EXHIBIT 10.52
MARINA BAY BUSINESS PARK
OFFICE LEASE
By and Between
MARINA BAY PARTNERS, LLC
a California limited liability company
and
QRS CORPORATION,
a Delaware corporation
Dated as of November 20, 1998
BASIC LEASE INFORMATION
MARINA BAY BUSINESS PARK
OFFICE LEASE
LEASE DATE: Dated as of November 20, 1998
LANDLORD: Marina Bay Partners, LLC, a California limited liability
company
ADDRESS OF LANDLORD: c/o Penterra Company
1391 Marina Way South
Richmond, CA 94804
TENANT: QRS Corporation, a Delaware corporation
ADDRESS OF TENANT: (PRIOR TO QRS Corporation
COMMENCEMENT DATE; THEREAFTER AT 1400 Marina Way South
THE PREMISES: Richmond, CA 94804
PREMISES: Portion of first and second floors of Building at Marina
Bay Business Park Phase I,
Richmond, California, more
specifically set forth on the
floor plan attached as EXHIBIT A
RENTABLE AREA OF THE PREMISES: 47,625 Square Feet
TERM: The period from the Commencement Date to the
Expiration Date.
COMMENCEMENT DATE: Upon delivery of possession of the Premises "Ready for
Occupancy".
EXPIRATION DATE: June 30, 2010.
TENANT'S SHARE: 49.91%
FIXED RENT (MONTHLY): PERIOD OF TERM FIXED RENT
Commencement Date through $71,437.50/mo.
June 30, 2000 ($1.50/rsf)
7/1/2000 through 6/30/2010 $76,200.00/mo.
($1.60/rsf)
SECURITY DEPOSIT: S71,500
BROKERS: None
TABLE OF CONTENTS
(Continued)
PAGE
EXHIBITS: Exhibit A Floor Plan
Exhibit B Legal Description
Exhibit C Build Out of Initial TI's
Exhibit D Tenant's Improvements Work Letter
NOTE: THIS BASIC LEASE INFORMATION IS PROVIDED SOLELY AS A CONVENIENCE TO
SUMMARIZE CERTAIN LEASE PROVISIONS AND IS NOT INTENDED AS A COMPLETE SUMMARY
OF ALL MATERIAL TERMS AND CONDITIONS OF THE LEASE. IN THE EVENT OF ANY
INCONSISTENCY BETWEEN ANY INFORMATION SHOWN ON THIS BASIC LEASE INFORMATION AND
THE PROVISIONS OF THE LEASE, THE PROVISIONS OF THE LEASE GOVERN.
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MARINA BAY BUSINESS PARK
OFFICE LEASE
(QRS CORPORATION, PHASE II BUILDING)
This Lease is made and entered in to as of the date specified in the
Basic Lease Information, by and between MARINA BAY PARTNERS, LLC, a California
limited liability company ("LANDLORD"), and the Tenant identified in the Basic
Lease Information.
IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS CONTAINED IN
THIS LEASE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. DEFINITIONS
Certain terms used in this Lease and the Exhibits attached to this
Lease shall have the meaning set forth below for each such term. Certain other
terms shall have the meaning set forth elsewhere in this Lease and the Exhibits
attached to this Lease.
1.1 BUILDING. The office building and related improvements to be
constructed by Landlord on the real property described in EXHIBIT B attached to
this Lease. Any enlargements to the Building or additional improvements on the
real property described in EXHIBIT B attached to this Lease shall be included in
the definition of Building for purposes of this Lease.
1.2 COMMON AREA. All of the Property, excluding those portions of the
Building not designated for the exclusive use of Tenant or other tenants, such
as the lobbies, elevators and common bathrooms, entrances, stairways and
accessways.
1.3 ENVIRONMENTAL LAW. Any federal, state or local law, ordinance or
regulation or policy applicable to the Premises during the Term, relating to
the environment, health and safety, any Hazardous Materials (including, without
limitation, the use, handling, transportation, production, disposal, discharge
or storage thereof) or to Tenant's use of the Premises, or to industrial hygiene
or the environmental conditions on, under or about the Property, including,
without limitation, soil, groundwater and indoor and ambient air conditions.
1.4 EXPIRATION DATE. The Lease shall expire on June 3O, 2010
("Expiration Date"). The Expiration Date is subject to extension pursuant to the
provisions of Section 26 of this Lease.
1.5 HAZARDOUS MATERIAL. Any hazardous or toxic substance, material or
waste the storage, use, or disposition of which is or becomes regulated by,
any local governmental authority with jurisdiction, the State of California
or the United States Government during the Term. The term "Hazardous Material"
includes, without limitation, any material or substance which is (i) defined
during the Term as hazardous or extremely hazardous pursuant to Article 11 of
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Title 22 of the California Administrative Code, Division 4, Chapter 20,
(ii) defined as a "hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901 ET SEQ. (42 U.S.C. 6903),
(iii) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601 ET SEQ. (42 U.S.C. 9601) or (iv) is listed or defined as a "hazardous
waste", "hazardous substance", or other similar designation by any regulatory
scheme of the State of California or the U.S. Government that is similar to the
foregoing.
1.6 INTEREST RATE. The per annum rate equal to the lesser of (i) the
reference rate, or succeeding similar index, of Bank of America, N.T. & S.A. in
effect from time to time plus two percent (2%), or (ii) the maximum rate allowed
by applicable usury law.
1.7 LEASE YEAR. A period of twelve (12) consecutive calendar months
during the Term, commencing with the Commencement Date if the Commencement
Date is the first day, of a calendar month, or commencing with the first day of
the month following the Commencement Date if the Commencement Date is not the
first day of a calendar month. The first Lease Year shall include the period
between the Commencement Date and the first day of the month following the
Commencement Date if the Commencement Date is not the first day of a calendar
month. The last Lease Year shall consist of the period between the date on which
the Term expires or terminates and the day after the last day of the preceding
Lease Year.
1.8 OPERATING EXPENSES. All expenses and costs of every kind and nature
actually incurred and paid by Landlord in, or properly allocable to, a calendar
year, in connection with the ownership, management, operation, maintenance,
repair and preservation of the Property. Specifically, but without limiting the
generality of the foregoing, Operating Expenses shall include the following:
(a) wages, salaries, payroll burdens and all related expenses and benefits of
all on-site and off-site employees to the extent attributable to the operation,
repair and maintenance of the Property; (b) all supplies, materials, tools and
rental equipment to the extent used in connection with the ownership, operation,
management, repair and maintenance of the Property; (c) property management fees
and other costs of property management, maintenance and other services for the
Property and the equipment therein which management fees shall not exceed four
percent (4%) of gross rental revenues from the Property; (d) reasonable legal
and accounting costs for the Property; provided, however, that legal expenses
shall not include the cost of negotiating leases, termination of leases,
extension of leases, legal costs incurred in proceedings against any specific
tenant or in connection with any breach by Landlord of this Lease or refinancing
of the Property; (e) premiums and all additional costs for all insurance carried
with respect to the Property (whether or not such insurance is required to be
carried pursuant to the terms of this Lease, but limited to the type and amount
of insurance customarily carried by owners of property comparable to the
Property); (f) costs of all repairs, service, service contracts and general
maintenance of the Property; (g) all maintenance and operating costs for the
Common Area and the cost of performing Landlord's maintenance and repair
obligations as provided in Section 10; (h) all Real Property Taxes; (i) subject
to the exclusion of
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capital items set forth below, all costs and expenses levied, incurred or
required to be paid, either directly or indirectly, in order to comply with
laws, statutes, ordinances, rules and regulations or the requirements of
governmental or public authorities with respect to the Property, or the
operation of the Building, or any portion thereof such as parking facilities,
sources of air pollution, traffic, storm water run-off or other adverse
environmental effects, and transit taxes, assessments or fees; and
(j) amortization of capital improvements made to the Property by Landlord which
result in a net annual reduction to the operating costs of the Property, with
amortization over such period as Landlord shall reasonably determine to be the
projected useful life of such capital improvement, together with interest
thereon at the rate paid by Landlord on funds borrowed for the purpose of making
such capital improvements, or at the Interest Rate if Landlord does not borrow
funds for such purpose. Operating Expenses shall exclude the following: (1) any
depreciation of the Building or other improvements on the Property or of the
equipment used in connection therewith; (2) any expense for which Landlord is
reimbursed pursuant to any insurance policy, warranty or other means of recovery
from third parties; (3) any costs (including permit, license and inspection
fees) of improving space for any other tenant of the Building; (4) any real
estate brokerage commissions or finders fees, advertising and promotional
expenditures; (5) any capital improvements except those described in clause
(j) above; (6) any rental under any ground or underlying lease; (7) any
financing costs, including principal and interest payments; (8) any penalties,
fines, interest or other charges attributable to the late payment of any Real
Property Taxes or other Operating Expenses; (9) Landlord's general overhead and
administrative expenses; (10) any expenses or costs incurred by Landlord as a
result of special services, privileges or amenities provided to tenants on an
individual basis rather than generally to all tenants; (11) any expenses or
costs incurred by Landlord with respect to facilities for the benefit of tenants
of the Building other than Tenant; (12) costs resulting from any failure of the
Building, as of the Commencement Date, to comply with all laws, ordinances,
regulations and codes in effect at the time of completion of construction of the
Building; (13) salaries or fringe benefits or personnel above the grade of
general manager; (14) the cost (including attorneys' fees and disbursements) of
any judgment, settlement or arbitration award resulting from any tort liability;
(15) the cost of or expenditures for any repairs in accordance with Sections 12
or 14 of this Lease; (16) costs and expenses incurred in connection with the
initial construction on the Property or the Building, whether above or below
ground; (17) costs of repairs, abatement, removal or clean-up of any Hazardous
Materials; (18) any costs or expenses that are incurred directly or indirectly
with respect to Landlord's indemnity obligations under this Lease; (19) any
costs or expenses that are incurred to make any of Landlord's representations or
warranties under this Lease true or correct; and (20) the cost of defects in the
design or construction of the Building, its structural components, the Building
systems or the Initial TI's (as defined in Section 7.2 of this Lease). In
calculating Operating Expenses, (i) the total Operating Expenses charged to the
tenants of the Building shall in no event be greater than actual total Operating
Expenses for the Property; (ii) no item of Operating Expenses shall be
included more than once; (iii) Landlord shall comply, with generally accepted
accounting principles, consistently applied.
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1.9 PERMITTED USE. General office purposes and research and
development. Tenant shall not use any portion of the Premises for any use that
is currently categorized as a biolevel-3 or higher use, unless such use is
permitted by the City of Richmond and all other governmental authorities with
jurisdiction over the Property. Landlord shall cooperate with Tenant in
obtaining any permits, licenses or other governmental approvals required or
necessary for Tenant's business at the Premises.
1.10 PREMISES. The portion of the Building described in the Basic Lease
Information and designated on EXHIBIT A, together with the appurtenant right to
use the Common Area in common other tenants of the Property, subject to the
Rules and Regulations.
1.11 PROPERTY. The Building and that certain real property located in
the City of Richmond, County of Contra Costa, State of California, more
particularly described in EXHIBIT B hereto.
1.12 REAL PROPERTY TAXES. "Real Property Taxes" includes: (i) all
real estate taxes and assessments, and all other taxes relating to, or
levied, assessed or imposed on, the Property, or any portion thereof, or
interest therein; and (ii) all other taxes, assessments, charges, levies,
fees, or penalties of any kind and nature imposed, levied, assessed, charged,
conformed or collected by any governmental authority or other entity either
directly or indirectly (A) for public improvements, user, maintenance or
development fees, transit, housing, police, fire, open space, streets,
sidewalks, utilities, job training or other governmental services or
benefits, and (B) upon or with respect to the development, possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy of, or business operations in, the Property. All special or
one-time assessments shall be amortized over the longest period allowed by
the applicable taxing authority. Real Property Taxes shall exclude: (1) taxes
or assessments against the personal property of Tenant or any other tenant of
the Building; and (2) income, franchise, estate or gift taxes of Landlord.
1.13 RENTABLE AREA. The number of rentable square feet in the Building,
or portions of the Building, calculated by Landlord, measured from the outside
walls of the Building, calculated in accordance with the most recent American
National Standard published by the Building Owners and Managers Association
International. The Rentable Area of the Premises as set forth on the Basic Lease
Information is an estimate. Upon completion of the Building and the Premises,
Landlord shall cause its architect to determine the Rentable Area of the
Building and the Premises, and such calculation shall be binding on Landlord and
Tenant. Notwithstanding the foregoing, if Tenant wishes to verify Landlord's
determination of the Rentable Area of the Building and the Premises, then within
sixty (60) days of the determination by Landlord's architect of the Rentable
Area of the Building and the Premises, Tenant shall have the right to cause an
independent architect to verify Landlord's determination. If Tenant's
determination of the Rentable Area of the Building and the Premises differs from
Landlord's, the dispute shall be resolved by an independent architect jointly
selected by Landlord and Tenant. The Rentable
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Area shall be adjusted, calculated in accordance with the most recent American
National Standard published by the Building Owners and Managers Association
International, if Landlord materially adjusts the size of the Building. Tenant
acknowledges that lobbies, elevators, bathrooms and core areas will cause the
usable area of the Premises to be approximately 10% less than the Rentable Area
of the Premises.
1.14 TENANT'S IMPROVEMENTS. The Alterations to the Premises that may be
constructed by Tenant during the Term of this Lease pursuant to Section 9.1 and
EXHIBIT D hereto.
1.15 TENANT'S SHARE. The percentage share described in the Basic Lease
Information, which shall be equal to the Rentable Area of the Premises divided
by the Rentable Area of the Building, shall be recalculated and adjusted as
appropriate, upon determination of such Rentable Areas pursuant to Section 1.13.
1.16 TERM. The period from the Commencement Date to the Expiration
Date.
SECTION 2. LEASE OF PREMISES
2.1 PREMISES. Landlord leases to Tenant and Tenant leases from Landlord
the Premises, subject to and upon all the terms, covenants and conditions
contained in this Lease.
2.2 LANDLORD'S RESERVED RIGHTS. Landlord reserves the right, without
unreasonable interference with Tenant's use of the Premises or parking and
without diminution of Tenant's usable space or other rights hereunder, including
but not limited to the right of access, and subject to Section 11.2 of this
Lease, to alter the Common Area.
2.3 NO REPRESENTATIONS OR WARRANTIES. Neither Landlord nor Landlord's
agent have made any representations or warranties with respect to the Premises,
the Property or this Lease except as expressly set forth in this Lease, and no
rights, easements or licenses are or shall be acquired by Tenant by implication
or otherwise unless expressly set forth in this Lease.
SECTION 3. TERM
3.1 INITIAL TERM. This Lease shall be effective as of the date hereof.
The Term shall commence on the Commencement Date and shall expire on the
Expiration Date unless the Term is earlier terminated as provided in this Lease
or extended as provided in this Lease. The Commencement Date shall be the date
that Landlord delivers the Premises to Tenant in "Ready For Occupancy"
condition, which shall mean that (a) construction of the Building and the
Initial TI's (as defined in Section 7.2) is substantially completed, as
confirmed in writing by Landlord's architect, subject to items that are
customarily referred to as "punch list items", and (b) a final or temporary
certificate of occupancy has been issued for Tenant to occupy, the Premises;
provided however if such construction is delayed or the certificate of
occupancy, is not issued due to the
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acts or omissions of Tenant under EXHIBIT C (a "Tenant Delay"), then for
purposes hereof, the Commencement Date shall be deemed to be the date that the
Commencement Date would actually have occurred but for such Tenant Delay. Tenant
and Tenant's architect shall have the right to inspect the Premises and deliver
to Landlord within ten (10) days of the Commencement Date a list of the
"punch-list items" which need to be completed. Landlord, upon receipt of such
notice, shall proceed with reasonable diligence to complete the punch-list items
to a reasonably satisfactory condition. Landlord covenants to exercise
commercially reasonable efforts to commence construction within thirty (30) days
after the date of this Lease, and upon commencement, to diligently complete such
construction. Notwithstanding the foregoing, if Landlord has so exercised
commercially reasonable efforts to commence construction but has not commenced
construction on or before May 15, 1999, then either party upon notice to the
other given on or before June 1, 1999, may elect to terminate this Lease;
provided however that Tenant may not so terminate this Lease if Landlord has
been prevented from commencing construction on or before May 15, 1999 due to a
Tenant Delay. If either party so elects to terminate this Lease, the Lease
shall be deemed terminated as of the date the notice is given, Landlord shall
return to Tenant any payments made by Tenant to Landlord hereunder, and neither
party shall have further rights under this Lease nor further obligations to the
other hereunder. If Landlord, for any reason other than a Tenant Delay, has not
delivered vacant possession of the Premises in "Ready for Occupancy" condition
within twenty-four (24) months after the date of this Lease, Tenant may
terminate this Lease and Landlord shall return to Tenant any payments made by
Tenant to Landlord hereunder, and neither party shall have further rights under
this Lease nor further obligations to the other hereunder. As construction nears
completion, Landlord shall notify Tenant of the estimated Commencement Date at
least thirty (30) days prior to tendering possession of the Premises to Tenant
"Ready for Occupancy". Promptly after the Commencement Date and subject to
Tenant's rights under Section 1.13 of this Lease, Landlord and Tenant shall
execute a letter confirming the Commencement Date, the Rentable Area of the
Building, the Rentable Area of the Premises, and the Monthly Fixed Rent based
thereon.
SECTION 4. RENT: ADDITIONAL CHARGES
4.1 FIXED MONTHLY RENT AND ADDITIONAL CHARGES. Commencing on the
Commencement Date, Tenant shall pay to Landlord Fixed Rent in the amounts and
during the periods described in the Basic Lease Information. Fixed Rent shall be
payable by Tenant in consecutive monthly installments on or before the first
day of each month, in advance. If the Commencement Date occurs on a day other
than the first day of a calendar month, or if the Expiration Date occurs on a
day other than the last day of a calendar month, then the Fixed Rent for such
fractional month shall be prorated upon a daily basis based upon a thirty (30)
day calendar month. Tenant shall also pay to Landlord all Additional Charges
required under this lease ("ADDITIONAL CHARGES"), including without
limitation all amounts due pursuant to the provisions of Section 5 and Section
6. Except as otherwise provided in this Lease, all payments of Fixed Rent
and Additional Charges ("RENT") shall be made without prior demand or notice
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and without offset, deduction or counterclaim, in lawful money of the United
States of America. Such payments shall be made at Landlord's Address.
4.2 NET LEASE. Except as otherwise provided herein, this shall be a
triple net lease, and Fixed Rent shall be paid to Landlord, plus Tenant's share
of Operating Expenses, and Additional Charges payable by Tenant.
SECTION 5. PAYMENT OF OPERATING EXPENSES
5.1 PAYMENT BY TENANT. Tenant shall pay to Landlord Tenant's Share of
the Operating Expenses for each calendar year.
5.2 MANNER OF PAYMENT. On or before the Commencement Date, with respect
to estimated Operating Expenses payable during the first calendar year of the
Term, and December 31 of each calendar year during the Term, or as soon
thereafter as practicable, Landlord shall furnish to Tenant a statement setting
forth the estimated Operating Expenses for the subsequent calendar year. On the
Commencement Date, and on the first day of each calendar month during each
ensuing calendar year, Tenant shall pay in advance to Landlord Tenant's Share of
one-twelfth (1/12th) of the most recent estimated Operating Expenses; provided,
however, that if such notice is not given in December, Tenant shall continue to
pay to Landlord Tenant's Share of one-twelfth (1/12th) of the Estimated
Operating Expenses of the previous calendar year until the month after such
statement is given. Within one hundred twenty (120) days after the end of each
calendar year during the Term or as soon thereafter as practicable, Landlord
shall furnish to Tenant a statement of the actual Operating Expenses for such
calendar year. If Tenant's Share of the estimated Operating Expenses paid by
Tenant during such calendar year is (x) less than Tenant's Share of the actual
Operating Expenses for such period as shown on Landlord's statement, then Tenant
shall pay the difference to Landlord within thirty (30) days after the date of
Landlord's statement, or (y,) more than Tenant's Share of the actual Operating
Expenses for such period, then Tenant shall receive a credit on the Rent next
due for the amount of such excess, or, if the statement is given by Landlord
with respect to the calendar year in which the Term expires, Landlord shall pay
such excess to Tenant together with such statement.
5.3 ADJUSTMENTS TO OPERATING EXPENSES. If at any time, but no more
than once each calendar year, it appears to Landlord that the actual Operating
Expenses for any calendar year during the Term will exceed the estimated
Operating Expenses set forth in Landlord's statement to Tenant by more than five
percent (5%), then Landlord shall have the right by notice to Tenant to revise
the estimated Operating Expenses for such year and subsequent payments thereof
shall, commencing with the first month after which Tenant receives such notice,
be increased based upon such revised statement.
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5.4 TENANT'S INSPECTION AND AUDIT RIGHTS. Tenant or Tenant's authorized
agent or representative, including a certified public accountant retained by
Tenant, shall have the right to inspect the books and records of Landlord
relating to Operating Expenses after giving reasonable prior written notice to
Landlord and during the business hours of Landlord at Landlord's office at
Marina Bay or at such other location in Richmond, California as Landlord may
designate, for the purpose of verifying Landlord's statement of Operating
Expenses. If Tenant has an audit performed of such books and records by a
certified public accountant and such audit reveals an overstatement of Operating
Expenses by Landlord of more than five percent (5%), then Landlord shall, within
thirty (30) days after receipt of such audit, reimburse to Tenant any excess
Operating Expenses previously paid to Landlord by Tenant and Landlord shall
reimburse Tenant for the cost of such audit.
SECTION 6. TAXES PAYABLE BY TENANT
In addition to payment of Fixed Rent and Operating Expenses, Tenant
shall pay prior to delinquency, any and all taxes, assessments, license fees,
levies, business taxes, impositions, transit development fees, assessments or
charges for housing funds, service payments, in lieu taxes or fees, and any
other governmental fees, excises or charges of any kind or character, general
and special, ordinary and extraordinary, whether or not customary or now within
the contemplation of the parties hereto, levied against, upon, measured by or
attributable to Tenant's occupancy of the Premises, excluding Real Estate Taxes
(which are paid by Tenant through Operating Expense reimbursements) and taxes
based upon Landlord's taxable income.
SECTION 7. CONDITION AND OPERATION OF THE BUILDING
7.1 INITIAL CONDITION. Landlord represents and warrants that upon
completion of construction of the Building and site improvements related
thereto, the Building and the Property will be in compliance in all material
respects with, all applicable municipal, county, state and federal laws,
ordinances, regulations and codes in effect as of the date of completion of
such construction, including without limitation, the Americans with Disabilities
Act ("ADA") and that the Building systems supplying utilities and services to
the Premises, including without limitation, HVAC, plumbing and electrical
systems, will be in good working order and condition as of the Commencement
Date. Except as so provided, no representation or warranty is made or shall be
deemed made by Landlord concerning the nature, quality or suitability for
Tenant's business of the Building or the Premises, and Tenant shall have no
rights against Landlord by reason of such matters except as otherwise expressly
set forth in this Lease.
7.2 INITIAL BUILDOUT OF PREMISES. Landlord shall, at its sole cost and
expense, construct the Building in conformance with elevations approved by the
City of Richmond, it being the intent of Landlord and Tenant that the exterior
of the Building be consistent in appearance with the existing buildings at
Phase I of Marina Bay Business Park. Furthermore, Landlord shall construct,
in accordance with EXHIBIT C attached hereto, the interior of Tenant's
Premises (the
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"Initial TI's"). As set forth in EXHIBIT C, the cost of construction of the
Initial TI's (including without limitation, all permits, architectural and
design costs, and hard costs of construction) shall be paid Landlord and Tenant
as follows: Landlord shall be responsible for the first $25.00 per square foot
of Rentable Area of the Premises (presently estimated at $1,190,625), which
amount is referred to herein as the "TI ALLOWANCE". All Costs of Work (as
defined in EXHIBIT C) in excess of the TI Allowance shall be the responsibility
of Tenant.
7.3 SECURITY. Tenant shall be solely responsible for security in the
Premises. Landlord shall have no obligations regarding the security of the
Premises or the Property.
SECTION 8. USE AND COMPLIANCE WITH LAWS
8.1 USE OF PREMISES. Tenant shall use and occupy the Premises during
the Term solely for the Permitted Use.
8.2 NO NUISANCE. Tenant shall not suffer, permit or commit any waste,
nor allow, suffer or permit any odors, vapors, steam, water, vibrations, noises
or undesirable effects to emanate from the Premises or from any apparatus,
equipment or installation in the Premises or outside the Premises which would
violate any applicable governmental law, order, rule, ordinance or regulation.
Tenant shall not allow, suffer or permit the Premises or any use thereof to
constitute a nuisance or interfere with the safety, comfort or enjoyment of the
Property by Landlord or any other occupants of the Building.
8.3 COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS. Tenant, at
Tenant's sole cost and expense, shall comply during the Term with all
applicable laws, orders, rules, ordinances and regulations of federal, state,
county and municipal authorities. Tenant shall not do anything, or permit
anything to be done, in or about the Premises that shall (a) invalidate or be
in conflict with the provisions of any fire, public liability or other
insurance policies covering the Building or any property located therein, or
(b) subject Landlord to any liability or responsibility for injury to any
person or property by reason of any business operation or other practice
being conducted in the Premises. Notwithstanding the foregoing, unless
arising as a result of its specific use of the Premises, Tenant need not
perform any structural or other major renovations, improvements or additions
to the Premises as part of such compliance.
8.4 HAZARDOUS MATERIALS. Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Premises.
(a) PROHIBITION ON USE OF HAZARDOUS MATERIALS. Subject to the
provisions of Section 8.4(b) of this Lease, Tenant shall not use, generate,
manufacture, produce, store, release, discharge, or dispose of, on, under or
about the Premises or any part of the Property or transport to or from the
Premises or any part of the Property any Hazardous Material or allow its
employees, agents, contractors, licensees, invitees or subtenants
(collectively, "TENANT'S AGENTS") to do so.
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(b) PERMITTED HAZARDOUS MATERIALS. Notwithstanding any other provision
of this Lease, Tenant shall be permitted to use, generate, manufacture, produce
and store in, and transport to and from the Premises Hazardous Materials so long
as: (a) each of the Hazardous Materials is used, generated, manufactured,
produced or stored in, or transported to and from, the Premises only to the
extent necessary for Tenant's operation of its business at the Premises, and
(b) the conditions set forth in this Section 8.4 are complied with.
(c) COMPLIANCE WITH ENVIRONMENTAL LAWS. Tenant shall comply with and
shall cause Tenant's Agents to comply with, and shall keep and maintain the
Premises and cause Tenant's Agents to keep and maintain the Premises in
compliance with, all Environmental Laws. Tenant shall, at its own expense prior
to Tenant's use and occupancy, procure, maintain in effect and comply with all
conditions of any and all permits, licenses and other governmental and
regulatory approvals required for Tenant's use of the Premises. Tenant shall
cause any and all Hazardous Materials removed from the Premises to be removed
and transported solely by duly licensed handlers to duly licensed facilities for
final disposal of such materials and wastes or as may otherwise be permitted
under applicable Environmental Laws. Only materials that, under all applicable
governmental laws, orders, rules, ordinances and regulations, may be disposed of
into the drains are permitted to be put into the drains at the Premises. Tenant
shall make available to Landlord for inspection and copying upon reasonable
advance notice and during the business hours of Tenant each and all of the
following to the extent the same are required by applicable Environmental Laws
to be maintained on-site at the Premises: (a) a copy of each hazardous material
management plan or similar document required by any federal, state or local
governmental or regulatory authority to be submitted by Tenant; (b) copies of
all permits, licenses and other governmental and regulatory approvals with
respect to the use of Hazardous Materials; (c) copies of hazardous waste
manifests reflecting the legal and proper disposal of all Hazardous Materials
removed from the Premises; and (d) copies of all reports, studies and written
results of tests or inspections concerning the Premises or any part of the
Property with respect to Hazardous Materials (collectively "DOCUMENTS")
(d) ROUTINE MONITORING. Upon commencing any activity involving Hazardous
Materials on the Premises, and continuing thereafter throughout the Term, Tenant
shall initiate and maintain any reporting and/or monitoring system required
under all applicable Environmental Laws to ensure the routine monitoring of the
levels of Hazardous Materials which may be present on, under or about the
Premises or any part of the Property resulting from Tenant's activities. At
Landlord's written request, Tenant shall provide Landlord copies of such
reports, if any, as are provided by Tenant to any governmental agency.
(1) LANDLORD'S RIGHT TO INSTALL TESTING WELLS. Provided it does
not unreasonably interfere with Tenant's business operations on or access to the
Premises, Landlord may install permanent or other testing wells or devices
at or about the Premises or any part of the Property, and may cause the
ground water to be tested to detect the presence of Hazardous Materials not
more than once every twelve (12) months during the
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term of the Lease by the use of such wells or devices as are then customarily
used for such purposes. The costs of any such tests shall be come solely by
Tenant if, following the initiation of such testing, the presence of Hazardous
Materials in violation of Environmental Laws or this Lease is detected to the
extent Tenant or Tenant's Agents are responsible therefor. Tenant's obligations
under this Section 8.4(d)(1) shall survive for a period of one year after the
expiration or earlier termination of this Lease.
(2) LANDLORD'S RIGHT TO INSPECT. Provided it does not unreasonably
interfere with Tenant's business operations on or access to the Premises,
Landlord, its lender and their representatives shall have the right, at any
time, but not more often than once every twelve (12) months, upon at least three
(3) business days' prior notice (except in an emergency) to enter the Premises
during Tenant's business hours to: (i) conduct any testing, monitoring and
analysis for Hazardous Materials; (ii) review any Documents, materials,
inventory, or notices to or from governmental or regulatory authorities relating
to Tenant's use of Hazardous Materials at the Premises; and (iii) review all
storage, use, transportation and disposal facilities and procedures required to
be maintained by applicable law for the storage, use, transportation and
disposal of Hazardous Materials.
(e) NOTICE TO LANDLORD. Tenant shall give written notice to Landlord
promptly after Tenant receives notice of any of the following: (i) any
proceeding or inquiry by, notice from, or order of any governmental authority
(including, without limitation, the California State Department of Health
Services) with respect to the presence of any Hazardous Material on, under or
about the Premises or any part of the Property or the migration thereof from or
to other property; and (ii) all claims made or threatened by any third party
against Tenant, the Premises or any part of the Property relating to any loss or
injury resulting from any Hazardous Materials. Tenant shall give written notice
to Landlord promptly after Tenant becomes aware of any spill, release, discharge
or nonroutine disposal of Hazardous Materials of a reportable quantity with
respect to the Premises or operations at the Premises by Tenant or Tenant's
Agents. Tenant shall also promptly provide copies to Landlord of all reports
pertaining to the use, generation, manufacture, release, discharge or disposal
of Hazardous Materials on the Premises that Tenant provides to any governmental
body or agency.
(f) LANDLORD'S RIGHT TO PARTICIPATE. If Landlord is joined in any legal
proceeding or action affecting the Premises or any part of the Property
initiated in connection with any Environmental Law, and if such proceeding or
action is brought in connection with a Release (as defined in Section 8.4(g)
below) of Hazardous Materials by Tenant or Tenant's Agents, Tenant shall defend
Landlord, or at Tenant's option pay, Landlord's reasonable attorneys fees in
connection therewith.
(g) TENANT'S INDEMNITY. Tenant shall protect. defend. indemnity and
hold harmless Landlord, its directors. officers, partners, employees, agents,
successors and assigns from and against any and all claims, fines, judgments.
penalties, losses, damages, costs, expenses or
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liability (including reasonable attorneys' fees and costs) to the extent
directly arising out of or attributable to the use, generation, manufacture,
production, storage, release, threatened release, discharge or disposal of any
Hazardous Material on, under or about the Premises or any part of the Property
by Tenant or Tenant's Agents or the transportation of any Hazardous Material to
or from the Premises (collectively, a "RELEASE") by Tenant or Tenant's Agents
including, without limitation: the costs of any investigation, monitoring,
removal, restoration, abatement, repair, cleanup, detoxification or other
ameliorative work of any kind or nature (collectively "REMEDIAL WORK") and the
preparation and implementation of any closure, remedial or other required plans,
as required by Environmental Laws. For purposes of this Section 8.4(g), any acts
or omissions of Tenant or Tenant's Agents (whether or not they are negligent,
intentional, willful or unlawful) shall be strictly attributable to Tenant.
Tenant's obligations under this Section 8.4(g) shall survive for a period of one
year after the expiration or earlier termination of this Lease.
(h) REMEDIAL WORK. Upon any spill or release of a reportable quantity
of Hazardous Materials by Tenant or Tenant's Agents, Tenant shall, subject to
Section 8.4(f) of this Lease, promptly notify Landlord of the spill or
release of Hazardous Materials and shall, at its sole expense, commence to
perform and thereafter diligently prosecute to completion such Remedial Work
as is required under Environmental Laws.
(i) LANDLORD'S REPRESENTATION. Landlord represents and warrants that, to
the best of Landlord's knowledge, (a) as of the date of this Lease the Property
complies, and as of the Commencement Date will comply, with applicable
Environmental Laws and (b) as of the date of this Lease there are, and as of the
Commencement Date there will be, no Hazardous Materials on, under or about the
Property; provided however, the Property and the Building may contain building
materials which are classified as Hazardous Materials, provided that those
materials are customarily and lawfully used in the construction of improvements
similar to those constructed thereon.
Section 9. ALTERATIONS, TENANT'S PROPERTY, TENANT'S WORK AND LIENS
9.1 ALTERATIONS By TENANT. Tenant shall not make or allow to be made any
structural alterations, additions or improvements in or to the Premises
whatsoever (collectively, "ALTERATIONS") without first (i) providing Landlord
copies of the plans and specifications for the Alterations, and (ii) obtaining
Landlord's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. All Alterations undertaken by Tenant shall be
done in accordance with the provisions of EXHIBIT D to this Lease. Upon
expiration of the Lease, Tenant shall have no obligation to remove all
Alterations to which Landlord has given its consent.
9.2 TITLE TO ALTERATIONS. The Initial TI's shall be and remain the
Property of Landlord. Tenant's Improvements and any other Alterations paid for
by Tenant shall be Tenant's property during the Term. Upon expiration of the
Term or termination of this Lease, all Alterations shall
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become the Property of Landlord and shall be surrendered to Landlord, in the
condition required by this Lease.
9.3 LIENS. Tenant shall keep the Premises and the Property free from
any liens arising out of any (i) work performed by or for Tenant or any person
claiming through or under Tenant or material furnished to or for the Premises
before or during the Term by or for Tenant or any person claiming through or
under Tenant, and (ii) obligations incurred by or for Tenant or any person
claiming through or under Tenant before or during the Term. Landlord shall have
the right at all times to post and keep posted on the Premises any notices
permitted or required by law with respect to any mechanics', materialmen's and
other liens. In addition to all other requirements contained in this Lease,
Tenant shall give to Landlord at least ten (10) business days prior notice of
commencement of any construction on the Premises.
SECTION 10. REPAIRS AND MAINTENANCE
10.1 LANDLORD'S OBLIGATIONS. As a part of the consideration for the
leasing of the Premises, and subject to the obligations of Tenant set forth in
this Lease, Landlord shall maintain, in good condition, the following: (i) the
Common Area, (ii) the foundations, (iii) exterior walls, (iv) the structural
portions of the roof of the Building, (v) all window frames (vi) all gutters and
down spouts on the Building, (vii) structural elements of the Building, and
(viii) all Building systems, including without limitation, HVAC, plumbing and
electrical. Landlord shall in good faith and with due diligence cause necessary
repairs to be made as soon as reasonably practicable. Except as set forth in
Section 16.7 hereof, Tenant waives any right now or hereafter granted by law to
make any repairs under this Section 10.1 upon Landlord's failure to do so
hereunder. Except as set forth in Section 16.7 hereof, Landlord shall not be
liable for and, except as provided in Section 12, there shall be no abatement of
Rent with respect to, any injury to or interference with Tenant's business
arising from any repairs, maintenance, alteration or improvement in or to any
portion of the Building, including the Premises, or in or to the fixtures,
appurtenances and equipment therein. Except as otherwise expressly provided
herein, Tenant hereby waives and releases its rights under Sections 1941,
1941.1, 1942 and 1942.5 of the California Civil Code or under any similar law
now or hereafter in effect.
10.2 TENANT'S OBLIGATIONS. Tenant shall be solely responsible for all
janitorial services for the Premises and may select persons to perform such
services in its reasonable discretion. Tenant at its sole expense, and subject
to normal wear and tear, casualty, acts of God and other causes beyond the
control of Tenant, shall clean. keep, and maintain the interior of the Premises
in good order and condition and repair and replace when necessary the
non-structural elements of the Premises (but excluding items which Landlord is
obligated to maintain, repair or replace under Section 1O.1
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SECTION 11. UTILITIES
11.1 UTILITIES. Landlord shall provide water, sewer, gas, and
electrical connections to the Premises and separate metering facilities
therefor. Tenant shall promptly pay, as the same become due, all charges for
water, gas, electricity, telephone, sewer service, waste pick-up and any other
utilities, materials or services furnished directly to or used by Tenant on or
about the Premises during the Lease Term.
11.2 INTERRUPTION. If Tenant is unable to conduct its ordinary
business activities in the Premises because of any failure or interruption of
any utility to the Premises for a period in excess of thirty (30) consecutive
days (except if due to the negligence or willful misconduct of Tenant's
Agents or if due to Tenant's failure to make repairs to the Premises as
required hereunder), unless Landlord is exercising commercially reasonable
efforts to restore the utility, Tenant shall have the right to terminate this
Lease, without any liability to Landlord, upon five (5) days' prior written
notice. Notwithstanding the foregoing, in the event such failure or
interruption is caused by damage or destruction covered by Section 12 hereof,
the provisions of Section 12 shall apply in lieu of the foregoing. Except as
set forth in this section or in Section 12 hereof, failure by Landlord to
furnish any service herein specified or any cessation thereof due to
accident, making of repairs, alterations or improvements, weather, unusual
difficulty or ability to obtain services or supplies from sources usually
used for the Property, labor difficulties or other causes beyond Landlord's
reasonable control shall not render Landlord liable in any respect for
damages of any kind, nor be construed as an eviction of Tenant nor work an
abatement of Rent.
SECTION 12. DAMAGE OR DESTRUCTION
12.1 LOSS COVERED BY INSURANCE. If, at any time prior to the expiration
or termination of this Lease, the Premises or the Building in which the Premises
are located is wholly or partially damaged or destroyed by a casualty, which
loss to Landlord is (except for any applicable deductible) fully covered by
insurance maintained by Landlord or for Landlord's benefit (or required to be
maintained by Landlord pursuant to Section 13), which casualty renders the
Premises totally or partially inaccessible or unusable by Tenant in the ordinary
conduct of Tenant's business, then:
(a) REPAIRS WHICH CAN BE COMPLETED WITHIN NINE MONTHS. Within twenty
(20) days of notice to Landlord of such damage or destruction, Landlord shall
provide Tenant with notice of its determination of whether the damage or
destruction can be repaired within nine (9) months of such damage or destruction
without the payment of overtime or other premiums. If all repairs to such
Premises or Building can, in Landlord's reasonable judgment, be completed within
nine (9) months following the date of such damage or destruction without the
payment of overtime or other premiums, Landlord, upon receipt of the insurance
proceeds with respect thereto, shall at Landlord's expense promptly commence
and diligently proceed to repair the same and this Lease shall remain in full
force and effect and a proportionate reduction of the Rent shall be allowed
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Tenant for such portion of the Premises as shall be rendered inaccessible or
unusable to Tenant, and which is not used by Tenant, during the period of time
that such portion is unusable or inaccessible and not used by Tenant.
(b) REPAIRS WHICH CANNOT BE COMPLETED WITHIN NINE MONTHS. If all such
repairs to the Building and Premises cannot, in Landlord's reasonable judgment,
be completed within nine (9) months following the date of notice to Landlord of
such damage or destruction without the payment of overtime or other premiums,
Landlord shall notify Tenant of such determination and either Landlord or Tenant
may, at its option, upon written notice to the other party given within thirty
(30) days after the occurrence of such damage or destruction, elect to terminate
this Lease as of the date of the occurrence of such damage or destruction.
Notwithstanding the foregoing, if the damage does not affect the Premises,
Landlord cannot terminate the Lease unless Landlord concurrently terminates all
other leases in the Building. In the event that neither Landlord nor Tenant
elects to terminate this Lease in accordance with the foregoing provisions, then
Landlord, upon receipt of the insurance proceeds with respect thereto, shall at
Landlord's expense promptly commence and diligently proceed to repair such
damage or destruction, and in such event, this Lease shall continue in full
force and effect but the Rent shall be proportionately reduced as hereinabove
provided in Section 12.1(a); provided, however, that if any such repair is not
commenced by Landlord within sixty (60) days after Landlord's receipt of the
insurance proceeds to which it is entitled on account of such damage or
destruction or is not substantially completed by Landlord within ten (10) months
after the occurrence of such damage or destruction, then in either such event
Tenant may, at its option, upon prompt written notice to Landlord, elect to
terminate this Lease.
12.2 LOSS NOT COVERED BY INSURANCE. If, at any time prior to the
expiration or termination of this Lease, the Premises or the Building in which
the Premises are located is totally or partially damaged or destroyed from a
casualty, which loss to Landlord is not fully covered (except for any
deductible) by insurance maintained by Landlord or for Landlord's benefit (or
required to be maintained by Landlord pursuant to Section 13), Landlord may, at
its option, upon written notice to Tenant within thirty (30) days after notice
to Landlord of the occurrence of such damage or destruction, elect to restore or
repair such damage or destruction, or Landlord may elect to terminate this
Lease so long as Landlord terminates every other lease in the Building which was
affected by, the casualty. Notwithstanding the foregoing, Landlord may not elect
to terminate this Lease if (i) the uninsured portion of the damage is less than
ten percent (10%) of the replacement cost of the Building and/or (ii) Landlord
does not elect to terminate the leases of all other tenants in the Building who
are similarly affected by such damage and/or destruction. If Landlord elects to
repair or restore such damage or destruction, Landlord shall promptly commence
and diligently proceed to repair such damage and this Lease shall continue in
full force and effect but the Rent shall be proportionately reduced as provided
in Section 12.1(a). If Landlord does not elect by notice to Tenant to
repair such damage the Lease shall terminate as of the date of the casualty.
Notwithstanding the foregoing, if all repairs to the Premises or the Building
required under this Section 12.2 cannot, in Landlord's reasonable
15
judgment, be completed within four (4) months following the date of such damage
or destruction without the payment of overtime or other expenses, then either
Landlord or Tenant may at its option, upon written notice to the other party
given within thirty (30) days after the occurrence of such damage or
destruction, elect to terminate this Lease as of the date of the occurrence of
such damage or destruction.
12.3 DESTRUCTION DURING FINAL YEAR. Notwithstanding anything to the
contrary contained in Sections 12.1 and 12.2 hereof, if the Premises or the
Building in which the Premises are located is wholly or partially damaged or
destroyed within the final twelve (12) months of the Term of this Lease, so
that Tenant shall be prevented from using the Premises for forty five (45)
consecutive days due to such damage or destruction, then either Landlord or
Tenant may, at its option, by notice to the other party within thirty (30) days
after the occurrence of such damage or destruction, elect to terminate this
Lease effective as of the date of casualty.
12.4 DESTRUCTION OF TENANT'S PERSONAL PROPERTY, TENANT IMPROVEMENTS OR
PROPERTY OF TENANT'S EMPLOYEES. In the event of any damage to or destruction of
the Premises or the Building, under no circumstances shall Landlord be required
to repair any injury, or damage to, or make any repairs to or replacements of
Tenant's Improvements but Landlord shall be obligated to repair or replace the
Initial TI's. Landlord shall have no responsibility for any contents placed or
kept in or on the Premises or the Building by Tenant or Tenant's agents or
employees.
SECTION 13. INSURANCE AND INDEMNITY
13.1 INSURANCE ON TENANT'S PROPERTY. Tenant shall during the Term
provide insurance coverage against loss or damage by fire and such other risks
as are from time to time included in a standard or special extended coverage
endorsement insuring Tenant's merchandise, trade fixtures, furnishings,
equipment and all other items of personal property of Tenant.
13.2 TENANT'S LIABILITY INSURANCE. Tenant shall procure at its sole
cost and expense and keep in effect from the date of this Lease and at all times
during the Term either comprehensive general liability insurance or commercial
general liability insurance applying to the use or occupancy of the Premises,
and contractual liability insurance applying to Tenant's indemnity obligations
under this Lease with respect to bodily injury, property damage, or other loss
covered by Tenant's liability insurance. Such coverage shall be written by
insurance companies reasonably acceptable to Landlord and its Lender and shall
have a minimum combined single limit of liability of at least three million
dollars ($3,000,000.00). All such policies shall be written to apply to all
bodily injury, property damage or other covered loss occurring during the
policy term, shall be endorsed to add Landlord as an additional named insured,
to provide that such coverage shall be primary and that any insurance
maintained by Landlord shall be excess insurance only. All such insurance shall
provide for severability of interests; shall provide that an act or omission of
one of the named insureds shall not reduce or
16
avoid coverage to the other named insureds; and shall afford coverage for all
claims based on acts, omissions, injury and damage, which claims occurred or
arose (or the onset of which occurred or arose) in whole or in part during the
policy period.
13.3 FIRE AND EXTENDED COVERAGE INSURANCE. Landlord shall maintain
insurance on the Building and the Premises against damage by fire and those
perils now specified in the most current standard extended coverage endorsement
in an amount equal to the full insurable cost of the Building and the Premises,
excluding any of Tenant's Improvements and Alterations, as reasonably determined
by Landlord, exclusive of excavations and foundations and subject to such
"deductibles" as Landlord may reasonably determine. In addition, Landlord shall
maintain loss of rent insurance and a policy of commercial general liability and
property damage insurance. All insurance proceeds payable under Landlord's
insurance carried hereunder shall by payable solely to Landlord.
13.4 WAIVER OF SUBROGATION. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
on account of any and all claims Landlord or Tenant may have against the other
with respect to any risk insured against by insurance actually carried, or
required to be carried hereunder. Each casualty insurance policy carried by
Landlord or Tenant hereunder, or which either may obtain with respect to the
Premises or the Property independent of obligations hereunder, shall provide
that the insurer waives all rights of recovery by way of subrogation against
Landlord or Tenant in connection with all matters included within the scope of
the waiver of recovery contained in this Section 13.4.
13.5 TENANT'S INDEMNITY. To the fullest extent permitted by law, Tenant
shall indemnify Landlord, and its officers, directors, partners, employees,
servants, and agents, and all mortgagees or beneficiaries of Landlord's interest
in all or any portion of the Property, (collectively, "RELATED ENTITIES")
against and save Landlord and its Related Entities harmless from and defend
Landlord and Related Entities through attorneys reasonably satisfactory to
Landlord from and against any and all claims, loss, cost, liability, damage and
expense including, without limitation, penalties, fines and reasonable
attorneys' fees (collectively, "CLAIMS"), incurred in connection with or arising
in whole or in part from the activities of Tenant or Tenant's Related Entities,
or any negligence or willful misconduct by Tenant or Tenant's Related Entities,
excluding any Claims to the extent arising out of: (i) the negligence or willful
misconduct of Landlord or Landlord's Related Entities, or (ii) Landlord's breach
of this Lease.
13.6 LANDLORD'S INDEMNITY. To the fullest extent permitted by law,
Landlord shall indemnify Tenant and its officers, directors, shareholders,
partners, employees, servants and agents (collectively "RELATED ENTITIES")
against and save Tenant and its Related Entities harmless from and defend Tenant
and its Related Entities through attorneys reasonably satisfactory to Tenant
from and against any and all Claims incurred in connection with or arising in
whole or in part from the activities of Landlord or Landlord's Related Entities
or any
17
negligence or willful misconduct of Landlord or Landlord's Related Entities,
excluding any Claims to the extent arising out of: (i) the negligence or willful
misconduct of Tenant or Tenant's Related Entities, or (ii) Tenant's breach of
this Lease.
SECTION 14. EMINENT DOMAIN
14.1 EFFECT OF TAKING. If all of the Premises is condemned or taken in
any manner before or during the Term for public or quasi-public use, or any
transfer of the Premises is made in avoidance of an exercise of the power of
eminent domain (each of which acts shall be referred to as a "TAKING"), this
Lease shall automatically terminate as of the date of the vesting of title as a
result of such taking. If a part of the Premises is so taken, this Lease shall
automatically terminate as to the portion of the Premises so taken as of the
date of the vesting of title as a result of such taking. If such portion of the
Property is taken as to render the Property incapable of economically feasible
operation or to require a substantial alteration or reconstruction of the
remaining portions thereof, this Lease may be terminated by Landlord, as of the
date of the vesting of title as a result of such taking, by written notice to
Tenant within sixty (60) days following notice to Landlord of the date of which
said vesting will occur. If such portion of the Premises is taken as, in the
reasonable opinion of Tenant, to materially impair the ability of Tenant to use
and conduct its business from the Premises, this Lease may be terminated by
Tenant as of the date of the vesting of title as a result of such taking, by
written notice to Landlord within sixty (60) days following notice to Tenant of
the date of which said vesting will occur.
14.2 AWARD. Landlord shall be entitled to the entire award for any
taking; provided, however, that Landlord shall have no interest in any award
made to Tenant for its leasehold interest, relocation expenses, the taking of
personal property and fixtures belonging to Tenant or the interruption of or
damage to Tenant's business, or attributable to improvements of the Premises
actually paid by Tenant.
14.3 ABATEMENT OF RENT. In the event of a partial or temporary taking
that does not result in a termination of this Lease as to the entire Premises,
the Rent shall abate in proportion to the portion of the Premises taken or
rendered untenable by such taking. Tenant hereby waives and releases its rights
under Section 1265.130 of the California Code of Civil Procedure or any similar
statute now or hereafter in effect.
SECTION 15. SUBLEASE AND ASSIGNMENT
15.1 CONSENT REQUIRED. Subject to Section 15.5 hereof, Tenant shall not
sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any
part of the Premises or Tenant's leasehold estate hereunder (each such act is
referred to herein as an "ASSIGNMENT"), or sublet the Premises or any
portion thereof or permit the Premises to be occupied by anyone other than
Tenant (each such act is referred to herein as a "SUBLEASE") without
Landlord's prior written
18
consent in each instance, which consent shall not be unreasonably withheld and
shall be given or withheld within ten (10) business days after Tenant's delivery
of request therefor, together with all information required to be provided to
Landlord under Section 15.2.
15.2 NOTICE. Tenant shall have no right to enter into an Assignment or
a Sublease unless Tenant shall have first requested in writing Landlord's
consent to such Assignment or Sublease. Any request by Tenant for Landlord's
consent to a specific Assignment or Sublease shall include (a) the name of the
proposed assignee, subtenant or occupant, (b) the nature of the proposed
assignee's, subtenant's or occupant's business to be carried on in the Premises,
(c) a copy of the proposed Assignment or Sublease, and (d) such
financial information as Landlord may reasonably request concerning the proposed
assignee, subtenant or occupant or its business.
15.3 CONDITIONS OF APPROVAL. Without limiting the circumstances under
which it may be reasonable for Landlord to withhold its consent to an Assignment
or Sublease, it is expressly agreed that it shall be reasonable for Landlord to
withhold its consent if Landlord reasonably determines that (i) the character or
value of the Building are likely to be adversely affected during the Term as a
result of such Assignment or Sublease, or (ii) the financial condition of the
proposed new tenant or subtenant at the time of the proposed Assignment or
Sublease is, in the reasonable opinion of Landlord, insufficient to meet the
obligations of Tenant being assigned to such new tenant or subtenant.
15.4 COST OF PROCESSING REQUEST. Tenant shall reimburse Landlord for
Landlord's reasonable attorneys' fees for the review and documentation of any
proposed Assignment or Sublease within thirty (30) days after Landlord gives
notice to Tenant of the amount thereof, together with reasonable documentation
supporting such fees.
15.5 SCOPE OF ASSIGNMENT. Any sale or other transfer of a majority of
(i) the partnership interests in Tenant or any beneficial interest therein,
if Tenant is a partnership, or (ii) the capital stock in Tenant, or any
beneficial interest therein, if Tenant is a corporation, shall be an Assignment
for purposes of this Lease. The sale or other transfer of more than fifty
percent (50%), by value, of the assets of Tenant used in conducting its business
in the Premises shall also constitute an Assignment for purposes of this Lease.
Notwithstanding anything to the contrary contained in this Section 15, Tenant
may assign or sublet the Premises, or any portion thereof, without Landlord's
consent, to any entity which controls, is controlled by or is under common
control with Tenant, or to any entity resulting from the merger or consolidation
with Tenant, or to any entity which acquires all or substantially all the assets
of Tenant as a going concern of the business that is being conducted on the
Premises, and any such Assignment shall not be subject to the provisions of
Section 15.7 below.
15.6 ASSUMPTION OF OBLIGATIONS. Each assignee subtenant or other
transferee of all or a portion of Tenant's interest hereunder, other than
Landlord, shall assume, as provided in this Section 15.6, all obligations of
Tenant under this Lease and shall be and remain liable jointly, and
19
severally with Tenant for the payment of Rent, and for the performance of all
the terms, covenants, conditions and agreements herein contained on Tenant's
part to be performed during the Term; provided, however, that a sublessee shall
be liable to Landlord for Rent only in the amount set forth in the Sublease.
15.7 EXCESS RENT; RECAPTURE RIGHTS. Landlord's right to the portion of
excess rent specified in this Section 15.7 is expressly reserved from the grant
of Tenant's leasehold estate. Landlord shall have such right to such portion of
the excess rent in the event of any Assignment or Sublease by any succeeding
subtenant or assignee, regardless of whether (i) the instrument effecting any
such Assignment or Sublease provides such right to Landlord, or (ii) Landlord
has approved such an instrument which fails to provide such right to Landlord.
If Landlord consents to any Assignment or Sublease, then Tenant shall pay to
Landlord within five (5) business days after Tenant's receipt thereof, 50% of
any and all consideration, as calculated pursuant to the following sentence,
received by Tenant on account of such transaction, howsoever the same may be
denominated, and in the case of Subleases, to the extent that such consideration
exceeds the pro rata portion of the Fixed Rent and other charges payable by
Tenant hereunder attributable to the sublet portion of the Premises, based on
the net Rentable Area of the Promises and the net Rentable Area of the Premises
sublet. In calculating the consideration subject to the preceding sentence, the
following items shall be deducted therefrom: (a) the reasonable costs paid by
Tenant for additional improvements installed in the portion of the Premises
subject to such assignment or sublease by Tenant for the specific subtenant or
assignee in question, amortized over the term of such assignment or sublease
with interest thereon at the rate paid by Tenant on funds borrowed for the
purpose of making such improvements or at the Interest Rate if Tenant does not
borrow funds for such purpose and (b) reasonable leasing commissions paid by
Tenant in connection with such assignment or subletting.
Section 16. DEFAULT: REMEDIES
16.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" by Tenant:
(a) ABANDONMENT. Abandonment of the Premises without payment of Rent.
Tenant's vacation of the Premises and concurrent efforts to sublet the Premises
or assign the Lease is not an abandonment of the Premises, provided that Tenant
is timely paying Rent.
(b) NONPAYMENT OF MONEY. Failure to pay Rent or any other sum due
and payable by Tenant under this Lease.
(c) OTHER OBLIGATIONS. Failure to perform any term, obligation,
condition, agreement or covenant under this Lease, other than nonpayment of
money.
(d) INSOLVENCY. The admission by Tenant in writing of its
inability to pay its debts as they become due; the filing by Tenant of a
petition seeking any reorganization, arrangement,
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composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, the filing by Tenant of an answer
admitting or failing timely to contest a material allegation of a petition filed
against Tenant in any such proceedings or, if within thirty (30) days after the
commencement of any proceeding against Tenant seeking any such relief, such
proceeding shall not have been dismissed; the appointment of a receiver or
trustee to take possession of all or substantially all of the assets of Tenant
unless such appointment is vacated or annulled within sixty (60) days; a general
assignment by Tenant for the benefit of creditors; any action or proceeding
commenced by Tenant under any insolvency or bankruptcy act, or under any other
statute or regulation having as its purpose the protection of creditors, or any
such action commenced against Tenant and not discharged within thirty (30) days
after the date of commencement, or the attachment, execution or other judicial
seizure of all or substantially all of Tenant's assets or the Premises, if such
attachment or other seizure remains undismissed or undischarged for a period of
ten (10) days after the levy thereof.
16.2 NOTICE TO TENANT. Upon the occurrence of any Event of Default,
Landlord shall give Tenant written notice thereof, specifying the Event of
Default and the provisions of this Lease breached by Tenant and Tenant shall
have the right to cure such Event of Default within the time periods, if any,
hereinafter specified.
(a) NONPAYMENT OF MONEY. For failure to pay Rent or any other sum,
within ten (10) days after Landlord's notice.
(b) OTHER OBLIGATIONS. For failure to perform any term, obligation,
condition, agreement or covenant under this Lease, other than nonpayment of
monies, thirty (30) days after Landlord's notice. Notwithstanding the foregoing,
if such failure cannot reasonably be cured within such 30-day period, Tenant
shall continue to have the right to cure and shall not be in default under this
Lease if Tenant commences within such 30-day period such cure and thereafter
diligently prosecutes the same to completion. No notice or cure period shall be
required or applicable hereunder for any Event of Default specified in Section
16.1(d) except as expressly set forth in Section 16.1(d) of this Lease.
16.3 REMEDY UPON OCCURRENCE OF UNCURED EVENT OF DEFAULT. On the
occurrence of an uncured Event of Default, Landlord shall have the right either
(i) to terminate this Lease, and at any time thereafter recover possession of
the Premises, or any part thereof, and expel and remove therefrom Tenant and any
other person occupying the same, by any lawful means, and again repossess and
enjoy the Premises without prejudice to any of the remedies that Landlord may
have under this Lease, or at law or equity by reason of the Event of Default or
of such termination, or (ii) to continue this Lease in effect for so long as
Landlord does not so terminate Tenant's right to possession, and enforce all
Landlord's rights and remedies under this Lease, including the right to
(A) recover Fixed Rent and Additional Charges as they become due, or(B) relet
the Premises at such rental and upon such terms and conditions as Landlord, in
its reasonable discretion, may deem advisable. Acts of maintenance, preservation
or efforts to lease
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the Premises, the appointment of a receiver upon application of Landlord to
protect Landlord's interest under this Lease, or re-entry or taking of
possession of the Premises by Landlord hereunder, shall not constitute an
election to terminate Tenant's right to possession unless specific written
notice of such termination is given to Tenant hereunder. Notwithstanding any
relating without termination, Landlord may at any time thereafter elect to
terminate this Lease pursuant to this Section 16.3. Provided Tenant cooperates
with Landlord, Landlord agrees to make reasonable efforts to mitigate its
damages arising from an uncured Event of Default by Tenant.
16.4 DAMAGES UPON TERMINATION. If Landlord terminates this Lease
pursuant to Section 16.3, Landlord may exercise all rights and remedies
available to a landlord at law or in equity, including, without limitation,
the right to recover from Tenant: (i) the worth at the time of award of the
unpaid Rent and other amounts payable by Tenant hereunder which had been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid Rent and such other amounts which would have been
earned after termination until the time of the award exceeds the amount of
loss of Rent and such other amounts that the Tenant proves could have been
reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid Rent and such other amounts for the balance of the term
after the time of the award exceeds the amount of loss of Rent and such other
amounts that the Tenant proves could be reasonably avoided; and (iv) any
other amount necessary to compensate Landlord for all the direct costs
proximately caused by Tenant's failure to perform its obligations under this
Lease or which, in the ordinary course of things, would be likely to result
therefrom. The "worth at the time of award" of the amounts referred to in
clauses (i) and (ii) shall be computed with Interest. The "worth at the time
of award" of the amounts referred to in clause (iii) shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco, California, plus one percent (1%). As used herein, "time of
award" shall mean either the date upon which Tenant pays to Landlord the
amount recoverable by Landlord as hereinabove set forth, or the date of entry
of any determination, order or judgment, of any court or other legally
constituted body determining the amount recoverable, whichever first occurs.
16.5 COMPUTATION OF RENT AND OTHER AMOUNTS FOR PURPOSES OF DEFAULT. For
purposes of Section 16.4, unpaid Rent and other amounts which would have accrued
and become payable under this Lease shall consist of the sum of: (i) the total
Fixed Rent for the balance of the Term, plus (ii) a computation of Tenant's
Share of the Operating Expenses for the balance of the Term.
16.6 LANDLORD'S RIGHT TO PERFORM ON TENANT'S BREACH. In addition to
any other right or remedy of Landlord hereunder, upon the occurrence of an
uncured Event of Default and without waiving or releasing Tenant from any
obligation of Tenant hereunder, Landlord may (but shall not be required) to cure
such uncured Event of Default for the account of Tenant. Landlord shall not be
responsible or liable to Tenant for any loss or damage that may be caused to
Tenant's stock or business by reason of effecting cure hereunder, unless caused
by the gross
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negligence or willful misconduct of Landlord or Landlord's Agents. All sums paid
by Landlord and all costs and expenses incurred by Landlord in connection with
such cure (including attorneys' fees), together with interest thereon at the
Interest Rate from the respective dates of Landlord's payment of each item of
cost or expense, shall be payable by Tenant on demand.
16.7 LANDLORD'S DEFAULTS.
(a) NOTICE AND CURES: LANDLORD'S LIABILITY. If Landlord fails to
perform any of its obligations under this Lease, then Tenant shall give
Landlord written notice thereof, specifying with particularity the breach
claimed by Tenant. Except for Landlord's failure to make repairs required
under Section 10.1, Landlord shall have the right to cure such breach during
the 30-day period following receipt of Tenant's notice hereunder, unless such
breach cannot reasonably be cured within such 30-day period, in which event
Landlord shall not be in default under this Lease if Landlord commences
within such 30-day period such cure and thereafter diligently prosecutes the
same to completion. Notwithstanding the foregoing, if such breach causes
immediate damage to Tenant's personal property or the ordinary conduct of
Tenant's business, such as roof leaks, Landlord shall use commercially
reasonable efforts to cure such breach as soon as possible. In addition, in
the event Landlord fails to cure such breach within the time period set forth
herein, Tenant shall have the right, but not the obligation, to cure such
breach and the reasonable costs and expenses incurred by Tenant in connection
with such cure, together with interest thereon at the Interest Rate from the
respective date(s) of Tenant's payment of each item of cost or expense, shall
be payable by Landlord upon demand. If the Premises, or any portion thereof,
are at any time subject to any mortgage or a deed of trust, and either
Landlord or the mortgagee or beneficiary has notified Tenant of the existence
of such mortgage or deed of trust, Tenant shall serve on the mortgagee or
beneficiary thereunder concurrent copies of any notice of default served on
Landlord hereunder at the last address for such mortgagee or beneficiary of
which Tenant has received notice from Landlord, and such mortgagee or
beneficiary shall have an additional period of 30 days after expiration of
Landlord's cure period to accomplish the cure of Landlord's default.
(b) RECOVERY AGAINST LANDLORD. Tenant shall look solely to
Landlord's interest in the Property for the recovery of any judgment against
Landlord. Landlord, or if Landlord is a partnership, its partners whether
general or limited, or if Landlord is a corporation, its directors, officers
and shareholders, shall not be personally liable for any such judgment.
16.8 WAIVER; REMEDIES CUMULATIVE. Failure of Landlord or Tenant to
declare an Event of Default immediately upon the occurrence thereof, or delay
in taking any action in connection therewith, shall not waive such Event of
Default, but Landlord or Tenant shall have the right to declare any such
Event of Default at any time thereafter. No waiver by Landlord or Tenant of
an Event of Default, or any agreement, term, covenant or condition contained
in this Lease, shall be effective or binding on the other party unless made
in writing and no such waiver shall be
23
implied from any omission by Landlord or Tenant to take action with respect to
such Event of Default or other such matter.
SECTION 17. SUBORDINATION, ATTORNMENT AND ESTOPPEL
17.1 SUBORDINATION. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, this
Lease, and all of Tenant's rights under this Lease, shall be subject and
subordinate at all times to the lien of any mortgage or deed of trust or other
security instrument (and any advances or interest thereunder) that may now exist
or hereafter be executed in any amount for which the Property or any portion
thereof, is specified as security, and all modifications, renewals, supplements,
consolidations and replacements thereof, provided that the rights of Tenant
herein are not disturbed so long as no Event of Default by Tenant shall have
occurred and be continuing. If any such mortgagee or beneficiary so elects in
writing, then this Lease shall be superior to the lien of the mortgage or deed
of trust held by such mortgagee or beneficiary, whether this Lease is dated or
recorded before or after such mortgage or trust deed. Tenant shall promptly
execute and deliver, upon demand by Landlord and in substantially the form
reasonably requested by Landlord, any additional documents evidencing the
priority or subordination of this Lease, provided such documents contain the
nondisturbance agreement described in Section 17.2 hereof.
17.2 ATTORNMENT BY TENANT: NON DISTURBANCE. Upon enforcement of any
rights or remedies under any mortgage or deed of trust to which this Lease is
subordinated (including, without limitation, proceedings for judicial or
power of sale foreclosure, or deed in lieu of foreclosure delivered by
Landlord to the mortgagee or beneficiary thereunder), Tenant shall attorn to
the purchaser or transferee under such right or remedy and recognize such
purchaser or transferee as Landlord under this Lease. If Tenant attorns
hereunder, then, so long as there is no uncured Event of Default, Tenant
shall not be disturbed in its possession of the Premises. Tenant shall
execute and deliver any reasonable document or instrument required by such
purchaser or transferee confirming the attornment hereunder.
17.3 CERTIFICATES. Each of Tenant and Landlord, at any time during
the Term and from time to time, shall execute, acknowledge and deliver to the
requesting party, addressed to such party or any prospective purchaser or
mortgagee of any part of the Property a certificate stating: (a) that Tenant
has accepted the Premises (or, if Tenant has not done so, that Tenant has not
accepted the Premises and specifying the reasons therefor), (b) the
Commencement Date and Expiration Date of this Lease, (c) that this Lease is
unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as modified and
stating the modifications), (d) whether or not the requested party is aware
of any then existing defenses against the enforcement of any of the
obligations of the requested party under this Lease (and, if so, specifying
same), (e) whether or not the requested party is aware of any then existing
defaults by the requesting party in the performance of its obligations under
this Lease (or acts or omissions which would constitute defaults if uncured
after notice), and, if so, specifying same,
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(f) the dates, if any, to which the Rent and Additional Charges and other
amounts under this Lease have been paid, (g) use of and knowledge with respect
to Hazardous Materials by Tenant or Landlord under, over and upon the Premises,
and (h) any other information and statements that may reasonably be required by
the requesting party.
SECTION 18. FEES AND EXPENSES; PAYMENT
18.1 INTEREST ON PAST DUE OBLIGATIONS. Unless otherwise specifically
provided herein, any amount due from Tenant to Landlord under this Lease
(including, without limitation, any payment of Rent) which is not paid within
ten (10) after written notice to Tenant (except no notice need be given for
failure to make any payment of Fixed Rent) shall bear interest from the due date
until paid at the Interest Rate. The payment of such interest shall not alone
excuse or cure any default under this Lease.
18.2 LATE CHARGES. Tenant acknowledges that late payment by Tenant to
Landlord of Rent will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such costs being extremely difficult and
impracticable to fix. Such costs include, without limitation, processing and
accounting charges, and late charges that may be imposed on Landlord by the
terms of any encumbrance and note secured by any encumbrance covering the
Premises. Therefore, in addition to the provisions of Section 18.1, if any
installment of Rent due from Tenant is not received within ten (10) days after
written notice to Tenant (except no notice need be given for failure to make any
payment of Fixed Rent) by Landlord, Tenant shall pay to Landlord an additional
sum of five percent (5%) of the overdue Rent as a late charge. The parties agree
that this late charge represents a fair and reasonable estimate of the costs
that Landlord will incur by reason of late payment by Tenant.
Section 19. ACCESS TO PREMISES
19.1 LANDLORD ACCESS. Landlord reserves for itself and its agents,
employees and independent contractors the right to enter the Premises at all
reasonable times and upon reasonable notice (i) to inspect the Premises. (ii) to
supply any service to be provided by Landlord to Tenant hereunder, (iii) to show
the Premises to prospective purchasers, mortgagees or tenants, (iv) to post
notices of non-responsibility, (v) to determine whether Tenant is complying
with its obligations under this Lease. (vi) to alter, improve or repair the
Premises or any other portion of the Building and (vii) for any other lawful
purpose not inconsistent with Tenant's rights hereunder. Any entry by, Landlord
or Landlord's Agents pursuant to this section shall, except in the case of any
emergency, be upon forty eight (48) hours' advance written or oral notice to
Tenant. Landlord shall comply with Tenant's security, safety and other
procedures applicable to the Premises and shall not unreasonably interfere with
Tenant's use of the Premises or the conduct of Tenant's business therein while
in the Premises. Provided Landlord complies with the requirements of this
section. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy,
or quiet
25
enjoyment of the Premises, any right to abatement of Rent, or any other loss
occasioned by Landlord's exercise of any of its rights under this Section 19,
unless caused by the negligence or willful misconduct of Landlord or its agents,
employees or contractors. Landlord shall have the right to use any and all means
that Landlord may reasonably deem necessary or proper in order to obtain entry
to any portion of the Premises in an emergency.
Section 20. NOTICES
Except as otherwise expressly provided in this Lease, any bills,
statements, notices, demands, requests or other communications given or required
to be given under this Lease shall be effective only if rendered or given in
writing, and either sent by overnight delivery service or registered or
certified mail, return receipt requested, addressed (a) to Tenant (i) at the
Premises, or (ii) at Tenant's last known address or at any place where Landlord
believes that Tenant or any agent or employee of Tenant may be found, if sent
subsequent to Tenant's vacating, deserting, abandoning or surrendering the
Premises, (b) to Landlord at Landlord's Address, or (c) to either Landlord or
Tenant at such other address as either Landlord or Tenant may designate as its
new address for such purpose by notice given to the other in accordance with the
provisions of this Section 20. Any such bill, statement, notice, demand, request
or other communication shall be deemed to have been rendered or given (i) on the
date it is officially recorded as delivered to the intended recipient by return
receipt or equivalent, and, in the absence of such record of delivery, the
effective date shall be presumed to have been the third (3rd) business day after
the date when it shall have been deposited in the mail as provided in this
Section 20 if sent by registered or certified mail. If Tenant is notified of the
identity and address of any mortgagee of Landlord, Tenant shall give to such
mortgagee by registered or certified mail written notice of any default by
Landlord or failure by Landlord to perform any of its obligations hereunder.
Section 21. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the rules and
regulations for the Building, a copy of which has been provided to Tenant, and
all reasonable modifications thereof and additions thereto which are applicable
to multiple tenants and which do not adversely affect Tenant in a material way
from time to time put into effect by Landlord. Landlord shall have the right to
promulgate different rules and regulations applicable to different portions of
the Building, but Landlord shall not have the right to promulgate rules and
regulations applicable only to Tenant. If there is any conflict between the
terms of the rules and regulations and any provision of this Lease, the terms of
this Lease shall govern. Landlord shall not be responsible for the
nonperformance by any other tenant or occupant of the Building of any of such
rules and regulations. Landlord's consent where required under the rules and
regulations shall not be unreasonably, withheld, conditioned or delayed.
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Section 22. SECURITY DEPOSIT
Tenant agrees to deposit with Landlord the Security Deposit, if any,
set forth in the Basic Lease Information within five (5) days after mutual
execution of this Lease, as security for Tenant's faithful performance of its
obligations under this Lease. Landlord and Tenant agree that the Security
Deposit may be commingled with other funds of Landlord. If Tenant fails to pay
any Rent or other amount when due and payable under this Lease, or fails to
perform any of the terms hereof, Landlord may appropriate and apply or use all
or any portion of the Security Deposit for Rent payments or any other amount
then due and unpaid, for payment of any amount for which Landlord has become
obligated as a result of Tenant's default or breach, and for any loss or damage
sustained by Landlord as a result of Tenant's default or breach, and Landlord
may so apply or use this deposit without prejudice to any other remedy Landlord
may have by reason of Tenant's default or breach. If Landlord so uses any of the
Security Deposit, Tenant shall, within ten (10) days after written demand
therefor, restore the Security Deposit to the full amount originally deposited;
Tenant' failure to do so shall constitute an act of default hereunder. If Tenant
performs all of Tenant's obligations hereunder, the Security Deposit, or so
much thereof as has not theretofore been applied by Landlord, shall be returned
to Tenant (or to the last permitted assignee, if any, of Tenant's interest
hereunder) within fifteen (15) days after the end of the Lease. If Landlord
sells its interest in the Premises, Landlord shall deliver this deposit to the
purchaser of Landlord's interest and thereupon be relieved of any further
liability or obligation with respect to the Security Deposit.
Section 23. SURRENDER OF PREMISES ON TERMINATION
On the Expiration Date or earlier termination of the Term, Tenant shall
quit and surrender the Premises to Landlord, broom clean, in good order,
condition and repair as required by Section 10.1, ordinary wear and tear, fire
and other casualties, acts of God or other causes beyond the control of Tenant
excepted, and Tenant shall comply with the provisions of Section 9.2 of this
Lease. Unless Landlord expressly agrees in writing to the contrary, Tenant
shall remove all machinery, equipment, trade fixtures and materials that Tenant
has placed on the Premises and Tenant shall repair any and all damage to the
Premises caused by Tenant's removal of such equipment, machinery, trade fixtures
and materials.
Section 24. MISCELLANEOUS
24.1 SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 15
regarding assignment and subleasing by Tenant, the terms, covenants and
conditions contained in this Lease shall bind and inure to the benefit of
Landlord and Tenant and, except as otherwise provided herein, their respective
personal representatives and successors and assigns; provided, however, that
upon the sale, assignment or transfer by Landlord (or by any subsequent
landlord) of its interest in the Building or the Property as owner or lessee,
including any transfer upon or in lieu of foreclosure or by operation of
law, Landlord (or subsequent landlord) shall be relieved
27
from all subsequent obligations or liabilities under this Lease. Provided that
Landlord delivers the Security Deposit, if any, to its successor, Landlord shall
have no further liability to Tenant with respect thereto.
24.2 CONSTRUCTION. This Lease shall be governed by and construed in
accordance with the laws of the State of California. Any actions or proceedings
brought under this Lease, or with respect to any matter arising under or out of
this Lease, shall be brought and tried only in courts located in the County of
Contra Costa, California (excepting appellate courts).
24.3 INTEGRATION. The terms of this Lease are intended by the parties
as a final expression of their agreement with respect to such terms as are
included in this Lease, and may not be contradicted by evidence of any prior or
contemporaneous agreement, arrangement, understanding or negotiation (whether
oral or written). The parties further intend that this Lease constitute the
complete and exclusive statement of its terms, and no extrinsic evidence
whatsoever may be introduced in any judicial proceeding involving this Lease.
The language in all parts of this Lease shall in all cases be construed as a
whole and in accordance with its fair meaning and not restricted for or against
any party.
24.4 LIGHT, AIR, VIEW, SIGNS, ETC. Tenant covenants and agrees that no
diminution of light, air or view, or any impairment of the visibility of the
Premises from inside or outside the Building, by any structure or other object
that may hereafter be erected (whether or not by Landlord) shall entitle Tenant
to any reduction of Rent under this Lease, constitute an actual or constructive
eviction of Tenant, result in any liability of Landlord to Tenant, or in any
other way affect this Lease or Tenant's obligations hereunder. Landlord shall
have the exclusive right to use all exterior walls, roofs and other portions of
the Building for signs, notices and other reasonable promotional purposes.
Tenant shall not place or allow to be placed in, on or about the Building any
sign or other notice indicating Tenant's desire to assign this Lease or sublet
the Premises .
24.5 HOLDING OVER. If Tenant remains in possession of the Premises
after the expiration of the Term with the express written consent of Landlord
and without executing a new lease, then such holding over shall be deemed a
tenancy from month-to-month, subject to all conditions, provisions and
obligations of this Lease. No holding over by Tenant after the Term shall
operate to extend the Term. In the event of any unauthorized holding over,
Landlord and Tenant agree that Landlord's damages, including any claims for
damages by any other tenant to whom Landlord may, have leased all or any part of
the Premises, would be difficult to establish. Landlord and Tenant desire to
liquidate the damages payable to Landlord in the event Tenant holds over after
the term without Landlord's consent and therefore agree upon damages payable by
Tenant to Landlord in a daily amount equal to 1/30th of the monthly Fixed Rent
in effect immediately, prior to the holding over which daily amount shall
increase by five percent (5%) per day but in no event more than 100%,
such that for example, on the tenth day the increase for
28
such day would be 50%. Landlord and Tenant agree that the above described
formula to establish damages is fair and reasonable.
24.6 COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24.7 BROKER'S COMMISSIONS. Landlord shall pay all brokers commissions
payable to the Brokers listed in the Basic Lease Information in connection with
this transaction. Tenant represents and warrants that other than such Brokers,
Tenant has not entered into any agreement or incurred or created any obligation
which might require Landlord to pay any broker's commission, finder's fee or
other commission or fee relating to the leasing of the Premises, unless
disclosed to and accepted by Landlord in writing before the date hereof, and
Tenant shall defend, indemnify and hold harmless Landlord from and against any
claims for any such commissions or fees by anyone claiming by or through Tenant.
24.8 LANDLORD'S CONSENTS. Unless otherwise expressly provided in this
Lease, all consents and approvals to be given by Landlord may be withheld for
any reason or no reason, at Landlord's sole discretion, and any such action
shall not be deemed inconsistent with any covenant of good faith and fair
dealing otherwise implied by law to be a part of this Lease. Landlord's failure
to respond to a request for consent or approval from Tenant with thirty (30)
days (or such other period as may be provided in this Lease) shall be deemed to
constitute the granting of such consent or approval.
24.9 AMENDMENTS. No amendments or modifications of this lease or any
agreements in connection therewith shall be valid unless in writing duly
executed by both Landlord and Tenant.
24.10 CONFIDENTIALITY. Landlord shall keep and maintain as confidential
and shall not disclose to third parties all information, documents and other
data supplied by Tenant to Landlord pursuant to or in connection with this Lease
that Tenant identifies as confidential at the time Tenant provides such
information to Landlord; provided, however, that Landlord may disclose such
information, documents and other data to its counsel and consultants who agree
to keep it confidential and to the extent required by applicable governmental
laws, orders, rules, ordinances and regulations.
24.11 ATTORNEYS' FEES. If either party becomes a party to any
litigation concerning this Lease, the Premises, or the Property by reason of
any act or omission of the other party or its authorized representatives. and
not by reason of any act or omission of the party that becomes a party to
that litigation, or any act or omission of its authorized representative, the
party that causes the other party, to become involved in the litigation shall
be liable to the party, involved for reasonable attorneys' fees and court
costs incurred by it in the litigation. If either party commences an action
against the other party arising out of or in connection with this Lease, or
29
institutes any proceeding in a bankruptcy or similar court which has
jurisdiction over the other party or any or all of its property or assets, the
prevailing party shall be entitled to have and recover from the losing party
reasonable attorneys' fees and court costs. "PREVAILING PARTY" within the
meaning of this Section 24.11 shall include a party who dismisses an action for
recovery hereunder in exchange for payment of the sums allegedly due,
performance of covenants allegedly breached or consideration substantially equal
to the relief sought in the action.
24.12 NO DISCRIMINATION. There shall be no discrimination against or
segregation of any person or group of persons, on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of the Premises,
nor shall Tenant or any person claiming under or through Tenant, establish or
permit any such practice of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vends in the Premises. Landlord shall deliver to Tenant a copy of
(a) any Covenants, Conditions and Restrictions affecting the Premises; and (b)
any rules and regulations governing Tenant's use of the Premises. Tenant hereby
acknowledges receipt of the aforementioned documents.
Section 25. PARKING AND SIGNAGE
25.1 PARKING. During the Term, Tenant shall have the non-exclusive
right to three (3) parking spaces per 1,000 square feet of the Rentable Area in
the Premises. The parking spaces shall be in the areas designated by Landlord
from time to time for non-exclusive Tenant parking. Tenant shall abide by any
and all reasonable parking regulations and rules applicable to multiple tenants
established from time to time by Landlord.
25.2 SIGNAGE. Tenant shall not affix, paint, erect or inscribe any
sign, projection, awning, or advertisement of any kind to any part of the
Premises, Building, or Property, including, without limitation, the inside or
outside of windows or doors, without the written consent of Landlord which
shall not be unreasonably withheld, conditioned or delayed so long as such
signage is consistent with signage generally approved by Landlord for the
Property. Landlord agrees that subject to Tenant obtaining permission from the
City of Richmond to the extent required therefor, Tenant may place signage on
the Premises and the Property substantially the same as Tenant's signage on
Phase I of Marina Bay Business Park.
Section 26. OPTION TO EXTEND
26.1 EXERCISE OF OPTION. Provided this Lease is in full force and
effect and no Event of Default has occurred and is continuing at the time of
Tenant's delivery, of the Extension Notice, Tenant shall have the right to
extend the Term of this Lease for two five (5) year terms (each an "Extended
Term") upon prior written notice of extension to Landlord given not later
than twelve (12) months prior to the expiration of the initial Term or the
Extended Term, as the case
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may be ("Extension Notice"). It is understood and agreed that Tenant's submittal
of each Extension Notice shall bind Tenant to a five (5) year extension of this
Lease. Each Extended Term shall be on the same terms and conditions as provided
in this Lease, except that (i) Tenant shall occupy the Premises in its then "AS
IS" condition, and (ii) the Fixed Monthly Rent for the Extended Term shall be
the greater of (x) 95% of the Fixed Monthly Rent in effect immediately prior to
the commencement date of the Extended Term, or (y) the fair market rent as of
the date that is eleven (11) months prior to the commencement of the Extended
Term, as determined below:
26.2 FAIR MARKET RENT DETERMINATION. The fair market rent of the
Premises as of the commencement of each Extended Term shall be determined as
follows. Within fifteen (15) days after Landlord's receipt of the Extension
Notice, Landlord shall notify Tenant of Landlord's reasonable opinion of the
fair market rental value of the Premises. If Landlord and Tenant do not agree as
to such fair market rental value within fifteen (15) days of Tenant's receipt of
Landlord's notice, the fair market rental value shall be determined pursuant to
the procedures set forth below.
26.3 APPRAISAL. Not later than ten (10) days after the expiration of
the second 15-day period described above, each of the parties shall select a
qualified real estate appraiser with at least five years of appraisal experience
who is familiar with rental value of similar property in the
Richmond/Berkeley/Oakland/Alameda area and the two appraisers so selected shall
appraise the fair market rental value of the Premises. If the two appraisals
differ and the higher of the two does not exceed the lower by ten percent (10%),
the two appraisals shall be averaged to determine the fair market rental value
of the Premises. If the two appraisals differ by more than ten percent (10%),
the two appraisers shall select a third person similarly qualified to act as a
third appraiser; provided however that if the two appraisers are unable to agree
on a third person to act as an appraiser, the third appraiser shall be selected
by lot from names submitted by the two other appraisers. The third appraisal
shall be promptly completed and if two of the three appraisers agree, their
determination shall be the fair market rental value; if no two agree, the
parties shall determine the fair market rental value by averaging the
appraisals; provided, however, that if the lowest appraisal is less than ninety
percent (90%) of the middle appraisal, then such lowest appraisal shall be
disregarded in determining the average and the highest appraisal shall be
disregarded in determining the average if the highest appraisal is more than one
hundred ten percent (110%) of the middle appraisal. Landlord and Tenant shall
each pay the appraiser it selects and one-half (1/2) of the costs and expenses
of the third appraiser, if a third appraiser is necessary.
26.4 DEFINITION OF FAIR MARKET RENTAL VALUE. "Fair Market Rental Value"
shall mean the fair market annual rental amount per rentable square foot that
Landlord has accepted in current, comparable, new transactions in Marina Bay
Business Park for comparable space, for a comparable period of time, from
non-expansion, non-renewal, and non-equity, tenants, or if there are not a
sufficient number of current comparable transactions in Marina Bay Business
Park, what a willing, comparable, new, non-expansion, non-renewal, non-equity,
tenant would
31
pay, and a willing comparable landlord of a comparable building with comparable
vacancy factors in the vicinity of the Building would accept, at arm's length
for a comparable amount of space for a comparable period of time, in either case
giving appropriate consideration to the annual rental rates per rentable square
foot, the standard of measurement by which the rentable square footage is
measured, the ratio of rentable square feet to usable square feet, the type of
escalation clauses, the extent of liability under the escalation clauses, and
abatement provisions reflecting free rent and/or no rent during the period of
construction or any other period during the lease term, brokerage commissions,
if any, which would be payable by Landlord in a comparable transaction, length
of the lease term, size and location of premises being leased, a fair market
tenant improvement allowances and other generally applicable conditions of
tenancy for the number of rentable square feet in the Premises so that Tenant
will obtain the same rent and other economic benefits.
IN WITNESS WHEREOF, Landlord and Tenant have each caused their duly
authorized representatives to execute this Lease on their respective behalf as
of the day and year first above written.
LANDLORD:
MARINA BAY PARTNERS, LLC,
a California limited liability company
By: /s/ Richard R. Poe
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Richard R. Poe, Its Manager
TENANT:
QRS CORPORATION.
a Delaware corporation
By: /s/ Peter Papano
--------------------------------------
Name: Peter Papano
------------------------------------
Title: VP FINANCE
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
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EXHIBIT A
FLOOR PLAN
33
EXHIBIT B
LEGAL DESCRIPTION
Portions of Lots 31 and 32, Section 24, and portions of Lots 1 and 2, Section
25, Township 1 North, Range 5 West, Mount Diablo Base and Meridian of "Map
No. 1 of Salt Marsh and Tidelands" filed June 11, 1997, Rack Map No. 9,
Official Records, Contra Costa County, State of California, further described
as follows:
PARCEL B
Commencing at the Southeastern corner of said Parcel Map (142 PM 36)
and along the Southern boundary of said Parcel Map, North 88DEG051'44"
West 39.50 feet to the Point of Beginning; thence
South 01DEG08'16" West 422.81 feet; thence
South 46DEG08'1 6" West 22.63 feet; thence
South 01DEG08'16" West 115.43 feet; thence
North 88DEG51'44" West 16.50 feet; thence
South 01DEG08'16" West 64.61 feet; thence
South 61DEG08'16" West 215.27 feet to a point on a non-tangent curve;
thence
Along said non-tangent curve to the left, having a radius of 50.00
feet, the center which bears South 68DEG15'34" West, through a central angle of
35DEG47'44", an arc distance of 31.24 feet; thence
Along a non-tangent line North 17DEG00'00" West 131.50 feet; thence
South 73DEG00'00" West 2.50 feet; thence
North 17DEG00'00" West 2.98 feet; thence
Along a tangent curve to the right, having a radius of 931.00 feet,
through a central angle of 18DEG08'16", an arc distance of 294.72 feet; thence
Along a tangent line North 01DEG08'16" East 286.37 feet to the
Southern boundary of said Parcel Map (142 PM 36); thence
Along said Southern boundary South 88DEG51'44" East 329.5 feet to the
point of beginning.
Containing an area of 4.7317 acres, more or less.
EXHIBIT C
BUILD OUT OF INITIAL TI'S
This Work Letter is incorporated into and made a part of that certain
Marina Bay Business Park Office Lease between Marina Bay Partners, LLC and QRS
Corporation. All initial-capitalized terms used in this Work Letter and not
otherwise defined herein shall have the meanings ascribed to them elsewhere in
the Lease.
ARTICLE I
GENERAL PROVISIONS
1.1 INITIAL TI'S. Landlord shall plan and design, and Landlord
shall construct certain office improvements (the "Initial TI's") in
accordance with the provisions of this Work Letter and all other applicable
terms and conditions of the Lease.
1.2 INITIAL TI Work. The planning, design and construction of the
Initial TI's are referred to collectively as "Initial TI Work."
1.3 COSTS OF THE Work. For purposes of this Work Letter, "Costs of the
Work" shall mean and include all: (a) architect's, engineer's and consultants'
fees and costs; (b) deposits, fees and costs for building and other permits,
licenses and approvals; (c) tests and inspections; (d) security; (e) insurance
and bond premiums; (f) utilities; (g) all amounts payable to any contractors,
subcontractors, suppliers and vendors; and (h) all other charges, fees, expenses
and other costs incurred or arising in connection with the Initial TI Work.
Costs of the Work shall exclude all costs of construction of the Building shell,
which shall be bome solely by Landlord.
1.4 CONSTRUCTION STANDARDS. The Initial TI's shall be constructed by
Landlord in a good and workmanlike manner, free from material defects in
workmanship and materials and in accordance with Section 7.2 and all applicable
laws, including without limitation, the Americans with Disabilities Act.
ARTICLE 2
IMPROVEMENT PLANS
2.1 PLANS FOR INITIAL TI's. Landlord agrees to perform the Initial TI
Work in accordance with drawings, specifications and other plans necessary for
the development, approval and construction of the Initial TI's (collectively,
the "Plans") reasonably approved by Landlord and Tenant. The Plans shall be
prepared by TSH Architects, or another architectural firm selected by Landlord
and reasonable approved by Tenant (the "Architect"). From time to time as
reasonably requested by Landlord or the Architect, Tenant shall meet with the
Architect to provide Architect sufficient information to enable Architect to
prepare preliminary plans for review and approval by Landlord and Tenant, which
approval shall not be unreasonably withheld. Upon approval of the preliminary
plans, Tenant shall again from time to time. as reasonably requested by Landlord
or Architect meet with the Architect to provide Architect sufficient information
to enable Architect to prepare the final plans and specifications for review
and approval by Landlord and Tenant, which approval shall not be
unreasonably withheld. Each of Landlord and Tenant shall within 15 days of
receipt of the preliminary plans or the Plans (as the case may be),
approve or disapprove the Plans. In the event of disapproval, the disapproving
party shall state its reasons for disapproval and the parties thereafter shall
work together in good faith to reach prompt agreement upon modifications to
such plans.
ARTICLE 3
CONSTRUCTION OF INITIAL TI'S
3.1 SELECTION OF GENERAL CONTRACTOR. Landlord shall employ a general
contractor to perform the construction of the Initial TI Work. Landlord shall
obtain bids from two or more general contractors selected by Landlord. Such
contractors shall be subject to the approval of Tenant prior to the bid process,
which approval shall not be unreasonably withheld; provided however that Tenant
hereby agrees that the general contractor hired by Landlord to construct the
Building shall be deemed acceptable to Tenant as a general contractor who may
bid the Initial TI Work. Such Work shall be bid on a maximum guaranteed amount
basis, and Landlord shall select the general contractor that submits the lowest
bid (or Landlord's general contractor if it is not the low bidder, but agrees to
perform the Work for the amount of the lowest bid).
3.2. PAYMENT FOR COSTS OF THE WORK. Upon selection of the general
contractor and reasonable approval by Tenant of the Costs of the Work, prior to
commencement of the construction of the Initial TI's, Tenant shall advance to
Landlord the amount of the Costs of the Work, if any, in excess of the TI
Allowance, which TI Allowance, as set forth in Section 7.2 of the Lease, is
$25.00 per square foot of Rentable Area. The funds so advanced to Landlord shall
be held in trust by Landlord and used solely to construct the Initial TI's.
3.3 CHANGE ORDERS. Tenant shall be responsible, subject to initial
exhaustion of the TI Allowance, for all costs relating to changes in the Initial
TI Work that arise from changes in the Plans after commencement of construction
that are requested by Tenant or required by the City of Richmond. Any such
changes in the Initial TI Work arising from changes in the Plans shall be
submitted by the general contractor to both Landlord and Tenant for their prompt
approval, which shall not be unreasonably withheld, and the costs for such
changes shall be set forth in written change orders approved by Tenant and
signed by Landlord. Concurrent with Tenant's approval of each change order,
Tenant shall advance to Landlord the additional costs (if any) set forth
therein. The funds so advanced to Landlord shall be held in trust by Landlord
and used solely to construct the Initial TI's.
EXHIBIT D
TENANT'S IMPROVEMENTS WORK LETTER
This Work Letter is incorporated into and made a part of that certain
Marina Bay Business Park Office Lease between Marina Bay Partners, LLC and QRS
Corporation. All initial-capitalized terms used in this Work Letter and not
otherwise defined herein shall have the meanings ascribed to them elsewhere in
the Lease.
ARTICLE 1
GENERAL PROVISIONS
1.1 TENANT IMPROVEMENTS. If Tenant desires to construct Alterations (as
defined in Section 9.1 of the Lease) to the Premises after construction of the
Initial TI's, Tenant shall plan, design and construct such Alterations (the
"Tenant Improvements") in accordance with the provisions of this Work Letter and
Section 9 of the Lease.
1.2 TENANT'S WORK The planning, design and construction of the Tenant
Improvements are referred to collectively as "Tenant's Work."
1.3 COSTS OF THE WORK. For purposes of this Work Letter, "Costs of the
Work" shall mean and include all: (a) architect's, engineer's and consultants'
fees and costs; (b) deposits, fees and costs for building and other permits,
licenses and approvals; (c) tests and inspections; (d) security; (e) insurance
and bond premiums; (f) utilities; (g) all amounts payable to any contractors,
subcontractors, suppliers and vendors; and (h) all other charges, fees, expenses
and other costs incurred or arising in connection with the Tenant's Work.
1.4 CONSTRUCTION STANDARDS. The Tenant Improvements shall be
constructed by Tenant in a good and workmanlike manner, free from material
defects in workmanship and materials and in accordance with Section 9 of this
Lease and all applicable laws.
ARTICLE 2
IMPROVEMENT PLANS
2.1 PLANS FOR TENANT IMPROVEMENTS. Tenant agrees at Tenant's sole cost
and expense, to perform the Tenant's Work in accordance with drawings,
specifications and other plans necessary for the development, approval and
construction of the Tenant Improvements (collectively, the "Plans") reasonably
approved by Landlord. Landlord shall have the right to reasonably approve the
general contractor for Tenant's Work. Tenant shall submit the Plans for Tenant's
Work to Landlord and shall reimburse Landlord for all reasonable costs which
Landlord may incur in connection with the granting approval of Tenant's Work.
Landlord shall, within ten (10) business days of receipt of the Plans, approve
or disapprove the Plans. In the event of disapproval, Landlord shall state its
reasons for disapproval and the parties thereafter shall work together in good
faith to reach prompt agreement upon modifications to the Plans. Tenant shall
file a notice of completion after completion of Tenant's Work and provide
Landlord with a copy thereof.
2.2 EFFECT OF LANDLORD'S ACCEPTANCE. Tenant acknowledges that Landlord's
review of the Plans are not being undertaken solely for Landlord's benefit, and
Landlord shall not be understood or deemed, by its review and acceptance of such
Plans, to make any representation or warranty as to their correctness, accuracy,
compliance with applicable law or any other quality, or to undertake any duty to
Tenant or any other persons. As between Landlord and Tenant, Tenant shall remain
solely responsible for the design of the Tenant Improvements and Landlord shall
have no liability to Tenant or any other person in connection with its review
and acceptance of the Plans.
ARTICLE 3
PAYMENT FOR WORK
3.1 COSTS OF THE WORK FOR TENANT IMPROVEMENTS. Tenant shall pay the
Costs of the Work incurred in connection with the Tenant Improvements.
ARTICLE 4
PERMITS
4.1 TENANT'S PERMITS. Before starting the Tenant Improvements, Tenant
shall procure, and provide Landlord with copies of, all permits, licenses,
consents, notices and other approvals necessary to commence such Work from all
public and quasi-public authorities with jurisdiction. During and upon
completion of the Tenant Improvements, Tenant shall: (a) procure, and provide
Landlord with copies of, all necessary permits, licenses, consents and other
approvals, (b) comply with the directions, orders and other requirements of all
building and other inspectors and representatives of public and quasi-public
authorities with jurisdiction; and (c) comply with the reasonable requirements
of any insurance underwriting board or insurance carrier insuring Tenant,
Landlord or the Premises. Tenant shall keep Landlord generally informed of the
status of, and Landlord shall have the right to participate and shall cooperate
with Tenant in the procurement of, Tenant's building permit for the Tenant
Improvements.