1
EXHIBIT 10.7
LEASE BETWEEN WAREHAM
DEVELOPMENT CORPORATION
AND
QUADRAMED CORPORATION
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS 1
2. PREMISES 3
3. DELAY IN POSITION 3
3.1 Option to Extend Term
4. RENT 3
4.1 Base Monthly Rent 4
4.2 Base Monthly Rent Adjustment 4
4.3 Option Term Rent Adjustment 4
4.4 Additional Rent 4
4.4.1 Verification and Audit of Operating Expenses 5
4.5 Security Deposit 5
4.6 Late Charges 5
5. TAXES 5
5.1 Landlord's Taxes 5
5.3 Tenant's Taxes 6
5.4 Tax Contests 6
6. INSURANCE
6.1 Landlord's Insurance 6
6.2 Tenant's Insurance 6
6.3 Waiver of Subrogation 6
6.4 Landlord Indemnification 7
6.5 Tenant Indemnification 7
6.6 Worker's Insurance 7
6.7 Insurance Deductibles 7
7. MAINTENANCE 8
7.1 Premises 8
7.2 Amenities 8
7.3 Alterations 8
7.4 Systems 9
7.5 Liens 9
8. MANAGEMENT 9
9. UTILITIES AND SERVICES 9
9.1 Property 9
9.2 Limitation of Liability 9
10. USE OF PREMISES 10
11. DEFAULTS AND REMEDIES 10
11.1 Default of Tenant 10
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11.2 Landlord's Remedies 11
11.3 Landlord's Default 12
12. TERMINATION 12
13. CONDEMNATION OF PREMISES 13
13.1 Total Condemnation 13
13.2 Partial Condemnation 13
13.3 Award to Tenant 13
14. LANDLORD'S ENTRY 13
15. LIMITATION OF LIABILITY AND INDEMNITY 14
15.1 Limitation of Landlord's Liability 14
15.2 Limitation on Enforcement of Remedies 14
16. ASSIGNMENT AND SUBLETTING 14
17. DAMAGE OR DESTRUCTION 15
18. HAZARDOUS MATERIALS 16
18.1 Tenant's Warranties 16
18.1.1 Restrictions on Hazardous Materials 16
18.1.2 Applicable Regulations 16
18.1.3 Restoration 16
18.1.4 Removal 16
18.1.5 Tenant's Written Confirmation 17
18.1.6 Tenant's Duty to Notify Landlord 17
18.2 Landlord's Rights 17
18.3 Tenant's Duty to Indemnify 17
18.4 Right of Entry 18
18.5 Definitions 18
18.5.1 "Hazardous Material" 18
18.5.2 "Environmental Health and Safety Requirements" 18
18.6 Allocation of Responsibilities 18
18.7 Inspections 19
18.8 Cooperation Respecting Regulations 19
18.9 Survival 19
18.10 Special Matters 19
18.10.1 Storage Tanks 19
18.10.2 Flammable Chemicals 19
18.19.3 NFPA Warnings 19
18.11 Landlord's Obligations 19
18.11.1 Compliance with Regulations 19
18.11.2 Restoration 19
18.11.3 Duty to Notify Tenant 19
18.11.4 Indemnity of Tenant 19
19. MISCELLANEOUS PROVISIONS 20
19.1 Waiver 20
19.2 Notices 20
19.3 Construction 20
19.4 Memorandum 20
19.5 Authority 20
19.6 Litigation 20
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19.7 Subordination of Leasehold 20
19.8 Estoppel 21
19.9 Attornment 21
19.10 Lender's Requests 21
19.11 Reasonable Expenditures 21
19.12 Submission 21
19.13 Arbitration of Disputes 21
19.14 Brokerage 22
19.15 Cooperation 22
19.16 Parking 22
19.17 Non-Disturbance Agreement 23
19.18 Preparation 23
19.19 CC&R's 23
19.20 Limitation and Restrictions Respecting Operating Expenses 23
19.21 Special Allocation of Capital Expenses Related to
Modifications Required by Regulations 23
19.22 Project Schedule 24
20. OVERRIDING CONDITIONS AND OTHER MATTERS 24
20.1 Acquisition of Property 24
20.2 Financing 25
20.3 Acquisition of Entitlements and Permits 25
20.4 Tenant's Cooperation 25
20.5 Landlord's Right to Assign Lease to Newly Formed Entity 25
20.6 Construction 25
20.6.1 Construction of Building Shell 25
20.6.2 Construction of Tenant Improvements 26
20.6.3 Measurement of Rentable and Usable Square
Footage 27
20.7 Delays out to Landlord's Control 28
20.8 Existing Lease 28
20.9 Landfill Disclosure 28
20.10 Acknowledgement of Receipt of Documents 28
SIGNATURE LINES 29
EXHIBITS
EXHIBIT A -Location of Premises in Development
EXHIBIT B -Initial Estimated Schedule of Operating Expenses
EXHIBIT C -Current Conceptual Drawings
EXHIBIT D -Final Space Plans and Working Drawings
EXHIBIT E -Project Schedule
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LEASE BETWEEN WAREHAM
DEVELOPMENT CORPORATION
AND
QUADRAMED CORPORATION
This Lease is made and entered into as of, November 19, 1998 between Wareham
Development Corporation, a California Limited Liability Company ("Landlord")
and QuadraMed Corporation, a California Corporation ("Tenant").
1. DEFINITIONS. Words not defined in this Section or elsewhere in this
Lease have their customary meanings. (1) The "Term" is the total of the
"Initial Term" and all validly exercised Option Terms allowed by this Lease;
the "Initial Term" is ten years; (2) "Commencement Date" is the tenth Day
following the Day on which Landlord provides notice to Tenant that the Premises
are ready for occupancy by Tenant or that the Premises would have been ready
for occupancy by Tenant but for a Tenant Delay. The premises shall be deemed
"ready for occupancy" when construction of the Building, including the Tenant
Improvements, the Premises, the Core Area and Common Area (which includes
landscaping and parking facilities) has reached "Substantial Completion" (as
defined below); the Commencement Date is the first day of the Initial Term; (3)
"Base Monthly Rent" means, subject to adjustment, $2.00 per month per Rentable
Square Foot, payable in advance, without deduction, offset, prior notice or
demand, on the first day of each Month of the Term; (4) "Premises" means the
entire Building which shall be leased to Tenant, consisting of approximately
33,000 rentable square feet, (as shown on Exhibit A and subject to adjustment to
the actual Rentable Square Footage of the Building upon the completion of its
design); (5) As this lease is for the entire Building, the terms "Building" and
"Premises" are used interchangeably; (6) "Property" includes the Building and
land on which it stands commonly known as Site A, Bayview Business Park,
located in San Rafael, California, together with all use rights and interest in
the Amenities (as defined below) pursuant the CC&Rs (as defined below) and the
land on which the Amenities are located within the Park (as defined below); (7)
"Agents" includes employees, agents, guests, invitees and, when applied to
Tenant, subtenants and assignees; (8) "Day", "Month" and "Year" mean calendar
day/month/year; (9) "Lease Year" means consecutive 12-month periods starting on
the Commencement Date, however if the Commencement Date is not the first Day of
a Month, the Lease Year shall run from the first Day of the Month following the
Commencement Date; (10) "Common Area" means the building Shell and core
including HVAC, halls, lobby, elevators, rest rooms, roof, exterior walls and
structural components including common stairways and accessways; (11) "Tax"
means any form of assessment, license, fee, rent, tax, levy, penalty or tax
imposed by any authority having direct or indirect taxing powers (including
Improvement Districts) against Landlord's interest in the Property or personal
property used in the operation of
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the Property and/or Landlord's business of renting the Property; (12)
"Alteration" includes additions, deletions, modifications and changes (including
utility installations such as ducting, power panels, fluorescent fixtures, base
heaters, conduit and wiring); (13) Except as limited by the provisions of
Paragraph 19.20 of this Lease, "Operating Expenses" include the following: (a)
all fees, cost and expenses incurred for maintenance, servicing, management,
upkeep and repair of the Property and the Premises inclusive of Taxes, insurance
premiums and deductibles, charges assessed by the Park and/or its owner's
association (including, without limitation, dues, fees maintenance costs and
assessments); (b) the costs of compliance with changes required by Regulations
adopted or modified or reinterpreted following the execution of this Lease and
with the requirements of the CC&Rs; and (c) all "Annual Assessments", "Special
Assessments" and "Individual Special Assessments" and the Landlord's "Allocable
Share" of all expenses imposed pursuant to the terms of the CC&Rs (as hereafter
defined); (14) "CC&Rs" means the Declaration of Covenants, Conditions and
Restrictions and Reciprocal Easements for Bayview Business Park dated July, 1989
as amended in October, 1989 and August, 1992, and as they may be amended, from
time to time in the future; (15) Tenant's "Pro Rata Share" is 100% of the total
cost of an item; (16) "Floor Area of the Building", for all purposes, including,
without limitation, the measurement of Usable Square Feet and Rentable Square
Feet as those terms are defined below, is measured from the exterior surface of
exterior walls including core areas; (17) "consent" and "approval", wherever
required from the Landlord and/or the Tenant in this Lease, require reasonable
conduct by the acting party; (18) "Regulation" includes all laws, ordinances,
statutes, regulations and requirements adopted by duly constituted public
authorities now in force or hereafter adopted; (19) "Litigation": includes
judicial actions, arbitrations and administrative proceedings; (20)
intentionally omitted; (21) "Condemnation" includes taking by exercise of
governmental power or the transfer to any condemnor under threat of or during
the of condemnation proceedings; (22) "Usable Square Foot" refers to space
within the total Floor Area of the Building consisting of the square footage of
the Premises less the amount of square footage of the Core Areas; (23) "Rentable
Square Foot" refers to space in the entire Floor Area of the Building including
all Usable Square Feet and the Core Areas; (24) "Core Areas" means the HVAC
installations, elevators, stairs, restrooms, entries and lobbies which would be
shared by tenants in a multi-user building; (25) "Amenities" means common
walkways, driveways, sidewalks, landscaping, parking spaces and driveways which
are part of the Bayview Business Park and which are defined as "Common Area" in
the CC&Rs (but are, in this Lease, referred to as Amenities to avoid confusion;
(26) "Park" means the Bayview Business Park located in San Rafael, California;
(27) "Association" means the Bayview Business Park Owners Association
established pursuant to the CC&Rs; (28) "Completion Date" means the date on
which the Premises (inclusive of Tenant Improvements), Building Shell, Core
Areas and Common Area are Substantially Complete; (29) "Substantially Complete"
or "Substantial Completion" means completion of the construction in all material
respects, but not including minor, cosmetic or "punch-list" items, which will be
deemed achieved upon issuance of a temporary or permanent Certificate of
Occupancy (or signed-off permit in the event that the municipality does not
issue separate Certificates of Occupancy); (30) "Shell" or "Building Shell"
refers to the basic structure, floor divisions and external finish of the
building including, without limitation the exterior walls, roof, foundation and
floors; (31) "Tenant Delays" shall mean any delay resulting directly and
primarily from Tenant's failure to cooperate or to timely cooperate, timely
provide
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plans or drawings, timely approve plans or drawings or timely provide any other
information, approval or cooperation required of Tenant pursuant to the
provisions of this Lease including, without limitation cooperation regarding
value-engineering to reduce any anticipated cost over the Allowance for the
Tenant Improvements and/or cost over the anticipated cost of construction of the
Building Shell; (32) "Projected Completion Date" shall mean that date certain
indicated on the schedule attached hereto as Exhibit E.
2. PREMISES. Landlord hereby leases to Tenant and Tenant shall have
exclusive use of the Premises for the Term. Tenant acknowledges that the
Building and the Property are located within the Park. The Property, the
Building, the Premises and Tenant as the occupant of the Premises are all
subject to the provisions of the CC&Rs and Tenant agrees to abide by the terms,
provisions and requirements of the CC&Rs. The Amenities are a part of the Park
and are available to Tenant to use on a non-exclusive basis for the duration of
Tenant's occupancy of the Premises pursuant to the terms of this Lease.
3. DELAY IN POSSESSION. If Landlord cannot deliver possession of the
Premises to Tenant on the Projected Completion Date, the failure shall not
affect this Lease's validity, or render Landlord liable for resulting damages;
but Tenant shall not be obligated to pay rent until Landlord tenders possession.
If Landlord cannot deliver possession within 180 Days of the Projected
Completion Date (or such other extended date as the parties may mutually agree
upon in writing) for any reason except a delay excludable under the terms of
this Lease (Tenant Delays or delays caused directly and primarily by Force
Majeur), Tenant may terminate this Lease on written notice to Landlord. If
Tenant elects to terminate this Lease pursuant to the provisions of this
Section,then neither Landlord nor Tenant shall have any further obligations
under this Lease and Tenant shall have no further recourse against Landlord
respecting the Lease. Notwithstanding any other provision of this Lease, a delay
in possession caused directly and primarily by a Tenant Delay will not delay the
commencement of the Tenant's obligation to pay Rent or Additional Rent or excuse
Tenant from that obligation.
3.1 OPTION TO EXTEND TERM. Tenant is granted one option to extend
this Lease for an additional five year period (the "Option Term") pursuant to
the provisions of this Lease and exercisable by written notice (the "Option
Notice") delivered to Landlord at least 180 Days before expiration of the
Initial Term. At Landlord's option, Tenant's failure to cure, prior to the
expiration of the Initial Term, any default existing at the time Tenant delivers
the Option Notice shall render the Option Notice invalid and preclude the
commencement of the Option Term.
4. RENT. Tenant shall pay all rent due Landlord in United States dollars
at the address set forth below or such other place as Landlord designates in
writing. If Alterations increase the number of Rentable Square Feet of the
Premises, Base Monthly Rent will increase proportionately. If the obligation to
pay rent commences other than on the first day of a Month, the first payment
shall include rent from the date the obligation commences to the first day of
the following month calculated per diem on the basis of the actual number of
Days in the Month. Base Monthly Rent has been calculated on the basis of 33,000
rentable square feet. Landlord and Tenant acknowledge that the actual square
footage of the Building upon the completion of construction may vary from
33,000. Upon the completion of the drawings upon which the
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building permits are issued and the issuance of the permits, the actual
square footage of the Premises will be calculated from the said drawings. If the
actual square footage of the Premises is greater or less than 33,000, the Base
Monthly Rent will be appropriately adjusted to reflect the actual Rentable
Square Footage of the Premises. Rent shall be due from and after the
Commencement Date. Notwithstanding any other provision of this Agreement, a
Delay in possession resulting directly and primarily from a Tenant Delay shall
not excuse Tenant from the obligation to pay Rent, inclusive of any Additional
Rent required under the provisions of this Lease.
4.1. BASE MONTHLY RENT. The initial Base Monthly Rent (subject to
adjustment as provided in this Lease) shall be $2.00 per Rentable Square Foot,
$66,000 per month.
4.2. BASE MONTHLY RENT ADJUSTMENT. The Base Monthly Rent (subject to
adjustment as provided in this Lease) will increase to $2.10 per Rentable Square
Foot ($69,300 per month) at the end of the 36th Month of the Lease Term and to
$2.15 per Rentable Square Foot ($82,500 per month) at the end of the 72nd month
of the Lease Term.
4.3. OPTION TERM RENT ADJUSTMENT. If Tenant exercises the right to extend
the Term to the Option Term, the Base Monthly Rent will be adjusted effective
the first Day of the first Month of the Option Term to the greater of the Base
Monthly Rent for the last Month of the Initial Term or 95% of the fair market
rental value as of the first day of the last Month of the Initial Term, based on
a third party, non-equity, non-renewal lease of the duration of the Option Term
for comparable quality office buildings in Southern Marin County.
4.4. ADDITIONAL RENT. For each year during the Term, Tenant shall pay to
Landlord, in addition to the Base Monthly Rent and all other payments due under
this Lease, an amount equal to the actual Operating Expenses for that year.
Prior to the beginning of each Lease Year, Landlord will prepare and distribute
to Tenant an "Estimated Schedule" setting out what Landlord believes to be the
reasonably anticipated Operating Expenses for the succeeding Lease Year. The
initial Estimated Schedule is annexed to this Lease as Exhibit B. The last
distributed Estimated Schedule shall remain operational until replaced by a new
Estimated Schedule. Tenant shall make payments against the Operating Expense
Schedule. After the end of each year Landlord will reconcile the actual
Operating Expenses to the Estimated Schedule. If Tenant has paid, on an
estimated basis, an amount less than the actual Operating Expenses for the
affected Year, Tenant shall pay the difference between the Estimated Schedules
and the actual Operating Expenses for the affected Year within 30 days of
receipt of a written reconciliation and invoice. If the Tenant has paid, on an
estimated basis, an amount more than the actual Operating Expenses for the
affected year, Tenant shall receive a rental credit upon delivery to Tenant of
the written reconciliation. If Landlord, for any reason, neglects or fails to
timely provide the required Estimated Schedule or reconciliation of Operating
Expenses to Tenant, such failure shall not be deemed a default under or breach
of this Lease by Landlord for any purpose; neither shall it be deemed a waiver
of any rights of Landlord to collect Tenant's Pro Rata Share of Operating
Expenses, nor shall such failure by Landlord excuse Tenant from performance of
any of Tenant's obligations under the provisions of this Lease. Notwithstanding
any other provision of this Lease, Tenant shall have no obligation to make a
reconciliation payment to Landlord in connection with under-estimated Operating
Expenses until 30 days after receipt of a written reconciliation and invoice.
Payments made by Tenant pursuant to this Paragraph are sometimes called
"Additional Rent."
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4.4.1. VERIFICATION AND AUDIT OF OPERATING EXPENSES.
Should Tenant question the Estimated Schedule or the reconciliation, Landlord
shall provide Tenant with verification of the amounts set forth in the
Estimated Schedule or the year-end reconciliation, as may be appropriate.
Tenant shall have the right to review and audit Operating Expenses and Landlord
will make such records as may reasonably be required for such audit available
to Tenant during normal business hours and upon reasonably notice. Tenant shall
pay the cost and expense of any such audit, unless such audit shows a
discrepancy of at least 5% of Operating Expenses, in which event Landlord shall
pay the costs and expenses of such audit, to a maximum of $2,000.
4.5. SECURITY DEPOSIT. Concurrent with the execution of this
Lease, Tenant shall give Landlord as a security deposit the sum of $66,000 [or
such other sum as may equal the initial Base Monthly Rent if the actual
Rentable Square Footage of the Premises is different than 33,000 Rentable
Square Feet] (the "Deposit"). Landlord shall hold the Deposit as security for
Tenant's faithful performance of all of Tenant's obligations under this Lease
and may, at its option, apply the Deposit to remedy Tenant's default in the
payment of any charge due under this Lease, to repair damages to the Property
caused by Tenant, or to clean the Premises at the end of the Lease Term. If any
portion of the Deposit is so applied by Tenant prior to the last day of the
Lease Term, Tenant shall, within 30 Days after written demand therefor, deliver
to Landlord funds sufficient to restore the Deposit to its original amount.
Landlord shall not be required to keep the Deposit separate from its general
funds. Tenant shall earn no interest on the Deposit. If Tenant fully performs
under this Lease, Landlord shall return any unused portion of the Deposit to the
last holder of Tenant's interest in this Lease upon Tenant's surrender of the
Premises. On any transfer of Landlord's interest in the Lease, the Deposit shall
be transferred to Landlord's successor, and, upon such transfer, Landlord
released from all liability for the Deposit without further action or
documentation.
4.6. LATE CHARGES. Late payment of any sums due hereunder
will cause Landlord to incur costs not contemplated by this Lease, including
without limit, accounting charges and late charges that may be imposed on
Landlord by the terms of loans secured by the Property. If Tenant fails to
deliver to Landlord any moneys due hereunder within 10 Days of the due date,
Tenant shall pay to Landlord a late charge of 5% of the overdue amount which is
agreed to be a reasonably estimate of the costs Landlord will incur by reason
of the late payment, the exact amount of which will be difficult to determine.
Acceptance of a late charge shall not constitute a waiver of the default or
preclude Landlord's exercise of other rights and remedies.
5. TAXES.
5.1. LANDLORD'S TAXES: Landlord shall pay (subject to
Tenant's obligation to reimburse Landlord as an Operating Expense) all Taxes
assessed against Landlord's interest in the Property and personal property used
in its operation. Such taxes shall be considered part of the Operating Expenses
of the Property.
5.2. TENANT'S TAXES: Tenant shall pay directly to the taxing
authority all taxes assessed on Tenant's fixtures, improvements, furnishings,
merchandise, equipment and personal property in and on the Premises. If Tenant
fails to timely pay taxes assessed directly to Tenant, Landlord may (but is not
obligated to) pay the same at any time thereafter. On demand, Tenant shall
repay Landlord amounts so paid by Landlord, together with interest at the
highest rate
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allowable by law:
5.3. TAX CONTESTS: If Tenant desires to contest the validity or
amount of any Tax applicable to the Premises, Tenant shall be entitled to do so
and to defer payment of such Tax until final determination of such contest upon
giving Landlord written notice thereof prior to commencing such contest and
protecting Landlord on demand by obtaining a surety bond in the amount of 150%
of the total amount of Taxes in dispute. The surety bond shall hold Landlord
harmless from any damages or costs incurred in connection with the contest,
Landlord shall, at Tenant's request, cooperate in all reasonable ways requested
by Tenant in connection with the contest of Taxes, provided that Tenant pays
all reasonable costs incurred by Landlord resulting from such cooperation.
6. INSURANCE.
6.1. LANDLORD'S INSURANCE. Landlord shall insure the Property for
100% of its replacement value against loss or damage by those risks normally
included by the insurance industry in the term "All Risk"; any recovery from
such insurance shall belong to Landlord. Landlord shall maintain comprehensive
general liability insurance insuring Landlord (and others named by Landlord,
but not Tenant) against liability for bodily injury, death and property damage
on or about the Property, with combined single limit coverage of at least $2
million. Notwithstanding any other provision of this Lease, if Landlord does
not have earthquake insurance on the Building during the first year of the
Lease Term but thereafter acquires it, Tenant shall only be responsible for
payment of the premium for such insurance which exceeds the premium during the
first year that Landlord has earthquake insurance on the Building.
6.2. TENANT'S INSURANCE. Tenant, at its sole expense, shall maintain:
a) All Risk coverage insurance on all fixtures, improvements, furnishings,
merchandise, equipment and personal property in the Premises; and b) for the
benefit of Tenant, commercial general liability and property damage insurance
against claims for bodily injury, death or property damage occurring in or
about, and/or arising from Tenant's use of, the Premises, with combined single
limit coverage of at least $2,000,000. Such insurance coverage shall not limit
Tenant's liability. Tenant shall furnish to Landlord prior to the Commencement
Date, and at least 30 Days prior to the expiration date of any policy,
certificates indicating that Tenant has acquired replacement insurance and that
all the insurance required of Tenant is in full force and effect, that Landlord
has been named as an additional insured on the liability policy, and that no
such policy will be canceled unless 30 Days' prior written notice has been given
to Landlord. Each liability policy shall include a broad form liability
endorsement and provide that Landlord as an additional insured may recover for
any loss it suffers by reason of acts/omissions of Tenant and its Agents.
Except as Landlord may approve in writing before issuance of such policy, all
policies which Tenant shall obtain hereunder shall be issued by companies with
"AAA" rating by either Moody's Rating Service or Standard & Poor's Rating
service and general policy rating of at least A in Best Insurance Guide's then
most current issue. Policies obtained by Tenant pursuant to this Lease shall be
subject to Landlord's approval.
6.3. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in
this Lease, the parties release each other and their respective officers,
agents, employees and servants, from all claims for damages, loss expense or
injury to the Premises, and/or to the furnishings and fixtures and equipment or
inventory or other property of either Landlord or
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Tenant in, about or upon the Premises, which is caused by or results from
perils, events or happenings which are covered by insurance in force at the
time of any such loss or by insurance required to be carried hereunder;
provided, however, that such waiver shall be effective only to the extent
permitted by the said insurance and to the extent such insurance coverage is
not prejudiced thereby. Each party shall cause each insurance policy obtained
by it to provide that the insurance company waives all right of recovery by way
of subrogation in connection with any damage covered by such policy.
6.4. LANDLORD INDEMNIFICATION. Tenant will indemnify and save
Landlord harmless from and against any and all claims, actions, damages,
liability and expense relating to loss of life, personal injury and/or property
damage arising from or out of any occurrence in, upon or at the Premises, or
the occupancy or Tenant's use of the Property, to the extent occasioned wholly
or in part by any acts or omissions of Tenant and its Agents. If Landlord
becomes a party to such Litigation commenced by or against Tenant, Tenant shall
defend and hold Landlord harmless from all claims, liabilities, costs and
expenses, and shall pay all costs, expenses and reasonable legal fees incurred
by Landlord in connection with such Litigation. If Tenant is made a party to
Litigation commenced by or against Landlord solely as a result of Landlord's
acts or omissions, Landlord shall defend Tenant and indemnify Tenant against
the costs of such Litigation including expenses and reasonable attorneys' fees.
The provisions of this Paragraph shall be deemed to apply only to those
circumstances where a portion of a loss or claim is not covered by existing
insurance and then only to the extent that such loss or claim is not covered by
insurance. This Paragraph shall not preclude application of comparative
negligence if the parties or their agents are both at fault.
6.5. TENANT INDEMNIFICATION. Landlord will indemnify and save Tenant
harmless from and against any and all claims, actions, damages, liability and
expense relating to loss of life, personal injury and/or property damage
arising from or out of any occurrence in, upon or at the Premises, or the
occupancy of Landlord's use of the Property, to the extent occasioned wholly or
in part by any acts or omissions of Landlord and its Agents. If Tenant becomes
a party to such Litigation commenced by or against Landlord, Landlord shall
defend and hold Tenant harmless from all claims, liabilities, costs and
expenses, and shall pay all costs, expenses and reasonable legal fees incurred
by Tenant in connection with such Litigation. If Landlord is made a party to
Litigation commenced by or against Tenant solely as a result of acts or
omissions by Tenant and/or Tenant's agents, Tenant shall defend Landlord and
indemnify Landlord against the costs, expenses and reasonable attorney's fees
incurred by Landlord in connection with such Litigation. The provisions of this
Paragraph shall apply only to those circumstances where a portion of a loss or
claim is not covered by existing insurance and then only to the extent that
such loss or claim is not covered by insurance. This Paragraph shall not
preclude application of comparative negligence if the parties or their agents
are both at fault.
6.6. WORKER'S INSURANCE. Tenant shall keep in force for the Term and
pay for worker's compensation and other insurance to comply with all applicable
Regulations.
6.7. INSURANCE DEDUCTIBLES: Notwithstanding any other provision of
this Lease, in the event that a deductible must be paid in connection with an
insured loss, then, with respect to each such loss, the Tenant shall pay the
first $10,000 of the deductible and the Landlord shall pay each deductible in
excess of $10,000.
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7. MAINTENANCE AND MODIFICATIONS.
7.1 PREMISES. During the Term, and subject to the CC&Rs, Landlord
shall maintain all improvements and appurtenances upon the Property and Premises
(including all interior walls, doors, doorways, lighting fixtures, plumbing
fixtures and Shell) in good order, condition and repair. Tenant waives the
provisions of any law permitting Tenant to make repairs at Landlord's expense,
including, without limitation, California Civil Code Sections 1941-1946. Tenant
shall notify Landlord in writing of required repairs to the Property. Landlord
shall make necessary repairs in a reasonable time. Maintenance and repairs shall
be completed in a good and workmanlike manner using such methods, supplies and
labor as Landlord deems appropriate in its reasonable discretion. Landlord shall
make commercially reasonable efforts to perform maintenance and repairs with
minimum interference with Tenant's business operations. All such maintenance
expenses shall be considered Operating Expenses of the Property. Should changes
in the terms, interpretation or requirements imposed by or under the authority
of any Regulation affecting the Property occur after the Commencement Date which
changes require modification of any portion of the Property or the Premises, or
should any Regulation adopted after the Commencement Date require such a
modification, Landlord shall cause such modification(s) to occur and Tenant
shall accept such modification(s). Tenant's obligation to pay for repairs under
this paragraph shall not extend to damage and repairs with respect to which any
insurance policy carried by Landlord and insuring the Building makes payment, to
the extent of the payment actually made by the insurance carrier and subject to
the requirement that any deductible applicable to the policy will be treated as
an Operating Expense. Notwithstanding any other provision of this Lease, any
expense associated with a modification to comply with new or changed Regulation
requirements shall be considered Operating Expenses of the Property.
Notwithstanding any other provision of this Lease, Tenant shall not be obligated
to pay for repairs to the extent such repairs result directly from defects in
design, construction or materials of the Building or caused by the intentional
act or omission of Landlord or Landlord's agents. Except as expressly limited by
the provisions of this Paragraph and the definition of Operating Expenses, the
provisions of this paragraph are subject to the provisions of this Lease
obligating Tenant to reimburse Landlord for Operating Expenses and to the
provisions of Paragraph 19.21 of this Lease. Nothing in this paragraph shall be
so interpreted or construed as to limit Landlord's right to reimbursement
pursuant to the provisions of this Lease respecting Operating Expense
reimbursement or the provisions of Paragraph 19.21 of this Lease.
Notwithstanding any other provision of this Lease, Tenant will be responsible
for the cost of any repair or replacement required as a result of the
intentional acts or the negligence of Tenant and its Agents.
7.2. AMENITIES: Tenant acknowledges and understands that the
Association will be responsible for maintenance of the Amenities pursuant to
the provisions of the CC&Rs.
7.3 ALTERATIONS. Tenant shall make no Alteration to the Property or
the Premises without Landlord's prior written consent. Landlord may impose such
conditions upon approval of an Alteration as Landlord may deem appropriate.
Every Alteration shall be done under supervision of a licensed contractor and
in accordance with plans and specifications furnished to and approved by
Landlord prior to commencement of work. If an Alteration increases the number
of Rentable Square Feet allocable to the Premises, the Base Monthly Rent shall
be increased in proportion to the resulting increase in the number of Rentable
Square Feet allocable to the Premises. Tenant shall give Landlord 7 Days'
advance written notice prior to starting
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construction of each Alteration. Each Alteration shall remain in place and
become the property of Landlord, unless, at the time of consent, Landlord
required removal of the Alteration on Termination, in which case, Tenant shall
remove such Alteration(s) and restore the Premises to their pre-Alteration
condition at Termination. Notwithstanding the foregoing, Tenant shall have the
right, without prior approval of the Landlord, to make interior, non-structural
alterations to the Premises which do not affect the Building systems and which
cost less than $25,000 in the aggregate, provided that such alterations are
otherwise performed in accordance with the terms and conditions of this Lease,
in compliance with the CC&Rs and with all applicable Regulations. Tenant shall
make no Alteration or any nature to the Amenities without the prior written
consent of the Landlord and the Association.
7.4. SYSTEMS. The heating/air-conditioning ("HVAC"), plumbing and
electrical systems (collectively "Systems") shall not be used for any purpose
other than for which they were constructed.
7.5. LIENS. Tenant shall keep the Property and the area owned by
the Association, inclusive of all the Amenities, free of liens arising out of
obligations incurred, work performed or materials furnished for or to Tenant.
Tenant shall indemnify Landlord from all costs, liens and encumbrances from work
performed or materials furnished by or at Tenant's direction. If Tenant fails to
obtain removal of such lien within 20 Days following its imposition, Landlord
shall have the right, but not the obligation, to obtain such release by such
means as it deems proper, including payment of the underlying claim. On demand,
Tenant shall reimburse Landlord for all such sums paid and expenses incurred by
Landlord in connection therewith (including attorneys' fees and costs) together
with interest at the highest rate allowable by law from the date Landlord makes
such payment until the date of reimbursement.
8. MANAGEMENT. The Wareham Property Group, Inc., an affiliate of
Landlord, or another affiliated or unaffiliated third party, will manage the
Property for a fee which will not exceed 5% of the Base Monthly Rent plus
reimbursement of reasonable expenses directly related to the operation of the
Property (which fee and expenses shall be an Operating Expense of the
Property). Notwithstanding the preceding sentence, reimbursement of expenses to
any entity related to the Landlord shall be limited to duties directly related
to the performance of the Landlord's obligations under the terms of this Lease.
9. UTILITIES AND SERVICES.
9.1. PROPERTY. Landlord will make HVAC and utilities for heating
and lighting use available to the Property at all times. Tenant shall pay to
Landlord as Additional Rent the estimated cost of supplying these utilities to
the Property (such expense being considered an Operating Expense).
9.2. LIMITATION OF LIABILITY. Landlord shall not be in default
under the provisions of this Lease or be liable for any damages directly or
indirectly resulting from the following conditions: (1) the interruption of use
of any equipment in connection with the furnishing of any of the services
described in Paragraph 9.1 of this lease; (2) failure to furnish or delay in
furnishing any services referred to in Paragraph 9.1 of this lease where
failure or delay is caused by accident or any condition or event beyond
Landlord's reasonable control; (3) the limitation, curtailment or rationing of,
or restriction on, use of water, electricity, gas or any other from of
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energy serving the Premises. Landlord shall not be liable under any
circumstances for a loss of or injury to property or business, however
occurring, through or in connection with or incidental to failure to furnish any
such services or for any consequential or incidental damages related to such a
loss or injury or circumstances. Notwithstanding the foregoing provisions of
this Paragraph, if utility service to the Premises is unavailable for a period
exceeding 15 consecutive days, then from and after the 16th consecutive day
without utility service and until utility service is restored, Tenant shall be
entitled to an abatement of rent unless the disruption of the utility service
results in whole, or in part, from the acts and/or omissions of Tenant
(inclusive of Tenant's agents, servants, employees, guests, invitees, operatives
and/or contractors) in which case there shall be no abatement of rent.
10. USE OF PREMISES. This Lease is subject to all Regulations governing the
Property and its use and to the CC&Rs and Tenant shall comply with all
applicable Regulations and with the CC&Rs. Tenant has not entered into this
Lease relying on any representation by Landlord or its Agents as to suitability
of the Premises for the conduct of Tenant's business. Tenant has made its own
analysis of suitability of the Premises for its intended use. Tenant shall: 1)
use the Premises for only general office, storage, warehousing, shipping and
other legal, related uses; 2) pay Landlord the full amount of any increased
insurance premium resulting from Tenant's use of the premises; 3) at its sole
expense, promptly comply with all Regulations and the requirements of any board
of fire underwriters or other similar body now or hereafter constituted relating
to or affecting Tenant's particular use of the Premises. Tenant shall not: 1)
sell or permit to be kept, used or sold in or about the premises any articles
prohibited by a standard form policy of fire insurance; 2) do or permit anything
to be done in or about the Property which will obstruct or interfere with rights
of other occupants of the Property or injure or annoy them; 3) maintain or
permit any nuisance in or about the Property; 4) commit or suffer to be
committed any waste in or upon the Property; 5) conduct or allow any auction or
similar sale upon the Property; 6) do or permit anything to be done in or about
the Property which will violate any Regulation [the judgment of any court of
competent jurisdiction, a binding arbitration award, administrative or
regulatory determination or Tenant's admission in any Litigation (whether or not
Landlord is a party) that Tenant has violated a Regulation shall be conclusive
of that fact between Landlord and Tenant]; 7) place a sign upon the Property
without prior written approval of Landlord and the Association; 8) do or permit
anything to be done which will increase existing insurance premiums for the
Property or cause cancellation of any policy covering the Property. However,
Tenant shall not be required to comply with or cause the Premises to comply with
any Regulations requiring the construction of improvements in the Premises
unless the compliance with any of the foregoing is necessitated by Tenant's
particular use of the Premises.
11. DEFAULTS AND REMEDIES.
11.1. TENANT'S DEFAULT. The occurrence of any one or more of the
following events shall constitute a default and breach of this Lease by Tenant:
(a) Tenant's failure to pay any Rent or charges required to be paid by Tenant
under this Lease within 5 days of Landlord's delivery of written notice from or
on behalf of Landlord to Tenant that said amounts are past due (this provision
relates only to a delay in payment constituting a breach or default under the
lease and
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not to the imposition of late charges); (b) Tenant's abandonment of the Premises
for 30 or more consecutive Days; (c) Tenant's failure to promptly and fully
perform any other covenant, condition or agreement contained in this Lease
where such failure continues for 30 days after written notice from Landlord to
Tenant of such default; (d) the levy of a writ of attachment or execution on
this Lease or on any of the property of Tenant located in the Premises; (e) the
making by Tenant of a general assignment for the benefit of its creditors or of
an arrangement, composition, extension or adjustment with its creditors; (f)
the filing by or against Tenant of a petition for relief or other proceeding
under federal bankruptcy laws or state or other insolvency laws, which petition
is not removed or which action is not dismissed within 90 days of its filing,
or the assumption by any court or administrative agency, or by a receiver,
trustee or custodian appointed by either, of jurisdiction, custody or control
of the Premises or of Tenant or any substantial part of its assets or property;
or (g) if the interest of Tenant under this Lease is held by a partnership or
by more than one person or entity, the occurrence of any act or event described
in parts (e) or (f) above in respect of any partner principal in the Tenant
entity. Except as otherwise specified by this Paragraph, in the event a
non-monetary default occurs which cannot reasonably be cured within the time
period specified above and Tenant commences corrective action within said time
period, Tenant shall not be subject to penalty under this Lease so long as
Tenant prosecutes such corrective action diligently and continuously to
completion.
11.2 LANDLORD'S REMEDIES. In the event of Tenant's default hereunder,
then in addition to any other rights or remedies Landlord may have under this
Lease or under law, Landlord may elect either of the remedies set forth in
Paragraphs 11.2(a) or 11.2(b). Notwithstanding any other provision of this
Lease, the Lessor has the remedy described in California Civil Code Section
1951.4 (Lessor (Landlord) may continue lease in effect after Lessee's
(Tenant's) breach and abandonment and recover rent as it becomes due, if Lessee
(Tenant) has the right to sublet or assign, subject only to reasonable
limitations):
(a) To immediately terminate this Lease and Tenant's right to
possession of the Premises by giving written notice to Tenant and to
recover from Tenant an award of damages equal to the sum of (i) the worth
at the time of award of the unpaid rental which had been earned at the
time of termination, (ii) the worth at the time of award of the amount by
which the unpaid rental which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
affirmatively proves could have been reasonably avoided, (iii) the worth
at the time of award of the amount by which the unpaid rental for the
balance of the term after the time of award exceeds the amount of such
rental loss that Tenant affirmatively proves could be reasonably avoided,
(iv) any other amount necessary to compensate Landlord for all the
detriment either proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, and (v) all such other amounts
in addition to or in lieu of the foregoing as may be permitted from time
to time under applicable law; or
(b) To have this Lease continue to effect for so long as Landlord
does not terminate this Lease and Tenant's right to possession of the
Premises, in which event Landlord shall have the right to enforce all of
the rights and remedies provided by this Lease and by law, including the
right to recover the rental and other charges
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payable by Tenant under this Lease as they become due.
For purposes of this Section 11, the worth at the time of award of the amounts
referred to in Paragraph 11.2(a)(1) and 11.2(a)(ii) shall be computed by
allowing interest at the highest rate allowable by law, and the worth at time
of award of the amount referred to in part 11.2(a)(iii) shall be computed by
discounting such amount at the rate specified in California Civil Code Section
1951.2(b) or any successor statute. In such computations, the rent due shall
include Base Monthly Rent plus the aggregate amount of all Additional Rents,
charges and other amounts payable by Tenant pursuant to the provisions of this
Lease.
11.3 LANDLORD'S DEFAULT. Landlord will be in default if Landlord fails to
perform any obligation required of Landlord (other than a delay in delivery of
possession as provided for in Section 3 of this Lease) with 30 Days after
written notice by Tenant to Landlord, specifying how Landlord has failed to
perform such obligation; provided that if the nature of Landlord's obligation
is such that more than 30 Days are required for performance, then Landlord
shall not be in default if Landlord commences performance within 30 day period
and thereafter diligently prosecutes the same to completion. If Landlord's
default deprives Tenant of the use of all or substantially all of the Premises
for the purposes for which they are let, pursuant to the provisions of this
Lease, then upon the occurrence of a Landlord default as defined by this
Paragraph, Tenant shall have the right to an abatement of that portion of the
Base Monthly Rent required by this Lease which is, to the whole of the Base
monthly Rent, equal to the ratio that the portion of the Premises of which
Tenant has been deprived of use as a result of Landlord's default bears to the
entirety of the Premises. Such abatement shall continue until the Landlord has
cured its default. If Landlord's default continues uncured for a period of 30
Days, Tenant shall have the right to terminate this Lease upon 30 days written
notice to Landlord. If Tenant elects to terminate this Lease, Tenant shall
vacate the Premises by the 30th Day following the delivery of the notice of
Tenant's election to terminate and shall deliver the Premises to the Landlord
in the condition required by the provisions of this Lease governing
termination. If Tenant has not exercised the right to terminate established by
this Paragraph prior to Landlord's curing of the default, Tenant shall be
deemed to have waived the right to terminate the Lease as a result of that
Default. Except as expressly set forth in this Lease, Tenant shall not have any
right whatsoever to terminate this Lease or to withhold, reduce or offset any
amount against any payments of rents or charges due and payable under this
Lease.
12. TERMINATION. Upon expiration of the Term or early termination of
this Lease (collectively "Termination"), Tenant shall deliver up and surrender
to Landlord possession of the Premises in as good order and condition as when
Tenant took possession excepting only ordinary wear and tear. Tenant's
obligation with respect to the surrender of the Premises shall be fulfilled if
Tenant surrenders possession of the Premises in the condition existing at the
Commencement Date (including the improvements described on Exhibits C and D,
ordinary wear and tear, casualties, condemnation, Hazardous Materials (other
than those released or emitted by Tenant in or about the Premises), and
alterations or other interior improvements which Landlord states in writing may
be surrendered at the termination of the Lease, excepted. Upon Termination,
Landlord may reenter the Premises and remove all persons and property
therefrom. If Tenant fails to remove anything that Tenant is required or
entitled to remove from the Premises on Termination, Landlord may remove the
same and store or dispose of such item(s) in accordance
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with Civil Code Sections 1980-91. Tenant shall pay to Landlord on demand all
expenses incurred in such removal and storage and in cleaning the Premises. If
the Premises are not surrendered at the end of the Term, Tenant shall indemnify
Landlord against all losses resulting from Tenant's delay in surrendering the
Premises. If Tenant remains in possession of the Premises after expiration of
the Term and if Landlord and Tenant have not executed an express written
agreement as to such holding over, then such occupancy shall be a tenancy from
month to month at a Base Monthly Rent fixed at 125% of the Base Monthly Rent in
effect immediately prior to such expiration, such payments to be made as herein
provided. In the event of such holding over, all terms of this Lease including
the obligation for payment of all charges owing hereunder shall remain in force
and effect on said month to month basis. The voluntary or other surrender of
this Lease by Tenant, if accepted by Landlord, or a mutual cancellation
thereof, shall not work a merger, but shall, at the Landlord's option,
terminate or operate as an assignment to Landlord of any or all subleases or
subtenancies.
13. CONDEMNATION OF PREMISES.
13.1. TOTAL CONDEMNATION. If the entire Premises are taken by
Condemnation during the Term, this Lease shall terminate on the date of
transfer of possession and Tenant shall have no claim against Landlord for the
value of the unexpired Term.
13.2. PARTIAL CONDEMNATION. If any portion of the Premises is
taken by Condemnation during the Term, this Lease shall remain in full force
and effect; except that if a partial taking leaves the Premises unsuitable for
occupancy, Tenant may terminate this Lease effective on the date transfer of
possession is required unless Landlord makes other comparable arrangements for
Tenant's space. Landlord and Tenant shall each have the right to terminate this
Lease effective on the date transfer of possession is required in the event of
Condemnation of more than 25% of the Usable Square Feet in the Premises. Either
party may exercise its right to terminate this Lease by serving written notice
to the other within 30 Days of their receipt of notice of condemnation, except
that Tenant's notice shall be ineffective if Landlord serves notice upon Tenant
of Landlord's election to provide alternate space equivalent to that condemned
within 10 Days of Tenant's delivery of notice to Landlord pursuant to this
Paragraph. Tenant shall have the right of approval of replacement space. All
rent and other obligations of Tenant under this Lease shall be paid to the date
of Termination; Tenant shall have no claim against Landlord for any unexpired
portion of the Term. If this Lease is not canceled after a partial taking, Base
Monthly Rent and Tenant's Pro Rata Share shall be adjusted to reflect the net
change in the number of Rentable Square Feet allocable to the Premises. TENANT
WAIVES CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1265.130.
13.3. AWARD TO TENANT. In the event of Condemnation, Tenant
may claim from the condemnor such compensation as Tenant may separately recover
for moving costs, loss of business, fixtures or equipment belonging to Tenant.
Tenant shall have no other right to recover from Landlord or the condemnor for
any additional claims arising out of such taking.
14. LANDLORD'S ENTRY. Landlord and its Agents may enter the Premises
at all reasonable times to: inspect; make repairs or Alternations; post "For
Lease" signs during the last 120 Days of the Term; show the Premises during the
last 120 days of the Term; and/or to post notices of nonresponsibility.
Landlord shall have such right of entry without any rebate of rent
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to Tenant for any loss of occupancy or quiet enjoyment of the Premises.
Landlord shall provide 24 hours' notice of intended entry except under
circumstances Landlord deems an emergency.
15. LIMITATION OF LIABILITY AND INDEMNITY: This Section 15,
inclusive of all paragraphs and subparagraphs, supersedes each and every other
provision of this Lease.
15.1. LIMITATION OF LANDLORD'S LIABILITY. SUBJECT TO THE
PROVISIONS OF PARAGRAPHS 6.7 AND 18.11.4 OF THIS LEASE, LANDLORD SHALL NOT BE
LIABLE FOR AMOUNTS EXCEEDING INSURANCE COVERAGE MAINTAINED BY LANDLORD UNDER
THIS LEASE ("EXISTING COVERAGE") RESPECTING ANY INJURY OR DAMAGE, PROXIMATE OR
REMOTE, OCCURRING THROUGH OR CAUSED BY REPAIRS OR ALTERATIONS TO THE PROPERTY,
UNLESS THE INJURY OR DAMAGE ARISES FROM LANDLORD'S NEGLIGENCE, WILLFUL
MISCONDUCT, OR BREACH OF THIS LEASE ("LANDLORD'S ACTS"). EXCEPT FOR LOSSES
ARISING FROM LANDLORD'S ACTS, LANDLORD SHALL HAVE NO LIABILITY IN EXCESS OF
EXISTING COVERAGE FOR ANY INJURY OR DAMAGE OCCASIONED BY DEFECTIVE ELECTRIC
WIRING, OR THE BREAKING, BURSTING, STOPPAGE OR LEAKING OF THE PLUMBING,
AIR-CONDITIONING, HEATING, FIRE CONTROL SPRINKLER SYSTEMS OR GAS, SEWER OR
STEAM PIPES.
15.2. LIMITATION ON ENFORCEMENT OF REMEDIES. NOTWITHSTANDING
ANY OTHER PROVISION OF THIS LEASE, TENANT AND ITS AGENTS SHALL, UNDER ALL
CIRCUMSTANCES, BE ABSOLUTELY LIMITED TO LANDLORD'S INTEREST IN THE PROPERTY FOR
SATISFACTION OF ANY AND ALL JUDGMENTS, AWARDS AND/OR ORDERS AGAINST LANDLORD
RELATING TO OR ARISING OUT OF TENANT AND ITS AGENTS' OCCUPANCY AND USE OF THE
PROPERTY AND/OR IN THE EVENT OF ANY DEFAULT BY LANDLORD UNDER THIS LEASE; AND
NO OTHER PROPERTY OF LANDLORD OR ITS PARTNERS OR PRINCIPALS, DISCLOSED OR
UNDISCLOSED, SHALL BE SUBJECT TO LEVY, EXECUTION OR OTHER ENFORCEMENT PROCEDURE
FOR THE SATISFACTION OF TENANT AND ITS AGENTS' REMEDIES WITH RESPECT TO THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, OR THE USE AND
OCCUPANCY OF THE PROPERTY AND THE PREMISES BY TENANT AND ITS AGENTS. TENANT, ON
BEHALF OF TENANT AND ITS AGENTS, WAIVES ALL RIGHTS TO COLLECT OR ENFORCE ANY
AND ALL ORDERS, AWARDS AND/OR JUDGMENTS AGAINST LANDLORD IN EXCESS OF
LIMITATIONS IMPOSED BY THIS SECTION 15. TENANT SHALL REQUIRE EVERY SUBTENANT
AND ASSIGNEE OF TENANT AGREE TO BE BOUND BY THE WAIVER SET FORTH IN THIS
SECTION. LANDLORD'S EXPOSURE AS SET FORTH IN THIS SECTION IS CUMULATIVE AND IN
THE AGGREGATE (AS TO ALL JUDGMENTS, AWARDS AND ORDERS AGAINST LANDLORD ARISING
IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, OR THE
USE AND OCCUPANCY OF THE PROPERTY BY TENANT AND ITS AGENTS). LIMITS IMPOSED BY
THIS SECTION INCLUDE DUTIES OF EXPRESS AND/OR IMPLIED INDEMNITY. "LANDLORD"
INCLUDES ALL PERSONS AND ENTITIES WHO NOW OR HEREAFTER OWN AN INTEREST IN
LANDLORD.
16. ASSIGNMENT AND SUBLETTING. Tenant shall not directly or
indirectly: (1) assign this Lease in whole or in part; (2) sublet any part or
all of the Premises; (3) license the use of all or any part of the Premises,
the Property or any business conducted thereon; or (4) encumber or hypothecate
this Lease (collectively "Transfer"), without first obtaining Landlord's
written consent. The transfer of shares of stock, partnership interests or
other ownership interests in Tenant resulting in a change in the effective
control of Tenant, or any merger, consolidation or other reorganization of
Tenant is a Transfer of this Lease. Tenant's request for consent to any
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assignment, sublease or other transfer shall be in writing and shall include the
following: (a) the name and legal composition of the proposed transferee; (b)
the nature of the proposed transferee's business to be carried on in the
Premises; (c) the terms and provisions of the proposed assignment or sublease;
and (d) such financial and other information as Landlord may request concerning
the proposed transferee or concerning the proposed assignment or sublease. Any
Transfer of this Lease, in whole or in part, without Landlord's prior written
consent shall constitute a default under this Lease. Landlord's consent to any
Transfer shall not constitute a waiver of the need for such consent to any
subsequent Transfer. Tenant may, without Landlord's prior written consent sublet
the Premises or assign the Lease to a subsidiary, affiliate, division or
corporation, controlling, controlled by or under common control with Tenant.
Notwithstanding any other provision of this Lease, tenant may transfer all
rights and obligations of Tenant under the provisions of this Lease to the
surviving corporation in the event of a merger or to the purchaser of all of the
assets of the corporation or the entity resulting from any other business
combination or restructuring in which Tenant cases to exist as an independent
entity without obtaining Landlord's consent provided that the surviving entity
which will become responsible for the Tenant's obligations under this lease
shall have a net worth (after consideration of all actual and contingent
liabilities) not less than that of the Tenant's net worth as of the date of this
Lease incrementally increased by a compounding 10% per annum, and provides
evidence reasonably satisfactory to Landlord of its ability to meet the
financial obligations of the Tenant under the terms of the Lease.
Notwithstanding any Transfer with or without Landlord's consent, Tenant shall
remain fully liable on this Lease unless expressly released by Landlord in
writing. Without limiting other reasons or circumstances, Landlord and Tenant
agree that it is reasonable for Landlord to withhold consent if, in Landlord's
judgment: (i) the financial strength of the proposed assignee is not
commensurate with the obligations of the Lease; (ii) the proposed use would be
incompatible with the use of the rest of the Property; or (iii) the proposed use
would generate traffic and/or wear and tear materially in excess of Tenant's
use. If Landlord consents to a Transfer, Tenant shall pay Landlord's reasonable
attorney's fees incurred in connection with such consent. Tenant shall pay to
Landlord, as received, 50% of all Excess Rent received by Tenant directly or
indirectly in respect of Transfer of all or any part of this Lease or of the
Premises. "Excess Rent" means, in the case of an assignment, all consideration
and, in the case of a sublease, all consideration in excess of the rents and
charges reserved under this Lease. Tenant, however, shall not be required to pay
Landlord any Excess Rent until Tenant has deducted therefrom the costs to Tenant
to effectuate the assignment or sublease, including attorneys' fees, leasing
commissions and remodeling costs.
17. DAMAGE OR DESTRUCTION. Each party may terminate this Lease if the
Premises or the Building are damaged to an extent exceeding 50% of the then
replacement cost of the Premises (in the event of damage limited to the
Premises) or 33% of the Building (in the event of damage not limited to the
Premises). Landlord may also terminate this Lease if the Premises or the
Building are damaged by an uninsured peril to an extent exceeding 33% of the
then replacement cost of the Premises (in the event of damage limited to the
Premises) or 25% of the Building (in the event of damages not limited to the
Premises). If a party elects Termination
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under this section, the terminating party shall deliver written notice to the
non-terminating party within 30 Days of the occurrence of the damage. Tenant
shall have 30 Days to vacate the Premises unless they are unsafe for occupancy,
in which case, Tenant shall immediately vacate. TENANT WAIVES SECTION 1932(2),
AND SECTION 1933(4) OF THE CALIFORNIA CIVIL CODE. If this Lease is not
terminated pursuant to this Section, Landlord shall, within 90 Days of the
occurrence of the damage, proceed to repair the Building, on substantially the
same plan as existed immediately before the occurrence of damage. Tenant shall
be liable for repair and replacement of all fixtures, leasehold improvements,
furnishings, merchandise, equipment and Tenant's personal property not covered
by insurance. The Base Monthly Rent will be reduced during the repair period in
the proportion that the unusable part of the Premises bears to the whole.
Notwithstanding any other provision of this Lease, if the discounted present
value of the Base Monthly Rent due for the remaining Term, using as the
discount rate the prime commercial lending rate in effect at the Bank of
America, NT&SA, as of the date of the damage is less than the cost of repairing
the damage to the Premises, Landlord may terminate this Lease on 10 Days'
written notice to Tenant.
18. HAZARDOUS MATERIALS.
18.1. TENANT'S WARRANTIES. Tenant's obligations are:
18.1.1. RESTRICTIONS ON HAZARDOUS MATERIALS. Hazardous
Material (as defined below) shall not be brought upon, manufactured, generated,
disposed of, handled, used, kept or stored (collectively "Handled" or
"Handling") in, on, about or under the Property by Tenant and its Agents without
Landlord's prior written consent.
18.1.2. APPLICABLE REGULATIONS. If any Hazardous Material
is Handled, in, on, about or under the Property by Tenant and its Agents,
Tenant shall bear all responsibility for ensuring that such material shall be
handled in compliance with all Environmental, Health and Safety Requirements
regulating such Hazardous Material. Tenant shall procure, maintain in effect
and comply with all conditions and requirements of any and all permits,
licenses and other governmental and regulatory approvals or authorizations
required by Environmental, Health or Safety Requirements relating to the
Handling of Hazardous Material. Tenant shall give Landlord copies of all such
permits, licenses, or other regulatory approvals within 5 Days of receipt.
18.1.3. RESTORATION. If, as a result of actions caused or
permitted by Tenant and its Agents, Hazardous Material in, on, about or under
the property or any adjoining property results in contamination of the Property
or other property, Tenant, at it sole expense, shall promptly take all actions
as are necessary to remove the Hazardous Material on the Property due to the
actions of Tenant and/or Tenant's Agents and return the Property and/or the
other affected property to the condition existing prior to such contamination
("Restoration"). Tenant shall not, however, undertake Restoration without first
providing Landlord with written notice and obtaining Landlord's approval of the
restoration procedures, work and contractor. Tenant shall effect Restoration in
compliance with all Environmental, Health and Safety Requirements. Tenant shall
not enter into any settlement agreement, consent decree or compromise respecting
any claims relating to Hazardous Material connected with the Property without
first notifying Landlord of its intention to do so and affording Landlord ample
opportunity to appear, intervene or appropriately assert and protect Landlord's
interests.
18.1.4. REMOVAL. On Termination, Tenant shall remove
from the Property all
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Hazardous Materials in, on, about or under the Property Handled by Tenant and
its Agents and all receptacles and containers therefor, and shall cause such
Hazardous Materials, receptacles and containers to be Handled, transported and
disposed of pursuant to all applicable Environmental, Health and Safety
Requirements. Hazardous Materials, receptacles and containers shall be removed
by duly licensed haulers, transported to and disposed of at duly licensed
facilities for the disposal of such Hazardous Materials, receptacles or
containers. Tenant shall deliver to Landlord copies of all documentation
relating to Handling of Hazardous Materials, receptacles or containers
therefor, reflecting legal and proper Handling. Tenant shall, at its sole
expense, repair all damage to the Property resulting from its removal of
Hazardous Materials, receptacles and containers. Tenant shall continue to pay
rent until completion of such removal and repairs.
18.1.5. TENANT'S WRITTEN CONFIRMATION. Tenant shall execute such
documents as Landlord may request as to Tenant's knowledge of the presence of
Hazardous Materials in, on, about or under the Property. On each anniversary of
the Commencement Date, Tenant shall give Landlord a letter stating that during
the preceding year Tenant complied with this Section 18, or, if Tenant has not
so complied, stating the details of noncompliance.
18.1.6. TENANT'S DUTY TO NOTIFY LANDLORD. Tenant shall notify
Landlord in writing immediately upon learning of: (1) enforcement, cleanup,
remediation or other action threatened, instituted or completed by any
governmental or regulatory agency or private person with respect to the
Property or any adjoining property relating to Hazardous Materials; (2) any
claim threatened or made by any person against Tenant, Landlord, the Property
or any adjoining landowner, tenant or property for personal injury,
compensation or any other matter relating to Hazardous Materials; and (3) any
reports made by or to any governmental or regulatory agency with respect to the
Property or any adjoining property relating to Hazardous Materials, including
without limitation, any complaints, notices or asserted violations in
connection therewith. Tenant shall supply to Landlord as promptly as possible,
and in any event within 5 Days after Tenant first receives or sends the same,
copies of all claims, reports, complaints, notices, warnings, asserted
violations or other documents relating in any way to the foregoing.
18.2. LANDLORD'S RIGHTS. Landlord and its Agents shall have the right to
communicate, verbally or in writing, with any regulatory agency or any
environmental consultant on any matter respecting the Property relating to
Hazardous Materials. Landlord shall be entitled to copies of all notices,
reports or other documents issued by or to any such regulatory agency or
consultant respecting the Property relating to Hazardous Materials.
18.3. TENANT'S DUTY TO INDEMNIFY. If the Handling by Tenant and its Agents
of Hazardous Materials results in contamination of the Property, Tenant shall
indemnify, defend, protect and hold Landlord and its Agents and all of
Landlord's partners or other affiliates, together with all their directors,
officers, shareholders, employees, agents, contractors and attorneys, harmless
from and defend them against any and all claims, damages, penalties, fines,
costs, liabilities and losses (including, without limitation, diminution in
value of the Property, damages for the loss or restriction on use of rental or
usable space or of any other amenity of the Property, damages arising from any
adverse impact on marketing of space in the Property, other consequential
damages and sums paid in settlement of claims, attorneys' fees, consultants'
fees and experts' fees) which arise during or after the Term as a result of
such contamination. This indemnification includes, without limitation, costs
incurred in connection with removal or restoration work required by any
regulatory agency and/or private persons because of the
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presence of Hazardous Materials in the soil or groundwater in, on, about or
under the Property or any adjoining property as a result of the acts of Tenant
and its Agents and legal fees and expenses incurred by Landlord relating to
such claims, demands, investigations and responses.
18.4. RIGHT OF ENTRY. If contamination of the Property by Hazardous
Materials occurs or if any lender or regulatory agency requires an
investigation to determine if there is contamination of the Property or any
adjoining property, then Landlord and its Agents shall have the right, at any
reasonable time and from time to time, to enter the Premises to perform
monitoring, testing or other analyses, and to review applicable documents,
notices, or other materials. If such contamination resulted from the conduct of
Tenant and its Agents, Tenant shall pay, on delivery of Landlord's invoice, all
costs and expenses reasonably incurred by Landlord in connection with such
investigation, monitoring, and testing.
18.5. DEFINITIONS. The following terms shall have the following
meanings:
18.5.1. "HAZARDOUS MATERIAL": means (a) any petroleum or
chemical products, whether in liquid, solid, or gaseous form, or any fraction
or by-product thereof, (b) asbestos or asbestos-containing materials, (c)
polychlorinated biphenyls (PCBs), (d) radon gas, (e) underground storage tanks,
(f) any explosive or radioactive substances, (g) lead or lead-based paint, or
(h) any other substance, material, waste or mixture now or hereafter during the
term of this lease listed, defined or otherwise determined by any governmental
authority to be hazardous, toxic, dangerous or otherwise regulated, controlled
or giving rise to liability under any Environmental Health and Safety
Requirements.
18.5.2. "ENVIRONMENTAL HEALTH AND SAFETY REQUIREMENTS" means
any federal, state or local law or rule (whether imposed by statute,
administrative or judicial order, or common law), now in force or hereafter
enacted, governing health, safety, industrial hygiene, the environment, natural
resources, or Hazardous Materials, including, without limitation, such laws
governing or regulating the use, generation, storage, removal, recovery,
treatment, handling, transport, disposal, control, discharge of, or exposure to
Hazardous Materials. All Environmental Health and Safety Requirements are
Regulations under the terms of this Lease.
18.6. ALLOCATION OF RESPONSIBILITIES. ALL LIABILITY ARISING FROM THE
TRANSPORTATION OR HANDLING OF HAZARDOUS MATERIALS IN, ON, UNDER, AND/OR ABOUT
THE PROPERTY OR ADJOINING PROPERTY BY TENANT AND ITS AGENTS SHALL, AT ALL TIMES,
REMAIN TENANT'S SOLE RESPONSIBILITY, EVEN IF THE HAZARDOUS MATERIALS ORIGINATE
FROM THE PROPERTY. NO ACT BY LANDLORD OR ITS AGENTS SHALL CONSTITUTE ASSUMPTION
BY LANDLORD OF ANY OBLIGATIONS, DUTIES, LIABILITIES OR RESPONSIBILITIES
PERTAINING TO TENANT'S COMPLIANCE WITH ANY ENVIRONMENTAL, HEALTH OR SAFETY
REQUIREMENTS. NOTWITHSTANDING TERMINATION OF THIS LEASE, TENANT SHALL RETAIN ALL
LIABILITY AND RESPONSIBILITY FOR COMPLIANCE WITH REGULATIONS AND ENVIRONMENTAL,
HEALTH OR SAFETY REQUIREMENTS CONCERNING TENANT AND ITS AGENTS' HANDLING OF
HAZARDOUS MATERIALS. TENANT SHALL INDEMNIFY AND HOLD LANDLORD AND ITS AGENTS,
HARMLESS FROM ALL COSTS AND EXPENSES ASSOCIATED WITH SUCH COMPLIANCE INCLUDING
THE OBLIGATIONS IMPOSED BY THE CC&Rs UPON LANDLORD TO INDEMNIFY THE ASSOCIATION,
THE BOARD OF THE
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ASSOCIATION AND EVERY OTHER OWNER AND THEIR RESPECTIVE TENANTS, AGENTS,
EMPLOYEES, REPRESENTATIVES, DIRECTORS, AND OFFICERS AGAINST LOSS, EXPENSE AND
LIABILITY ARISING FROM THE TRANSPORTATION OR HANDLING OF HAZARDOUS MATERIALS BY
TENANT AND ITS AGENTS.
18.7. INSPECTIONS. Tenant will cooperate with the completion of
inspections of the Property as required by applicable Regulations. Tenant shall
provide to Landlord a copy of the reports for each such inspection within 15
days of Tenant's receipt of such reports.
18.8. COOPERATION RESPECTING REGULATIONS. Tenant will not
interfere with Landlord's acts pursuant to the above-referenced Regulations.
Tenant will comply with reasonable procedures promulgated by Landlord pursuant
to such Regulations. Landlord shall have no duty to establish any procedures or
to supervise in any way Tenant's activities on the Property.
18.9. SURVIVAL. The covenants, agreements and indemnities set
forth in this Section 18 shall survive Termination and shall not be affected by
any investigation, or information obtained as a result of any investigation, by
or on behalf of Landlord or any prospective Tenant.
18.10. SPECIAL MATTERS.
18.10.1. STORAGE TANKS: TENANT SHALL NOT INSTALL ANY
STORAGE TANKS ON THE PROPERTY WITHOUT LANDLORD'S PRIOR WRITTEN CONSENT.
18.10.2. FLAMMABLE CHEMICALS: Tenant shall store all
flammable chemicals in a metal storage cabinet. Flammable Chemicals includes,
without limitation, turpentine, thinner, brush cleaner, solvents and other
combustible products.
18.10.3. NFPA WARNINGS: If Tenant uses any chemicals on
the Premises, Tenant shall post an NFPA diamond on the exterior side of the door
to the Premises.
18.11. LANDLORD'S OBLIGATIONS. Landlord's obligations are:
18.11.1. COMPLIANCE WITH REGULATIONS. If Landlord and its
Agents Handle Hazardous Material in, on, about or under the Property, such
material shall be Handled in compliance with all Environmental, Health and\
Safety Requirements.
18.11.2. RESTORATION. If, as a result of Landlord's
bringing Hazardous Material upon the Property, any contamination of the Property
or the surrounding environment occurs, Landlord shall promptly take all
necessary actions to return the Property and/or the surrounding environment to
the condition existing prior to such contamination.
18.11.3. DUTY TO NOTIFY TENANT. Landlord shall notify
Tenant in writing upon learning of: (1) enforcement, cleanup, remediation or
other action threatened, instituted or completed by any regulatory agency or
private person with respect to the Property relating to Hazardous Materials; (2)
any claim threatened or made against Landlord respecting the Tenant or the
Property for personal injury, compensation or any other matter relating to
Hazardous Materials; and (3) reports made by or to any regulatory agency
respecting the Property, complaints, notices or asserted violations in
connection therewith. Landlord shall supply to Tenant copies of claims, notices,
warnings, or other documents relating to the foregoing.
18.11.4. INDEMNITY OF TENANT. If Hazardous Materials,
resulting from Landlord's acts, contaminate the Property, or if the Property is
contaminated on the Commencement Date (excluding remediated contaminations
currently monitored pursuant to an approved remediation plan), Landlord shall
indemnify, defend, protect and hold Tenant and its Agents harmless from all
claims, damages, penalties, costs, liabilities and losses, including
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reasonable attorneys fees, resulting from such contamination.
19. MISCELLANEOUS PROVISIONS.
19.1. WAIVER. No waiver of any breach of this Lease shall be
construed as a waiver of any other breach. Landlord's acceptance of rent after
Tenant's breach shall not be a waiver of any preceding breach of this Lease by
Tenant, even if known by Landlord at the time.
19.2. NOTICES. Notices, requests, demands and other
communications shall be in writing personally delivered or sent by certified
mail, return receipt requested, postage prepaid, or by a nationally recognized
overnight delivery service (such as, by way of example, Federal Express or UPS
Overnight Delivery Service) properly addressed to the other party at the
address set forth by its signature below, or at such other address as may be
designated in writing by one party to the other. Notice shall be effective on
personal delivery or on the date indicated on the post office's certified mail
receipt of delivery.
19.3. CONSTRUCTION. This Lease shall be construed pursuant to
California law. The invalidity of any provision of this Lease shall not affect
the remainder. All terms of this Lease shall be construed to mean either the
singular or the plural, masculine, feminine or neuter, as the situation may
demand. Headings are descriptive only and not determinative of meaning. Time is
of the essence in performance of all obligations. This Lease constitutes the
entire agreement between the parties respecting the subject matters that it
addresses. This Lease supersedes all prior oral and written agreements
respecting the hiring or the Premises. Provisions of this Lease may be waived,
amended or repealed only by all parties' written consent. This Lease binds and
inures to the benefit of the parties' heirs, personal representatives,
successors and assigns. Should any provision of this Lease require judicial
interpretation, it is agreed that the court interpreting or construing the same
shall not apply a presumption that the terms shall be more strictly construed
against one party by reason of the rule that a document is to be construed more
strictly against the party responsible for its preparation; the parties agree
that all parties have participated in the preparation of this Lease.
19.4. MEMORANDUM. If Landlord requests a memorandum of Lease,
the parties shall execute, acknowledge and record such a document.
19.5. AUTHORITY. Each individual executing this Lease for a
corporation warrants that he is duly authorized to execute and deliver the
Lease for the corporation and that the Lease binds the corporation in accordance
with its terms. Each individual executing this Lease on behalf of a partnership
warrants that he is duly authorized to execute and deliver this Lease for the
partnership and that this Lease binds the partnership in accordance with its
terms.
19.6. LITIGATION. All Litigation arising out of or in
connection with this Lease shall be venued in Marin County, California. The
prevailing party shall recover costs of suit and attorneys' fees, whether or
not the matter proceeds to judgment or award.
19.7. SUBORDINATION OF LEASEHOLD. This Lease shall, at all
times, be subordinate to the lien of any loan that Landlord may secure with the
Property. Landlord shall obtain a non-disturbance agreement from the lender
secured by the Property at the time Tenant first occupies the Property, which
agreement shall provide that absent Tenant's default, the lienholder will allow
Tenant to remain in possession of the Premises, subject to the provisions of
this Lease, for the duration of the Term. Landlord shall use its best efforts
to obtain a similar non-disturbance agreement from any and all subsequent
lenders secured by the Property during the Term. Tenant
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shall execute written instruments to effect such subordination respecting new
lenders secured by the Property, conditioned upon the lender providing the
non-disturbance agreement for Tenant.
19.8. ESTOPPEL. Within 15 Days of Landlord's request, Tenant shall
complete, execute and deliver to Landlord a certification: (a) that this Lease
is unmodified and in full force and effect (or if modified, stating the nature
of such modification and certifying that this Lease as so modified is in full
force and effect); (b) of the date to which the rent and other charges are paid;
(c) that Tenant knows of no uncured defaults on the part of Landlord hereunder,
or specifying such defaults, if any are claimed; and (d) of the date of
commencement and expiration of the Term. Tenant's failure to timely deliver the
document constitutes a certification that Landlord is not in default under the
Lease and the terms of the Lease are in force without modification. Prospective
purchasers, lenders or lender's assignees may rely upon such certification.
19.9. ATTORNMENT. In the event of a sale of the Property or the
completion of foreclosure against the Property, Tenant shall attorn to the
Landlord's successor in interest.
19.10. LENDER'S REQUESTS. Tenant shall consent to Lease amendments
requested by any lender against the Property, provided that such amendments do
not materially affect Tenant's obligations. Tenant shall timely supply
financial information requested by such lender.
19.11. REASONABLE EXPENDITURES. Any expenditure by a party permitted
or required under the Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be limited to the fair market
value of the goods and services involved, shall be reasonably incurred, and
shall be substantiated by documentary evidence available for inspection and
review by the other party or its representative during normal business hours.
19.12. SUBMISSION. Submission of this document to Tenant does not
create a reservation for a lease or any rights respecting the Premises prior to
Landlord's execution.
19.13. ARBITRATION OF DISPUTES. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS LEASE, THE PROVISIONS OF THIS SECTION APPLY TO ALL DISPUTES ARISING OUT OF
THE LEASE SAVE AND EXCEPT UNLAWFUL DETAINER PROCEEDINGS; NOTHING IN THIS
AGREEMENT SHALL BE INTERPRETED TO REQUIRE LANDLORD TO SUBMIT UNLAWFUL DETAINER
PROCEEDINGS TO ARBITRATION, IF A CONTROVERSY, CLAIM OR DISPUTE EXCLUDING
UNLAWFUL DETAINER PROCEEDINGS AND ISSUES RAISED IN CONNECTION THEREWITH
(COLLECTIVELY "DISPUTE"). THE TERM "DISPUTE" SHALL NOT BE CONSTRUED TO INCLUDE
UNLAWFUL DETAINER PROCEEDINGS. IN THE EVENT THAT A DISPUTE BETWEEN THE PARTIES
ARISES OUT OF THIS LEASE, THE DISPUTE SHALL BE SUBMITTED TO BINDING ARBITRATION
TO BE CONDUCTED UNDER THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. JUDGMENT ON THE ARBITRATOR'S AWARD MAY BE ENTERED IN
ANY COURT OF COMPETENT JURISDICTION. CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
1283.05 SHALL APPLY TO SUCH ARBITRATION.
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NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISIONS
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO
NEUTRAL ARBITRATION.
19.14. BROKERAGE. Landlord and Tenant each warrants and represents for the
benefit of the other that it has had no dealings with any real estate broker or
agent in connection with the negotiation of this Lease and that it knows of no
other real estate broker or agent who is or might be entitled to a real estate
brokerage commission or finder's fee in connection with this Lease. Each party
shall indemnify and hold harmless the other from and against any and all
liabilities or expenses arising out of claims made by any broker or individual
for commissions or fees resulting from the actions of the indemnifying party in
connection with this Lease.
19.15. COOPERATION. Tenant will not interfere with Landlord's actions
pursuant to any Regulation affecting the Property or with respect to the CC&Rs,
however Landlord agrees to provide to Tenant the constructive benefit of the
CC&R's by cooperating with Tenant to enforce the provisions of the CC&R's in
order to obtain for Tenant all benefits entitled to be derived from the CC&R's.
Landlord agrees to vote against material changes to the CC&R's which would
adversely impact Tenant's rights or reduce Landlord's obligations under the
provisions of this Lease. Tenant will comply with all reasonable procedures
promulgated by Landlord relating to the matters covered by such Regulations and
the CC&Rs as to which it receives written notice. Landlord has no duty to
establish procedures or regulations or to supervise Tenant's activities for any
purpose including, without limitation, the Handling of Hazardous Materials.
19.16. PARKING. Tenant shall have the use of no fewer off-street parking
places than
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is required by the applicable Regulations respecting the Property based on the
Rentable Square Footage of the Property. Landlord anticipates that the Tenant
shall have at least 70 off street parking spaces based on current plans for the
construction of the Building. Parking spaces within the area of the Restricted
Common Area (as defined by the CC&Rs) and designated on the Parking Plan of the
Association as assigned to the Building, shall be for Tenant's exclusive use.
Any and all other parking spaces made available to Tenant shall be for the
Tenant's non-exclusive use.
19.17. NON-DISTURBANCE AGREEMENT. Landlord shall use its reasonable best
efforts to obtain, for Tenant's benefit, execution of a Non-Disturbance
Agreement by the beneficiary of any deed of trust or lien now or hereafter,
during the Term, secured by the Property.
19.18. PREPARATION. Tenant has had the opportunity to review this Lease
and have it reviewed by such legal counsel and other advisors as Tenant deems
necessary or appropriate. Tenant understands that this document affects
significant legal rights. Each party has been represented by separate counsel
of its own selection respecting the preparation of this Lease.
19.19. CC&RS. The CC&Rs shall be treated as Regulations under this Lease
and the failure to abide by the CC&Rs shall be treated as a failure to comply
with applicable Regulations.
19.20. LIMITATIONS AND RESTRICTIONS RESPECTING OPERATING EXPENSES:
Notwithstanding any other provision of this Lease, the following shall not be
included as Operating Expenses: (1) legal fees, brokerage commissions,
advertising costs and other related expenses incurred in connection with the
leasing of the Building; (2) damage and repairs covered under any warranty or
insurance policy carried by Landlord in connection with the Building or the
Property; (3) damage and repairs necessitated by the gross negligence or
willful misconduct of Landlord or Landlord's employees, contractors or agents;
(4) salaries of service personnel to the extent that such service personnel
perform services not solely in connection with the management, operation,
repair or maintenance of the Building or Common Areas; (5) Landlord's general
overhead expenses not related to the Building; (6) payments of principal or
interest on any mortgage or other encumbrance, ground lease payments, points
commissions and legal fees associated with financing (as used in this
subparagraph, however, "encumbrance" does not include Taxes or assessments
against the Property); (7) depreciation; (8) legal fees, accountants' fees and
other expenses incurred in connection with disputes with other tenants or
occupants of the Building or associated with the enforcement of any other
leases respecting the Building or any portion of the Building; (9) costs
(including permit, license and inspection fees) incurred in renovating or
otherwise improving, decorating, painting or altering space for other tenants
or other occupants or vacant space in the Building (excluding Common Areas and
Core Areas); (10) the cost of any service provided to Tenant or other occupants
of the Building for which Landlord is entitled to be reimbursed (other than
reimbursement by Tenant as provided elsewhere in this Lease); (11) any other
expense which, under generally accepted accounting principals and practice
would not be considered a normal maintenance and operating expense, except as
limited by the provisions of Paragraph 19.21 of this Lease.
19.21. SPECIAL ALLOCATION OF CAPITAL EXPENSES RELATED TO MODIFICATIONS
REQUIRED BY REGULATIONS: Except as provided by the provisions of this Lease
relating to Hazardous Materials, in the event that Landlord should be required
to make a capital improvement or upgrade to the Building in order to comply
with Regulations, the cost of each such upgrade shall be pro-rated over its
useful life and the portion of the pro-rated cost allocable to each year of the
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Term shall be included as an Operating Expense for that year.
19.22. PROJECT SCHEDULE: Landlord has prepared and attached as
Exhibit E to this Lease a timeline showing the estimated time frame for the
acquisition of the Property, obtaining the required permits (including those
required to be obtained by Tenant for the Tenant Improvements and those required
to be obtained by Landlord for the construction of the Building Shell,
construction and the Substantial Completion of the improvements (the "Project
Schedule"). The parties acknowledge that the Project Schedule is not a binding
commitment on the Landlord, but only the Landlord's current best estimate of the
time frame for the completion of the project. Landlord will revise the Project
Schedule and provide a copy of the Revised Project Schedule to Tenant within 20
days of the commencement of construction of the improvements. Landlord agrees
that if Landlord anticipates any material variance from the Project Schedule
annexed as an Exhibit to this Lease, Landlord will provide Tenant with a further
Revised Project Schedule.
20. OVERRIDING CONDITIONS AND OTHER MATTERS:
20.1. ACQUISITION OF PROPERTY. Landlord has entered into a contract
to purchase the Property; however, escrow for the acquisition of the Property
has not yet closed. Should Landlord not acquire the title to the Property for
any reason, including, without limitation, unsatisfactory conditions discovered
in the course of Landlord's due diligence investigation which the Seller is
unable or unwilling to remedy, either Landlord or Tenant shall have the right
to terminate this Lease upon written notice to the other. If either party
terminates this Lease pursuant to the provisions of this paragraph, then this
Lease shall be of no force or effect and Landlord and Tenant shall be relieved
of any further responsibility or obligation in connection with performance
required under this Lease. Landlord's acquisition of the Property shall be an
express condition of this Lease for the benefit of both parties.
20.2 FINANCING. Tenant acknowledges that Landlord's ability to
construct the Building is premised upon Landlord's ability to obtain necessary
construction and permanent financing. Landlord does not anticipate a problem in
obtaining such financing, however, Landlord's obtaining of construction and
permanent financing under commercially reasonable terms and market financing
rates, for the acquisition and improvement of the Property, is a condition to
this Lease, which condition is for Landlord's exclusive benefit. Should
Landlord not obtain the required construction and permanent financing for the
acquisition and improvement of the Property for any reason, Landlord shall have
the right to terminate this Lease upon written notice to Tenant. Landlord's
acquisition of construction and permanent financing is a condition of this
Lease for Landlord's benefit. If Landlord does not waive this condition by
December 31, 1998, Tenant shall have the right to terminate this Lease on
written notice to Landlord. Notwithstanding the foregoing, if Landlord obtains
construction and permanent financing commitments after December 31, 1998 and
Tenant has not delivered to Landlord written notice of termination of this
lease pursuant to the provisions of this paragraph prior to the date on which
Landlord acquires such financing commitments, then the right to terminate this
lease pursuant to this paragraph shall terminate and this condition will be
deemed satisfied in a timely manner. If Landlord or Tenant terminates this
Lease pursuant to the provisions of this paragraph, then this Lease shall be of
no force or effect and Landlord and Tenant shall be relieved of any further
responsibility or obligation in connection with performance required under this
Lease.
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20.3 ACQUISITION OF ENTITLEMENTS AND PERMITS. Tenant acknowledges
that Landlord's ability to construct the Building is premised upon Landlord's
ability to obtain necessary governmental approvals and permits. Landlord does
not anticipate a problem in obtaining such approvals and permits, however,
Landlord's obtaining of all required permits and approvals (including
applicable use permits) under commercially reasonable terms and in a timely
fashion is a condition to this Lease, which condition is for Landlord's and
Tenant's mutual benefit. Should Landlord not obtain the required approvals and
permits by April 15, 1999, for any reason, Landlord and Tenant shall each have
the right to terminate this Lease upon written notice to the other.
Notwithstanding the foregoing, if Landlord obtains all necessary approvals and
permits after April 15, 1999 and Tenant has not delivered to Landlord written
notice of termination of this lease pursuant to the provisions of this
paragraph prior to the date on which Landlord acquires all necessary permits
and approvals, then the right to terminate this lease pursuant to this
paragraph shall terminate and this condition will be deemed satisfied in a
timely manner. If Landlord or Tenant terminates this Lease pursuant to the
provisions of this paragraph, then this Lease shall be of no force or effect
and Landlord and Tenant shall be relieved of any further responsibility or
obligation in connection with performance required under this Lease. Nothing in
this Lease shall be construed as obligating the Landlord to obtain the building
permits or the Tenant Improvements. Tenant shall have sole responsibility for
the timely obtaining and delivery of the permits for the Tenant Improvements.
20.4 TENANT'S COOPERATION. Tenant shall cooperate with Landlord
respecting all applications for construction and permanent financing and in all
applications for permits and approvals, provided that Tenant shall not be
required to incur any material expense or liability in connection with such
cooperation.
20.5 LANDLORD'S RIGHT TO ASSIGN LEASE TO NEWLY FORMED ENTITY. The
parties acknowledge and agree that Landlord intends to create a new California
Limited Liability Company (Company). Wareham Development Corporation or an
affiliated entity will be the Managing Member of the Landlord once the company
is formed. Landlord shall have the absolute and unrestricted right to transfer
this Lease, together with all rights, duties and obligations of the Landlord
hereunder to Company. Tenant agrees that upon Landlord's delivery of written
notice to Tenant of said transfer and assignment, Company shall be the Landlord
for all purposes under this Lease and shall have the rights and duties of the
Landlord hereunder as though Company had signed this Lease at its inception. At
such time, Wareham Development Corporation shall have no further obligations as
the Landlord under the terms of this Lease.
20.6 CONSTRUCTION. Tenant acknowledges that the Building has not yet
been constructed. Landlord and Tenant have agreed that, subject to the
conditions and terms of this Lease, Landlord will build a Building on the
Property for lease to Tenant pursuant to the provisions of this Lease. Landlord
shall cause the Building and Tenant Improvements to be constructed in a good
and workmanlike manner and in compliance with applicable Regulations. The
Building shall be constructed in accordance with plans and specifications
mutually acceptable to Landlord and Tenant.
20.6.1 CONSTRUCTION OF BUILDING SHELL. Landlord shall
construct the Building Shell in accordance with plans and specifications
mutually approved by Landlord and Tenant, which approval shall not be
unreasonably withheld. Exhibit C to this Lease is the
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current conceptual drawing for the Building. The parties agree that the drawings
require further revision and will work together cooperatively to review, revise
and finalize the conceptual drawings. Once the final drawings are prepared, they
will be annexed to this Lease as Exhibit C, replacing the current conceptual
drawings for the Building attached upon signing of this Lease. Landlord has
based the rent structure on a shell construction cost not exceeding $50 per
Rentable Square Foot including core items such as HVAC, elevators, stairs and
restrooms. Landlord agrees that Landlord will exhaust any project construction
contingency funds available for the construction of the Shell prior to
increasing the initial Base Monthly Rent above the amount based on the $50 per
rentable Square Foot shell cost figure. If the actual construction cost for the
Shell exceeds $50 plus the prorated construction contingency funds available for
the construction of the Shell per Rentable Square Foot, the parties agree that
the Base Monthly Rent will be proportionately increased to reflect the increase
in the actual per square foot cost of construction. By way of example, if the
cost per Rentable Square Foot is $53.00 and the available contingency fund is $2
per square foot, the Base Monthly Rent rates provided for in this Lease will be
increased by 2% per Rentable Square Foot. Any increase in the cost of the shell
in excess of 10% above the sum of the $50 per square foot shell figure and the
construction contingency funds shall require Tenant's approval. In the event
Tenant refuses to approve a cost increase, Tenant and landlord shall work, in
good faith, to determine how to modify the construction so as to reduce the cost
and avoid the increase. Landlord agrees to immediately notify Tenant in the
event that Landlord has a reasonable expectation that the cost of the
construction of the Shell is likely to exceed $50 per Rentable Square Foot in
order to enable Tenant to participate with Landlord in the discussion of how to
address that anticipated overage with the anticipated result of value
engineering the costs down to as close as possible to $50 per Rentable Square
Foot.
20.6.2. CONSTRUCTION OF TENANT IMPROVEMENTS. Landlord and Tenant
will cooperate in the preparation of working drawings for the Tenant
Improvements, utilizing the services of Tenant's designer, Erik Ibsen of
Ibsen/Senty Architecture ("Designer"). As used in this Lease, "Tenant
Improvements" refers to the interior portion of the Premises exclusive of the
Shell. The final space plans and working drawings approved by both Landlord and
Tenant shall be attached to this Lease as Exhibit D. It shall be Tenant's
obligation to timely produce the final space plans and working drawings and to
obtain all required permits respecting the construction of the Tenant
Improvements. Time is of the essence in this effort. The parties will make all
reasonable efforts to expedite the preparation and approval of the space plans
and working drawings for the Tenant Improvements. The Project Schedule annexed
as an Exhibit to this Lease will set out a deadline for the delivery of the
final space plan and working drawings. In the event that the Designer fails to
timely deliver the final space plan and the working drawings, any delay
resulting from that failure will be considered a Tenant Delay. In the event of a
Tenant Delay, Landlord will work with the contractor and utilize commercially
reasonable measures to attempt to eliminate or reduce the impact of the Tenant
Delay upon the Completion Date.
Landlord will pay an amount equal to $35.00 per Usable Square Foot of the
Premises ("Allowance") expendable for the costs of the design and construction
of the Tenant Improvements. Any costs incurred by Landlord in excess of the
Allowance shall be Tenant's obligation and if expended by Tenant within 15 Days
of Delivery to Tenant of invoices and other
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documentation will reimburse Landlord therefor. In the event that Landlord
anticipates construction of the Tenant Improvements will cost more than $35.00
per Usable Square Foot, Landlord shall promptly advise Tenant of that fact and
provide Tenant with an estimate of the overage. Tenant shall promptly either
approve the overage and accept financial responsibility for all costs in excess
of the Allowance or agree with Landlord on appropriate modifications of the
build-out to reduce the cost of the construction of the Tenant Improvements.
Landlord will accept bids on all aspects of the construction of the Tenant
Improvements and will exercise commercially reasonable judgment in determining
which bid to accept. Nothing in this Lease shall be construed as obligating
Landlord to accept the lowest bid if, in the Landlord's judgment good reason
exists to accept a different or higher bid.
Any costs for Tenant Improvements in excess of the Allowance will be Tenant's
obligation and if expended by Landlord will be reimbursed by Tenant on demand.
Notwithstanding the foregoing, Landlord reserves the right to require Tenant to
deposit any anticipated cost for Tenant Improvements exceeding the Allowance
with Landlord prior to the start of construction.
Landlord agrees to immediately notify Tenant in the event that Landlord has a
reasonable expectation that the cost of the construction of the Tenant
Improvements are likely to exceed $35 per Rentable Square Foot in order to
enable Tenant to participate with Landlord in the discussion of how to address
that anticipated overage with the anticipated result of value engineering the
costs down to the amount of the Allowance, or as close as is possible to that
amount.
Landlord shall notify Tenant not less than 10 Days prior to the date on which
Landlord expects to achieve Substantial Completion of the Premises, Core Area
and Common Areas (including landscaping and parking facilities); Landlord will
make reasonable efforts to provide more than 10 Days notice to the Tenant, but
the Landlord's failure to provide more than 10 Days notice prior to Substantial
Completion shall not be construed as a default under the provisions of this
Lease. Forthwith upon such notification, Landlord and Tenant shall schedule a
walk-through of the Premises. Upon the conclusion of the walk-through, Tenant
shall prepare and deliver to Landlord a punch-list identifying any items Tenant
deems deficient. Upon delivery of the punch-list to Landlord, Tenant shall be
deemed to have accepted the Premises subject to correction of the Punch List
items. Tenant's failure to deliver a punch-list to Landlord within three Days of
the date of the walk-through shall be deemed Tenant's waiver of objection to any
deficiencies and Tenant's acceptance of the Premises.
20.6.3. MEASUREMENT OF RENTABLE AND USABLE SQUARE FOOTAGE. Because
the Building has not yet been constructed, Usable Square Footage and Rentable
Square Footage will be determined after the completion of plans for construction
of the building upon which building permits have been issued (the "Plans").
Landlord will calculate the Usable Square Feet and advise Tenant of the
calculation forthwith upon completion of the Plans and the issuance of the
permits. Landlord will advise Tenant of the completion of the Plans and make a
copy of the Plans available to the Tenant. Tenant shall have the right to
measure the Usable Square Footage and Rentable Square Footage and to object to
Landlord's calculations of the Usable Square Footage and/or Rentable Square
Footage in writing within 10 Days of the date on which the Landlord notifies the
Tenant of the Landlord's calculations. Tenant's failure to object within
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such 10 Day period shall constitute Tenant's acceptance of the Landlord's
measurements as correct and the Landlord's measurements shall, thereafter, be
conclusively presumed correct for all purposes related to this Lease.
20.7 DELAYS OUT OF LANDLORD'S CONTROL. Notwithstanding any other
provision of this Lease, delays in the commencement date caused by weather,
acts of God, labor strikes, or other circumstances outside of Landlord's
control (including delays in the transfer of title to the Property caused by or
as a result of the actions of or limitations upon the current title holder of
the Property, shall not create a breach or default by Landlord respecting the
terms of this Lease. No such delay shall be included in the calculation of the
time period referred to in Paragraph 3 of this Lease.
20.8 EXISTING LEASE. Landlord acknowledges that Tenant is currently
obligated under the terms of a lease with Point Richmond R&D Associates, a
California Limited Partnership for space located in Point Richmond Tech Center
1, Building D, 1003 West Cutting Boulevard, Richmond, California (the "PR
Lease"). The PR Lease contains a provision allowing for termination upon the
construction of the Premises. Coincident with Tenant's relocation from the
premises demised by the PR Lease to the Premises demised by this Lease, the PR
Lease shall terminate. Upon Tenant's removal from the Premises demised by the
PR Lease, any deposit that Tenant placed with the landlord of the PR Lease,
less appropriate charges to the deposit, will be refunded to Tenant. Landlord
will make such arrangements and provide such notices as may be required to
effect such termination and refund. The provisions of this paragraph shall be
of no force or effect unless and until Tenant moves into the Premises. Tenant
shall not terminate the PR Lease unless and until Tenant moves into the
Premises.
20.9 LANDFILL DISCLOSURE. Tenant acknowledges that Landlord has disclosed
to Tenant, as required by the CC&Rs that the Park contains landfill subject to
Regulation under Title 144, California Code of Regulations, Division 7 ("Title
14"). Leachate monitoring and control, ground water monitoring and gas
monitoring and control of the property owned by the Association (including the
Amenities) during postclosure, and postclosure maintenance, control, land use,
and reporting will be conducted by the Association in compliance with the
requirements of Title 14. The costs of such monitoring, control and reporting
will be charged to the Landlord by the Association and will be included as an
Operating Expense under the provisions of this Lease.
10.10 ACKNOWLEDGMENT OF RECEIPT OF DOCUMENTS. Tenant acknowledges receipt
of a complete copy of the: (a) Phase I environmental Site Assessment Report
dated October 30, 1998 prepared for Landlord by Kleinfelder, Inc.; (b)
Declaration of Covenants, Conditions and Restrictions and Reciprocal Easements
for Bayview Business Park dated July, 1989 as amended in October, 1989 and
August, 1992; (c)
QuadraMed Lease 110398
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LANDLORD: TENANT:
WAREHAM DEVELOPMENT CORPORATION QUADRAMED CORPORATION,
a California Corporation a California Corporation
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ KEITH ROBERTS
----------------------------- -----------------------------
Authorized Signature Authorized Signature
KEITH ROBERTS, EVP & CFO
-----------------------------
Please print name and title
Date: 11/19/98 Date: 11/17/98
------------------- -------------------
ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:
1120 Nye Street, Suite 400 1003 W. Cutting Boulevard
San Rafael, CA 94901 Building D
Richmond, California 94804
QuadraMed Lease 110398
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EXHIBIT A
LOCATION OF PREMISES IN DEVELOPMENT
35
[MAP OF THE AREA SURROUNDING AND
INCLUDING THE PREMISES]
36
EXHIBIT B
INITIAL ESTIMATED SCHEDULE OF OPERATING EXPENSES
37
EXHIBIT C
CURRENT CONCEPTUAL DRAWINGS
38
EXHIBIT E
PROJECT SCHEDULE
(to be completed and attached to lease prior to 12/1/98)
39
EXHIBIT D
FINAL SPACE PLANS AND WORKING DRAWINGS
(to be completed and attached to lease according to the Schedule)
40
COMMENCEMENT DATE AGREEMENT
PELICAN WAY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, ("LANDLORD") AND
QUADRAMED CORPORATION, A CALIFORNIA CORPORATION ("TENANT"), HAVE ENTERED INTO A
CERTAIN OFFICE LEASE DATED AS OF NOVEMBER 19, 1998 (THE "LEASE").
WHEREAS, Landlord and Tenant wish to confirm and memorialize the Commencement
Date and Expiration Date of the Lease:
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and in the Lease, Landlord and Tenant agree as follows:
1. Unless otherwise defined herein, all capitalized terms shall have the
same meaning ascribed to them in the Lease.
2. The Commencement Date (as defined in the Lease) of the Lease is:
December 6, 1999.
3. The Expiration Date (as defined in the Lease) of the Lease is:
December 31, 2009.
4. Tenant hereby confirms the following.
(a) That it has accepted possession of the premises pursuant to the
terms of the Lease;
(b) That the Landlord Work is Substantially Complete; and
(c) That the Lease is in full force and effect.
5. Except as expressly modified hereby, all terms and provisions of the
Lease as hereby ratified and shall remain in full force and effect and
binding on the parties hereto.
6. The Lease and this Commencement Date Agreement contain all of the
terms, covenants, conditions and agreements between the Landlord and
the Tenant relating to the subject matter herein. No prior other
agreements or understandings pertaining to such matters are valid or
of any force and effect.
TENANT: LANDLORD:
QUADRAMED CORPORATION PELICAN WAY, LLC
a California Corporation a California Limited Liability Company
By: /s/ KEITH ROBERTS By: /s/ RICHARD K. ROBBINS
---------------------------------- ----------------------------------
Print Name: Keith Roberts Print Name: Richard K. Robbins
---------------------------------- ----------------------------------
Its: EVP General Counsel Its: Managing Member
---------------------------------- ----------------------------------
By: /s/ JAMES D. DURHAM
----------------------------------
Print Name: James D. Durham
----------------------------------
Its: Chairman & CEO
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