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LEASE AGREEMENT
between
SEAPORT PLAZA ASSOCIATES, LLC
as "Landlord"
and
THE 3DO COMPANY
as "Tenant"
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TABLE OF CONTENTS
SECTION PAGE
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1. PREMISES..................................................................................................4
2. TERM......................................................................................................4
3. RENT......................................................................................................5
4. SECURITY DEPOSIT..........................................................................................9
5. USE AND COMPLIANCE WITH LAWS.............................................................................10
6. TENANT IMPROVEMENTS & ALTERATIONS........................................................................12
7. MAINTENANCE AND REPAIRS..................................................................................14
8. TENANT'S TAXES...........................................................................................15
9. UTILITIES AND SERVICES...................................................................................16
10. EXCULPATION AND INDEMNIFICATION..........................................................................16
11. INSURANCE................................................................................................17
12. DAMAGE OR DESTRUCTION....................................................................................18
13. CONDEMNATION.............................................................................................20
14. ASSIGNMENT AND SUBLETTING................................................................................21
15. DEFAULT AND REMEDIES.....................................................................................23
16. LATE CHARGE AND INTEREST.................................................................................25
17. WAIVER...................................................................................................26
18. ENTRY, INSPECTION AND CLOSURE............................................................................26
19. SURRENDER AND HOLDING OVER...............................................................................27
20. ENCUMBRANCES.............................................................................................27
21. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS...........................................................28
22. NOTICES..................................................................................................28
23. ATTORNEYS' FEES..........................................................................................29
24. QUIET POSSESSION.........................................................................................29
25. SECURITY MEASURES........................................................................................29
26. FORCE MAJEURE............................................................................................29
27. RULES AND REGULATIONS....................................................................................29
28. LANDLORD'S LIABILITY.....................................................................................30
29. CONSENTS AND APPROVALS...................................................................................30
30. WAIVER OF RIGHT TO JURY TRIAL............................................................................30
31. BROKERS..................................................................................................30
32. RELOCATION OF PREMISES...................................................................................31
33. ARBITRATION OF SELECTED DISPUTES.........................................................................31
34. ENTIRE AGREEMENT.........................................................................................32
35. MISCELLANEOUS............................................................................................32
36. AUTHORITY................................................................................................32
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INDEX OF DEFINED TERMS
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Additional Rent....................................10 Tenant..............................................5
Alterations........................................17 Tenant Improvements................................17
Award..............................................29 Tenant's Share.....................................10
Broker.............................................44 Tenant's Taxes.....................................22
Building............................................5 Term................................................5
Building 100........................................5 Trade Fixtures.....................................19
Building 200........................................5 Transfer...........................................31
Building Rules.....................................43 Transferee.........................................31
Building Systems...................................14 Visitors...........................................14
Cessation of Construction Termination Notice........6
Change in Control..................................31
Claims.............................................23
Commencement Date...................................5
Condemnation.......................................29
Condemnor..........................................29
Construction Rider..................................5
Controls...........................................22
Date of Condemnation...............................29
Effective Date......................................6
Encumbrance........................................39
Environmental Losses...............................14
Environmental Requirements.........................14
Event of Default...................................34
Executed Lease Delivery Date........................5
Expiration Date.....................................5
Failure to Commence Termination Notice..............6
Fees...............................................42
Handled by Tenant..................................14
Handling by Tenant.................................14
Hazardous Materials................................14
Hazardous Materials Rent Abatement.................17
HVAC...............................................14
Interest Rate......................................37
Landlord............................................5
Landlord Delay......................................5
Laws................................................8
Mortgagee..........................................40
Newly Enacted Laws..................................8
Operating Costs.....................................7
Outside Date........................................6
Outside Date Termination Notice.....................6
Parking Facility....................................5
Permitted Hazardous Materials......................15
Premises............................................5
Project.............................................5
Property............................................5
Property Manager...................................25
Proposed Transferee................................31
Rent...............................................12
Rent Commencement Date..............................5
Rental Tax.........................................22
Representatives....................................14
Security Deposit...................................12
Service Failure....................................23
Taxes..............................................10
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BASIC LEASE INFORMATION
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Lease Date: For identification purposes only, the date of this Lease is July 12, 1999
Landlord: SEAPORT PLAZA ASSOCIATES, LLC, a California limited liability company
Tenant: The 3DO Company, a California corporation
Project: Seaport Plaza, consisting of two (2) buildings (hereinafter referred to as the
"100 Building" and the "200 Building", respectively), the associated land and
common areas
Rentable Area of the Project: Approximately 159,350 rentable square feet
Address of the 100 Building: 100 Cardinal Way
Redwood City, CA
Rentable Area of the 100 Building: Approximately 79,675 rentable square feet
Address of the 200 Building: 200 Cardinal Way
Redwood City, CA
Rentable Area of the 200 Building: Approximately 79,675 rentable square feet
Premises (consisting of the
100 Building and the 200 Building): Approximately 159,350 rentable square feet
Term: Commencing on the Commencement Date and continuing for 144 full calendar months
following the Rent Commencement Date (plus any partial month following the Rent
Commencement Date); provided, however, that if the Rent Commencement Date is
different for each of the Buildings, then the Term shall only continue for 144
full calendar months following the Rent Commencement Date for the first Building
(plus any partial month following the Rent Commencement Date for the first
Building)
Commencement Date: The date Landlord delivers this Lease to Tenant after this Lease has been fully
executed by Landlord and Tenant
Rent Commencement Date: December 1, 2000, subject to extension for reasons of Landlord Delay and force
majeure delay, as more particularly described in Section 2 of this Lease
Expiration Date: The last day of the 144th full calendar month following the Rent Commencement Date
Base Rent following the Months following the Rent Commencement Date:
Rent Commencement Date: Months 01 - 12: $2.55 per rentable square foot per month
Months 13 - 24: $2.63 per rentable square foot per month
Months 25 - 36: $2.71 per rentable square foot per month
Months 37 - 48: $2.79 per rentable square foot per month
Months 49 - 60: $2.87 per rentable square foot per month
Months 61 - 72: $2.96 per rentable square foot per month
Months 73 - 84: $3.04 per rentable square foot per month
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Months 85 - 96: $3.14 per rentable square foot per month
Months 97 - 108: $3.23 per rentable square foot per month
Months 109 - 120: $3.33 per rentable square foot per month
Months 121 - 132: $3.43 per rentable square foot per month
Months 133 - 144: $3.53 per rentable square foot per month
Maintenance, Operating Costs and This is a "triple net lease" where Tenant is responsible for maintenance,
Taxes: operating costs and taxes, all in accordance with the applicable provisions of
the Lease.
Tenant's Share: 100% (with respect to both the 100 Building and the 200 Building together) and
50% with respect to each such separate Building
Security Deposit: (a) $816,000.00 Letter of Credit (including the cash proceeds thereof, as
provided in Section 37 of this Lease), and
(b) $5,240,000.00 Letter of Credit
Landlord's Address for Payment of Seaport Plaza Associates, LLC
Rent: Ten Almaden Boulevard, Suite 430
San Jose, CA 95113
Landlord's Address Seaport Plaza Associates, LLC
for Notices: Ten Almaden Boulevard, #430
San Jose, CA 95113
with a copy to:
Seaport Plaza Associates, LLC
2929 Campus Drive, Suite 450
San Mateo, CA 94403
Attn: General Counsel
Tenant's Address Before the Rent Commencement Date:
for Notices:
600 Galveston Drive
Redwood City, CA 94063
Attn: Chief Financial Officer
After the Rent Commencement Date
At the Premises
Attn: Chief Financial Officer
Broker(s): Commercial Property Services
Guarantor(s): The 3DO Company (a Delaware corporation)
Property Manager: Cornerstone Properties Limited Partnership
dba Wilson-Cornerstone Properties Limited Partnership
Additional Provisions: 37. $816,000.00 Letter of Credit
38. $5,240,000.00 Letter of Credit
39. Parking
40. Tenant's Monument Sign
41. Extension Option
42. Guaranty of Lease and Conditions to Termination of Guaranty
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Exhibits:
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Exhibit A-1: The Portion of the Premises located in the 100 Building
Exhibit A-2: The Portion of the Premises located in the 200 Building
Exhibit A-3: Monument Sign Location
Exhibit B: Construction Rider
Exhibit C: Building Rules
Exhibit D: Additional Provisions
Exhibit E: Approved Letter of Credit Form
Exhibit F: Memorandum of Lease
Exhibit G: Form of Consent to Assignment
Exhibit H: Form of Consent to Sublease
Exhibit I: Form of Guaranty
The Basic Lease Information set forth above is part of the Lease. In
the event of any conflict between any provision in the Basic Lease Information
and the Lease, the Lease shall control.
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THIS LEASE is made as of the Lease Date set forth in the Basic Lease
Information, by and between the Landlord identified in the Basic Lease
Information ("Landlord"), and the Tenant identified in the Basic Lease
Information ("Tenant"). Landlord and Tenant hereby agree as follows:
1. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord the office space identified in the Basic Lease Information as the
Premises (the "Premises"), consisting of the two (2) Buildings identified as
Building 100 ("Building 100") and ("Building 200") to be constructed by Landlord
at the addresses specified in the Basic Lease Information (each, a "Building").
The approximate configuration and location of Building 100 is shown on Exhibit
A-1. The approximate configuration and location of Building 200 is shown on
Exhibit A-2. As more particularly described in Section 2.1 of Exhibit B to this
Lease, Landlord shall have the square feet of rentable area of the Buildings
established by the Building Architect upon completion of the Final Working
Drawings (as such terms are defined in Exhibit B) based upon BOMA, American
National Standard Z.651-1996; provided, however, if the rentable area of the
Premises is greater than 160,944 square feet, Tenant shall not be obligated to
pay Base Rent, Operating Costs and Taxes (as hereinafter defined) on that
portion of the Premises greater than 160,944 rentable square feet. Each
Building, together with the parking facilities serving such Building (the
"Parking Facility"), and the parcel(s) of land on which such Building and the
Parking Facility are situated and all appurtenant easements, private roads,
sidewalks, driveways, loading areas and other improvements located thereon
(collectively, the "Property"), are part of the Project identified in the Basic
Lease Information (the "Project"). [The Project consists of Lot 1 and the parcel
designated Cardinal Way, as shown on that map entitled "SEAPORT PLAZA
SUBDIVISION MAP", filed in the office of the County Recorder of San Mateo
County, State of California, on November 17, 1998 in Book 129 of Maps at page(s)
10 and 11.] Landlord represents and warrants to Tenant that Landlord has not
recorded any covenants, conditions and restrictions against the Project.
2. TERM.
2.1 Term. The term of this Lease (the "Term") shall commence on the
Commencement Date as described below and, unless sooner terminated, shall expire
on the Expiration Date set forth in the Basic Lease Information (the "Expiration
Date"). The "Commencement Date" shall be the date Landlord delivers to Tenant a
fully executed original copy of this Lease after Landlord and Tenant have fully
executed this Lease (the "Executed Lease Delivery Date").
2.2 Rent Commencement Date. The "Rent Commencement Date" (which term
shall be used, as applicable, for (a) both Buildings if the Rent Commencement
Date is simultaneous, or (b) each Building, if the Rent Commencement Date is
different for each Building) shall be the earlier of (a) December 1, 2000
(subject to day for day extension for each day of (i) "Landlord Delay " as such
term is defined in the Construction Rider attached as Exhibit B (the
"Construction Rider"), and (ii) force majeure delay); or (b) with respect to
either Building, the date upon which Tenant, with Landlord's written permission,
actually occupies and conducts business in any portion of such Building (it
being agreed by the parties that each Building may have a separate Rent
Commencement Date). Landlord shall not be liable for any claims, damages or
liabilities if the Premises are not ready for occupancy by the Rent Commencement
Date. When the Rent Commencement Date has been established (whether for each
Building if there are separate Rent Commencement Dates, or both Buildings),
Landlord and Tenant shall at the request of either party confirm the Rent
Commencement Date and Expiration Date in writing.
2.3 Tenant's Termination Rights Relating to Construction.
(a) Landlord's Failure to Commence Base Building Work. If
Landlord does not receive the foundation permit and start driving indicator
piles as the first step in construction of the of the Base Building Work (as
defined in the Construction Rider) within one hundred eighty (180) days
following the Executed Lease Delivery Date, then Tenant's sole remedy shall be
the right to deliver a notice to Landlord ("Failure to Commence Termination
Notice ") electing to terminate this Lease effective on Landlord's receipt of
such notice. Such Failure to Commence Termination Notice must be delivered by
Tenant, if at all, no earlier than the expiration of such one hundred eighty
(180) day period and no later than twenty (20) days following the end of such
one hundred eighty (180) day period.
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(b) Cessation of Construction. If construction of the Base
Building Work ceases for more than one hundred fifty (150) consecutive days,
then Tenant may deliver a notice to Landlord ("Cessation of Construction
Termination Notice") electing to terminate this Lease effective on Landlord's
receipt of such notice; provided, however, that such one hundred fifty (150)
consecutive day period shall be extended day-for-day for each day of Tenant
Delay and force majeure delays. Notwithstanding any provision in this Lease to
the contrary, for the purposes of this Section 2.3 (b) "force majeure" delays
shall not include delays caused by the investigation, removal or remediation of
any (known or unknown) Hazardous Materials (as hereinafter defined) located on
the Property. Such Cessation of Construction Termination Notice must be
delivered to Landlord by Tenant, if at all, no earlier than the expiration of
such one hundred fifty (150) day period (as such one hundred fifty (150) day
period may be extended by Tenant Delay or by such force majeure delays as are
not associated with Hazardous Materials) and no later than twenty (20) days
following the end of such one hundred fifty (150) day period.
(c) Landlord's Failure to Complete Construction of Base
Building Work. For purposes of this Section 2, the "Outside Date" shall be June
1, 2001, as extended by the number of days of Tenant Delay; provided, however,
the Outside Date shall not be extended by reason of Landlord Delay or force
majeure delays. Notwithstanding any provision in this Lease to the contrary, if
Landlord does not complete construction of the Base Building Work by the Outside
Date, Tenant's sole remedy shall be the right to deliver a notice to Landlord
("Outside Date Termination Notice ") electing to terminate this Lease effective
on Landlord's receipt of the Outside Date Termination Notice ("Effective Date
"). The Outside Date Termination Notice must be delivered by Tenant, if at all,
no earlier than the Outside Date and no later than fifteen (15) Business Days
following the Outside Date.
2.4 Return of Sums and Letters of Credit Upon Tenant's Termination of
Lease Pursuant to Section 2.3. Upon any such termination of this Lease by Tenant
pursuant to the provisions of Section 2.3 of this Lease, Landlord promptly shall
return to Tenant (i) all sums paid by Tenant to Landlord under this Lease and
(ii) the Letters of Credit issued in favor of Landlord in connection with this
Lease.
3. RENT.
3.1 Base Rent. Tenant agrees to pay to Landlord the Base Rent set forth
in the Basic Lease Information, without prior notice or demand, on the first day
of each and every calendar month commencing on the Rent Commencement Date for
each Building (if the two Buildings have separate Rent Commencement Dates) and
continuing during the Term, except that Base Rent for the first full calendar
month in which Base Rent is payable shall be paid upon Tenant's execution of
this Lease and Base Rent for any partial month at the following the Rent
Commencement Date shall be paid on the Rent Commencement Date. Base Rent for any
partial month following the Rent Commencement Date or at the end of the Term
shall be prorated based on the actual number of days in the month.
If the Basic Lease Information provides for any change in Base Rent by
reference to years or months (without specifying particular dates), the change
will take effect on the applicable annual or monthly anniversary of the Rent
Commencement Date (which won't necessarily be the first day of a calendar
month).
3.2 Additional Rent: Operating Costs and Taxes.
(a) Definitions.
(1) "Operating Costs" means all costs of managing,
operating, maintaining and repairing the areas of the Project located outside of
the Buildings, including, without limitation, the sidewalks, driveways, storm
drain lines, water lines, pipes, and landscaping improvements, and the Parking
Facility (including the portion of the Parking Facility located below the
Buildings) (all such areas outside of the Buildings being collectively referred
to as the "Outside Areas") including all costs, expenditures, fees and charges
for: (A) maintenance and repair of the Outside Areas; (B) utilities and services
(including recycling programs and trash removal), and associated supplies and
materials; (C) compensation (including employment taxes and fringe benefits) for
persons (at or below the level equivalent to senior property manager or senior
engineering manager) who perform duties in connection with the operation,
management, maintenance and repair of the Outside Areas, such compensation to be
appropriately allocated for persons who also perform duties unrelated to the
Project; (D) property (including coverage for earthquake and flood if carried by
Landlord), liability, rental income and other
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insurance relating to the Project, and (i) expenditures for deductible amounts
paid under such insurance, provided that in any calendar year in which Landlord
pays the deductible amount under such insurance, Tenant's Share of such
deductible amount shall be limited to Thirty-Five Cents ($0.35) per rentable
square foot in the Premises (excluding earthquake insurance, which shall be
payable pursuant to the following provisions), and (ii) expenditures for
deductible amounts paid in any calendar year under earthquake insurance, subject
to the following limitations: (x) in the year in which Landlord pays the
deductible amount under earthquake insurance, Tenant's Share of the deductible
amount under earthquake insurance shall be limited to Ninety-Four Cents ($0.94)
per rentable square foot in the Premises, and (y) in subsequent calendar years,
Tenant's Share of that portion of the earthquake insurance deductible in excess
of Ninety-Four Cents ($0.94) per rentable square foot in the Premises (the
"Excess Deductible") under (x) shall be amortized over a period of ten (10)
years commencing in the calendar year following the year in which Landlord pays
the deductible, provided that Tenant's Share of the Excess Deductible shall not
exceed Ninety-Four Cents ($0.94) per rentable square foot in the Premises in any
calendar year; (E) licenses, permits and inspections; (F) complying with the
requirements of any law, statute, ordinance or governmental rule or regulation
or any orders pursuant thereto (collectively "Laws") either (i) not in effect as
of the Rent Commencement Date or (ii) as any Laws in effect as of the Rent
Commencement Date may be amended, changed, added to, interpreted or
re-interpreted by applicable governmental authority or court decision, or
administrative ruling subsequent to the Rent Commencement Date (such [i] and
[ii] being herein called "Newly Enacted Laws"; (G) amortization of capital
replacements, repairs or improvements to (x) the Outside Areas, and (y) the
Premises (as if such compliance with Laws to the Premises were part of the
Outside Areas) when required to comply with Laws, as provided under the
provisions of Section 5.1 of this Lease, with interest on the unamortized
balance at the rate paid by Landlord on funds borrowed to finance such capital
improvements (or, if Landlord finances such improvements out of Landlord's funds
without borrowing, the rate that Landlord would have paid to borrow such funds,
as reasonably determined by Landlord), over their useful life as Landlord shall
reasonably determine; (H) [intentionally deleted]; (I) property management fees
not to exceed the lesser of (x) the rate of property management fees charged by
managers which are unaffiliated to Landlord for managing comparable single
tenant commercial properties, providing similar services as are being provided
Tenant, in the vicinity of the Project, or (y) two and one-half percent (2.5%)
of the Base Rent and Additional Rent at the Project; (J) accounting, legal and
other professional services incurred in connection with the operation of the
Project and the calculation of Operating Costs and Taxes; (K) a reasonable
allowance for depreciation on machinery and equipment used to maintain the
Project; (L) contesting the validity or applicability of any Laws that may
affect the Project; (M) the Project's share of any shared or common area
maintenance fees and expenses (including costs and expenses of operating,
managing, owning and maintaining the Parking Facility, and an allocation of the
costs associated with the private road serving the Project); and (N) any other
cost, expenditure, fee or charge, whether or not hereinbefore described, which
in accordance with generally accepted property management practices would be
considered an expense of managing, operating, maintaining and repairing the
Project.
Operating Costs shall not include:
1) interest and principal payments on loans or indebtedness
secured by the Project;
2) costs that could properly be capitalized under generally
accepted accounting principles and which are not otherwise
excluded by any of the Operating Cost exclusions set forth
herein, except to the extent the costs of such items are
amortized in accordance with the provisions of Subsection 3.2
(a) (1) (G) above;
3) utility charges paid by Tenant directly to the applicable
public utility company;
4) leasing commissions, attorneys' fees and other expenses
incurred in connection with leasing space in the Project or
enforcing such leases;
5) depreciation or amortization, other than as specifically
enumerated in the definition of Operating Costs above;
6) costs, fines or penalties incurred due to the violation of any
Law by Landlord, or by Landlord's employees or agents;
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7) repairs or other work occasioned by fire, windstorm or other
casualty or hazard, provided, however, Tenant shall be
responsible for any deductible portion of insurance proceeds
as provided in Subsection 3.2 (a)(1)(D) above;
8) repairs or rebuilding necessitated by condemnation;
9) costs of repairs directly resulting from the negligence or
willful misconduct of Landlord, its agents or employees;
10) amounts paid to subsidiaries or other affiliates of Landlord
(i.e., persons or companies controlled by, under common
control with, or which control, Landlord) for services on or
to the Outside Areas (or any portion thereof), to the extent
only that the costs of such services exceed competitive costs
of such services were they not so rendered by a subsidiary or
other affiliate of Landlord;
11) the costs of maintaining, repairing or replacing any of the
structural elements of the Parking Facility;
12) the costs to correct any construction defects in the Outside
Areas;
13) the costs to comply with any covenant, condition, restriction,
or insurance underwriter's requirements in effect and
applicable to the Project on the Rent Commencement Date;
14) any costs for which Landlord is entitled to be reimbursed by
Landlord's insurance carrier;
15) any costs for which Landlord is actually reimbursed by third
parties other than Landlord's insurance carrier;
16) costs with respect to (a) violation of any Law with respect to
Base Building Work, or (b) construction or design defects in
the Base Building Work;
17) the costs of maintaining, repairing or replacing the
structural elements of the Buildings;
18) any costs associated with the investigation or remediation of
Hazardous Materials (which subject is covered exclusively by
the provisions of Section 5.2 of this Lease); and
19) costs (including rental and other expenses) associated with
any office used by Landlord for management of the Project.
(2) "Taxes" means: all real property taxes and general,
special or district assessments or other governmental impositions, of whatever
kind, nature or origin, imposed on or by reason of the ownership or use of the
Project; governmental charges, fees or assessments for transit or traffic
mitigation (including area-wide traffic improvement assessments and
transportation system management fees), housing, police, fire or other
governmental service or purported benefits to the Project; personal property
taxes assessed on the personal property of Landlord used in the operation of the
Project; service payments in lieu of taxes and taxes and assessments of every
kind and nature whatsoever levied or assessed in addition to, in lieu of or in
substitution for existing or additional real or personal property taxes on the
Project or the personal property described above; any increases in the foregoing
caused by changes in assessed valuation, tax rate or other factors or
circumstances; and the reasonable cost of contesting by appropriate proceedings
the amount or validity of any taxes, assessments or charges described above.
Taxes shall not include any state and federal personal or corporate income taxes
measured by the income of Landlord from all sources (other than taxes on rent at
the Property), as well as any franchise, inheritance, or estate, succession,
gift tax, or capital levy, or any sales tax (except any sales tax applicable to
the receipt of rent) or transfer tax. Taxes shall not any include penalty or
interest for Landlord's failure to pay taxes when due, other than those
attributable to Tenant's failure to comply timely with Tenant's obligations
under this Lease. Landlord agrees that for the purpose of this Lease any special
assessments or special taxes for public improvements to the property will be
amortized, with interest at the rate payable to the assessing or taxing
authority, over the maximum time Landlord is permitted to pay such special
assessment or special tax without penalty. To the
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extent paid by Tenant or other tenants as "Tenant's Taxes" (as defined in
Section 8 - Tenant's Taxes), "Tenant's Taxes" shall be excluded from Taxes.
(3) "Tenant's Share" means the Rentable Area of the Premises
divided by the total Rentable Area of the Project, as set forth in the Basic
Lease Information. If the Rentable Area of the Project is changed or the
Rentable Area of the Premises is changed by Tenant's leasing less than all of
the Premises or for any other reason, Tenant's Share shall be adjusted
accordingly.
(b) Additional Rent. Tenant shall pay Landlord as "Additional Rent" for
each calendar year or portion thereof following the Rent Commencement Date for
each Building, if the two Buildings have separate Rent Commencement Dates (in
which event Tenant's Share of Additional Rent shall be 50% for the time period
between the Rent Commencement Date for the first Building and the Rent
Commencement Date for the second Building), Tenant's Share of the sum of (x) the
amount of Operating Costs, and (y) the amount of Taxes, as follows:
(1) Operating Costs.
(a) Prior to the Rent Commencement Date Landlord shall notify
Tenant of Landlord's estimate of Operating Costs and for the partial calendar
year following the Rent Commencement Date; and prior to each calendar year
thereafter, Landlord shall notify Tenant of Landlord's estimate of Operating
Costs for the following calendar year. Commencing on the Rent Commencement Date,
and with respect to subsequent calendar years, on the first day of January of
each calendar year and continuing on the first day of every month thereafter in
such year, Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated
annual Operating Costs. If Landlord thereafter estimates that Operating Costs
for such year will vary from Landlord's prior estimate, Landlord may, by notice
to Tenant, revise the estimate for such year (and Operating Costs shall
thereafter be payable based on the revised estimate).
(b) As soon as reasonably practicable after the end of each
calendar year, Landlord shall furnish Tenant a statement with respect to such
year, showing Operating Costs for the year, and the total payments made by
Tenant with respect thereto. Unless Tenant raises any objections to Landlord's
statement within ninety (90) days after receipt of the same, such statement
shall conclusively be deemed correct and Tenant shall have no right thereafter
to dispute such statement or any item therein or the computation of Operating
Costs based thereon. If Tenant does object to such statement, then Landlord
shall provide Tenant with reasonable verification of the figures shown on the
statement and the parties shall negotiate in good faith to resolve any disputes.
Any objection of Tenant to Landlord's statement and resolution of any dispute
shall not postpone the time for payment of any amounts due Tenant or Landlord
based on Landlord's statement, nor shall any failure of Landlord to deliver
Landlord's statement in a timely manner relieve Tenant of Tenant's obligation to
pay any amounts due Landlord based on Landlord's statement.
(c) If Tenant's Operating Costs as finally determined for any
calendar year exceeds the total payments made by Tenant on account thereof,
Tenant shall pay Landlord the deficiency within twenty (20) days of Tenant's
receipt of Landlord's statement. If the total payments made by Tenant on account
thereof exceed Tenant's Operating Costs as finally determined for such year,
Tenant's excess payment shall be credited toward the rent next due from Tenant
under this Lease. For any partial calendar year following the Rent Commencement
Date or at the end of the Term, Operating Costs shall be prorated on the basis
of a 365-day year by computing Tenant's Share of Operating Costs for the entire
year and then prorating such amount for the number of days during such year
included in the Term. Notwithstanding the termination of this Lease, Landlord
shall pay to Tenant or Tenant shall pay to Landlord, as the case may be, within
twenty (20) days after Tenant's receipt of Landlord's final statement for the
calendar year in which this Lease terminates, the difference between Tenant's
Operating Costs for that year, as finally determined by Landlord, and the total
amount previously paid by Tenant on account thereof. The obligations of Landlord
to refund any overpayment of Operating Costs and of Tenant to pay any Operating
Costs not previously paid shall survive the expiration of the Term.
(2) Taxes.
(a) Tenant shall be responsible to pay to Landlord Tenant's
Share of all Taxes accruing from the Rent Commencement Date, and continuing
through the Term (including any Extension Term). For any partial calendar year
following the Rent Commencement Date or ending at the end of the Term, Taxes
shall
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be prorated on the basis of a 365-day year by computing Tenant's Share of Taxes
for the entire year and then prorating such amount for the number of days during
such year following the Rent Commencement Date or at the end of the Term. At
such time as Landlord learns the amount of Taxes due for any calendar year for
which Tenant is obligated to pay Landlord as provided above in this subsection,
Landlord shall promptly give written notice to Tenant of all Taxes due. Tenant
shall pay such Taxes to Landlord no later than the date which is the later of
(i) thirty (30) days after Tenant's receipt of notice of the amount of such
Taxes, or (ii) sixty (60) days prior to the date Taxes become delinquent. Tenant
shall also pay to Landlord on demand all interest, penalties and late charges
with respect to Taxes resulting from Tenant's failure to pay Taxes to Landlord
within the time specified in the immediately preceding sentence. If for any
reason Taxes for any calendar year during the Term following the Rent
Commencement Date are refunded, Landlord shall promptly refund to Tenant the
amount of refund of Taxes which were paid by Tenant to Landlord. The obligations
of Landlord to refund any overpayment of Taxes and of Tenant to pay any Taxes
not previously paid shall survive the expiration of the Term.
(b) Landlord shall notify Tenant in writing of any material
change in any Tax assessment or reassessment of the Project within sufficient
time to allow Tenant to review such assessment or reassessment; and Tenant shall
have the right, at Tenant's cost and expense, to cause Landlord, by appropriate
proceedings, to protest or contest any such assessment or reassessment of the
Project used as the basis of determining Taxes. Landlord shall cooperate in good
faith with Tenant in connection with any such protest or contest. Landlord shall
promptly refund to Tenant any reimbursements or refunds of Taxes obtained by
Landlord as a result of any such protest or contest.
3.3 Payment of Rent. All amounts payable or reimbursable by Tenant
under this Lease, including late charges and interest (collectively, "Rent"),
shall constitute rent and shall be payable and recoverable as rent in the manner
provided in this Lease. All sums payable to Landlord on demand under the terms
of this Lease shall be payable within thirty (30) days after notice from
Landlord of the amounts due. All rent shall be paid without offset, recoupment
or deduction in lawful money of the United States of America to Landlord at
Landlord's Address for Payment of Rent as set forth in the Basic Lease
Information, or to such other person or at such other place as Landlord may from
time to time designate.
4. SECURITY DEPOSIT. On execution of this Lease, Tenant shall deposit with
Landlord the letters of credit identified in Sections 37 and 38 below as the
Security Deposit (collectively, the "Security Deposit", which term shall include
the $408,000 portion of the cash deposit as described in Section 37 (b) below
and all amounts drawn on either of both letters of credit), as security for the
performance of Tenant's obligations under this Lease. Landlord may (but shall
have no obligation to) use the Security Deposit or any portion thereof to cure
any breach or default by Tenant under this Lease, or to compensate Landlord for
any damage it incurs as a result of Tenant's failure to perform any of Tenant's
obligations hereunder. Subject to Tenant's obligation to replenish, if
necessary, the cash portion of the Security Deposit, Landlord shall first look
to the cash portion of the Security Deposit before calling on the letters of
credit. In such event, Tenant shall pay to Landlord on demand an amount in the
form of cash, or a replacement letter of credit, sufficient to replenish the
Security Deposit to the full amount of the cash specified in the Basic Lease
Information and the applicable Face Amounts (defined in Sections 37 and 38
below) of the letters of credit. Notwithstanding the foregoing or any other
provision of this Lease, Landlord agrees that it will only draw on L/C #2 (as
defined in Section 38 below) the amount necessary to fulfill or perform the
following Tenant obligations after first applying any cash portion of the
Security Deposit towards such obligations: to pay any rent, insurance premiums,
insurance deductibles or Taxes, to compensate Landlord for any damage it incurs
as a result of Tenant's failure to perform any of Tenant's obligations under
this Lease, to replenish the $408,000 cash deposit portion of the Security
Deposit, and if Tenant does not renew or replace L/C #2 as provided in Section
38, Landlord may draw the entire amount of L/C #2. Within thirty (30) days after
the expiration or termination of this Lease, Landlord shall promptly return the
Security Deposit to Tenant in accordance with the provisions of California Civil
Code Section 1950.7 or any successor statute thereto; provided, however, that if
Tenant is then in default or there is an outstanding Claim (as defined in
Section 10.1 below) for which Landlord has made written demand upon Tenant, then
Landlord shall be entitled to withhold one hundred twenty-five percent (125%) of
Landlord's reasonable estimate of the amount that Tenant owes Landlord on
account of such default or Claim until there is settlement, resolved litigation,
or other disposition determining the validity of the right of Landlord to
withhold such amount. Landlord may commingle any cash portion of the Security
Deposit with Landlord's general and other funds. Landlord shall not be required
to pay interest on the Security Deposit to Tenant. Tenant acknowledges that
Landlord has agreed to accept letters of credit in lieu of an additional cash
deposit as an accommodation to Tenant and Tenant agrees that the
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letters of credit and all amounts drawn thereunder shall be treated for all
purposes under this Lease as if a cash deposit had been tendered to Landlord
upon the execution of this Lease.
5. USE AND COMPLIANCE WITH LAWS.
5.1 Use. The Premises may be used and occupied only for general
business office, sales, administrative, software engineering, and software
research and development purposes and for no other use or purpose without
Landlord's prior consent, which consent shall not be unreasonably withheld. In
addition to other reasons Landlord may have to withhold consent to a change in
use of the Premises by Tenant, Landlord may withhold consent if the proposed use
is either not compatible with the use as an office building or violates another
provision of this Lease. Tenant shall comply with all present and future Laws
relating to Tenant's use or occupancy of the Premises (and make any repairs,
alterations or improvements as required to comply with all such Laws), and shall
observe the "Building Rules" (as defined in Section 27 - Rules and Regulations),
except that repairs or alterations required to comply with Laws generally
applicable to the condition of the Premises for use as office space, and not
required or caused by Tenant's particular use or activities or by any
Alterations made or proposed by Tenant, shall be made by Landlord (and the cost
thereof, if such cost is not subject to any of the exclusions to Operating
Costs, shall be included in Operating Costs either as an expense or as a capital
item to be amortized pursuant to the provisions of Section 3.2(a)(1)(G) above).
Tenant shall not do, bring, keep or sell anything in or about the Premises that
is prohibited by, or that will cause a cancellation of, or an increase in the
existing premium (unless within fifteen days after Landlord gives Tenant written
notice of such increase in premium, Tenant agrees in writing to pay for such
increase) for, any insurance policy covering the Project or any part thereof.
Tenant shall not permit the Premises to be occupied or used in any manner that
will constitute waste or a nuisance. Tenant shall not, without the prior consent
of Landlord, bring into the Building or the Premises anything that may cause
substantial noise, odor or vibration, overload the floors in the Building or any
of the heating, ventilating and air-conditioning ("HVAC"), mechanical, elevator,
plumbing, electrical, fire protection, life safety, security or other systems in
the Building ("Building Systems"), or jeopardize the structural integrity of the
Building or any part thereof.
5.2. Hazardous Materials.
(a) Definitions.
(1) "Hazardous Materials" shall mean any substance:
(A) that now or in the future is regulated or governed by, requires
investigation or remediation under, or is defined as a hazardous waste,
hazardous substance, pollutant or contaminant under any governmental statute,
code, ordinance, regulation, rule or order, and any amendment thereto, including
the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C.ss.9601 et seq., and the Resource Conservation and Recovery Act, 42
U.S.C.ss.6901 et seq., or (B) that is toxic, explosive, corrosive, flammable,
radioactive, carcinogenic, dangerous or otherwise hazardous, including gasoline,
diesel fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos,
radon and urea formaldehyde foam insulation.
(2) "Environmental Requirements" shall mean all
present and future Laws, orders, permits, licenses, approvals, authorizations
and other requirements of any kind applicable to Hazardous Materials.
(3) "Handled by Tenant" and "Handling by Tenant"
shall mean and refer to any installation, handling, generation, storage, use,
disposal, discharge, release, abatement, removal, transportation, or any other
activity of any type by Tenant or its agents, employees, contractors, licensees,
assignees, sublessees, transferees or representatives (collectively,
"Representatives") or its guests, customers, invitees, or visitors
(collectively, "Visitors"), at or about the Premises in connection with or
involving Hazardous Materials.
(4) "Environmental Losses" shall mean all costs and
expenses of any kind, damages, including foreseeable and unforeseeable
consequential damages, fines and penalties incurred in connection with any
violation of and compliance with Environmental Requirements and all losses of
any kind attributable to the diminution of value, loss of use or adverse effects
on marketability or use of any portion of the Premises or Project.
(b) Tenant's Covenants. No Hazardous Materials shall be
Handled by Tenant at or about the Premises or Project without Landlord's prior
written consent, which consent may be granted, denied, or conditioned
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upon compliance with Landlord's requirements, all in Landlord's absolute
discretion. Notwithstanding the foregoing, normal quantities and use of those
Hazardous Materials customarily used in the conduct of general office
activities, such as copier fluids and cleaning supplies ("Permitted Hazardous
Materials"), may be used and stored at the Premises without Landlord's prior
written consent, provided that Tenant's activities at or about the Premises and
Project and the Handling by Tenant of all Hazardous Materials shall comply at
all times with all Environmental Requirements. At the expiration or termination
of the Lease, Tenant shall promptly remove from the Premises and Project all
Hazardous Materials Handled by Tenant at the Premises or the Project. Tenant
shall keep Landlord fully and promptly informed of all Handling by Tenant of
Hazardous Materials other than Permitted Hazardous Materials. Tenant shall be
responsible and liable for the compliance with all of the provisions of this
Section by all of Tenant's Representatives and Visitors, and all of Tenant's
obligations under this Section (including its indemnification obligations under
paragraph (e) below) shall survive the expiration or termination of this Lease.
(c) Compliance. Tenant shall at Tenant's expense promptly take
all actions required by any governmental agency or entity in connection with or
as a result of the Handling by Tenant of Hazardous Materials at or about the
Premises or Project, including inspection and testing, performing all cleanup,
removal and remediation work required with respect to those Hazardous Materials,
complying with all closure requirements and post-closure monitoring, and filing
all required reports or plans. All of the foregoing work and all Handling by
Tenant of all Hazardous Materials shall be performed in a good, safe and
workmanlike manner by consultants qualified and licensed to undertake such work
and in a manner that will not interfere with any other tenant's quiet enjoyment
of the Project or Landlord's use, operation, leasing and sale of the Project.
Tenant shall deliver to Landlord prior to delivery to any governmental agency,
or promptly after receipt from any such agency, copies of all permits,
manifests, closure or remedial action plans, notices, and all other documents
relating to the Handling by Tenant of Hazardous Materials at or about the
Premises or Project. If any lien attaches to the Premises or the Project in
connection with or as a result of the Handling by Tenant of Hazardous Materials,
and Tenant does not cause the same to be released, by payment, bonding or
otherwise, within ten (10) days after the attachment thereof, Landlord shall
have the right but not the obligation to cause the same to be released and any
sums expended by Landlord (plus Landlord's administrative costs) in connection
therewith shall be payable by Tenant on demand.
(d) Landlord's Rights. Upon reasonable oral or written notice
to Tenant (and without notice in emergencies), Landlord shall have the right,
but not the obligation, to enter the Premises at any reasonable time (i) to
confirm Tenant's compliance with the provisions of this Section 5.2, and (ii) to
perform Tenant's obligations under this Section if Tenant has failed to do so
after reasonable notice to Tenant. Landlord shall also have the right to engage
qualified Hazardous Materials consultants to inspect the Premises and review the
Handling by Tenant of Hazardous Materials, including review of all permits,
reports, plans, and other documents regarding same. If Tenant violates the
provisions of this Section 5.2, then Tenant shall pay to Landlord on demand the
costs of Landlord's consultants' fees and all costs incurred by Landlord in
performing Tenant's obligations under this Section. Landlord shall use
reasonable efforts to minimize any interference with Tenant's business caused by
Landlord's entry into the Premises, but Landlord shall not be responsible for
any interference caused thereby.
(e) Tenant's Indemnification. Tenant agrees to indemnify,
defend, protect and hold harmless Landlord and its partners or members and its
or their partners, members, directors, officers, shareholders, employees and
agents from all Environmental Losses and all other claims, actions, losses,
damages, liabilities, costs and expenses of every kind, including reasonable
attorneys', experts' and consultants' fees and costs, incurred at any time and
arising from or in connection with the Handling by Tenant of Hazardous Materials
at or about the Project or Tenant's failure to comply in full with all
Environmental Requirements with respect to the Premises.
(f) Landlord's Representations. Landlord hereby represents and
warrants to Tenant that (i) Landlord has, as of the date of this Lease, Landlord
has given to Tenant a copy of all environmental reports with respect to the
Project which are in Landlord's possession, and (ii) Landlord has received no
notification from any private, governmental, or other entity that the Project
does not comply with any environmental Laws.
(g) Landlord's Responsibilities and Indemnification. Landlord
shall not use any of the Land or Building for any activities involving the use,
generation, handling, release, threatened release, treatment, storage,
discharge, disposal or transportation of any Hazardous Materials, except in such
quantity or concentration that is customarily used, stored or disposed in the
ordinary course of the business so long as such activity duly complies with
applicable Laws and good business practice. If Landlord violates the foregoing
covenant resulting in an Environmental Claim (as hereinafter defined) with
respect to the Premises, then Landlord agrees to (a) notify Tenant
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immediately of any such Environmental Claim and (b) clean up any contamination
in full compliance with all applicable Laws at Landlord's cost. In accordance
with the provisions of the immediately preceding sentence, Landlord shall be
responsible for any Environmental Claim for Hazardous Materials (x) existing on
the Property on the date of this Lease, and (y) caused by third parties (except
to the extent any Environmental Claim for Hazardous Materials is caused by
Handling by Tenant). Any Environmental Claim for Hazardous Materials not caused
by Handling by Tenant shall not be included in Operating Costs or otherwise be
the responsibility of Tenant; provided, however, Tenant shall be responsible for
any Environmental Claim for Hazardous Material to the extent of any Handling by
Tenant of Hazardous Materials, as otherwise provided in this Section 5.2.
"Environmental Claim" means any claim, demand, action, cause of action, suit,
damage, punitive damage, fine, penalty, expense, liability, criminal liability,
judgment, or governmental investigation relating to remediation or compliance
with requirements of Laws covering Hazardous Materials . The term "Environmental
Claim" also includes any costs incurred in responding to efforts to require
remediation and any claim based upon any asserted or actual breach or violation
of any requirements of any Laws covering Hazardous Materials.
Landlord shall indemnify, defend, protect and hold harmless
Tenant and its officers, directors, employees and shareholders from and against
any and all claims, actions, losses, damages, liabilities, costs and expenses of
every kind, including reasonable attorneys', experts, and consultants' fees and
costs, incurred at any time and arising from or in connection with Hazardous
Materials which existed on the Property prior to the Rent Commencement Date.
(h) Environmental Rent Abatement and Termination Right. If at
any time following the Rent Commencement Date, any regulatory agency requires
Tenant to vacate all or a portion of the Premises due to the presence of
Hazardous Materials in the Project (and such Hazardous Materials have not been
Handled by Tenant), and as a result thereof, Tenant is not able to reasonably
use more than twenty percent (20%) of the Premises then occupied by Tenant for a
period of five (5) consecutive Business Days, and Tenant in fact ceases to use
such portion of the Premises for five (5) consecutive Business Days, then Tenant
shall be entitled to (a) an abatement of Base Rent and Additional Rent
("Hazardous Materials Rent Abatement ") with respect to the portion of the
Premises that Tenant is prevented from using by reason of such presence of
Hazardous Materials commencing on the sixth (6th) Business Day following
Tenant's inability to reasonably use such portion of the Premises due to
Hazardous Materials, and continuing until Tenant is no longer prevented from
using such portion of the Premises, and (b) terminate this Lease if Tenant is
not able to reasonably use more than twenty percent (20%) of the Premises then
occupied by Tenant for a period of twelve (12) consecutive months, and Tenant in
fact ceases to use such portion of the Premises for twelve (12) consecutive
months.
6. TENANT IMPROVEMENTS & ALTERATIONS.
6.1 Landlord and Tenant shall perform their respective obligations with
respect to design and construction of any improvements to be constructed and
installed in the Premises (the "Tenant Improvements"), as provided in the
Construction Rider. Except for any Tenant Improvements to be constructed by
Tenant as provided in the Construction Rider, Tenant shall not make any
alterations, improvements or changes to the Premises, including installation of
any security system or telephone or data communication wiring, ("Alterations"),
without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed; provided, however, upon seven (7) days prior
written notice to Landlord, Tenant shall have the right to make installations
and changes to the telephone and data communication wiring without Landlord's
consent on the conditions that Tenant shall (x) at the expiration or termination
of this Lease remove all such telephone and data communication wiring located
above and below ceilings, in chases and in risers (to the extent, within seven
(7) days after Landlord's receipt of Tenant's notification of such installation,
Landlord notifies Tenant that Landlord will require Tenant to remove such
telephone and data communications wiring at the expiration or termination of
this Lease), (y) obtain Landlord's prior written consent to any boring or
cutting through structural or load-bearing portions of the Premises, which
consent shall not be unreasonably withheld so long as such boring or cutting
does not affect the structural integrity of the Building, and Tenant complies
with any requirements of Landlord's independent structural engineer, and (z) at
the expiration or termination of this Lease, Tenant shall restore all portions
of the Premises being detrimentally affected by any boring or cutting for wires
or cables done by, or at the request of, Tenant. Notwithstanding any other
provision contained herein, Tenant shall not be required to obtain Landlord's
prior consent for minor, non-structural Alterations that (a) do not affect any
of the Building Systems, (b) are not visible from the exterior of the Premises,
and (c) cost less than One Hundred Thousand Dollars ($100,000), so long as
Tenant gives Landlord notice
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of the proposed Alterations at least ten (10) days prior to commencing the
Alterations and complies with all of the following provisions (except that
Tenant shall not be required to obtain Landlord's approval of any plans or
specifications therefor). Any such Alterations shall be completed by Tenant at
Tenant's sole cost and expense: (i) with due diligence, in a good and
workmanlike manner, using new materials; (ii) in compliance with plans and
specifications approved by Landlord, which approval shall not be unreasonably
withheld; (iii) in compliance with the reasonable construction rules and
regulations promulgated by Landlord from time to time; (iv) in accordance with
all applicable Laws (including all work, whether structural or non-structural,
inside or outside the Premises, required to comply fully with all applicable
Laws and necessitated by Tenant's work); and (v) subject to all conditions which
Landlord may reasonably impose. Such conditions may include requirements for
Tenant to: (i) provide payment or performance bonds (but only for Alterations
costing more than $100,000.00) or additional insurance (from Tenant or Tenant's
contractors, subcontractors or design professionals); (ii) use contractors or
subcontractors approved by Landlord, which approval shall not be unreasonably
withheld, provided that contractors and subcontractors for Alterations affecting
(x) the Building Systems are bondable, are experienced and have done work in
buildings similar to the Buildings, (y) the structure of the Building are
selected by Tenant from one of three (3) contractors or subcontractors
designated by Landlord; and (iii) remove all or part of the Alterations prior to
or upon expiration or termination of the Term, as designated by Landlord at the
time Landlord approves any such Alterations. Landlord's right to review and
approve (or withhold approval of) Tenant's plans, drawings, specifications,
contractor(s) and other aspects of construction work proposed by Tenant is
intended solely to protect Landlord, the Project and Landlord's interests. No
approval or consent by Landlord shall be deemed or construed to be a
representation or warranty by Landlord as to the adequacy, sufficiency, fitness
or suitability thereof or compliance thereof with applicable Laws or other
requirements. Except as otherwise provided in Landlord's consent, all
Alterations shall upon installation become part of the realty and be the
property of Landlord.
Notwithstanding the foregoing, or anything to the contrary contained in
this Lease, upon expiration of this Lease, Tenant shall have the right to remove
its Alterations from the Premises on the condition that (x) Tenant repairs all
damage to the Premises resulting from such removal, and (y) where Tenant removes
any such Alterations, Tenant restores that portion of the Premises affected
thereby to the condition existing on the Rent Commencement Date (including
capping all utility lines, if any resulting from such removal), ordinary wear
and tear excepted, on the condition that the Alterations can be removed from the
Premises or the Building without causing any structural damage to the Premises
and the Building.
6.2 Before making any Alterations, Tenant shall submit to Landlord for
Landlord's prior reasonable approval reasonably detailed final plans and
specifications prepared by a licensed architect or engineer, a copy of the
construction contract, including the name of the contractor and all
subcontractors proposed by Tenant to make the Alterations and a copy of the
contractor's license. Tenant shall reimburse Landlord upon demand for any
third-party, out-of-pocket expenses reasonably incurred by Landlord in
connection with any Alterations made by Tenant, including reasonable fees
charged by Landlord's contractors or consultants to review plans and
specifications prepared by Tenant and to update the existing as-built plans and
specifications of the Building to reflect the Alterations. Tenant shall obtain
all applicable and required permits, authorizations and governmental approvals
and deliver copies of the same to Landlord before commencement of any
Alterations.
6.3 Tenant shall keep the Premises and the Project free and clear of
all liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. If any such lien attaches to the Premises or the Project,
and Tenant does not cause the same to be released by payment, bonding or
otherwise within ten (10) days after Tenant's receipt of notice of the
attachment thereof, Landlord shall have the right but not the obligation to
cause the same to be released, and any sums expended by Landlord (plus
Landlord's administrative costs) in connection therewith shall be payable by
Tenant on demand with interest thereon from the date of expenditure by Landlord
at the Interest Rate (as defined in Section 16.2 - Interest). Tenant shall give
Landlord at least ten (10) days' notice prior to the commencement of any
Alterations and cooperate with Landlord in posting and maintaining notices of
non-responsibility in connection therewith.
6.4 Subject to the provisions of Section 5 - Use and Compliance with
Laws and the foregoing provisions of this Section, Tenant may install and
maintain furnishings, equipment, movable partitions, business equipment and
other trade fixtures ("Trade Fixtures") in the Premises, provided that the Trade
Fixtures can be removed from the Premises or the Building without damage to the
structure of the Premises and the Building. Tenant shall promptly repair any
damage to the Premises or the Building caused by any installation or removal of
such Trade Fixtures.
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7. MAINTENANCE AND REPAIRS.
7.1 By taking possession of the Premises Tenant agrees that the
Premises are then in a good and tenantable condition, subject to (a) any defects
in the Base Building Work of which Tenant notifies Landlord in writing within
one (1) year after the Rent Commencement Date for the applicable Building, (b)
completion of any "punchlist" items pursuant to the provisions of Exhibit B
attached hereto, and (c) Landlord's obligations under Sections 7.2, 12 and 13 of
this Lease. Landlord hereby assigns to Tenant all construction warranties for
the Base Building Work, on the condition that Landlord shall also have the right
to enforce such construction warranties. Subject to Landlord's obligations under
Sections 7.2, 12 and 13 of this Lease, from and after the Rent Commencement Date
and continuing thereafter throughout the Term, Tenant shall be responsible to
clean, maintain and repair the Premises, including providing janitorial services
and disposal of trash; and to that end, commencing upon the Rent Commencement
Date and continuing thereafter throughout the Term, Tenant, at Tenant's expense
but under the reasonable direction of Landlord, shall repair and maintain the
Premises, including, without limitation, the interior of the Premises, the
exterior of the Buildings (including repair and maintenance of the roof
membrane, and washing the exterior of the Buildings, but excluding Landlord's
repair obligations contained in Section 7.2 below), the heating, ventilating and
air conditioning system or systems serving the Premises, the electrical and
plumbing systems serving the Premises, including the lighting and plumbing
fixtures, the restrooms serving the Premises, interior stairways in the
Premises, the interior and exterior glass, including caulking (but excluding
structural portions of the exterior of the Buildings), plate glass skylights,
interior walls, floor coverings, ceiling (ceiling tiles and grid), Tenant
Improvements, Alterations, fire extinguishers, outlets and fixtures, and any
appliances (including dishwashers, hot water heaters and garbage disposers) in
the Premises, in a reasonably good condition, and keep the Premises in a clean,
safe and orderly condition. Prior to the Rent Commencement Date Tenant shall
provide Landlord with a copy of a service contract with a licensed commercial
Heating, Ventilating and Air-conditioning maintenance company (which contract
and company shall be subject to Landlord's prior approval, which approval shall
not be unreasonably withheld), to maintain, on an ongoing basis (at least
quarterly), the heating, ventilating and air-conditioning system serving the
Premises. If Tenant fails to perform its maintenance and repair obligations
under this Section 7.1, and such failure continues for thirty (30) days after
written notice from Landlord to Tenant, then Landlord shall have the right to
perform such maintenance and repairs at Tenant's expense.
Notwithstanding the foregoing provisions of this Section 7.1, and
without in any way relieving Landlord of its obligations under Section 12 of
this Lease, if (a) at any time during the period beginning on the first (1st)
anniversary date of the Rent Commencement Date (for the applicable Building, if
each Building has a separate Rent Commencement Date) and ending on the first
(1st) day of the eighty-fifth (85th) full calendar month of the initial Term of
this Lease, (b) it appears to Tenant that any individual repair to the Base
Building Work costs more than Fifty Thousand Dollars ($50,000.00), and (c) the
repair is not the result of Tenant's negligence or willful misconduct, then
Tenant may request Landlord to make such repair ("Tenant's Base Building Repair
Request"). Upon receipt of Tenant's Base Building Repair Request, Landlord shall
request three (3) qualified contractors selected by Landlord to give cost
estimates for the repair described in Tenant's Base Building Repair Request. If
the lowest estimate from such three (3) contractors for the cost of the repairs
described in Tenant's Base Building Repair Request exceeds Fifty Thousand
Dollars ($50,000.00), then Landlord shall cause such repairs ("Landlord's Base
Building Repair for Tenant") to the Base Building Work to be made at Landlord's
expense. The costs of Landlord's Base Building Repair for Tenant shall be
amortized straight-line over its useful life, as reasonably determined by
Landlord, and be included in Operating Costs in the calendar year in which the
repair is made and in each calendar year thereafter during the Term, including
any Extension Period (as defined in Section 41 of this Lease); provided, such
amortized costs shall not be included in determining Fair Market Base Rental
applicable to any Extension Period.
Notwithstanding the foregoing provisions of this Section 7.1, and
without in any way relieving Landlord of its obligations under Section 12 of
this Lease, if (a) less than five (5) years remain in the Term of this Lease,
(b) it appears to Tenant that any individual repair which is Tenant's
responsibility under this Section 7.1 costs more than Fifteen Thousand Dollars
($15,000.00), and (c) the repair is not the result of Tenant's negligence or
willful misconduct, then Tenant may request Landlord to make such repair
("Tenant's Repair Request"). Upon receipt of Tenant's Repair Request, Landlord
shall request three (3) qualified contractors selected by Landlord to give cost
estimates for the repair described in Tenant's Repair Request. If the lowest
estimate from such three (3) contractors for the cost of the repairs described
in Tenant's Repair Request exceeds Fifteen Thousand Dollars ($15,000.00), then
Landlord shall cause such repairs ("Landlord's Repair for Tenant") to be made at
Landlord's expense. The costs of
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Landlord's Repair for Tenant shall be amortized straight-line over its useful
life, as reasonably determined by Landlord, and be included in Operating Costs
in the calendar year in which the repair is made and in each calendar year
thereafter during the Term, including any Extension Period (as defined in
Section 41 of this Lease); provided, such amortized costs shall not be included
in determining Fair Market Base Rental applicable to any Extension Period.
7.2 Landlord shall maintain or cause to be maintained in reasonably
good order, condition and repair, (a) the structural portions of the roof
(excluding the roof membrane), columns, footings, foundations, floors and
exterior walls of the Buildings (excluding glass and window caulking) and
structural portions of any other improvements located in the Outside Areas, (b)
the main water lines, pipes and conduit serving the Premises (including the fire
protection loop) to the point of entry into the Buildings, (c) the Parking
Structure below the Buildings, and (d) all other portions of the Outside Areas
not listed in (a), (b) and (c) above, the costs of which items contained in this
Section 7.2 shall be included as a part of Operating Costs (except for the costs
of maintenance of levees, which shall be at Landlord's sole cost), subject to
the terms, conditions, exclusions and limitations contained in Section 3.2 of
this Lease. Landlord shall maintain or cause to be maintained in reasonably good
order, condition and repair all levees located in the Outside Areas, the costs
of which maintenance of levees shall not be included in Operating Costs.
Additionally, Landlord shall perform and construct, at Landlord's sole cost and
expense, any repair, maintenance or improvements to the Premises or the Project
(i) necessitated by the acts or omissions of Landlord, or Landlord's
contractors, agents or employees, (ii) required as a consequence of any
violation of any Law with respect to the original construction of the Base
Building Work, or construction or design defects in the Base Building Work, or
(iii) for which Landlord has a right to receive reimbursement from others.
Landlord shall be under no obligation to inspect the Premises. Tenant shall
promptly report in writing to Landlord any defective condition known to Tenant
which Landlord is required to repair. As a material part of the consideration
for this Lease, Tenant hereby waives any benefits of any applicable existing or
future Law, including the provisions of California Civil Code Sections 1932(1),
1941 and 1942, that allows a tenant to make repairs at its landlord's expense.
7.3 Landlord hereby reserves the right, at any time and from time to
time, without liability to Tenant, and without constituting an eviction,
constructive or otherwise, or entitling Tenant to any abatement of rent or to
terminate this Lease or otherwise releasing Tenant from any of Tenant's
obligations under this Lease:
(a) To reduce, increase, enclose or otherwise change at any
time and from time to time the size, number, location, lay-out and nature of the
Outside Areas (including the Parking Facility, subject to the provisions of
Section 39 - Parking of this Lease) and other tenancies and premises in the
Project; and
(b) If any governmental authority promulgates or revises any
Law or imposes controls or guidelines on Landlord or the Project relating to the
use or conservation of energy or utilities or the reduction of automobile or
other emissions or reduction or management of traffic or parking on the Project
(collectively "Controls"), to comply with such Controls, or make any alterations
to the Project related thereto.
(c) In exercising its rights under this Section 7.3, Landlord
shall not materially and permanently impair Tenant's access to the Premises.
8. TENANT'S TAXES. "Tenant's Taxes" shall mean (a) all taxes, assessments,
license fees and other governmental charges or impositions levied or assessed
against or with respect to Tenant's personal property or Trade Fixtures in the
Premises, whether any such imposition is levied directly against Tenant or
levied against Landlord or the Project, (b) all rental, excise, sales or
transaction privilege taxes arising out of this Lease (excluding, however, state
and federal personal or corporate income taxes measured by the income of
Landlord from all sources) imposed by any taxing authority upon Landlord or upon
Landlord's receipt of any rent payable by Tenant pursuant to the terms of this
Lease ("Rental Tax"), and (c) any increase in Taxes attributable to inclusion of
a value placed on Tenant's personal property, Trade Fixtures or Alterations.
Tenant shall pay any Rental Tax to Landlord in addition to and at the same time
as Base Rent is payable under this Lease, and shall pay all other Tenant's Taxes
before delinquency (and, at Landlord's request, shall furnish Landlord
satisfactory evidence thereof). If Landlord pays Tenant's Taxes or any portion
thereof, Tenant shall reimburse Landlord upon demand for the amount of such
payment, together with interest at the Interest Rate from the date of Landlord's
payment to the date of Tenant's reimbursement.
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9. UTILITIES AND SERVICES.
9.1. Description of Services and Payment of Utilities.
(a) If the temperature otherwise maintained in any portion of
the Premises by the HVAC systems of the Building is affected as a result of any
lights, machines or equipment used by Tenant in the Premises, or for any other
reason, then Landlord shall not be responsible to make any changes or additions
to the HVAC, it being the responsibility of Tenant, at Tenant's sole cost and
expense, to install any machinery or equipment desired by Tenant to restore the
temperature, including modifications to the standard air-conditioning equipment,
subject to the provisions of Section 6.1 of this Lease.
(b) Electricity, water, sanitary sewer and any gas will be
separately metered for the Premises. Tenant shall pay prior to delinquency all
charges for water, gas, electricity, telephone and other telecommunication
services, janitorial service, trash pick-up, sewer and all other services
consumed on or supplied to the Premises, and all taxes, levies, fees and
surcharges thereon.
9.2 Interruption of Services. In the event of an interruption in or
failure or inability to provide any services or utilities to the Premises or
either Building for any reason (a "Service Failure"), such Service Failure shall
not, regardless of its duration, impose upon Landlord any liability whatsoever,
constitute an eviction of Tenant, constructive or otherwise, entitle Tenant to
an abatement of rent or to terminate this Lease or otherwise release Tenant from
any of Tenant's obligations under this Lease. Tenant hereby waives any benefits
of any applicable existing or future Law, including the provisions of California
Civil Code Section 1932(1), permitting the termination of this Lease due to such
interruption, failure or inability. Notwithstanding the foregoing, if there is
any Service Failure caused by the negligence or willful misconduct of Landlord,
or its agents, employees or contractors, and such Service Failure prevents
Tenant from reasonably using any material portion of the Premises for a period
of five (5) consecutive Business Days and Tenant in fact ceases to use such
portion of the Premises for five (5) consecutive Business Days, then Tenant
shall be entitled to (a) an abatement of Base Rent and Additional Rent with
respect to the portion of the Premises that Tenant is prevented from using by
reason of such Service Failure commencing on the sixth (6th) Business Day
following the occurrence of the Service Failure and continuing until Tenant is
no longer prevented from using such portion of the Premises, and (b) if such
interruption continues for one hundred eighty (180) consecutive days after
Tenant gives Landlord written notice of such interruption, terminate this Lease
by written notice to Landlord at any time after such one hundred eighty (180)
consecutive days, provided, however, if following such one hundred eighty (180)
consecutive day period such interruption is cured prior to Tenant giving
Landlord written notice terminating this Lease, then Tenant shall no longer have
the right to terminate this Lease under this sentence due to such interruption.
10. EXCULPATION AND INDEMNIFICATION.
10.1 Landlord's Indemnification of Tenant. Landlord shall indemnify,
protect, defend and hold Tenant harmless from and against any claims, actions,
liabilities, damages, costs or expenses, including reasonable attorneys' fees
and costs incurred in defending against the same ("Claims") asserted by any
third party against Tenant for loss, injury or damage, to the extent such loss,
injury or damage is caused by the willful misconduct or negligent acts or
omissions of Landlord or its authorized representatives.
10.2 Tenant's Indemnification of Landlord. Tenant shall indemnify,
protect, defend and hold Landlord and Landlord's authorized representatives
harmless from and against Claims arising from (a) the acts or omissions of
Tenant or Tenant's Representatives or Visitors in or about the Project, or (b)
any construction or other work undertaken by Tenant on the Premises (including
any design defects), or (c) any breach or default under this Lease by Tenant, or
(d) any loss, injury or damage, howsoever and by whomsoever caused, to any
person or property, occurring in or about the Premises during the Term,
excepting only Claims described in this clause (d) to the extent they are caused
by the willful misconduct or negligent acts or omissions of Landlord or its
authorized representatives. This Section shall not apply to Hazardous Materials,
the subject of which is governed by the provisions of Section 5.2 of this Lease.
10.3 Damage to Tenant and Tenant's Property. Landlord shall not be
liable to Tenant for any loss, injury or other damage to Tenant or to Tenant's
property in or about the Premises or the Project at any time from any cause
(including defects in the Property or in any equipment in the Project; fire,
explosion or other casualty;
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bursting, rupture, leakage or overflow of any plumbing or other pipes or lines,
sprinklers, tanks, drains, drinking fountains or washstands in, above, or about
the Premises or the Property; or acts of other tenants in the Project). Tenant
hereby waives all claims against Landlord for any such loss, injury or damage to
Tenant or Tenant's property, and the cost and expense of defending against
claims relating thereto, including any loss, injury or damage caused by
Landlord's negligence (active or passive) or willful misconduct. Notwithstanding
any other provision of this Lease to the contrary, in no event shall Landlord be
liable to Tenant for any punitive or consequential damages or damages for loss
of business by Tenant, except to the extent that consequential damages or
damages for loss of business by Tenant are incurred as a result of the gross
negligence or willful misconduct of Landlord or Landlord's authorized
representatives.
10.4. Survival. The obligations of the parties under this Section 10
shall survive the expiration or termination of this Lease.
11. INSURANCE.
11.1 Tenant's Insurance.
(a) Liability Insurance. Tenant shall maintain in full force
throughout the Term, commercial general liability insurance providing coverage
on an occurrence form basis with limits of not less than Ten Million Dollars
($10,000,000.00) each occurrence for bodily injury and property damage combined,
Ten Million Dollars ($10,000,000.00) annual general aggregate, and Ten Million
Dollars ($10,000,000.00) products and completed operations annual aggregate.
Tenant's liability insurance coverage may be provided by a combination of
primary, excess and umbrella policies, but these policies must be absolutely
concurrent in all respects regarding the coverage afforded by the policies. The
coverage of any excess or umbrella policy must be at least as broad as the
coverage of the primary policy. Tenant's liability insurance policy or policies
shall: (i) include premises and operations liability coverage, products and
completed operations liability coverage, broad form property damage coverage
including completed operations, blanket contractual liability coverage
including, to the maximum extent possible, coverage for the indemnification
obligations of Tenant under this Lease, and personal and advertising injury
coverage; (ii) provide that the insurance company has the duty to defend all
insureds under the policy; (iii) provide that defense costs are paid in addition
to and do not deplete any of the policy limits; (iv) cover liabilities arising
out of or incurred in connection with Tenant's use or occupancy of the Premises
or the Project; (v) extend coverage to cover liability for the actions of
Tenant's Representatives and Visitors; and (vi) [intentionally deleted]. Each
policy of liability insurance required by this Section shall: (i) contain a
separation of insureds clause or otherwise provide cross-liability coverage;
(ii) provide that any waiver of subrogation rights or release prior to a loss
does not void coverage; (iii) provide that it is primary insurance; (iv) provide
that any failure to comply with the reporting provisions shall not affect
coverage provided to Landlord, its partners, property managers and Mortgagees;
and (v) name Landlord, its partners, the Property Manager identified in the
Basic Lease Information (the "Property Manager"), and such other parties in
interest as Landlord may from time to time reasonably designate to Tenant in
writing, as additional insureds. Such additional insureds shall be provided at
least the same extent of coverage as is provided to Tenant under such policies.
All endorsements effecting such additional insured status shall be at least as
broad as additional insured endorsement form number CG 20 11 11 85 or CG 20 11
01 96 promulgated by the Insurance Services Office.
(b) Property Insurance. Tenant shall at all times maintain in
effect with respect to any Alterations and Tenant's Trade Fixtures and personal
property, commercial property insurance providing coverage, on an "all risk" or
"special form" basis, in an amount equal to at least 90% of the full replacement
cost of the covered property. Tenant may carry such insurance under a blanket
policy, provided that such policy provides coverage equivalent to a separate
policy. During the Term, the proceeds from any such policies of insurance shall
be used for the repair or replacement of the Alterations, Trade Fixtures and
personal property so insured. Landlord shall be provided coverage under such
insurance to the extent of its insurable interest and, if requested by Landlord,
both Landlord and Tenant shall sign all documents reasonably necessary or proper
in connection with the settlement of any claim or loss under such insurance.
Landlord will have no obligation to carry insurance on any Alterations or on
Tenant's Trade Fixtures or personal property.
(c) Requirements For All Policies. Each policy of insurance
required under this Section 11.1 shall: (i) be in a form, and written by an
insurer, reasonably acceptable to Landlord, (ii) be maintained at Tenant's sole
cost and expense, and (iii) require at least thirty (30) days' written notice to
Landlord prior to any cancellation,
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nonrenewal or material modification of insurance coverage. Insurance companies
issuing such policies shall have rating classifications of "A" or better and
financial size category ratings of "VII" or better according to the latest
edition of the A.M. Best Key Rating Guide. All insurance companies issuing such
policies shall be admitted carriers licensed to do business in the state where
the Property is located. Any deductible amount under such insurance shall not
exceed $5,000. Tenant shall provide to Landlord, upon request, evidence that the
insurance required to be carried by Tenant pursuant to this Section, including
any endorsement effecting the additional insured status, is in full force and
effect and that premiums therefor have been paid.
(d) Updating Coverage. Tenant shall increase the amounts of
insurance as required by any Mortgagee, and, not more frequently than once every
three (3) years, as reasonably recommended by Landlord's insurance broker, if,
in the reasonable opinion of either of them, the amount of insurance then
required under this Lease is not adequate, but in no event shall such increased
amounts of insurance be in excess of that required by landlords (which are
unrelated to Landlord) of comparable buildings in the general vicinity of the
Buildings. Any limits set forth in this Lease on the amount or type of coverage
required by Tenant's insurance shall not limit the liability of Tenant under
this Lease.
(e) Certificates of Insurance. Prior to any entry into or
occupancy of the Premises by Tenant, and not more than ten (10) days after
expiration of any policy thereafter, Tenant shall furnish to Landlord a
certificate of insurance reflecting that the insurance required by this Section
is in force, accompanied by an endorsement showing the required additional
insureds satisfactory to Landlord in substance and form. Notwithstanding the
requirements of this paragraph, Tenant shall at Landlord's request provide to
Landlord a certified copy of each insurance policy required to be in force at
any time pursuant to the requirements of this Lease or its Exhibits.
11.2 Landlord's Insurance. Commencing upon the date that the builder's
risk coverage carried by Landlord on the construction of Building expires, and
continuing through the Term, to the extent such coverages are available at a
commercially reasonable cost, Landlord shall maintain in effect insurance on the
Buildings with responsible insurers, on an "all risk" or "special form" basis,
insuring the Buildings and the Tenant Improvements in an amount equal to at
least 90% of the replacement cost thereof, excluding land, foundations, footings
and underground installations. Landlord may, but shall not be obligated to,
carry insurance against additional perils and/or in greater amounts.
11.3 Mutual Waiver of Right of Recovery & Waiver of Subrogation.
Notwithstanding any other provision in this Lease to the contrary, Landlord and
Tenant each hereby waive any right of recovery against each other and the
partners, managers, members, shareholders, officers, directors, and sublessees
which have been approved by Landlord pursuant to the provisions of Section 14 of
this Lease (on the condition that any such sublessee agrees in writing to
provide for the benefit of Landlord a reciprocal waiver as is contained in this
Section 11.3), and authorized representatives of each other for any loss or
damage that is covered by any policy of property insurance maintained by either
party (or required by this Lease to be maintained) with respect to the Premises
or the Property or any operation therein, regardless of cause, including
negligence (active or passive) of the party benefiting from the waiver. If any
such policy of insurance relating to this Lease or to the Premises or the
Property does not permit the foregoing waiver or if the coverage under any such
policy would be invalidated as a result of such waiver, the party maintaining
such policy shall obtain from the insurer under such policy a waiver of all
right of recovery by way of subrogation against either party in connection with
any claim, loss or damage covered by such policy.
12. DAMAGE OR DESTRUCTION.
12.1 Landlord's Duty to Repair.
(a) If all or any part of either Building in which the
Premises is located are rendered untenantable or inaccessible by damage to all
or any part of the Property from fire or other casualty then, unless either
party is entitled to and elects to terminate this Lease pursuant to Sections
12.2 - Landlord's Right to Terminate and 12.3 - Tenant's Right to Terminate,
Landlord shall, at its expense, use reasonable efforts to repair and restore the
Premises and/or the Property, as the case may be, to substantially their former
condition to the extent permitted by then applicable Laws, provided that any
changes to the Premises and/or Property required by then applicable Law do not
materially, adversely affect Tenant's use and occupancy of the Premises;
provided, however, in no event shall
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Landlord have any obligation for repair or restoration for any of Tenant's
personal property, Trade Fixtures or Alterations.
(b) If Landlord is required or elects to repair damage to the
Premises and/or the Property, this Lease shall continue in effect, but Tenant's
Base Rent and Additional Rent shall be abated with regard to any portion of the
Premises that Tenant is prevented from using by reason of such damage or its
repair from the date of the casualty until substantial completion of Landlord's
repair of the affected portion of the Premises as required under this Lease. If
this Lease is terminated following any fire or other casualty pursuant to the
provision of this Section 12, then Tenant's Base Rent and Additional Rent shall
be abated from and after the date of such fire or other casualty. In no event
shall Landlord be liable to Tenant by reason of any injury to or interference
with Tenant's business or property arising from fire or other casualty or by
reason of any repairs to any part of the Property necessitated by such casualty.
12.2 Landlord's Right to Terminate. Landlord may elect to terminate
this Lease following damage by fire or other casualty under the following
circumstances:
(a) If, in the reasonable judgment of Landlord, that portion
of the Property which has been damaged, and the Premises cannot be substantially
repaired and restored under applicable Laws within one (1) year from the date of
Landlord's Casualty Election Notice (as hereinafter defined);
(b) If, in the reasonable judgment of Landlord, adequate
proceeds are not, for any reason (other than Landlord's failure to maintain the
"all risk" insurance required under Section 11.2 of this Lease), made available
to Landlord from Landlord's insurance policies (and/or from Landlord's funds
made available for such purpose, it being agreed that Landlord shall be
obligated to contribute the difference, not to exceed $250,000.00, between the
amount of the proceeds made available to Landlord from Landlord's insurance
policies and the cost to make the required repairs) to make the required repairs
and Landlord notifies Tenant in writing that Landlord has elected not to restore
the Premises but instead intends to either (x) demolish the Premises without the
intent to restore it to substantially its original condition within nine (9)
months after such demolition, or (y) replace the Premises with a materially and
substantially different structure; provided, however, Landlord shall not have
the right to terminate this Lease pursuant to the provisions of this Subsection
(b) if Landlord restores or repairs the Premises within one (1) year following
the date of any such fire or other casualty. In determining whether or not
adequate proceeds are available to Landlord, the following funds shall be taken
into account: (i) proceeds from Landlord's insurance policies actually received
by Landlord, (ii) any additional funds Landlord makes available for such
purpose, which funds shall be not less than $250,000.00 (provided, Landlord
shall not be required to contribute more than $250,000.00 out of Landlord's
funds to make the required repairs arising from any fire or other casualty),
(iii) any funds Tenant elects to make available for such purpose at Tenant's
sole option (which option Tenant may exercise by written notice to Landlord
within thirty (30) days after Landlord notifies Tenant that Landlord elects to
terminate the Lease under this subsection) and (iv) any payments of Operating
Expenses which relate to insurance deductibles paid by Tenant in the 12 months
following the casualty;
(c) If either Building in which the Premises is located is
damaged or destroyed during the last two (2) years of the Term to the extent
that, in the reasonable judgment of Landlord, the cost to repair and restore
such Building would exceed seventy-five percent (75%) of the full replacement
cost of such Building; provided, however, that Landlord may not terminate this
Lease pursuant to this Subsection (c) if (i) Tenant has any remaining Extension
Option and (ii) within thirty (30) days after the date Tenant receives from
Landlord written notification terminating this Lease pursuant to the provisions
of this subsection (c), Tenant delivers to Landlord written notice exercising
such Extension Option ("Tenant's Termination Override") at the Fair Market Base
Rental to be determined at the time of Tenant's Termination Override (and for
the purposes of this subsection (c) the restrictions on the time within which
Tenant must exercise such Extension Option are hereby waived); or
(d) If the fire or other casualty occurs during the last year
of the Term, and the repairs and restoration would either (i) take longer than
ninety (90) days to complete following the date of the fire or other casualty,
or (ii) would not be completed at least ninety (90) days prior to the expiration
of the Term.
If any of the circumstances described in subparagraphs (a), (b), (c) or (d) of
this Section 12.2 occur or arise, Landlord shall give Tenant notice ("Landlord's
Casualty Election Notice") within one hundred and twenty (120)
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days after the date of the casualty, specifying whether Landlord elects to
terminate this Lease as provided above and, if not, Landlord's estimate of the
time required to complete Landlord's repair obligations under this Lease.
12.3 Tenant's Right to Terminate. If all or a substantial part of the
Premises are rendered untenantable or inaccessible by damage to all or any part
of the Property from fire or other casualty, and Landlord does not elect to
terminate as provided above, then Tenant may elect to terminate this Lease if
(a) Landlord's estimate of the time required to complete Landlord's repair
obligations under this Lease is greater than one (1) year from the date of
Landlord's Casualty Election Notice, in which event Tenant may elect to
terminate this Lease by giving Landlord notice of such election to terminate
within thirty (30) days after the date of Landlord's Casualty Election Notice,
or (b) Landlord (x) does not restore the Premises and the Property within one
(1) year following date of Landlord's Casualty Election Notice, and (y) in
addition, after the expiration of such one (1) year period, does not complete
Landlord's repair obligations under this Lease within forty-five (45) days after
Landlord's receipt of written demand from Tenant to complete such repair
obligations, or (c) the fire or other casualty occurs during the last year of
the Term, and would either (i) take longer than ninety (90) days to complete
following the date of the fire or other casualty, or (ii) would not be completed
at least ninety (90) days prior to the expiration of the Term, then Tenant may
elect to terminate this Lease during the last year of the Term by giving
Landlord written notice of such election to terminate within thirty (30) days
following the determination of the time to repair or restore the Premises. In
addition, if, following any fire or other casualty, any changes to the Premises
and/or Property required by then applicable Law materially, adversely affect
Tenant's use and occupancy of the Premises, then Tenant shall have the right to
terminate this Lease by written notice received by Landlord within thirty (30)
days after Landlord notifies Tenant of such changes (and Landlord shall not be
obligated, to the extent otherwise required under this Section 12, to commence
repair and restoration of the Premises/and or the Building until the earlier of
the date Tenant's right to terminate this Lease pursuant to the provisions of
this sentence expires, or Landlord receives a written waiver of such termination
right signed by Tenant).
12.4 Waiver. Landlord and Tenant each hereby waive the provisions of
California Civil Code Sections 1932(2), 1933(4) and any other applicable
existing or future Law permitting the termination of a lease agreement in the
event of damage or destruction under any circumstances other than as provided in
Sections 12.2 - Landlord's Right to Terminate and 12.3 - Tenant's Right to
Terminate.
13. CONDEMNATION.
13.1 Definitions.
(a) "Award" shall mean all compensation, sums, or anything of
value awarded, paid or received on a total or partial Condemnation.
(b) "Condemnation" shall mean (i) a permanent taking (or a
temporary taking for a period extending beyond the end of the Term) pursuant to
the exercise of the power of condemnation or eminent domain by any public or
quasi-public authority, private corporation or individual having such power
("Condemnor"), whether by legal proceedings or otherwise, or (ii) a voluntary
sale or transfer by Landlord to any such authority, either under threat of
condemnation or while legal proceedings for condemnation are pending.
(c) "Date of Condemnation" shall mean the earlier of the date
that title to the property taken is vested in the Condemnor or the date the
Condemnor has the right to possession of the property being condemned.
13.2 Effect on Lease.
(a) If the Premises are totally taken by Condemnation, this
Lease shall terminate as of the Date of Condemnation. If a portion but not all
of the Premises is taken by Condemnation, this Lease shall remain in effect;
provided, however, that if the portion of the Premises remaining after the
Condemnation will be unsuitable for Tenant's continued use, then upon notice to
Landlord within thirty (30) days after Landlord notifies Tenant of the
Condemnation, Tenant may terminate this Lease effective as of the Date of
Condemnation. If (i) the private road serving the Premises is taken by
Condemnation, (ii) Landlord does not provide an alternative means of access to
the Premises upon such taking, and (iii) the Premises will be unsuitable for
Tenant's continued use, then upon notice to Landlord within thirty (30) days
after Landlord notifies Tenant of the Condemnation, Tenant may terminate this
Lease effective as of the Date of Condemnation.
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(b) If twenty-five percent (25%) or more of the Project or of
the parcel(s) of land on which the Buildings are situated or of the Parking
Facility or of the floor area in the Building or Buildings then leased by Tenant
is taken by Condemnation, Landlord may elect to terminate this Lease, effective
as of the Date of Condemnation, by notice to Tenant within thirty (30) days
after the Date of Condemnation.
(c) If all or a portion of the Premises is temporarily taken
by a Condemnor for a period greater than twelve (12) consecutive months, then
Tenant shall have the right to terminate this Lease by written notice to
Landlord within twenty (20) days following either (i) notice from the Condemnor
that the temporary taking will be for a period in excess of twelve (12)
consecutive months, or (ii) the expiration of such twelve (12) consecutive month
period; and for any other temporary taking, not extending beyond the end of the
Term, this Lease shall remain in full force and effect.
13.3 Restoration. If this Lease is not terminated as provided in
Section 13.2 - Effect on Lease, Landlord, at its expense, shall diligently
proceed to repair and restore the Project to substantially its former condition
(to the extent permitted by then applicable Laws) and/or repair and restore the
Building or Buildings then leased by Tenant to an architecturally complete
office building; provided, however, that Landlord's obligations to so repair and
restore shall be limited to the amount of any Award received by Landlord and not
required to be paid to any Mortgagee (as defined in Section 20.2 below). In no
event shall Landlord have any obligation to repair or replace any improvements
in the Premises beyond the amount of any Award received by Landlord for such
repair or to repair or replace any of Tenant's personal property, Trade
Fixtures, or Alterations. Notwithstanding the foregoing, if (i) the Premises
and/or Project cannot be restored to substantially their former condition under
the then applicable Laws, or (ii) Landlord has not received an Award in an
amount sufficient to complete the necessary restoration work, then Landlord
shall notify Tenant as soon as is reasonably practicable learning of either of
such conditions, and Tenant shall have the right to terminate this Lease by
notice to Landlord within thirty (30) days after receipt of such notice from
Landlord.
13.4 Abatement and Reduction of Rent. If any portion of the Premises is
taken in a Condemnation or is rendered permanently untenantable by repairs
necessitated by the Condemnation, and this Lease is not terminated, the Base
Rent and Additional Rent payable under this Lease shall be proportionally
reduced as of the Date of Condemnation based upon the percentage of rentable
square feet in the Premises so taken or rendered permanently untenantable. In
addition, if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises, the Base Rent and Additional Rent
payable under this Lease shall be abated during the period of such repair or
restoration to the extent such repairs prevent Tenant's use of the Premises.
13.5 Awards. Any Award made shall be paid to Landlord, and Tenant
hereby assigns to Landlord, and waives all interest in or claim to, any such
Award, including any claim for the value of the unexpired Term; provided,
however, that Tenant shall be entitled to receive, or to prosecute a separate
claim for, an Award for a temporary taking of the Premises or a portion thereof
by a Condemnor where this Lease is not terminated (to the extent such Award
relates to the unexpired Term), or an Award or portion thereof separately
designated for relocation and moving expenses or the interruption of or damage
to Tenant's business, or loss of goodwill, or as compensation for Tenant's
personal property, Trade Fixtures or Alterations.
13.6 Waiver. Landlord and Tenant each hereby waive the provisions of
California Code of Civil Procedure Section 1265.130 and any other applicable
existing or future Law allowing either party to petition for a termination of
this Lease upon a partial taking of the Premises and/or the Property.
14. ASSIGNMENT AND SUBLETTING.
14.1 Landlord's Consent Required. Tenant shall not assign this Lease or
any interest therein, or sublet or license or permit the use or occupancy of the
Premises or any part thereof by or for the benefit of anyone other than Tenant,
or in any other manner transfer all or any part of Tenant's interest under this
Lease (each and all a "Transfer" and the transferee in any transfer is referred
to herein as a "Transferee"), without the prior written consent of Landlord,
which consent (subject to the other provisions of this Section 14) shall not be
unreasonably withheld. Notwithstanding any provision in this Lease to the
contrary, Tenant shall not mortgage, pledge, hypothecate or otherwise encumber
this Lease or all or any part of Tenant's interest under this Lease. The term
"Transfer" shall include any direct or indirect transfer of ownership interest
of the entity, whether in one transaction
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or in a series of related transactions, that results in any person or entity (or
group of related persons or entities) becoming the owners of fifty percent (50%)
or more of the ownership interests of the entity (a "Change of Control");
provided, however, that none of the following shall constitute a Transfer, or be
considered in determining whether or not a Change of Control has occurred: (i)
any transfer of stock in a corporation that is the Tenant if the stock of such
corporation is publicly held and traded through an exchange or over the counter;
(ii) if Tenant is a corporation, any public or private placements or offerings
of Tenant's stock, including any initial public offering of such stock; and
(iii) the issuance of warrants or stock options to purchase Tenant's stock, and
the exercise of purchase rights under any such warrants or stock options.
14.2.Reasonable Consent.
(a) Prior to any proposed Transfer, Tenant shall submit in
writing to Landlord (i) the name and legal composition of the proposed assignee,
subtenant, user or other transferee (each a "Proposed Transferee"); (ii) the
nature of the business proposed to be carried on in the Premises; (iii) a
current balance sheet, income statements for the last two years and such other
reasonable financial and other information concerning the Proposed Transferee as
Landlord may request; and (iv) a copy of the proposed assignment, sublease or
other agreement governing the proposed Transfer. Within fifteen (15) Business
Days after Landlord receives all such information it shall notify Tenant whether
it approves or disapproves such Transfer or if it elects to proceed under
Section 14.7 - Landlord's Right to Space.
(b) Tenant acknowledges and agrees that, among other
circumstances for which Landlord could reasonably withhold consent to a proposed
Transfer, it shall be reasonable for Landlord to withhold consent where (i) the
Proposed Transferee does not intend itself to occupy the entire portion of the
Premises assigned or sublet, (ii) Landlord reasonably disapproves of the
Proposed Transferee's business operating ability or history, reputation or
creditworthiness or the character of the business to be conducted by the
Proposed Transferee at the Project, (iii) the Proposed Transferee is a
governmental agency or unit or an existing tenant in the Project, or (iv)
Landlord otherwise determines that the proposed Transfer would have the effect
of materially decreasing the value of the Project or materially increasing the
expenses associated with operating, maintaining and repairing the Project.
14.3 Excess Consideration. If Landlord consents to the Transfer, Tenant
shall pay to Landlord, as Additional Rent, fifty percent (50%) of all "Sublease
Profits" (as defined below) within thirty (30) days after Tenant receives any
such Sublease Profits. "Sublease Profits" shall mean any consideration paid by
the Transferee for the assignment or sublease and, in the case of a sublease,
the excess of the rent and other consideration payable by the subtenant over the
amount of Base Rent and Additional Rent payable hereunder applicable to the
subleased space, less any and all direct, out-of-pocket expenses and cash
concessions, including costs for necessary Alterations, reasonable attorneys'
fees and brokerage commission, paid by Tenant to procure the assignee or
subtenant.
14.4 No Release Of Tenant. No consent by Landlord to any Transfer shall relieve
Tenant of any obligation to be performed by Tenant under this Lease, whether
occurring before or after such consent, assignment, subletting or other
Transfer. Each Transferee shall be jointly and severally liable with Tenant (and
Tenant shall be jointly and severally liable with each Transferee) for the
payment of rent (or, in the case of a sublease, rent in the amount set forth in
the sublease) and for the performance of all other terms and provisions of this
Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any
such Transferee from the obligation to obtain Landlord's express prior written
consent to any subsequent Transfer by Tenant or any Transferee. The acceptance
of rent by Landlord from any other person (whether or not such person is an
occupant of the Premises) shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer. If, in connection
with any such Transfer, Tenant gives Landlord a written request for Landlord to
provide an estoppel certificate, then Landlord agrees to use reasonable efforts
to provide to the Transferee a certificate stating whether or not this Lease is
in full force and effect, describing any amendments or modifications hereto, the
Term, the monthly Base Rent, the date to which Rent has been paid, the amount of
any security deposit or prepaid rent, and whether Landlord in good faith
believes to be true to the best of its knowledge that either party hereto is in
default under the terms of the Lease.
14.5 Expenses and Attorneys' Fees. Tenant shall pay to Landlord on
demand all costs and expenses (including reasonable attorneys' fees for
Landlord's consent to a Transfer) incurred by Landlord in connection with
reviewing or consenting to any proposed Transfer (including any request for
consent to, or any waiver of Landlord's rights in connection with, any security
interest in any of Tenant's property at the Premises).
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14.6 Effectiveness of Transfer. Prior to the date on which any
permitted Transfer (whether or not requiring Landlord's consent) becomes
effective, Tenant shall deliver to Landlord a counterpart of the fully executed
Transfer document and Landlord's standard form of Consent to Assignment or
(attached hereto as Exhibit G) or Consent to Sublease (attached hereto as
Exhibit H) executed by Tenant and the Transferee in which each of Tenant and the
Transferee confirms its obligations pursuant to this Lease. Failure or refusal
of a Transferee to execute any such instrument shall not release or discharge
the Transferee from liability as provided herein. The voluntary, involuntary or
other surrender of this Lease by Tenant, or a mutual cancellation by Landlord
and Tenant, shall not work a merger, and any such surrender or cancellation
shall, at the option of Landlord, either terminate all or any existing subleases
or operate as an assignment to Landlord of any or all of such subleases.
14.7 Landlord's Right to Space. Notwithstanding any of the above
provisions of this Section to the contrary, if Tenant notifies Landlord that it
desires to enter into a Transfer, Landlord, in lieu of consenting to such
Transfer, may elect (x) in the case of an assignment or a sublease of the entire
Premises, to terminate this Lease, or (y) in the case of a sublease which
cumulatively results in Tenant subleasing at any given time (whether to one or
more entities other than an Affiliate) one hundred percent (100%) of one of the
Buildings for a term which expires less than twelve (12) months prior to the
scheduled Expiration Date of this Lease, to terminate this Lease as it relates
to the space proposed to be subleased by Tenant. In such event, this Lease will
terminate (or the space proposed to be subleased will be removed from the
Premises subject to this Lease and the Base Rent and Tenant's Share under this
Lease shall be proportionately reduced) on the earlier of sixty (60) days after
the date of Landlord's notice to Tenant making the election set forth in this
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