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GREYLANDS BUSINESS PARK, PHASE 2
AND
EBAY, INC.
LEASE
SUMMARY OF LEASE
GREYLANDS BUSINESS PARK, PHASE 2
<PAGE>
1. DATE OF LEASE:
2. LANDLORD: Greylands Business Park, Phase 2
3945 Freedom Circle, Suite 640
Santa Clara, California 95054
3. TENANT: eBay, Inc.
4. PREMISES: 2125 Hamilton Avenue and
2145 Hamilton Avenue
San Jose, California
5. SQUARE FEET: 103,058 sq. ft.
6. PERMITTED USE: See paragraph 1
7. TERM: See paragraph 2
8. RENT: See paragraphs 4 and 5
9. SECURITY DEPOSIT: See paragraph 4(e)
10. PARKING SPACES PROVIDED: See paragraph 15
11. OTHER IMPORTANT PROVISIONS: Early Access (paragraph 54)
Capital Expenditures (paragraph 55)
Satellite Dish (paragraph 56)
First Right to Lease (paragraph 57)
Option to Extend Term (paragraph 58)
Tenant Improvement Allowance (paragraph 59)
Consents
Cross Default
12. EXHIBITS: Exhibit A - Premises
Exhibit B - Project
Exhibit C - Signage
Exhibit D - Tenant Work Letter
Exhibit E - Hazardous Materials Disclosure
<PAGE>
THIS SUMMARY OF LEASE IS INTENDED TO SUMMARIZE CERTAIN KEY PROVISIONS IN THE
ATTACHED LEASE. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE
PROVISIONS OF THIS SUMMARY AND THE LEASE, THE PROVISIONS OF THE LEASE SHALL
GOVERN.
<PAGE>
TABLE OF CONTENTS
ITEM PAGE
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1. USE
2. TERM
3. POSSESSION
4. MONTHLY RENT
5. ADJUSTMENT OF BASIC RENT AND DIRECT EXPENSES
6. RESTRICTION ON USE
7. COMPLIANCE WITH LAWS
8. ALTERATIONS
9. REPAIR AND MAINTENANCE
10. LIENS
11. INSURANCE
12. UTILITIES AND SERVICE
13. TAXES AND OTHER CHARGES
14. ENTRY BY LANDLORD
15. COMMON AREA; PARKING
16. DAMAGE BY FIRE; CASUALTY
17. INDEMNIFICATION
18. ASSIGNMENT AND SUBLETTING
19. DEFAULT
20. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
21. EMINENT DOMAIN
22. NOTICE AND COVENANT TO SURRENDER
23. TENANT'S QUITCLAIM
24. HOLDING OVER
25. SUBORDINATION
26. CERTIFICATE OF ESTOPPEL
27. SALE BY LANDLORD
28. ATTORNMENT TO LENDER OR THIRD PARTY
29. DEFAULT BY LANDLORD
30. [INTENTIONALLY OMITTED]
31. MEASUREMENT OF PREMISES
32. ATTORNEY FEES
33. SURRENDER
34. WAIVER
35. EASEMENTS; AIRSPACE RIGHTS
36. RULES AND REGULATIONS
37. NOTICES
38. NAME
39. GOVERNING LAW; SEVERABILITY
40. DEFINITIONS
41. TIME
42. INTEREST ON PAST DUE OBLIGATIONS; LATE CHARGE
43. ENTIRE AGREEMENT
44. AUTHORITY
45. RECORDING
46. REAL ESTATE BROKERS
47. EXHIBITS AND ATTACHMENTS
48. ENVIRONMENTAL MATTERS
49. SIGNAGE
50. SUBMISSION OF LEASE
51. PREMISES TAKEN "AS IS"
52. ADDITIONAL RENT
53. [INTENTIONALLY OMITTED]
54. EARLY ACCESS
55. CAPITAL EXPENDITURES
56. SATELLITE DISH
<PAGE>
57. FIRST RIGHT TO LEASE
58. OPTION TO EXTEND TERM
59. TENANT IMPROVEMENTS
60. CONSENTS
61. CROSS DEFAULT
<PAGE>
GREYLANDS BUSINESS PARK, PHASE 2
OFFICE LEASE
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THIS LEASE is made this 29th day of January 1999, by and between GREYLANDS
BUSINESS PARK, PHASE 2, a California general partnership ("Landlord"), and EBAY,
INC., a Delaware corporation ("Tenant").
W I T N E S S E T H :
Landlord leases to Tenant and Tenant leases from Landlord those certain
premises outlined in red on Exhibit A (the "Premises"), which Premises are
commonly known as 2125 Hamilton Avenue ("Building 2125") and 2145 Hamilton
Avenue ("Building 2145"), San Jose, California, which Landlord and Tenant hereby
agree consists of approximately one hundred three thousand fifty-eight (103,058)
square feet with each building consisting of approximately 51,529 square feet.
As used herein the term "Project" shall mean and include all of the land
described in Exhibit B and all the buildings, improvements, fixtures and
equipment now or hereafter situated on said land.
Tenant covenants, as a material part of the consideration of this lease, to
perform and observe each and all of the terms, covenants and conditions set
forth below, and this lease is made upon the condition of such performance and
observance.
1. USE. Subject to the restrictions contained in paragraph 6, Tenant
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shall use the Premises for general office and research and development and other
legal uses related to the operation of Tenant's business and consistent with
operation of the Project as a first-class office/research and development
project and shall not use or permit the Premises to be used for any other
purpose.
2. TERM.
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(a) Commencement Expiration. The term shall commence on the Lease
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Commencement Date (defined below) and end on the Lease Expiration Date (defined
below) (unless sooner terminated as hereinafter provided). The "Lease
Commencement Date" shall be the earlier of (i) April 15, 1999, (ii) substantial
completion of the Building 2125 Tenant Improvements, or (iii) occupancy of
Building 2125 or any part thereof by Tenant and/or Tenant's employees for
purposes other than as permitted in paragraph 54 of this lease (regarding early
access). The "Lease Expiration Date" shall be the date that is (i) five (5)
years after the Building 2145 Expansion Date or (ii) five (5) years after the
Lease Commencement Date if Tenant terminates this lease as to Building 2145 as
provided in paragraph 2(b) below. For purposes of this lease, the "Building
2145 Expansion Date" shall be the date that is sixty (60) days after the date
that Landlord tenders access to Building 2145 in accordance with paragraph 54 of
this lease (regarding early access).
1.
<PAGE>
(b) Failure to Deliver Building 2145. Notwithstanding the above, if
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Landlord is unable to tender possession of Building 2145 to Tenant by September
2, 1999 plus the number of days of delay caused by Tenant, or by force majeure
(defined below), then Tenant as its sole remedy shall be entitled to a credit
against the monthly rent first coming due and payable under this lease in the
amount of $6,000.00 per day for each day of such delay in delivery of Building
2145 to Tenant beyond September 2, 1999 (as extended above, if applicable) and
Landlord shall not be liable to Tenant for any loss, damage or expense resulting
from Landlord's failure to deliver possession. Landlord shall not extend the
lease of Building 2145 to Symbol Technologies, Inc. ("Symbol") beyond September
1, 1999 and in the event of a holdover by Symbol beyond September 1, 1999,
Landlord shall diligently pursue its rights and remedies under the lease between
Landlord and Symbol (as permitted by law) to expedite recovery of possession of
Building 2145 by Landlord and delivery of possession thereof to Tenant as
provided herein. For purposes of this lease, the term "force majeure" shall
mean acts of God, strikes, lockouts, labor troubles, inability to procure labor
or materials, fire, accident, riot, civil commotion, laws or regulations of
general applicability, acts of any tenant or other third party (other than
Symbol Technologies, Inc.), or any cause that is not due to Landlord's
negligence or willful misconduct or any cause that is beyond Landlord's
reasonable control.
If Landlord's tender of Building 2145 is delayed beyond January 1,
2000, Tenant may terminate this lease with respect to Building 2145, by giving
written notice of termination to Landlord on or before January 5, 2000. Upon
such termination neither party shall have any further obligation to the other
with respect to Building 2145 under this lease and Tenant shall not be entitled
to any rent credit provided for above, but this lease shall continue in full
force and effect as to Building 2125.
3. POSSESSION. Tenant's inability or failure to take possession of
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Building 2125 when access is tendered by Landlord (including without limitation
Tenant's failure to satisfy the conditions precedent to early access specified
in paragraph 54 below) shall not delay the commencement of the term of this
lease or Tenant's obligation to pay rent. Tenant's inability or failure to take
possession of Building 2145 when access is tendered by Landlord shall not delay
the Building 2145 Expansion Date. Tenant acknowledges that Landlord shall incur
significant expenses upon the execution of this lease, even if Tenant never
takes possession of the Premises, including without limitation brokerage
commissions and fees, and legal and other professional fees. Tenant
acknowledges that all of said expenses shall be included in measuring Landlord's
damages should Tenant breach the terms of this lease.
4. MONTHLY RENT.
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(a) Basic Rent. Tenant shall pay to Landlord as basic rent for the
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Premises, in advance and subject to adjustment as provided in paragraph 5, the
sum of One Hundred Five Thousand Six Hundred Thirty-Four and 45/100 Dollars
($105,634.45) on or before the first day of the first full calendar month of the
2.
<PAGE>
term and on or before the first day of each and every successive calendar month.
Basic rent for any partial month shall be payable in advance and shall be
prorated based on the actual number of days during the lease term occurring in
such month divided by the total number of days in such month.
(b) Direct Expenses. In addition to the above basic rent and as
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additional rent, commencing on the Lease Commencement Date, Tenant shall pay to
Landlord, subject to adjustment and reconciliation as provided in paragraph 5(b)
of this lease, the sum of Twenty Thousand Six Hundred Eleven and 60/100 Dollars
($20,611.60) on or before the first day of the first full calendar month of the
term and on the first day of each and every successive calendar month, said sum
representing Tenant's estimated payment of its proportionate share of direct
expenses as provided for in paragraph 5(b) of this lease. Payment for direct
expenses for any partial month shall be payable in advance and shall be prorated
based on the actual number of days during the lease term occurring in such month
divided by the total number of days in such month.
(c) Manner and Place of Payment. All payments of basic rent and
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direct expenses shall be paid to Landlord, without deduction or offset, in
lawful money of the United States of America, at the office of Landlord at 3945
Freedom Circle, Suite 640, Santa Clara, California 95054, or to such other
person or place as Landlord may from time to time designate in writing.
(d) Advance Rent Payments.
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(1) First Month's Rent (Building 2125). Concurrently with
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Tenant's execution of this lease, Tenant shall deposit with Landlord the sum
of One Hundred Twenty-Six Thousand Two Hundred Forty-Six and 05/100 Dollars
($126,246.05) to be applied against the basic rent and direct expenses for the
first lease month of the term.
(2) First Month's Rent (Building 2145). Within five (5) days
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after the date that Landlord permits access by Tenant to Building 2145 as
provided in paragraph 54 of this lease, Tenant shall deposit with Landlord the
sum of One Hundred Twenty-Six Thousand Two Hundred Forty-Six and 05/100
Dollars ($126,246.05) to be applied against the basic rent and direct expenses
applicable to Building 2145 for the first lease month after the Building 2145
Expansion Date.
(e) Security Deposit. Concurrent with Tenant's execution of this
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lease, Tenant shall deliver to Landlord an unconditional and irrevocable letter
of credit ("Letter of Credit") in the amount of Five Hundred Thousand Dollars
($500,000) to secure the faithful performance by Tenant of all of the terms,
covenants and conditions of this lease to be kept and performed by Tenant. The
Letter of Credit shall be issued by a bank (the "L-C Bank") approved by Landlord
and shall be in a form that is reasonably acceptable to Landlord. The L-C Bank
shall be a bank that accepts deposits, maintains accounts, has a local Santa
Clara County office that will negotiate a letter of credit, and the deposits of
which are insured by the Federal Deposit Insurance Corporation. Tenant shall
pay all expenses, points, or
3.
<PAGE>
fees incurred by Tenant in obtaining the Letter of Credit. The Letter of
Credit shall be available by draft at sight, subject only to receipt by the
bank of a notarized statement from Birk S. McCandless or Steven E. Sund or
other authorized representative of Landlord requesting such draw and
certifying that Landlord is entitled to make such draw in accordance with the
terms of this lease. The Letter of Credit shall by its terms expire no sooner
than September 1, 2000, provided that unless Tenant deposits with Landlord a
cash security deposit of like amount as permitted below, said Letter of Credit
shall be renewed by Tenant for successive periods of not less than one year
each to and including the date that is thirty (30) days after the Lease
Expiration Date of this lease. The bank's written renewal of the Letter of
Credit shall in each case be delivered to Landlord not less than forty-five
(45) days prior to the expiration date of the then outstanding Letter of
Credit. Tenant's failure to so deliver, renew (including specifically but not
limited to the delivery to Landlord of such renewal not less than forty-five
(45) days prior to expiration of the Letter of Credit) and maintain such
Letter of Credit, shall be a material breach of this lease unless Tenant
delivers to Landlord a cash security deposit of like amount. The amount of the
Letter of Credit shall be increased to One Million Dollars ($1,000,000) on or
before September 1, 1999 unless the following criteria are satisfied as of
August 1, 1999:
1. Tenant's Market Cap has not been less than One Billion Four
Hundred Million Dollars ($1,400,000,000) ($35/share) at any time
during the previous three quarters.
2. Tenant has at least Thirty Million Dollars ($30,000,000) of cash
or cash equivalents (which shall be deemed to include high
quality short-term investments).
If, on September 1, 2000 and on September 1 of each year thereafter, Tenant is
not in default and no event shall have occurred which with the passing of time
or the giving of notice or both would constitute a default, then upon each
annual renewal the amount of the Letter of Credit shall be reduced for the
upcoming year by $100,000 (or $200,000 if the original Letter of Credit is
increased to $1,000,000 as provided above) each year upon renewal, but in no
event shall the Letter of Credit be reduced to an amount which is less than Two
Hundred Forty-Five Thousand Two Hundred Seventy-Eight and 04/100 Dollars
($245,278.04).
If Tenant defaults in the performance of any provision of this lease
to be performed by Tenant, including, without limitation, providing, renewing
and maintaining the Letter of Credit as required above, or payment of rent or
any other amounts due Landlord under this lease, Landlord may, without prejudice
to any other remedy available to Landlord, immediately and without further
notice draw down the entire amount of the Letter of Credit to be held by
Landlord as a cash security deposit for the faithful performance by Tenant of
all of the terms, covenants and conditions of this lease to be kept and
performed by Tenant. If Tenant defaults with respect to any provision of this
lease, including, but not limited to, the default that precipitated the draw on
the Letter of Credit, Landlord may (but shall not be required to) use, apply or
retain all or any part of this security deposit
4.
<PAGE>
for the payment of any amount which Landlord may spend by reason of Tenant's
default or to compensate Landlord for any other reasonable expense, loss or
damage which Landlord may suffer by reason thereof. If any portion of said
deposit is so used as specified above, Tenant shall, within five (5) days
after written demand therefor, deposit cash with Landlord in the amount
sufficient to restore the security deposit to its original amount and Tenant's
failure to do so shall be a material breach of this lease. Landlord shall not
be required to keep this security deposit separate from its general funds and
Tenant shall not be entitled to interest on such deposit. If Tenant is not in
default at the expiration or termination of this lease, the security deposit
or any balance thereof shall be returned to Tenant within fifteen (15) days
after Tenant has vacated the Premises, subject to retention of a reasonable
amount to pay for any damages still to be determined by Landlord; provided
that the excess, if any, shall be returned to Tenant when such damages have
been finally ascertained. In the event of termination of Landlord's interest
in this lease, Landlord shall transfer said deposit to Landlord's successor in
interest, and Tenant agrees that Landlord shall thereupon be released from
liability for the return of such deposit or any accounting therefor.
(f) Application of Payments. All payments received by Landlord from
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Tenant may be applied by Landlord in Landlord's sole discretion to the oldest
payment obligation(s) owed by Tenant to Landlord or in such other order as
Landlord determines in Landlord's sole and absolute discretion. No designation
by Tenant, either in a separate writing or on a check or money order, shall
modify this clause or have any force or effect. Notwithstanding the above,
Landlord's determination not to apply such payments to the oldest payment
obligations first as specified above shall not constitute a waiver by Landlord
with respect to Landlord's claims against Tenant for such prior payment
obligation(s) of Tenant or Landlord's right to apply future payments to such
prior payment obligation(s) of Tenant in such order as Landlord may determine in
Landlord's sole and absolute discretion.
5. ADJUSTMENT OF BASIC RENT AND DIRECT EXPENSES.
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(a) Adjustments in Basic Rent. The basic rent provided for in
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paragraph 4(a) shall be adjusted periodically and the monthly basic rent for
each period shall be as set forth below:
From the Lease Commencement Date
through the date that is one day
prior to the Building 2145
Expansion Date $105,634.45 per month
From the Building 2145 Expansion
Date through March 14, 2000 $211,268.90 per month
From March 15, 2000 through
March 14, 2001 $217,452.38 per month
From March 15, 2001 through
March 14, 2002 $223,635.86 per month
5.
<PAGE>
From March 15, 2002 through
March 14, 2003 $230,849.92 per month
From March 15, 2003 through
March 14, 2004 $238,063.98 per month
From March 15, 2004 through
the Lease Expiration Date
(specified in paragraph 2 above) $245,278.04 per month
However, if Tenant terminates its obligation to lease Building 2145 as
provided in paragraph 2(b) above, the rent schedule for Building 2125 shall be
as follows:
From the Lease Commencement Date
through March 14, 2000 $105,634.45 per month
From March 15, 2000 through
March 14, 2001 $108,726.19 per month
From March 15, 2001 through
March 14, 2002 $111,817.93 per month
From March 15, 2002 through
March 14, 2003 $115,424.96 per month
From March 15, 2003 through
March 14, 2004 $119,031.99 per month
From March 15, 2004 through
October 31, 2004 $122,639.02 per month
(b) Adjustments to Direct Expenses. Commencing on the Lease
------------------------------
Commencement Date, Tenant's proportionate share of direct expenses of the
Project shall be twenty-two and forty-two one-hundredths percent (22.42%) and
Tenant's proportionate share of direct expenses of the Building 2125 shall be
one hundred percent (100%) and Tenant's proportionate share of direct expenses
of Building 2145 shall be zero percent (0%). Commencing on the Building 2145
Expansion Date Tenant's proportionate share of direct expenses shall be
increased to the following percentages:
Project: 44.85%
Building 2125: 100.00%
Building 2145: 100.00%
and Tenant's payment of its estimated share of direct expenses shall be
increased to Fifty-Eight Thousand Seven Hundred Forty-Three and 06/100 Dollars
($58,743.06) per month.
6.
<PAGE>
Tenant shall be required to pay to Landlord, as additional rent in
accordance with paragraph 4(b) of this lease, Tenant's proportionate share of
direct expenses for each calendar year (or portion thereof) during the term of
this lease. Tenant's estimated share of the monthly direct expenses payable by
Tenant during the calendar year in which the term commences is set forth in
paragraph 4(b) of this lease. A written estimate of Tenant's monthly share of
direct expenses for each succeeding calendar year shall be delivered to Tenant
prior to the commencement of each such succeeding calendar year (or as soon as
practicable thereafter). Tenant shall pay to Landlord in accordance with
paragraph 4(b) of this lease its monthly share of direct expenses as reasonably
estimated by Landlord. Landlord reserves the right to revise such written
estimate during a calendar year if Landlord's actual or projected direct
expenses shows an increase or decrease in excess of ten percent (10%) from that
of an earlier written estimate delivered to Tenant, and if Landlord elects to
revise the earlier estimate, Landlord shall deliver the revised estimate to
Tenant, together with an explanation of the reasons therefor, and Tenant shall
revise its payments accordingly. Statements of the actual direct expenses for
the calendar year in which the term commences and for each succeeding calendar
year (herein called "statement of actual direct expenses") shall be delivered to
Tenant within one hundred twenty (120) days following the expiration of each
such calendar year (or as soon as practicable thereafter). If the statement of
actual direct expenses for any such calendar year shows that Tenant's
proportionate share of actual direct expenses for the year is in excess of the
aggregate amount Tenant has paid as direct expenses for that calendar year,
Tenant shall pay such excess to Landlord within thirty (30) days after receipt
of the statement of actual direct expenses. If Tenant fails to pay such excess
amount due within said thirty (30) day period, Tenant shall pay an additional
ten percent (10%) of the amount due as a penalty. In the event that any
statement of actual direct expenses shall show that Tenant has paid Landlord an
aggregate amount in excess of the actual direct expenses for the preceding
calendar year and Tenant is not in default in the performance or observance of
any of the terms, covenants or conditions of this lease at the time such
statement of actual direct expenses is delivered, Landlord shall, at its option,
promptly either refund such excess to Tenant or credit the amount thereof to the
monthly direct expenses next becoming due from Tenant. The respective
obligations of Landlord and Tenant under this paragraph shall survive the
expiration or other termination of this lease. Upon written request of Tenant
made within sixty (60) days of Tenant's receipt of the statement of actual
direct expenses, Landlord shall provide to Tenant copies of documentation
reasonably available to Landlord to support the amounts set forth in such
statement.
(c) Definition of Direct Expenses. As used in this lease, "direct
-----------------------------
expenses" shall include, but not be limited to, (i) real property taxes,
assessments, and other costs identified as direct expenses in paragraph 13; (ii)
insurance premiums and other costs identified as direct expenses in paragraph
11; (iii) the cost of all utilities and services including water, gas, and sewer
charges, electricity, heat, air conditioning, refuse collection, and janitorial
services identified as direct expenses in paragraph 12; (iv) the costs of
operating and maintaining the Common Area (as defined in paragraph 15)
identified as direct
7.
<PAGE>
expenses in paragraph 15, including, but not limited to, the landscaping,
elevators, parking lots, paving, sidewalks, and security and exterminator
services; (v) the costs and expenses of maintaining and repairing the Project
identified as direct expenses in paragraph 9, including but not limited to,
mechanical, electrical, plumbing and sewage systems, windows, glazing,
gutters, downspouts, heating and ventilating and air conditioning systems,
walls, floor coverings, roofs, structural elements, exterior walls, and the
cost of maintenance contracts and supplies, materials, equipment and tools
used in connection therewith; (vi) the cost of certain alterations identified
as direct expenses in paragraph 8; (vii) amortization of such capital
improvements having a useful life greater than one year as Landlord may have
installed for the purpose of reducing operating costs and/or to comply with
all laws, rules and regulations of federal, state, county, municipal and other
governmental authorities now or hereafter in effect (the cost of such capital
improvement shall equal Tenant's proportionate share of the fraction of the
cost of such capital improvement equal to the remaining term of the lease over
the useful life of such capital improvement); (viii) wages, salaries, employee
benefits (including union benefits) and related expenses of all on-site and
off-site personnel engaged in the operation, management and maintenance of the
Project (or the building in which the Premises are located) and payroll taxes
applicable thereto and all costs incurred to maintain a management office in
or near the Project (including, without limitation, rental payments therefor
or the reasonable rental value of the space so occupied); (ix) supplies,
materials, equipment and tools used or required in connection with the
operation and maintenance of the Project; (x) licenses, permits and inspection
fees; (xi) a reasonable reserve for repairs and replacement of equipment used
in the maintenance and operation of the Project; and (xii) all other
reasonable operating costs incurred by Landlord in maintaining and operating
the Project.
(d) Exclusions from Direct Expenses. Notwithstanding anything to the
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contrary contained in this lease, the following shall not be included within
direct expenses:
(1) Leasing commissions, attorneys' fees, costs, disbursements,
and other expenses incurred in connection with negotiations or disputes with
tenants, or in connection with leasing, renovating, or improving space for
tenants or other occupants or prospective tenants or other occupants of the
Project.
(2) The cost of any service sold to any tenant (including
Tenant) or other occupant for which Landlord is reimbursed as an additional
charge or rental over and above the basic rent and escalations payable under
the lease with that tenant.
(3) Any depreciation on the Project.
(4) Expenses in connection with services or other benefits of a
type that are not provided to Tenant but which are provided specifically for
another tenant or occupant of the Project.
8.
<PAGE>
(5) Costs incurred due to Landlord's violation of any terms or
conditions of this lease or any other lease relating to the Project.
(6) Management fees and/or overhead profit increments paid to
Landlord's subsidiaries or affiliates for management or other services on or to
the building or for supplies or other materials to the extent that the cost of
the services, supplies, or materials exceeds the cost that would have been paid
for comparable services had the services, supplies or materials been provided by
unaffiliated parties of comparable skill, competence, stature, reputation and
reliability on a competitive basis.
(7) All interest, loan fees, and other carrying costs related to
any mortgage or deed of trust and all rental and other payable due under any
ground or underlying lease.
(8) Any compensation paid to clerks, attendants, or other persons
in commercial concessions operated by landlord.
(9) Advertising and promotional expenditures.
(10) Costs of repairs and other work occasioned by fire,
windstorm or other casualty to the extent covered by insurance.
(11) Any costs, fines or penalties incurred due to violations by
Landlord of any governmental rule or authority, this lease or any other lease in
the Project, or due to Landlord's negligence or willful misconduct.
(12) Costs for sculpture, paintings or other objects of fine art
exceeding $20,000 per item (and insurance thereon or extraordinary security in
connection therewith).
(13) Wages, salaries, or other compensation paid to any executive
employees of Landlord or to Landlord's employees above the grade of Property
Manager.
(14) The cost of correcting any building code or other violations
which were violations requiring correction prior to the Lease Commencement Date.
(15) The cost of containing, removing or otherwise remediating any
contamination of the Project (including the underlying land and ground water) by
any toxic or hazardous materials for which Tenant is not otherwise responsible
under paragraph 48 of this lease.
(16) Utilities and services applicable to the Premises and paid
directly by Tenant.
6. RESTRICTION ON USE. Tenant shall not do or permit to be done in or
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about the Premises or the Project, nor bring or keep or permit to be brought or
kept
9.
<PAGE>
in or about the Premises or Project, anything which is prohibited by or will
in any way increase the existing rate of (or otherwise affect) fire or any
other insurance covering the Project or any part thereof, or any of its
contents, or will cause a cancellation of any insurance covering the Project
or any part thereof, or any of its contents. Tenant shall not do or permit to
be done anything in or about the Premises or the Project which will constitute
waste or which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Project or injure or annoy them, or use or allow
the Premises to be used for any unlawful purpose, nor shall Tenant cause,
maintain or permit any nuisance in or about the Premises or the Project. No
loudspeaker or other device, system or apparatus which can be heard outside
the Premises shall be used in or at the Premises without the prior written
consent of Landlord. Tenant shall not use the Premises for sleeping, washing
clothes, cooking (except for customary office use of microwave ovens) or in
any manner that will cause or emit any objectionable odor, noise or light into
the adjoining premises or Common Area; provided that Tenant shall be permitted
to construct a cafeteria or similar food service facility (as specified in
Exhibit D-1) for use by Tenant's employees and their invitees (not the general
public). Tenant shall not do anything on the Premises that will cause damage
to the Project or the building in which the Premises are located and Tenant
shall not overload the floor capacity of the Premises or the Project. No
machinery, apparatus or other appliance shall be used or operated in or on the
Premises that will in any manner injure, vibrate or shake the Premises. No
waste materials or refuse shall be dumped upon or permitted to remain upon any
part of the Premises or outside of the building proper except in trash
containers placed inside exterior enclosures designated for that purpose by
Landlord, or inside of the building proper where designated; and no toxic or
hazardous materials shall be disposed of through the plumbing or sewage
system. No materials, supplies, equipment, finished products or semifinished
products, raw materials or articles of any nature shall be stored or permitted
to remain outside of the building proper. No retail sales shall be made on the
Premises.
7. COMPLIANCE WITH LAWS. Tenant shall, in connection with its use and
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occupation of the Premises, at its sole cost and expense, promptly observe and
comply with (i) all laws, statutes, ordinances and governmental rules,
regulations and requirements of federal, state, county, municipal and other
governmental authorities, now or hereafter in effect, which shall impose any
duty upon Landlord or Tenant with respect to the use, occupancy or alteration of
the Premises (subject to paragraph 8 below), (ii) with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted
and (iii) with any direction or occupancy certificate issued pursuant to law by
any public authority; provided, however, that no such failure shall be deemed a
breach of these provisions if Tenant, immediately upon notification, commences
to remedy or rectify said failure. The judgment of any court of competent
jurisdiction or the admission of Tenant in any action against Tenant (whether or
not Landlord is a party thereto) that Tenant has violated any such law, statute,
ordinance or governmental rule, regulation, requirement, direction or provision,
shall be conclusive of that fact as between Landlord and Tenant. This lease
shall remain in full force and effect notwithstanding any loss of use or other
effect on Tenant's enjoyment of the
10.
<PAGE>
Premises by reason of any governmental laws, statutes, ordinances, rules,
regulations and requirements now or hereafter in effect.
8. ALTERATIONS. Tenant shall not make or suffer to be made any
-----------
alteration, addition or improvement to or of the Premises or any part thereof
(collectively referred to herein as "alterations") without (i) the prior written
consent of Landlord, (ii) a valid building permit issued by the appropriate
governmental authority and (iii) otherwise complying with all applicable laws,
regulations and requirements of governmental agencies having jurisdiction and
with the rules, regulations and requirements of any board of fire underwriters
or similar body. Notwithstanding the foregoing, Tenant may make non-structural
alterations costing less than Fifteen Thousand Dollars ($15,000) per project and
costing, in the aggregate less than Thirty Thousand Dollars ($30,000) in any one
lease year of the term without the prior written consent of Landlord, provided
that Tenant promptly informs Landlord in writing of the nature of the
alterations, the cost thereof and the contractor engaged or proposed to be
engaged to perform such work, and provided further that all such work complies
with clauses (ii) and (iii) above. Landlord's consent to any requested
alteration shall not create on the part of Landlord or cause Landlord to incur
any responsibility or liability for such alteration's compliance with all laws,
rules, regulations of federal, state, county, municipal and other governmental
authorities. Any alteration, and the initial Tenant Improvements (specified in
paragraph 59 herein), shall be deemed to belong to Tenant during the term of
this lease and Tenant shall have the right to finance such alterations and
initial Tenant Improvements. Upon expiration or upon termination any alteration
made by Tenant (excluding moveable furniture and trade fixtures) shall become a
part of the Premises and belong to Landlord. Without limiting the foregoing,
all heating, lighting, electrical (including all wiring, conduit, outlets,
drops, buss ducts, main and subpanels), air conditioning, partitioning, drapery,
window covering and carpet installations made by Tenant, regardless of how
attached to the Premises, together with all other alterations that have become
an integral part of the building in which the Premises are a part, shall be and
become part of the Premises and belong to Landlord upon installation and shall
not be deemed trade fixtures and, subject to Landlord's right to require removal
and restoration as specified herein, shall remain upon and be surrendered with
the Premises at the termination of the lease.
If Landlord consents to the making of any alteration by Tenant, the
same shall be made by Tenant at its sole risk, cost and expense and only after
Landlord's written approval of any contractor or person selected by Tenant for
that purpose (not to be unreasonably withheld). Tenant shall, if required by
Landlord, secure at Tenant's cost a completion and lien indemnity bond for such
work. Unless expressly waived by Landlord in writing, upon the expiration or
sooner termination of the term, Landlord may, at its sole option, require
Tenant, at Tenant's sole cost and expense, to promptly remove any such
alteration made by Tenant and designated by Landlord to be removed, repair any
damage to the Premises caused by such removal and restore the Premises to their
condition prior to Tenant's alteration. Upon Tenant's written request at the
time that Landlord's consent is requested, Landlord shall notify Tenant if
Landlord will waive its right to require removal of the
11.
<PAGE>
alteration and restoration of the Premises as specified above. Any moveable
furniture and equipment or trade fixtures remaining on the Premises at the
expiration or other termination of the term shall become the property of the
Landlord; provided, however, in addition to all other remedies available to
Landlord at law or in equity, Landlord may (i) require Tenant to remove same
or (ii) remove same at Tenant's cost, and Tenant shall be liable to Landlord
for all damages incurred by Landlord related thereto.
If during the term any alteration, addition or change of the Premises,
the Common Area or the Project is required by law, regulation, ordinance or
order of any public authority due to Tenant's particular use, occupancy or
alteration of the Premises, Tenant, at its sole cost and expense, shall promptly
make the same. If during the term any alterations, additions or changes to the
Common Area or the Project is required by law, regulation, ordinance or order of
any public or quasi-public authority, and is not due to Tenant's particular use,
occupancy or alteration of the Premises, and, in Landlord's judgment, it is
impractical for the tenants of the Project to individually make such
alterations, additions or changes, Landlord shall make such alterations,
additions or changes and the cost thereof shall be a direct expense and Tenant
shall pay its percentage share of such cost to Landlord as provided in
paragraphs 4 and 5, subject to the limitations set forth in paragraphs 5(b) and
55 herein.
9. REPAIR AND MAINTENANCE. Subject to paragraph 16, Landlord shall
----------------------
maintain and keep in good repair the Common Area and the mechanical, electrical,
plumbing and sewage systems, windows, window frames, plate glass, glazing,
elevators, gutters and downspouts, the roof, structural elements of the roof,
exterior walls, structural elements and the heating, ventilating and air
conditioning systems (unless dedicated entirely to the Premises) of the Premises
and the Project; provided, however, that Landlord shall not be required to
perform repairs made necessary by the negligence or abuse of such improvements
or property by Tenant or its employees, agents, subtenants or permittees. The
cost of all maintenance and repairs made by Landlord pursuant to this paragraph
9, including without limitation maintenance contracts and supplies, materials,
equipment and tools used in such repairs and maintenance, shall be direct
expenses and Tenant shall pay its percentage share of such costs to Landlord as
provided in paragraphs 4 and 5, subject to the limitations set forth in
paragraphs 5(b) and 55 herein.
By entry hereunder Tenant accepts the Premises as being in good and
sanitary order, condition and repair. Subject to paragraphs 16 and 21, and
excepting repairs and maintenance required by this paragraph 9 to be made by
Landlord, Tenant at its cost shall keep the Premises and every part thereof
(including the heating, ventilating and air conditioning systems dedicated
entirely to and servicing only the Premises, subject to Landlord's approval of
all contractors and that such services are performed to at least the standard of
service provided by Landlord at the Project) in good and sanitary order,
condition and repair and Tenant shall be solely responsible for the cost and
maintenance of, and electricity supplied to, any special air conditioning for
Tenant's computer facilities. Upon Landlord's request, Tenant shall provide
Landlord with copies of
12.
<PAGE>
all contracts, records, receipts, written communications, invoices and
payments made in connection with such HVAC services. If Landlord determines at
any time that such contractors or the HVAC services being provided are
unacceptable in Landlord's discretion, Landlord may terminate Tenant's right
to provide or obtain such services, in which case Landlord shall be
responsible for such services and all reasonable costs related thereto shall
be direct expenses and Tenant shall pay its percentage share of such costs to
Landlord as provided in paragraphs 4 and 5 of this lease. All contracts for
such services entered into by Tenant shall be terminable by Tenant at any time
and for any reason and Tenant shall exercise such right upon Landlord's
written request and notice that Landlord is resuming responsibility for such
services. Further, Tenant shall repair (or, at the option of Landlord,
reimburse Landlord if Landlord elects to repair) damage to improvements or
other property located on or about the Project where such repairs are made
necessary by the negligence of or abuse of such improvement or other property
by Tenant or its employees, agents, subtenants or permittees. Tenant waives all
rights and benefits under California Civil Code Sections 1932(1), 1941, and
1942 and under any similar law, statute or ordinance now or hereafter in
effect.
10. LIENS. Tenant shall keep the Premises and the Project free from any
-----
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant, its agents, employees or contractors. Upon Tenant's receipt
of a preliminary twenty (20) day notice filed by a claimant pursuant to
California Civil Code Section 3097, Tenant shall immediately provide Landlord
with a copy of such notice. Should any lien be recorded against the Project,
Tenant shall give immediate notice of such lien to Landlord. In the event that
Tenant shall not, within twenty (20) days following the imposition of such lien,
cause the same to be released of record, Landlord shall have, in addition to all
other remedies provided herein and by law, the right, but no obligation, to
cause the same to be released by such means as it shall deem proper, including
payment of the claim giving rise to such lien. All sums paid by Landlord for
such purpose, and all expenses (including attorneys' fees) incurred by it in
connection therewith, shall be payable to Landlord by Tenant on demand with
interest at the rate of twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less. Landlord shall have the right at all times
to post and keep posted on the Premises any notices permitted or required by
law, or which Landlord shall deem proper for the protection of Landlord, the
Premises and the Project and any other party having an interest therein, from
mechanics' and materialmen's liens and like liens. Tenant shall give Landlord
at least ten (10) days' prior notice of the date of commencement of any
construction on the Premises in order to permit the posting of such notices. In
the event Tenant is required to post an improvement bond with a public agency in
connection with any work performed by Tenant on or to the Premises, Tenant shall
include Landlord as an additional obligee.
11. INSURANCE. Tenant, at its sole cost and expense, shall keep in force
---------
during the term (i) commercial general liability and property damage insurance
with a combined single limit of at least $4,000,000 per occurrence insuring
against personal or bodily injury to or death of persons occurring in, on or
about the Premises or Project and any and all liability of the insureds with
respect to the
13.
<PAGE>
Premises or arising out of Tenant's maintenance, use or occupancy of the
Premises and all areas appurtenant thereto, (ii) direct physical loss-special
insurance covering the leasehold improvements in the Premises and all of
Tenant's equipment, trade fixtures, appliances, furniture, furnishings, and
personal property from time to time located in, on or about the Premises, with
coverage in the amount of the full replacement cost thereof, and (iii)
Worker's Compensation Insurance as required by law, together with employer's
liability coverage with a limit of not less than $2,000,000 for bodily injury
for each accident and for bodily injury by disease for each employee. Tenant's
commercial general liability and property damage insurance and Tenant's
Workers Compensation Insurance shall be endorsed to provide that said
insurance shall not be cancelled or reduced except upon at least thirty (30)
days prior written notice to Landlord. Further, Tenant's commercial general
liability and property damage insurance shall be primary and shall be endorsed
to provide that Landlord and McCandless Management Corporation, and their
respective partners, officers, directors, lenders and employees and such other
persons or entities as reasonably directed from time to time by Landlord shall
be named as additional insureds for all liability using ISO Bureau Form
CG20111185 (or a successor form) or such other endorsement form reasonably
acceptable to Landlord; shall contain a severability of interest clause and a
cross-liability endorsement; shall be endorsed to provide that the limits and
aggregates apply per location using ISO Bureau Form CG25041185 (or a successor
form) or such other endorsement form reasonably acceptable to Landlord; and
shall be issued by an insurance company admitted to transact business in the
State of California and rated A/VIII or better in Best's Insurance Reports (or
successor report). The deductibles for all insurance required to be maintained
by Tenant hereunder shall be reasonably satisfactory to Landlord. The
commercial general liability insurance carried by Tenant shall specifically
insure the performance by Tenant of the indemnification provisions set forth
in paragraph 17 of this lease provided, however, nothing contained in this
paragraph 11 shall be construed to limit the liability of Tenant under the
indemnification provisions set forth in said paragraph 17. If Landlord or any
of the additional insureds named on any of Tenant's insurance, have other
insurance which is applicable to the covered loss on a contributing, excess or
contingent basis, the amount of the Tenant's insurance company's liability
under the policy of insurance maintained by Tenant shall not be reduced by the
existence of such other insurance. Any insurance carried by Landlord or any of
the additional insureds named on Tenant's insurance policies shall be excess
and non-contributing with the insurance so provided by Tenant.
Tenant shall, prior to the commencement of the term and at least
thirty (30) days prior to any renewal date on any insurance policy required to
be maintained by Tenant pursuant to this paragraph, provide Landlord with a
completed Certificate of Insurance, using a form acceptable in Landlord's
reasonable judgement, attaching thereto copies of all endorsements required to
be provided by Tenant under this lease. Tenant agrees to increase the coverage
or otherwise comply with changes in connection with said commercial general
liability, property damage, direct physical loss and Worker's Compensation
Insurance as Landlord or Landlord's lender may from time to time require.
14.
<PAGE>
Landlord shall obtain and keep in force a policy or policies of
insurance covering loss or damage to the Premises and Project, in the amount of
the full replacement value thereof, providing protection against those perils
included within the classification of "all risk" insurance, with increased cost
of reconstruction and contingent liability (including demolition), plus a policy
of rental income insurance in the amount of one hundred percent (100%) of twelve
(12) months' rent (including sums paid as additional rent) and such other
insurance as Landlord or Landlord's lender may from time to time require.
Landlord may, but shall not be obligated to, obtain flood and/or earthquake
insurance. Landlord shall have no liability to Tenant if Landlord elects not to
obtain flood and/or earthquake insurance. The cost of all such insurance
purchased by Landlord, plus any charges for deferred payment of premiums and the
amount of any deductible incurred upon any covered loss within the Project,
shall be direct expenses and Tenant shall pay to Landlord its percentage share
of such costs as provided in paragraphs 4(b) and 5(b). If the cost of insurance
is increased due to Tenant's use of the Premises, then Tenant shall pay to
Landlord upon demand the full cost of such increase.
Landlord and Tenant hereby mutually waive any and all rights of
recovery against one another for real or personal property loss or damage
occurring to the Premises or the Project, or any part thereof, or to any
personal property therein, from perils insured against under fire and extended
insurance and any other property insurance policies existing for the benefit of
the respective parties so long as such insurance permits waiver of liability and
contains a waiver of subrogation without additional premiums.
If Tenant does not take out and maintain insurance as required
pursuant to this paragraph 11, Landlord may, but shall not be obligated to, take
out the necessary insurance and pay the premium therefor, and Tenant shall repay
to Landlord promptly on demand, as additional rent, the amount so paid. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
additional rent, any and all reasonable expenses (including attorney fees) and
damages which Landlord may sustain by reason of the failure of Tenant to obtain
and maintain such insurance, it being expressly declared that the expenses and
damages of Landlord shall not be limited to the amount of the premiums thereon.
12. UTILITIES AND SERVICE. Tenant shall pay for all water, gas, light,
---------------------
heat, power, electricity, telephone, trash pickup, sewer charges, janitorial and
all other services supplied to or consumed on the Premises. In the event that
any service is not separately metered or billed to the Premises, the cost of
such utility service or other service shall be a direct expense and Tenant shall
pay its percentage share of such cost to Landlord as provided in paragraph 5.
In addition, the cost of all utilities and services furnished by Landlord to the
Common Area shall be a direct expense and Tenant shall pay its percentage share
of such cost to Landlord as provided in paragraph 5.
If Tenant's use of any such utility or service is materially in excess
of the average furnished to the other tenants of the Project, and such utility
or service is not separately metered, then Tenant shall pay to Landlord upon
demand,
15.
<PAGE>
as additional rent, the full cost of such excess use, or Landlord may cause
such utility or service to be separately metered, in which case Tenant shall
pay the full cost of such utility or service and reimburse Landlord upon
demand for the cost of installing the separate meter. In the event that
Landlord charges Tenant for excess usage of utilities, Tenant shall have the
right to have the electricity for each floor separately metered, at Tenant's
cost paid in advance to Landlord, if such separate meters are practical and
reasonable in light of the amount of the excess charges and each such separate
meter shall be for an entire floor of a building occupied by Tenant.
Landlord shall not be liable for, and Tenant shall not be entitled to
any abatement or reduction of rent by reason of, the failure of any person or
entity to furnish any of the foregoing services when such failure is caused by
accident, breakage, repairs, strikes, lockouts or other labor disturbances or
labor disputes of any character, governmental moratoriums, regulations or other
governmental actions, or by any other cause, similar or dissimilar, beyond the
reasonable control of Landlord. In addition, Tenant shall not be relieved from
the performance of any covenant or agreement in this lease because of any such
failure, and no eviction of Tenant shall result from such failure.
13. TAXES AND OTHER CHARGES. All real estate taxes and assessments and
-----------------------
other taxes, fees and charges of every kind or nature, foreseen or unforeseen,
which are levied, assessed or imposed upon Landlord and/or against the Premises,
building, Common Area or Project or any part thereof by any federal, state,
county, regional, municipal or other governmental or quasi-governmental
authority or special district authority, together with any increases therein
whether resulting from increased rate and/or valuation, shall be a direct
expense and Tenant shall pay its percentage share of such costs to Landlord as
provided in paragraphs 4 and 5. By way of illustration and not limitation,
"other taxes, fees and charges" as used herein include any and all taxes payable
by Landlord (other than state and federal personal or corporate income taxes
measured by the net income of Landlord from all sources, and premium taxes),
whether or not now customary or within the contemplation of the parties hereto,
(i) upon, allocable to, or measured by the rent payable hereunder, including,
without limitation, any gross income or excise tax levied by the local, state or
federal government with respect to the receipt of such rent, (ii) upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any part
thereof, (iii) upon or measured by the value of Tenant's personal property or
leasehold improvements located in the Premises, (iv) upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
estate in the Premises, (v) upon or with respect to vehicles, parking or the
number of persons employed in, at or about the Project, and (vi) any tax,
license, franchise fee or other imposition upon Landlord which is otherwise
measured by or based in whole or in part upon the Project or any portion
thereof. If Landlord contests any such tax, fee or charge, the cost and expense
incurred by Landlord (including, but not limited to, costs of attorneys and
experts) thereby shall also be direct expenses and Tenant shall pay its
percentage share of such costs to Landlord as provided in paragraphs 4 and 5.
In the event the Premises and any improvements installed therein by Tenant
16.
<PAGE>
or Landlord are valued by the assessor disproportionately higher than those of
other tenants in the building or Project or in the event alterations or
improvements are made to the Premises, Tenant's percentage share of such taxes,
assessments, fees and/or charges shall be readjusted upward accordingly and
Tenant agrees to pay such readjusted share. Such determination shall be made by
Landlord from the respective valuations assigned in the assessor's work sheet or
such other information as may be reasonably available.
Tenant agrees to pay, before delinquency, any and all taxes levied or
assessed during the term hereof upon Tenant's equipment, furniture, fixtures and
other personal property located in the Premises, including carpeting and other
property installed by Tenant notwithstanding that such carpeting or other
property has become a part of the Premises. If any of Tenant's personal
property shall be assessed with the Project, Tenant shall pay to Landlord, as
additional rent, the amounts attributable to Tenant's personal property within
ten (10) days after receipt of a written statement from Landlord setting forth
the amount of such taxes, assessments and public charges attributable to
Tenant's personal property.
14. ENTRY BY LANDLORD. Landlord reserves, and shall at all reasonable
-----------------
times have, the right to enter the Premises following the giving of reasonable
advance notice (e.g. 24 hours notice except in case of emergency) (i) to inspect
the Premises, (ii) to supply services to be provided by Landlord hereunder,
(iii) to show the Premises to prospective purchasers, lenders or tenants and to
put 'for sale' or 'for lease' signs thereon, (iv) to post notices required or
allowed by this lease or by law, (v) to alter, improve or repair the Premises
and any portion of the Project when required by law, or necessary to fulfill its
obligations as Landlord under this or other leases in the Project, or as
otherwise permitted by Tenant, which permission shall not be unreasonably
withheld or delayed, and (vi) to erect scaffolding and other necessary
structures in or through the Premises or the Project where reasonably required
by the character of the work to be performed. Landlord shall not be liable in
any manner for any inconvenience, disturbance, loss of business, nuisance or
other damage arising from Landlord's entry and acts pursuant to this paragraph
unless caused by Landlord's gross negligence or willful misconduct and Tenant
shall not be entitled to an abatement or reduction of rent if Landlord exercises
any rights reserved in this paragraph. For each of the foregoing purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in, on, and about the Premises (excluding Tenant's vaults, safes and
similar areas designated in writing by Tenant in advance), and Landlord shall
have the right to use any and all means which Landlord may deem proper to open
said doors in an emergency in order to obtain entry to the Premises. Any entry
by Landlord to the Premises pursuant to this paragraph shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into or
a detainer of the Premises or an eviction, actual or constructive, of Tenant
from the Premises or any portion thereof.
15. COMMON AREA; PARKING. Subject to the terms and conditions of this
--------------------
lease and such rules and regulations as Landlord may from time to time
prescribe, Tenant and Tenant's employees and invitees shall, in common with
other occupants of
<PAGE>
the Project, and their respective employees and invitees and others entitled
to the use thereof, have the nonexclusive right to use the access roads,
parking areas and facilities within the Project provided and designated by
Landlord for the general use and convenience of the occupants of the Project,
which areas and facilities shall include, but not be limited to, common
lobbies, corridors, restrooms and showers, part or all of the Greylands
Mansion and the .37 acre parcel upon which it is located (unless the right to
use thereof by Landlord's tenants is subsequently terminated), telephone,
electrical, janitorial and mechanical rooms, elevators, stairwells, vertical
duct shafts, sidewalks, parking, refuse, landscape and plaza areas, roofs,
building exteriors, electrical, mechanical, plumbing and HVAC systems, and
storage areas, which areas and facilities are referred to herein as "Common
Area". This right shall terminate upon the termination of this lease.
Landlord reserves the right from time to time to make changes in the
shape, size, location, amount and extent of the Common Area so long as such
change does not reduce the number of Tenant's parking spaces or unreasonably
impair Tenant's access to or use of the Premises. Landlord shall also have the
right at any time to change the name, number or designation by which the Project
is commonly known. Landlord further reserves the right to promulgate such
reasonable rules and regulations relating to the use of the Common Area, and any
part thereof, as Landlord may reasonably deem appropriate for the best interests
of the occupants of the Project. The rules and regulations shall be binding
upon Tenant upon delivery of a copy of them to Tenant and Tenant shall abide by
them and cooperate in their observance. Such rules and regulations may be
amended by Landlord from time to time, with or without advance notice.
Tenant acknowledges that Landlord's right to provide its tenants with
use of the Greylands Mansion may be terminated in the future and upon such
termination the Common Area shall thereafter include no part of the Greylands
Mansion and the .37 acre parcel upon which it is located.
Commencing on the Lease Commencement Date, Tenant shall have the
nonexclusive use of one hundred ninety (190) parking spaces in the Common Area
as designated from time to time by Landlord and commencing on the Building 2145
Expansion Date, Tenant shall have the nonexclusive use of a total of three
hundred eighty-one (381) parking spaces in the Common Area as designated from
time to time by Landlord. Landlord reserves the right at its sole option to
assign and label parking spaces, but it is specifically agreed that Landlord is
not responsible for policing any such parking spaces. Tenant shall not at any
time park or permit the parking of Tenant's trucks or other vehicles, or the
trucks or other vehicles of others, adjacent to loading areas so as to interfere
in any way with the use of such areas; nor shall Tenant at any time park or
permit the parking of Tenant's vehicles or trucks, or the vehicles or trucks of
Tenant's suppliers or others, in any portion of the Common Area not designated
by Landlord for such use by Tenant. Tenant shall not park or permit any
inoperative vehicle or equipment to be parked on any portion of the Common Area.
18.
<PAGE>
Landlord shall operate, manage and maintain the Common Area. The
manner in which the Common Area shall be operated, managed and maintained and
the expenditures for such operation, management and maintenance shall be
consistent with those of a first class office complex. The cost of such
maintenance, operation and management, including but not limited to landscaping,
repair of paving, parking lots and sidewalks, the Greylands Mansion (including
interior repair and maintenance, janitorial service, furniture rental or
depreciation charges, and lease payments charged by the owner of the Greylands
Mansion), security services and salaries and employee benefits. (including union
benefits) of on-site and accounting personnel engaged in such maintenance and
operations management, shall be a direct expense and Tenant shall pay to
Landlord its percentage share of such cost as provided in paragraphs 4 and 5,
subject to the limitations described in such paragraphs.
16. DAMAGE BY FIRE; CASUALTY. In the event the Premises are damaged by
------------------------
any casualty which is covered under an insurance policy required to be
maintained by Landlord pursuant to paragraph 11, Landlord shall be entitled to
the use of all insurance proceeds and shall repair such damage as soon as
reasonably possible and this lease shall continue in full force and effect.
In the event the Premises are damaged by any casualty not covered
under an insurance policy required to be maintained pursuant to paragraph 11,
Landlord may, at Landlord's option, either (i) repair such damage, at Landlord's
expense, as soon as reasonably possible, in which event this lease shall
continue in full force and effect, or (ii) give written notice to Tenant within
thirty (30) days after the date of the occurrence of such damages of Landlord's
intention to cancel and terminate this lease as of the date of the occurrence of
the damages; provided, however, that if such damage is caused by an act or
omission of Tenant or its agent, servants or employees, then Tenant shall repair
such damage promptly at its sole cost and expense. In the event Landlord elects
to terminate this lease pursuant hereto, Tenant shall have the right within ten
(10) days after receipt of the required notice to notify Landlord in writing of
Tenant's intention to repair such damage at Tenant's expense, without
reimbursement from Landlord, in which event this lease shall continue in full
force and effect and Tenant shall proceed to make such repairs as soon as
reasonably possible. If Tenant does not give such notice within the ten (10)
day period, this lease shall be cancelled and terminated as of the date of the
occurrence of such damage. Under no circumstances shall Landlord be required to
repair any injury or damage to (by fire or other cause), or to make any
restoration or replacement of, any of Tenant's personal property, trade fixtures
or property leased from third parties, whether or not the same is attached to
the Premises.
If the Premises are totally destroyed during the term from any cause
(including any destruction required by any authorized public authority), whether
or not covered by the insurance required under paragraph 11, this lease shall
automatically terminate as of the date of such total destruction; provided,
however, that if the Premises can reasonably and lawfully be repaired or
restored within eight (8) months of the date of destruction to substantially the
condition existing prior to such destruction and if the proceeds of the
insurance payable to the
19.
<PAGE>
Landlord by reason of such destruction are sufficient to pay the cost of such
repair or restoration, then the said insurance proceeds shall be so applied,
Landlord shall promptly repair and restore the Premises and this lease shall
continue, without interruption, in full force and effect. If the Premises are
totally destroyed during the last twelve (12) months of the term, Landlord may
at Landlord's option cancel and terminate this lease as of the date of
occurrence of such damage by giving written notice to Tenant of Landlord's
election to do so within thirty (30) days after the occurrence of such damage.
If the Premises are partially or totally destroyed or damaged and
Landlord or Tenant repair them pursuant to this lease, the rent payable
hereunder for the period during which such damage and repair continues shall be
abated only in proportion to the square footage of the Premises rendered
untenantable to Tenant by such damage or destruction. Tenant shall have no
claim against Landlord for any damage, loss or expense suffered by reason of any
such damage, destruction, repair or restoration, unless caused by Landlord's
gross negligence or willful misconduct. The parties waive the provisions of
California Civil Code sections 1932(2) and 1933(4) (which provisions permit the
termination of a lease upon destruction of the lease premises), and hereby agree
that the provisions of this paragraph 16 shall govern in the event of such
destruction.
17. INDEMNIFICATION. Landlord shall not be liable to Tenant and Tenant
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hereby waives all claims against Landlord for any injury to or death of any
person or damage to or destruction of property in or about the Premises or the
Project by or from any cause whatsoever except those caused by Landlord's gross
negligence or willful misconduct or the failure of Landlord to perform its
obligations under this lease where such failure has persisted for an
unreasonable period of time after notice of such failure. Without limiting the
foregoing, Landlord shall not be liable to Tenant for any injury to or death of
any person or damages to or destruction of property by reason of, or arising
from, any latent defect in the Premises or Project or the act or negligence of
any other tenant of the Project. Tenant shall promptly notify Landlord of any
defect in the Premises or Project discovered by Tenant.
Except as to injury to persons or damage to property caused by
Landlord's gross negligence, willful misconduct, or the failure by Landlord to
observe any of the terms and conditions of this lease, Tenant shall hold
Landlord harmless from and indemnify and defend Landlord against any claim,
liability, loss, damage or expense (including attorney fees) arising out of any
injury to or death of any person or damage to or destruction of property
occurring in, on or about the Premises from any cause whatsoever or on account
of the use, condition, occupational safety or occupancy of the Premises. Tenant
shall further hold Landlord harmless from and indemnify and defend Landlord
against any claim, liability, loss, damage or expense (including attorney fees)
arising (i) from Tenant's use of the Premises or from the conduct of its
business or from any activity or work done, permitted or suffered by Tenant or
its agents or employees in or about the Premises or Project, (ii) out of the
failure of Tenant to observe or comply with Tenant's obligation to observe and
comply with laws or other requirements as set forth in paragraph 7, (iii) by
reason of Tenant's use, handling, storage, or disposal of toxic or
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hazardous materials or waste, (iv) by reason of any labor or service performed
for, or materials used by or furnished to, Tenant or any contractor engaged by
Tenant with respect to the Premises, or (v) from any other act, neglect, fault
or omission of Tenant or its agents or employees.
The provisions of this paragraph 17 shall survive the expiration or
earlier termination of this lease.
18. ASSIGNMENT AND SUBLETTING
-------------------------
Tenant shall not voluntarily assign, encumber or otherwise transfer
its interest in this lease or in the Premises, or sublease all or any part of
the Premises, or allow any other person or entity to occupy or use all or any
part of the Premises, without first obtaining Landlord's written consent, which
consent shall not be unreasonably withheld, and otherwise complying with the
requirements of this paragraph 18. Any assignment, encumbrance or sublease
without Landlord's consent, shall constitute a default. The proposed assignee
or subtenant is referred to herein as the "Transferee". Reasonable grounds for
denying consent to a proposed assignment or sublet include, without limitation,
any of the following:
(a) Transferee's character, reputation, credit history, or business is
not consistent with the character or quality of the Project;
(b) Transferee is either a government agency or an instrumentality of
one;
(c) Transferee's intended use of the Premises is inconsistent with the
permitted use specified in this lease or such use will materially and adversely
affect Landlord's interest;
(d) Transferee's financial condition is or may be inadequate to
support the lease obligations of Transferee under the assignment or sublease;
(e) The assignment or sublet would cause Landlord to violate another
lease or agreement to which Landlord is a party or would give another tenant in
the Project the right to cancel its lease;
(f) Transferee occupies space in the Project and such space is not
contiguous to the Premises, is negotiating with Landlord to lease space in the
Project, or has negotiated with Landlord during the six (6) months immediately
preceding notice of the proposed assignment or sublet to Landlord, provided that
Landlord has similar space available in the Project at the time of Tenant's
proposed transfer;
(g) Transferee does not intend to occupy the entire Premises and
conduct business there for a substantial portion of the term of the assignment
or sublease; or
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(h) The rent charged by Tenant to Transferee during the term of the
assignment or sublet, is less than eighty-five percent (85%) of the market rent
at that time for comparable space in the Project for a comparable term.
If Tenant desires to assign or sublet all or any portion of the
Premises, Tenant shall give Landlord written notice ("Transfer Notice") thereof,
specifying the projected commencement date of the proposed sublet or assignment
(which date shall be not less than thirty (30) days or more than ninety (90)
days after the date of Landlord's receipt of such notice), the portions of the
Premises proposed to be sublet or assigned (the "Subject Space"), a description
of any planned alterations or improvements to the Subject Space, the terms and
conditions of the proposed assignment or sublease (including the rent to be paid
by the Transferee and any and all other consideration to be given by the
Transferee), the name, address and telephone number of the Transferee, and a
detailed calculation of the Transfer Premium (defined below) (certified by
Tenant's chief financial officer) to be paid as provided below. Tenant shall
further provide Landlord with such other information concerning such Transferee
as requested by Landlord. If (i) the Subject Space for all subleases entered
into by Tenant in the aggregate consists of more than 35,000 square feet, or
(ii) the Subject Space for all subleases entered into by Tenant in the aggregate
consists of more than 20,000 square feet and the term of the proposed sublease
is greater than twenty-four (24) months or will expire during the last twelve
(12) months of this lease, then for a period of thirty (30) days after
Landlord's receipt of the Transfer Notice, Landlord shall have the option,
exercisable by delivering written notice to Tenant, to terminate this lease for
the Subject Space or for the entire building in which the Subject Space is
located as of the date specified in Landlord's written notice to Tenant, which
date shall not be less than thirty (30) days nor more than ninety (90) days
after the date of Landlord's written notice to Tenant. Landlord shall have the
right to communicate with such Transferee to discuss the terms of the proposed
assignment or sublet, to discuss and negotiate, if Landlord desires, the terms
of a direct lease between Landlord and Transferee, or any other matter and to
enter into a direct lease agreement with Transferee as provided below and
failure of Transferee to meet with Landlord and to negotiate in good faith the
terms of a direct lease with Landlord shall constitute grounds for Landlord's
refusal to consent to the proposed assignment or sublet. If Landlord
exercises its option to terminate this lease as provided in the foregoing
sentence, Landlord may, if it so elects, enter into a new lease for the building
in which the Subject Space is located or any portion thereof with the Transferee
or any other third party on such terms as Landlord and the Transferee or other
third party may agree; in such event, Tenant shall not be entitled to any
portion of the profit, if any, which Landlord may realize on account of such
termination and reletting. If Landlord exercises its option to terminate this
lease with respect to either (a) the building in which the Subject Space is
located, or (b) the Subject Space only, then Tenant shall continue to be
obligated under this lease as to the remaining space (i.e., the Premises less
the building in which the Subject Space is located or the Subject Space) and
basic rent and direct expenses payable by Tenant under this lease shall be
adjusted as follows: (i) the basic rent amount(s) specified in paragraphs 4(a)
and 5(a) of this lease shall be multiplied by a fraction, the numerator of which
is the square feet of the Premises
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retained by Tenant after Landlord's recapture and the denominator of which is
the total square feet of the Premises before Landlord's recapture; (ii)
Tenant's proportionate share of direct expenses as provided in paragraph 5(b)
of this lease shall be reduced to reflect Tenant's proportionate share based
on the square feet of the Premises retained by Tenant after Landlord's
recapture. This lease as so amended shall continue thereafter in full force
and effect. Either party may require written confirmation of the amendments to
this lease necessitated by Landlord's recapture. If Landlord recaptures the
Subject Space only, Landlord shall, at Landlord's sole expense, construct any
partitions required to segregate the Subject Space from the remaining Premises
retained by Tenant. Tenant shall, however, pay for painting, covering, or
otherwise decorating the surfaces of the partitions facing the remaining
Premises retained by Tenant.
If Landlord consents in writing to the proposed assignment or sublet,
Tenant shall be free to assign or sublet all or a portion of the Premises
subject to the following conditions: (i) any assignment or sublease shall be on
the same terms set forth in the Transfer Notice given to Landlord; (ii) no
assignment or sublease shall be valid and no assignee or subtenant shall take
possession of the Subject Space until an executed counterpart of such assignment
or sublease has been delivered to Landlord; (iii) no assignee or subtenant shall
have a further right to assign or sublet; (iv) eighty percent (80%) of any sums
or other consideration payable by Transferee to Tenant as a result of or in
connection with such assignment or sublet (except rental or other payments
received which are attributable to the amortization over the term of this lease
of (a) the cost of leasehold improvements constructed by Tenant for such
assignee or subtenant, excluding the initial tenant improvements to be
constructed in the Premises pursuant to the terms of this lease, if any, and (b)
broker fees and attorneys fees paid by Tenant in connection therewith) whether
denominated rentals or otherwise, which exceed, in the aggregate, the basic rent
and direct expenses which Tenant is obligated to pay Landlord under this lease
during the term of such assignment or sublease (prorated to reflect obligations
allocable to that portion of the Premises subject to such sublease), shall be
payable to Landlord monthly as additional rent under this lease without
affecting or reducing any other obligation of Tenant hereunder (such amounts are
referred to herein as the "Transfer Premium"); (v) no assignment or sublet shall
release Tenant of Tenant's obligation or alter the primary liability of Tenant
to pay the rent and to perform all other obligations to be performed by Tenant
hereunder; and (vi) any assignee or subtenant must expressly agree to assume and
perform all of the covenants and conditions of Tenant under this lease. Tenant
shall pay to Landlord promptly upon demand as additional rent, Landlord's actual
and reasonable attorneys' fees and other reasonable costs incurred for
reviewing, processing or documenting any requested assignment or sublease,
whether or not Landlord's consent is granted. Tenant shall not be entitled to
assign this lease or sublease all or any part of the Premises (and any attempt
to do so shall be voidable by Landlord) during any period in which Tenant is in
default under this lease.
If Tenant is a partnership, a withdrawal or change, voluntary or
involuntary or by operation of law, of any general partner or the dissolution of
the
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partnership shall be deemed an assignment of this lease subject to all the
conditions of this paragraph 18. If Tenant is a corporation any dissolution,
merger, consolidation or other reorganization of Tenant or the sale or other
transfer of a controlling percentage of the capital stock of Tenant or the sale
of more than fifty percent (50%) of the value of Tenant's assets shall be an
assignment of this lease subject to all the conditions of this paragraph 18.
The term "controlling percentage" means the ownership of, and the right to vote,
stock possessing more than 50% of the total combined voting power of all classes
of Tenant's capital stock issued, outstanding and entitled to vote. This
subparagraph of this paragraph 18 shall not apply if Tenant is a corporation the
stock of which is traded on the New York Stock Exchange, the American Stock
Exchange or NASDAQ.
The acceptance of rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision hereof. Consent to one
assignment or sublet shall not be deemed consent to any subsequent assignment or
sublet. In the event of default by any assignee of Tenant or any successor of
Tenant in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such assignee or successor. Landlord may consent to subsequent assignments or
sublets of this lease or amendments or modifications to this lease with
assignees of Tenant, without notifying Tenant, or any successor of Tenant, and
without obtaining its or their consent thereto and such action shall not relieve
Tenant of liability under this lease.
No interest of Tenant in this lease shall be assignable by operation
of law (including, without limitation, the transfer of this lease by testacy or
intestacy). Each of the following acts shall be considered an involuntary
assignment: (i) if Tenant is or becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors or institutes a proceeding under the
Bankruptcy Act in which Tenant is the bankrupt; or, if Tenant is a partnership
or consists of more than one person or entity, if any partner of the partnership
or other person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors; (ii) if a writ of attachment or
execution is levied on this lease; or (iii) if, in any proceeding or action to
which Tenant is a party, a receiver is appointed with authority to take
possession of the Premises. An involuntary assignment shall constitute a
default by Tenant and Landlord shall have the right to elect to terminate this
lease, in which case this lease shall not be treated as an asset of Tenant.
Tenant immediately and irrevocably assigns to Landlord, as security
for Tenant's obligations under this lease, all rent or other consideration from
any assignment or subletting of all or a part of the Premises as permitted by
this lease, and Landlord, as assignee and as attorney-in-fact for Tenant, or a
receiver of Tenant appointed on Landlord's application, may collect such rent or
other consideration and apply it toward Tenant's obligations under this lease
and any Transferee agrees to make such payments directly to Landlord upon
Landlord's written request; provided that, until the occurrence of a default by
Tenant, Tenant shall have the right to collect such rent, subject to promptly
forwarding to Landlord any portion thereof to which Landlord is entitled
pursuant to this paragraph 18.
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Notwithstanding the above requirement that Tenant obtain the consent
of Landlord prior to any assignment or sublet, Tenant may, without obtaining the
prior consent of Landlord, assign or sublease the whole or any part of the
Premises to any corporation or other entity which controls, is controlled by, or
is under common control with Tenant ("Tenant Affiliate"), provided that (i)
Tenant shall give written notice thereof to Landlord in the manner required for
other assignments or subleases by this paragraph 18 or as soon as reasonably
possible in the event such prior notice is prohibited by law; (ii) Tenant shall
continue to be fully obligated under this lease; (iii) any such assignee or
sublessee shall expressly assume and agree to perform all the terms and
conditions of this lease to be performed by Tenant; and (iv) any such assignment
or sublet shall be subject to all other terms and conditions of this paragraph
18 pertaining to assignments and/or sublets (excepting only the requirement
concerning prior written consent of Landlord).
19. DEFAULT. The occurrence of any of the following shall constitute a
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default by Tenant and default as used in this lease shall mean: (i) failure of
Tenant to pay any rent or other sum payable hereunder when due (provided that
Landlord's right to terminate this lease for such default shall be subject to
Tenant's right to cure within three (3) days after written notice of such
default pursuant to California Code of Civil Procedure Section 1161 et seq);
(ii) abandonment of the Premises (Tenant's failure to occupy and conduct
business in the Premises for fourteen (14) consecutive days while in default of
any other provision of this lease shall be deemed an abandonment); (iii)
failure of Tenant to deliver to Landlord any instrument, assurance, financial
statement, subordination agreement or certificate of estoppel required under
this Lease within the time period specified for such performance if the failure
continues for five (5) days after written notice of the failure from Landlord to
Tenant; or (iv) failure of Tenant to perform any other obligation under this
lease if the failure to perform is not cured within thirty (30) days after
written notice thereof has been given to Tenant, except in the case of an
emergency or dangerous condition, in which case Tenant's time to perform shall
be that time period which is reasonable under the circumstances, but not more
than thirty (30) days and except in circumstances where such failure cannot be
cured within such thirty (30) day period, so long as Tenant commences such cure
within such period and diligently prosecutes such cure to completion. The
notice referred to in clauses (iii) and (iv) above shall specify the obligations
Tenant has failed to perform. No notice shall be deemed a forfeiture or
termination of this lease unless Landlord so elects in the notice. No notice
shall be required in the event of abandonment or vacation of the Premises and
Tenant has not provided Landlord with an alternate address where Tenant can be
found and Tenant accepts service of process and notices required hereunder.
In addition to the above, the occurrence of any of the following
events shall also constitute a default by Tenant: (i) Tenant fails to pay its
debts as they become due or admits in writing its inability to pay its debts, or
makes a general assignment for the benefit of creditors (for purposes of
determining whether Tenant is not paying its debts as they become due, a debt
shall be deemed overdue upon the earliest to occur of the following: thirty (30)
days from the date a
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statement therefor has been rendered; the date on which any action or
proceeding therefor is commenced; or the date on which a formal notice of
default or demand has been sent); and (ii) any financial statements given to
Landlord by Tenant, any assignee of Tenant, subtenant of Tenant, any guarantor
of Tenant, or successor in interest of Tenant (including, without limitation,
any schedule of Tenant's aged accounts payable) are materially false.
In the event of a default by Tenant, then Landlord, in addition to any
other rights and remedies of Landlord at law or in equity, shall have the right
either to terminate Tenant's right to possession of the Premises (and thereby
terminate this lease) or, from time to time and without termination of this
lease, to relet the Premises or any part thereof for the account and in the name
of Tenant for such term and on such terms and conditions as Landlord in its
reasonable discretion may deem advisable, with the right to make alterations and
repairs to the Premises.
Should Landlord elect to keep this lease in full force and effect,
Landlord shall have the right to enforce all of Landlord's rights and remedies
under this lease, including but not limited to the right to recover and to relet
the Premises and such other rights and remedies as Landlord may have under
California Civil Code Section 1951.4, which Section provides that the landlord
may continue the Lease in effect after the tenant's breach and abandonment and
recover rent as it becomes due, when the tenant has the right to sublet or
assign, subject only to reasonable limitations (or successor Code section) or
any other California statute. If Landlord relets the Premises, then Tenant
shall pay to Landlord, as soon as ascertained, the costs and expenses reasonably
incurred by Landlord in such reletting and in making alterations and repairs.
Rentals received by Landlord from such reletting shall be applied (i) to the
payment of any indebtedness due hereunder, other than basic rent and direct
expenses, from Tenant to Landlord; (ii) to the payment of the cost of any
repairs necessary to return the Premises to good condition normal wear and tear
excepted, including the cost of alterations and the cost of storing any of
Tenant's property left on the Premises at the time of reletting; and (iii) to
the payment of basic rent or direct expenses due and unpaid hereunder. The
residue, if any, shall be held by Landlord and applied in payment of future rent
or damages in the event of termination as the same may become due and payable
hereunder and the balance, if any at the end of the term of this lease, shall be
paid to Tenant. Should the basic rent and direct expenses received from time to
time from such reletting during any month be less than that agreed to be paid
during that month by Tenant hereunder then Tenant shall pay such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. No such
reletting of the Premises by Landlord shall be construed as an election on its
part to terminate this lease unless a written notice of such intention is given
to Tenant or unless the termination hereof is decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this lease for such previous
breach, provided it has not been cured.
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Should Landlord at any time terminate this lease for any breach, in
addition to any other remedy it may have, it shall have the immediate right of
entry and may remove all persons and property from the Premises and shall have
all the rights and remedies of a landlord provided by California Civil Code
Section 1951.2 or any successor code section. Upon such termination, in
addition to all its other rights and remedies, Landlord shall be entitled to
recover from Tenant all damages it may incur by reason of such breach, including
the cost of recovering the Premises and including (i) the worth at the time of
award of the unpaid rent which had been earned at the time of termination; (ii)
the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; (iv)
any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
lease or which in the ordinary course of events would be likely to result
therefrom. The "worth at the time of award" of the amounts referred to in (i)
and (ii) above is computed by allowing interest at the rate of twelve percent
(12%) per annum. The "worth at the time of award" of the amount referred to in
(iii) above shall be computed by discounting such amount at the discount rate of
the federal reserve bank of San Francisco at the time of award plus one percent
(1%). Tenant waives the provisions of Section 1179 of the California Code of
Civil Procedure (which Section allows Tenant to petition a court of competent
jurisdiction for relief against forfeiture of this lease). Property removed
from the Premises may be stored in a public or private warehouse or elsewhere at
the sole cost and expense of Tenant. In the event that Tenant shall not
immediately pay the cost of storage of such property after the same has been
stored for a period of thirty (30) days or more, Landlord may sell any or all
thereof at a public or private sale in such manner and at such times and places
that Landlord, in its sole discretion, may deem proper, without notice to or
demand upon Tenant.
20. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. Landlord, at any time
-----------------------------------------
after Tenant commits a default, may, but shall not be obligated to, cure the
default at Tenant's cost. If Landlord at any time, by reason of Tenant's
default, pays any sum or does any act that requires the payment of any sum, the
sum paid by Landlord shall be due immediately from Tenant to Landlord and shall
bear interest at the rate of twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less, from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant. Amounts due Landlord hereunder shall be
additional rent.
21. EMINENT DOMAIN. If all or any part of the Premises shall be taken by
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any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, this lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor, and
Landlord shall be entitled to any payments, income, rent, award or any interest
therein whatsoever which may be paid or made in connection with such taking or
conveyance. Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired
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term of this lease. Notwithstanding the foregoing, Tenant shall be entitled to
any compensation for depreciation to and cost of removal of Tenant's equipment
and fixtures and any compensation for its relocation expenses necessitated by
such taking, but in each case only to the extent the condemning authority
makes a separate award therefor or specifically identifies a portion of the
award as being therefor. Each party waives the provisions of Section 1265.130
of the California Code of Civil Procedure (which section allows either party
to petition the Superior Court to terminate this lease in the event of a
partial taking of the Premises).
If any action or proceeding is commenced for such taking of the
Premises or if Landlord is advised in writing by any entity or body having the
right of power of condemnation of its intention to condemn the Premises or more
than fifty percent (50%) of the Premises or the Project, and Landlord shall
decide to discontinue the use and operation of the Project or decide to
demolish, alter or rebuild the Project, then Landlord shall have the right to
terminate this lease by giving Tenant written notice thereof within sixty (60)
days of the earlier of the date of Landlord's receipt of such notice of
intention to condemn or the commencement of said action or proceeding. Such
termination shall be effective as of the last day of the calendar month next
following the month in which such notice is given or the date on which title
shall vest in the condemnor, whichever occurs first.
In the event of a partial taking, or conveyance in lieu thereof, of
the Premises and fifty percent (50%) or more of the number of square feet in the
Premises are taken then Tenant may terminate this lease. Any election by Tenant
to so terminate shall be by written notice given to Landlord within sixty (60)
days from the date of such taking or conveyance and shall be effective on the
last day of the calendar month next following the month in which such notice is
given or the date on which title shall vest in the condemnor, whichever occurs
first.
If a portion of the Premises is taken by power of eminent domain or
conveyance in lieu thereof and neither Landlord nor Tenant terminates this lease
as provided above then this lease shall continue in full force and effect as to
the part of the Premises not so taken or conveyed and all payments of rent shall
be apportioned as of the date of such taking or conveyance so that thereafter
the amounts to be paid by Tenant shall be in the ratio that the area of the
portion of the Premises not so taken bears to the total area of the Premises
prior to such taking.
22. NOTICE AND COVENANT TO SURRENDER. On the last day of the term or on
--------------------------------
the effective date of any earlier termination, Tenant shall surrender to
Landlord the Premises in as good a condition as existed as of the date of
completion of construction of the initial Tenant Improvements (subject to
Landlord's right to require removal of same as specified in the Work Letter
attached hereto as Exhibit D) and, except as otherwise provided by Landlord
pursuant to the terms of paragraph 8 of this lease, all the improvements and
alterations made to the Premises in their condition existing as of the date of
completion of construction and/or installation (normal wear and tear excepted),
with all originally painted interior walls washed or repainted if marked or
damaged, interior vinyl covered walls cleaned and repaired
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or replaced if marked or damaged, all carpets shampooed and cleaned and all
floors cleaned and waxed; all to the reasonable satisfaction of Landlord. On
or prior to the last day of the term or the effective date of any earlier
termination, Tenant shall remove all of Tenant's personal property and trade
fixtures, together with improvements or alterations that Tenant is obligated
to remove pursuant to the provisions of paragraph 8 of this lease, from the
Premises, and all such property not removed shall be deemed abandoned. In
addition, on or prior to the expiration or earlier termination of this lease,
Tenant shall remove, at Tenant's sole cost and expense, all telephone, other
communication, computer and any other cabling and wiring of any sort installed
in the space above the suspended ceiling of the Premises or anywhere else in
the Premises and shall promptly repair any damage to the suspended ceiling,
lights, light fixtures, walls and any other part of the Premises resulting
from such removal.
If the Premises are not surrendered as required in this paragraph,
Tenant shall indemnify Landlord against all loss, liability and expense
(including but not limited to, attorney fees) resulting from the failure by
Tenant in so surrendering the Premises, including, without limitation, any
claims made by any succeeding tenants. It is agreed between Landlord and Tenant
that the provisions of this paragraph shall survive termination of this lease.
23. TENANT'S QUITCLAIM. At the expiration or earlier termination of this
------------------
lease, Tenant shall execute, acknowledge and deliver to Landlord, within ten
(10) business days after written demand from Landlord to Tenant, any quitclaim
deed or other document required to remove the cloud or encumbrance created by
this lease from the real property of which the Premises are a part. This
obligation shall survive said expiration or termination.
24. HOLDING OVER. Any holding over after the expiration or termination
------------
of this lease with the written consent of Landlord shall be construed to be a
tenancy from month-to-month at the monthly rent agreed upon by Landlord and
Tenant, but in no event less than the monthly rent payable under this lease for
the last lease month before the date of such expiration or termination. All
provisions of this lease, except (i) as modified by the preceding sentence and
(ii) those provisions pertaining to the term, expansion rights and any option to
extend, shall apply to the month-to-month tenancy.
If Tenant shall retain possession of the Premises or any part thereof
without Landlord's written consent following the expiration or sooner
termination of this lease for any reason, then Tenant shall pay to Landlord as
rent during the holdover period an amount equal to the greater of (i) two
hundred percent (200%) of the amount of the monthly rent in effect during the
last full lease month prior to the date of such expiration or termination or
(ii) one hundred fifty percent (150%) of the fair market rental (as reasonably
determined by Landlord) for the Premises. Tenant shall also indemnify and hold
Landlord harmless from any loss, liability and expense (including, but not
limited to, attorneys fees) resulting from delay by Tenant in surrendering the
Premises, including without limitation any claims made by any succeeding tenant
founded on such delay. Acceptance of rent by Landlord
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following expiration or termination shall not constitute a renewal of this
lease, and nothing contained in this paragraph shall waive Landlord's right of
re-entry or any other right. Tenant shall be only a tenant at sufferance,
whether or not Landlord accepts any rent from Tenant, while Tenant is holding
over without Landlord's written consent.
The provisions of this paragraph 24 are in addition to, and do not
affect, Landlord's right of re-entry or other rights hereunder or provided by
law. Nothing in this paragraph 24 shall be construed as implied consent by
Landlord to any holding over by Tenant. Landlord expressly reserves the right
to require Tenant to surrender possession of the Premises to Landlord as
provided in this Lease on expiration or other termination of this Lease. The
provisions of this paragraph 24 shall not be considered to limit or constitute a
waiver of any other rights or remedies of Landlord provided in this Lease or at
law. The provisions of this paragraph 24 shall survive the expiration or early
termination of this lease.
25. SUBORDINATION. In the event Landlord's title or leasehold interest
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is now or hereafter encumbered in order to secure a loan to Landlord, Tenant
shall, at the request of Landlord or the lender, execute in writing an agreement
subordinating its rights under this lease to the lien of such encumbrance, or,
if so requested, agreeing that the lien of lender's encumbrance shall be or
remain subject and subordinate to the rights of Tenant under this lease
conditioned upon Tenant's receipt of a nondisturbance agreement, in form and
substance as customary in the lending industry. Notwithstanding any such
subordination, Tenant's possession under this lease shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay all amounts due
hereunder and otherwise observe and perform all provisions of this lease. In
addition, if in connection with any such loan lender shall request reasonable
modifications in this lease as a condition to such financing, Tenant will not
unreasonably withhold, delay or defer its consent thereof, provided that such
modifications do not increase the obligations of Tenant hereunder or materially
adversely affect the leasehold interest hereby created or Tenant's rights
hereunder.
26. CERTIFICATE OF ESTOPPEL. Each party shall, within five (5) business
-----------------------
days after request therefor, execute and deliver to the other party, in
recordable form, a certificate stating that the lease is unmodified and in full
force and effect, or in full force and effect as modified and stating the
modifications and certifying to its knowledge that there are no defaults under
this lease. The certificate shall also state the amount of the monthly rent,
the date to which monthly rent has been paid in advance, the amount of the
security deposit and/or prepaid monthly rent, and, if the request is made by
either party, shall include such other items as either party or its lender may
reasonably request. Failure to deliver such certificate within such time shall
constitute a conclusive acknowledgement by the party failing to deliver the
certificate that the lease is in full force and effect and has not been modified
except as may be represented by the party requesting the certificate. Any such
certificate requested by Landlord may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises or Project. Further,
within five (5) calendar days following written
30.
<PAGE>
request made from time to time by Landlord, Tenant shall furnish to Landlord
Tenant's most recent quarterly or annual financial statements.
27. SALE BY LANDLORD. In the event the original Landlord hereunder, or
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any successor owner of the Project or Premises, shall sell or convey the Project
or Premises, all liabilities and obligations on the part of the original
Landlord, or such successor owner, under this lease accruing thereafter shall
terminate, and thereupon all such liabilities and obligations shall be binding
upon the new owner. Tenant agrees to attorn to such new owner and to look
solely to such new owner for performance of any and all such liabilities and
obligations.
28. ATTORNMENT TO LENDER OR THIRD PARTY. In the event the interest of
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Landlord in the land and buildings in which the Premises are located (whether
such interest of Landlord is a fee title interest or a leasehold interest) is
encumbered by deed of trust, and such interest is acquired by a lender or any
other third party through judicial foreclosure or by exercise of a power of sale
at private trustee's foreclosure sale, Tenant hereby agrees to release Landlord
of any obligation arising on or after any such foreclosure sale and to attorn to
the purchaser at any such foreclosure sale and to recognize such purchaser as
the Landlord under this lease.
29. DEFAULT BY LANDLORD. Landlord shall not be in default unless
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Landlord fails to perform obligations required of Landlord within a reasonable
time, but in no event earlier than thirty (30) days after written notice by
Tenant to Landlord and to the holder of any first mortgage or deed of trust
covering the Premises (provided Tenant has been given the address of such party)
specifying wherein Landlord has failed to perform such obligations; provided,
however, that if the nature of Landlord's obligations is such that more than
thirty (30) days are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.
If Landlord is in default of this lease, Tenant's sole remedy shall be
to institute suit against Landlord in a court of competent jurisdiction, and
Tenant shall have no right to offset any sums expended by Tenant as a result of
Landlord's default against future rent and other sums due and payable pursuant
to this lease. If Landlord is in default of this lease, and as a consequence
Tenant recovers a money judgment against Landlord, the judgment shall be
satisfied only out of the proceeds of sale received on execution of the judgment
and levy against the right, title and interest of Landlord in the Project of
which the Premises are a part, and out of rent or other income from such real
property receivable by Landlord or out of the consideration received by Landlord
from the sale or other disposition of all or any part of Landlord's right, title
and interest in the Project of which the Premises are a part. Neither Landlord
nor any of the partners comprising the partnership designated as Landlord shall
be personally liable for any deficiency.
30. [INTENTIONALLY OMITTED].
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31.
<PAGE>
31. MEASUREMENT OF PREMISES. Tenant understands and agrees that any
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reference to square footage of the Premises is approximate only and includes all
interior partitions and columns, one-half of exterior walls, and one-half of the
partitions separating the Premises from the rest of the Project, and any outside
entry overhang, if applicable. Tenant waives any claim against Landlord
regarding the accuracy of any such measurement and agrees that there shall not
be any adjustment in basic rent or direct expenses or other amounts payable
hereunder by reason of inaccuracies in such measurement.
32. ATTORNEY FEES. If either party commences an action against the other
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party arising out of or in connection with this lease, the prevailing party
shall be entitled to have and recover from the losing party all expenses of
litigation, including, without limitation, travel expenses, reasonable attorney
fees, reasonable expert witness fees, trial and appellate court costs, and
deposition and transcript expenses. If either party becomes a party to any
litigation concerning this lease or concerning the Premises or the Project, by
reason of any act or omission of the other party or its authorized
representatives, the party that causes the other party to become involved in the
litigation shall be liable to the other party for all expenses of litigation,
including, without limitation, travel expenses, reasonable attorney fees,
reasonable expert witness fees, trial and appellate court costs, and deposition
and transcript expenses.
33. SURRENDER. The voluntary or other surrender of this lease or the
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Premises by Tenant, or a mutual cancellation of this lease, shall not work a
merger, and at the option of Landlord shall either terminate all or any existing
subleases or subtenancies or operate as an assignment to Landlord of all or any
such subleases or subtenancies.
34. WAIVER. No delay or omission in the exercise of any right or remedy
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of Landlord on any default by Tenant shall impair such right or remedy or be
construed as a waiver. The receipt and acceptance by Landlord of delinquent
rent or other payments shall not constitute a waiver of any other default and
acceptance of partial payments shall not be construed as a waiver of the balance
of such payment due. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises, shall constitute an
acceptance of the surrender of the Premises by Tenant before the expiration of
the term. Only a written notice from Landlord to Tenant shall constitute
acceptance of the surrender of the Premises and accomplish a termination of this
lease. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by Landlord of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of this
lease.
35. EASEMENTS; AIRSPACE RIGHTS. Landlord reserves the right to alter the
--------------------------
boundaries of the Project and grant easements and dedicate for public use
portions of the Project without Tenant's consent, provided that no such grant or
dedication shall interfere with Tenant's use of the Premises or otherwise cause
Tenant to incur
32.
<PAGE>
cost or expense. From time to time, and upon Landlord's demand,
Tenant shall execute, acknowledge and deliver to Landlord, and in accordance
with Landlord's instructions, any and all documents, instruments, maps or plats
necessary to effectuate Tenant's covenants hereunder.
This lease confers no rights either with regard to the subsurface of
the land on which the Premises are located or with regard to airspace above the
ceiling of the Premises. Tenant agrees that no diminution or shutting off of
light or view by a structure which is or may be erected (whether or not by
Landlord) on property adjacent to the building of which the Premises are a part
or to property adjacent thereto, shall in any way affect this lease, or entitle
Tenant to any reduction of rent, or result in any liability of Landlord to
Tenant.
36. RULES AND REGULATIONS. Landlord shall have the right from time to
---------------------
time to promulgate rules and regulations for the safety, care and cleanliness of
the Premises, the Project and the Common Area, or for the preservation of good
order. On delivery of a copy of such rules and regulations to Tenant, Tenant
shall comply with the rules and regulations, and a violation of any of them
shall constitute a default by Tenant under this lease. If there is a conflict
between the rules and regulations and any of the provisions of this lease, the
provisions of this lease shall prevail. Such rules and regulations may be
amended by Landlord from time to time with or without advance notice.
37. NOTICES. Except for legal process and Notice of Belief of Abandonment
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(pursuant to California Civil Code Section 1951.3) which may be served either as
provided by law or as provided herein, all notices, demands, requests, consents,
approvals and other communications ("Notices") which may be given or are
required to be given by either party to the other shall be in writing and shall
be deemed given to and received by the party intended to receive such Notice and
deemed sufficiently given for all purposes as follows:
(a) when personally delivered to the recipient, notice is effective on
delivery;
(b) when mailed first class to the last address of the recipient known
to the party giving notice, notice is effective on delivery;
(c) when mailed by certified mail with return receipt requested,
notice is effective on receipt if delivery is confirmed by a return receipt; or
(d) when delivered by reputable overnight courier (e.g. Federal
Express, Airborne) or other comparable service with charges prepaid or charged
to the sender's account, notice is effective on delivery if delivery is
confirmed by the courier service.
Any correctly addressed Notice that is refused, unclaimed, or
undeliverable because of an act or omission of the party to be notified shall be
deemed effective as of the first date that the Notice was refused, unclaimed, or
33.
<PAGE>
considered undeliverable by the postal authorities, messenger, or overnight
delivery service.
Prior to the commencement date, all such Notices from Landlord to
Tenant shall be served or addressed to Tenant at 2005 Hamilton Avenue, Suite
235, San Jose, California. On or after the commencement date all such Notices
from Landlord to Tenant shall be addressed to Tenant at the Premises.
All such Notices by Tenant to Landlord shall be sent to Landlord at
its offices at 3945 Freedom Circle, Suite 640, Santa Clara, California 95054.
Either party may change its address by giving the other party notice
of such change in any manner permitted by this paragraph 37.
38. NAME. Tenant shall not use the name of the Project for any purpose
----
other than as the address of the business conducted by Tenant in the Premises
without the prior written consent of Landlord.
39. GOVERNING LAW; SEVERABILITY. This lease shall in all respects be
---------------------------
governed by and construed in accordance with the laws of the State of
California. If any provision of this lease shall be held or rendered invalid,
unenforceable or ineffective for any reason whatsoever, all other provisions
hereof shall be and remain in full force and effect.
40. DEFINITIONS. As used in this lease, the following words and phrases
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shall have the following meanings:
Authorized representative: any officer, agent, employee or
-------------------------
independent contractor retained or employed by either party, acting within
authority given him by that party.
Encumbrance: any deed of trust, mortgage or other written security
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device or agreement affecting the Premises or the Project that constitutes
security for the payment of a debt or performance of an obligation, and the note
or obligation secured by such deed of trust, mortgage or other written security
device or agreement.
Lease month: the period of time determined by reference to the day of
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the month in which the term commences and continuing to one day short of the
same numbered day in the next succeeding month; e.g., the tenth day of one month
to and including the ninth day in the next succeeding month.
Lender: the beneficiary, mortgagee or other holder of an encumbrance,
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as defined above.
Lien: a charge imposed on the Premises by someone other than
----
Landlord, by which the Premises are made security for the performance of an act.
Most of the liens referred to in this lease are mechanic's liens.
34.
<PAGE>
Maintenance: repairs, replacement, repainting and cleaning.
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Monthly rent: the sum of the monthly payments of basic rent and
------------
direct expenses.
Person: one or more human beings, or legal entities or other
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artificial persons, including, without limitation, partnerships, corporations,
trusts, estates, associations and any combination of human being and legal
entities.
Provision: any term, agreement, covenant, condition, clause,
---------
qualification, restriction, reservation or other stipulation in the lease that
defines or otherwise controls, establishes or limits the performance required or
permitted by either party.
Rent: basic rent, direct expenses, additional rent and all other
----
amounts payable by Tenant to Landlord required by this lease or arising by
subsequent actions of the parties made pursuant to this lease.
Words used in any gender include other genders. If more than one
individual or entity comprises Tenant, the obligations imposed on each
individual or entity that comprises Tenant under this Lease are and shall be
joint and several. All provisions whether covenants or conditions, on the part
of Tenant shall be deemed to be both covenants and conditions. The paragraph
headings are for convenience of reference only and shall have no effect upon the
construction or interpretation of any provision hereof.
41. TIME. Time is of the essence of this lease and of each and all of
----
its provisions.
42. INTEREST ON PAST DUE OBLIGATIONS; LATE CHARGE. Any amount due from
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Tenant to Landlord hereunder which is not paid when due shall bear interest at
the rate of ten percent (10%) per annum from when due until paid, unless
otherwise specifically provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this lease. In addition, Tenant
acknowledges that late payment by Tenant to Landlord of basic rent, or of
Tenant's monthly direct expenses, or of any other amount due Landlord from
Tenant, will cause Landlord to incur costs not contemplated by this lease, the
exact amount of such costs being extremely difficult and impractical to fix.
Such costs include, with