for which annual statements
are available), including a balance sheet and profit and loss statement for the
most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied. Such financial statements shall not
be required to be prepared or compiled by a certified public accountant,
provided, however, that if Tenant does retain a certified public accountant to
prepare or compile such statements, then Landlord shall have the right to review
the same. Landlord shall keep Tenant's financial statements confidential, except
that Landlord shall have the right to disclose such statements to Landlord's
partners, lenders, consultants and advisors, including accountants and
attorneys, and otherwise as required by law or legal process.
41. RULES AND REGULATIONS
Tenant agrees to comply with such reasonable rules and regulations as
Landlord may adopt from time to time for the orderly and proper operating of the
Premises and parking and other common areas. Such rules may include but shall
not be limited to the following: (a) restriction of employee parking to a
limited, designated area or areas reasonably conveniently located with respect
to the Premises; and (b) regulation of the removal, storage and disposal of
Tenant's refuse and other rubbish at the sole cost and expense of Tenant. The
rules and regulations shall be binding upon Tenant upon delivery of a copy of
them to Tenant. Landlord shall not be responsible to Tenant for the failure of
any other person to observe and abide by any of said rules and regulations.
42. MORTGAGEE PROTECTION
(a) Modifications for Lender. If, in connection with obtaining financing
for the Premises or any portion thereof, Landlord's lender shall request
reasonable modifications to this Lease as a condition to such financing, Tenant
shall not unreasonably withhold, delay or defer its consent to such
modifications, provided such modifications do not materially adversely affect
Tenant's rights or increase Tenant's obligations under this Lease.
(b) Rights to Cure. Tenant agrees to give to any trust deed or mortgage
holder ("Holder"), by certified mail, at the same time as it is given to
Landlord, a copy of any notice of default given to Landlord, provided that prior
to such notice Tenant has been notified, in writing, (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the Holder shall have an
29
additional twenty (20) days after expiration of such period, or after receipt of
such notice from Tenant (if such notice to the Holder is required by this
Paragraph 42(b)), whichever shall last occur within which to cure such default
or if such default cannot be cured within that time, then such additional time
as may be necessary if within such twenty (20) days, any Holder has commenced
and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated.
43. ENTIRE AGREEMENT
This Lease, including the Exhibits and any Addenda attached hereto, which
are hereby incorporated herein by this reference, contains the entire agreement
of the parties hereto, and no representations, inducements, promises or
agreements, oral or otherwise, between the parties, not embodied herein or
therein, shall be of any force and effect.
44. INTEREST
Any installment of Rent and any other sum due from Tenant under this Lease
which is not received by Landlord within ten (10) days from when the same is due
shall bear interest from such tenth (10th) day until paid at an annual rate
equal to the maximum rate of interest permitted by law. Payment of such interest
shall not excuse or cure any Default by Tenant. In addition, Tenant shall pay
all costs and attorneys' fees incurred by Landlord in collection of such
amounts.
45. CONSTRUCTION
This Lease shall be construed and interpreted in accordance with the laws
of the State of California. The parties acknowledge and agree that no rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall be employed in the interpretation of this Lease, including
the Exhibits and any Addenda attached hereto. All captions in this Lease are for
reference only and shall not be used in the interpretation of this Lease.
Whenever required by the context of this Lease, the singular shall include the
plural, the masculine shall include the feminine, and vice versa. If any
provision of this Lease shall be determined to be illegal or unenforceable, such
determination shall not affect any other provision of this Lease and all such
other provisions shall remain in full force and effect.
46. REPRESENTATIONS AND WARRANTIES OF TENANT
Tenant hereby makes the following representations and warranties, each of
which is material and being relied upon by Landlord, is true in all respects as
of the date of this Lease, and shall survive the expiration or termination of
the Lease.
(a) If Tenant is an entity, Tenant is duly organized, validly existing and
in good standing under the laws of the state of its organization and the persons
executing this
30
Lease on behalf of Tenant have the full right and authority to execute this
Lease on behalf of Tenant and to bind Tenant without the consent or approval of
any other person or entity. Tenant has full power, capacity, authority and legal
right to execute and deliver this Lease and to perform all of its obligations
hereunder. This Lease is a legal, valid and binding obligation of Tenant,
enforceable in accordance with its terms.
(b) Tenant has not (1) made a general assignment for the benefit of
creditors, (2) filed any voluntary petition in bankruptcy or suffered the filing
of an involuntary petition by any creditors, (3) suffered the appointment of a
receiver to take possession of all or substantially all of its assets, (4)
suffered the attachment or other judicial seizure of all or substantially all of
its assets, (5) admitted in writing its inability to pay its debts as they come
due, or (6) made an offer of settlement, extension or composition to its
creditors generally.
Landlord and Tenant have executed and delivered this Lease as of the Lease
Date specified in the Basic Lease Information.
Landlord: Tenant:
Aetna Life Insurance Company, International Network Services, Inc.,
a Connecticut corporation a California corporation
By: Aetna Realty Investors, Inc.,
a corporation, By: _________________________________
Its Agent Print Name:__________________________
Its:_________________________________
By:_________________________________
By: _________________________________
Its: _______________________________ Print Name:__________________________
Its:_________________________________
31
Exhibit A
DIAGRAM OF THE PREMISES
Exhibit B
TENANT IMPROVEMENTS
This exhibit, entitled Tenant Improvements, is and shall constitute Exhibit
B to the Lease Agreement, dated as of the Lease Date, by and between Landlord
and Tenant for the Premises. The terms and conditions of this Exhibit B are
hereby incorporated into and are made a part of the Lease. Capitalized terms
used, but not otherwise defined, in this Exhibit B have the meanings ascribed to
such terms in the Lease.
1. LANDLORD'S WORK
In addition to the Tenant Improvements (as defined in Paragraph 3 below) to
be constructed in the Premises pursuant to this Exhibit B, prior to the
Commencement Date, Landlord shall demolish the interior tenant improvements
existing in the Premises on the date of this Lease (except for the restroom
cores and sprinkler system risers) at Landlord's sole cost and expense.
(Landlords Work). Landlords Work shall be paid for out of Landlords own funds
and shall not be applied against or funded out of the Tenant Improvements
Allowance (hereinafter defined in Paragraph 6) or the Tenant Improvements Loan
(hereinafter defined in Paragraph 7).
2. TENANT IMPROVEMENTS
In addition to Landlord's Work to be constructed by Landlord at its sole
cost and expense pursuant to Paragraph 1 above, Landlord agrees, subject to the
conditions set forth below, to construct certain Tenant Improvements in the
Premises pursuant to the terms of this Exhibit B.
3. DEFINITION
Tenant Improvements as used in the Lease and this Exhibit B shall include
only those improvements within the interior portions of the Premises which are
depicted on the Final Plans and Specifications (hereafter defined in Paragraph
4) or described hereinbelow. Tenant Improvements shall specifically not include
Landlords Work to be performed by Landlord pursuant to Paragraph 1 above or any
alterations, additions, or improvements installed or constructed by Tenant, and
any of Tenants personal property or trade fixtures.
The Tenant Improvements may include:
(a) Partitioning, doors, floor coverings, finishes, ceilings, wall
coverings and painting, millwork and similar items.
(b) Electrical wiring, lighting fixtures, outlets and switches, and other
electrical work.
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(c) Duct work, terminal boxes, diffusers and accessories required for the
completion of the heating, ventilation and air conditioning systems serving the
Premises, including the cost of meter and key control for after-hour air
conditioning.
(d) Any additional Tenant requirements including, but not limited to odor
control, special heating, ventilation and air conditioning, noise or vibration
control or other special systems.
(e) All fire and life safety control systems such as fire walls,
sprinklers, halon, fire alarms, including piping, wiring and accessories
installed within and serving the Premises.
(f) All plumbing, fixtures, pipes, and accessories to be installed within
and serving the Premises.
4. PLANS AND SPECIFICATIONS
Landlord shall retain the architect specified in the Basic Lease
Information ("Architect") for the preparation of preliminary and final working
architectural and engineering plans and specifications for the Tenant
Improvements ("Final Plans and Specifications"). Landlord reserves the right to
substitute for the Architect another architect of its selection. Tenant shall
cooperate diligently with the Architect and shall furnish within ten (10) days
after request therefor, all information required by the Architect for completion
of the Final Plans and Specifications, and shall provide (in writing, if
requested by Landlord), not later than three (3) business days after request
therefor, any approval or disapproval of preliminary or Final Plans and
Specifications which Tenant is permitted to give under this Exhibit B. Landlord
and Tenant shall indicate their approval of the Final Plans and Specifications
by initialing them and attaching them to the Lease as Exhibit B-1. Upon
completion of the Final Plans and Specifications and approval thereof by
Landlord and Tenant, Landlord will obtain subcontractor trade bids and furnish a
cost breakdown to Tenant. In the event the estimated Tenant Improvements Cost
(hereafter defined in Paragraph 8), based on such bids and the reasonably
anticipated costs of other items constituting the Tenant Improvements Cost,
exceeds the sum of the Tenant Improvements Allowance and the Tenant Improvements
Loan plus any amounts which Tenant desires to pay as an Excess Tenant
Improvements Cost (hereafter defined in Paragraph 9) ("Tenants T.I. Budget"), at
Tenant's request, the Final Plans and Specifications may be revised once, at
Tenant's cost and expense. Any such revisions shall be subject to Landlord's
approval, and the amended Final Plans and Specifications, as approved by
Landlord and Tenant, shall thereafter be deemed to be the Final Plans and
Specifications for the Tenant Improvements. The amended Final Plans and
Specifications shall be approved by Tenant (in writing, if requested by
Landlord) not later than three (3) days after Landlords request therefor.
Landlord shall thereafter submit such amended Final Plans and Specifications to
its contractor and subcontractor for re-bidding, and shall furnish a cost
breakdown to Tenant. If the estimated Tenant Improvements Cost, as determined by
the bids based on the amended Final Plans and Specifications and the reasonably
anticipated costs of other items
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constituting the Tenant Improvements Cost, result in an Excess Tenant
Improvements Cost, then Tenant shall pay such Excess Tenant Improvements Cost as
and when required by Paragraph 9. Tenants failure to approve or disapprove any
matters which Tenant shall be entitled to approve or disapprove pursuant to this
Paragraph 4 shall be conclusively deemed to be approval of same by Tenant.
5. LANDLORD TO CONSTRUCT IMPROVEMENTS
When the Final Plans and Specifications (as amended, if required by
Paragraph 4 above) have been approved by Landlord and Tenant, Landlord shall
submit such Final Plans and Specifications to all governmental authorities
having rights of approval over the Tenant Improvement work and shall apply for
all governmental approvals and building permits. Subject to satisfaction of all
conditions precedent and subsequent to its obligations under this Exhibit B, and
further subject to the provisions of Paragraph 9, Landlord shall thereafter
commence and proceed to complete construction of the Tenant Improvements.
6. TENANT IMPROVEMENTS ALLOWANCE
Landlord shall provide an allowance for the planning and construction of
the Tenant Improvements in the amount specified in the Basic Lease Information
("Tenant Improvements Allowance"). Subject to Paragraph 7, the Tenant
Improvements Allowance shall be the maximum contribution by Landlord for the
Tenant Improvements Cost. Should the actual cost of planning and constructing
those Tenant Improvements depicted on the Final Plans and Specifications be less
than the Tenant Improvements Allowance, the Tenant Improvements Allowance shall
be reduced to an amount equal to said actual cost.
7. TENANT IMPROVEMENTS LOAN
Landlord agrees to lend Tenant up to Ninety-three Thousand Eight Hundred
Seventy-nine Dollars ($93,879.00) for Tenant Improvements (the "Tenant
Improvements Loan") after the Tenant Improvements Allowance has been disbursed.
The Tenant Improvements Loan shall be repayable by Tenant to Landlord in
substantially equal self-amortizing installments over the Term of the Lease,
together with interest on the balance outstanding from time to time at the rate
of twelve percent (12%) per annum. Notwithstanding anything herein to the
contrary, in the event the Lease shall terminate for any reason prior to the
scheduled expiration thereof, the Tenant Improvements Loan and all accrued and
unpaid interest thereon shall immediately become due and payable in full.
8. TENANT IMPROVEMENTS COST
The Tenant Improvements Cost ("Tenant Improvements Cost") shall include all
costs and expenses associated with the design, preparation, approval and
construction of the Tenant Improvements, including, but not limited, to the
following:
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(a) All costs incurred by Landlord or Tenant of preliminary and final
architectural and engineering plans and specifications for the Tenant
Improvements, and engineering costs associated with completion of the State of
California energy utilization calculations under Title 24 legislation;
(b) All costs of obtaining building permits and other necessary
authorizations from local governmental authorities;
(c) All costs of interior design and finish schedule plans and
specifications including as-built drawings;
(d) All direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises, including, but not limited
to, the construction fee for overhead and profit and the cost of all on-site
supervisory and administrative staff, office, equipment and temporary services
rendered by Landlords contractor in connection with construction of the Tenant
Improvements;
(e) All fees payable to the Architect and Landlords engineering firm if
they are required by Tenant to redesign any portion of the Tenant Improvements
following Tenant's approval of the Final Plans and Specifications;
(f) All construction and project management fees payable by Landlord to
Landlords property management company or any other individual or entity; and
(g) Utility connection fees.
In no event shall the Tenant Improvements Cost include any costs of
Landlords Work or any costs of procuring, constructing or installing in the
Premises any of Tenant's personal property or trade fixtures.
9. EXCESS TENANT IMPROVEMENTS COST
If the Tenant Improvements Cost is more than the sum of the Tenant
Improvements Allowance and Tenant Improvements Loan, then the difference between
the Tenant Improvements Cost and the sum of the Tenant Improvements Allowance
and Tenant Improvements Loan ("Excess Tenant Improvements Cost") shall be paid
by Tenant to Landlord in cash, within ten (10) days of delivery of statements
from Landlord to Tenant therefor. If construction of the Tenant Improvements
will result in Excess Tenant Improvements Cost, Landlord shall not be obligated
to commence construction of the Tenant Improvements if payment of the Excess
Tenant Improvements Cost by Tenant is not received within ten (10) days after
delivery by Landlord to Tenant of a statement therefor; provided, however, that
Landlord may, at its option, commence construction of the Tenant Improvements,
in which event Tenant shall pay the Excess Tenant Improvements Cost within ten
(10) days after delivery by Landlord to Tenant of the statement therefor. If
Landlord so elects to commence construction of the Tenant Improvements or has
already commenced construction of the Tenant Improvements when
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there occurs an Excess Tenant Improvements Cost, then Landlord shall be entitled
to suspend or terminate construction of the Tenant Improvements if payment by
Tenant to Landlord of the Excess Tenant Improvement Cost has not been received
within ten (10) days after delivery by Landlord to Tenant of a statement
therefor.
10. CHANGE REQUEST
When the Final Plans and Specifications have been approved by Landlord,
there shall be no changes without Landlord's prior written consent, except for
(a) necessary on-site installation variations or minor changes necessary to
comply with building codes and other governmental regulations; (b) one revision,
if requested by Tenant, to adjust the estimated Tenant Improvements Cost to
Tenants T.I. Budget therefor, as permitted by Paragraph 4 above; and (c) changes
approved in writing by both parties. Any costs related to such governmentally
required or requested and approved changes shall be added to the Tenant
Improvements Cost and, to the extent such cost results in Excess Tenant
Improvements Cost, shall be paid for by Tenant as and with any Excess Tenant
Improvements Cost as set forth in Paragraph 9. The billing for such additional
costs to Tenant shall be accompanied by evidence of the amounts billed as is
customarily used in the business. Costs related to changes shall include,
without limitation, any architectural or design fees, and Landlord's general
contractors price for effecting the change.
11. TERMINATION
If the Lease is terminated prior to completion of the Tenant Improvements
for any reason due to the Default of Tenant under the Lease, in addition to any
other damages available to Landlord, Tenant shall pay to Landlord, within five
(5) days of receipt of a statement therefor, all costs incurred by Landlord
through the date of termination in connection with the Tenant Improvements.
Landlord shall have the right to terminate the Lease, upon written notice to
Tenant, if Landlord is unable to obtain a building permit for the Tenant
Improvements within one hundred twenty (120) days from the date the Lease is
mutually executed.
12. INTEREST
Any payments required to be made by Tenant hereunder which are not paid
when due shall bear interest at the maximum rate permitted by law from the due
date therefor until paid.
13. DISCLAIMER
Landlord shall have no liability to Tenant in the event construction of the
Tenant Improvements is delayed or prevented due to any cause beyond Landlords
reasonable control; provided, however, that the foregoing clause shall not limit
Tenant's right to terminate this Lease where applicable under Section 7(d) of
the Lease. If Tenant is entitled or permitted to enter the Premises prior to
completion of the Tenant
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Improvements, Landlord shall not be liable to Tenant or its Agents for any loss
or damage to property, or injury to person, arising from or related to
construction of the Tenant Improvements. Tenant shall take all reasonable
precautions to protect against such loss, damage or injury during construction
of the Tenant Improvements, and shall not interfere with the conduct of the
Tenant Improvement work. Tenant shall cooperate with all reasonable directives
of Landlord and Landlords contractor in order to minimize any disruption or
delay in completion of the Tenant Improvements work.
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Exhibit B-1
FINAL PLANS AND SPECIFICATIONS
Reference is hereby made to that certain Lease Agreement dated May 8, 1996
by and between Aetna Life Insurance Company, a Connecticut corporation, as
landlord ("Landlord"), and International Network Services, Inc., a California
corporation, as tenant ("Tenant"), ("Lease Agreement").
The Final Plans and Specifications (as defined in Exhibit B to the Lease
Agreement) consists of the following described drawings, specifications and
other documents:
Title of Drawing, Specification or
Other Document Date
The Final Plans and Specifications have been initialed by both Landlord and
Tenant and are on file with Landlord.
Initials: Landlord _______ Tenant _______
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Exhibit C
COMMENCEMENT DATE MEMORANDUM
Landlord: Aetna Life Insurance Company
Tenant: International Network Services, Inc.
Lease Date: May 8, 1996
Premises: Located at 1213 Innsbruck Drive, Sunnyvale, California
Tenant hereby accepts the Premises as being in the condition required under
the Lease, with all Tenant Improvements completed (except for minor punchlist
items which Landlord agrees to complete).
The Commencement Date of the above referenced Lease is hereby established
as _________________, 1996.
Tenant: International Network Services, Inc.,
a California corporation
By: __________________________________________
Print Name: __________________________________
Its: _________________________________________
Approved and Agreed:
Aetna Life Insurance Company,
a Connecticut corporation
By: Aetna Realty Investors, Inc.,
a corporation,
Its Agent
By: ___________________________
Its: __________________________
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