<PAGE>
EXHIBIT 10.1
OFFICE LEASE
POST MONTGOMERY CENTER
One Montgomery Tower
San Francisco, California
LANDLORD:
POST-MONTGOMERY ASSOCIATES
TENANT:
FIRST ALBANY COMPANIES
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S>
<C>
1.
Definitions...............................................................
1
1.1 Terms
Defined.........................................................
1
1.2 Basic Lease
Information...............................................
12
1.3 Certain Defined
Terms................................................. 12
2. Lease of
Premises.........................................................
12
3. Term; Condition and Acceptance of
Premises................................ 13
3.1 Delivery of Premises;
Term Commencement............................... 13
3.2 Early
Entry...........................................................
14
4.
Rent......................................................................
14
4.1 Obligation to Pay Base
Rent........................................... 14
4.2 Manner of Rent
Payment................................................
14
4.3 Additional
Rent.......................................................
14
4.4 Late Payment of Rent;
Interest........................................ 14
5. Calculation and Payments of Escalation
Rent............................... 15
5.1 Payment of Estimated
Escalation Rent.................................. 15
5.2 Escalation Rent
Statement and Adjustment.............................. 15
5.3 Proration for Partial
Year............................................ 16
5.4 Abatement of Escalation
Rent.......................................... 16
5.5 Building Property
Taxes............................................... 16
5.6 Audit
Right...........................................................
16
6. Impositions Payable by
Tenant............................................. 17
7. Use of
Premises...........................................................
17
7.1 Permitted
Use.........................................................
17
7.2 No Violation of
Requirements.......................................... 17
7.3 Compliance with
Requirements.......................................... 18
7.4 No
Nuisance...........................................................
19
7.5 Compliance With
Environmental Laws; Use of Hazardous Materials........ 19
7.6 Gas Fire Suppression
System; UPS Unit................................. 21
8. Building
Services.........................................................
21
8.1 Maintenance of
Project................................................
21
8.2 Building-Standard
Services............................................ 21
8.3 Interruption or
Unavailability of Services............................ 22
8.4 Tenant's Use of Excess
Electricity and Water.......................... 23
8.5 Provision of Additional
Services...................................... 23
8.6 Tenant's Supplemental
Air Conditioning................................ 23
9. Maintenance of
Premises...................................................
24
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
10. Alterations to
Premises..................................................
24
10.1 Landlord Consent;
Procedure......................................... 24
10.2 General
Requirements................................................
25
10.3 Landlord's Right
to Inspect......................................... 26
10.4 Tenant's
Obligations Upon Completion................................
27
10.5
Repairs.............................................................
27
10.6 Ownership and
Removal of Alterations................................ 27
10.7 Minor
Alterations...................................................
27
10.8 Landlord's
Fee......................................................
28
11.
Liens....................................................................
28
12. Damage or
Destruction....................................................
28
12.1 Obligation to
Repair................................................ 28
12.2 Landlord's
Election.................................................
29
12.3 Tenant's
Election...................................................
29
12.4 Cost of
Repairs.....................................................
29
12.5 Damage at End of
Term............................................... 29
12.6 Waiver of
Statutes..................................................
30
13. Eminent
Domain...........................................................
30
13.1 Effect of
Taking....................................................
30
13.2 Condemnation
Proceeds...............................................
30
13.3 Restoration of
Premises............................................. 31
13.4 Taking at End of
Term............................................... 31
13.5 Tenant
Waiver.......................................................
31
14.
Insurance................................................................
31
14.1 Tenant's
Insurance..................................................
31
14.2 Form of
Policies....................................................
32
14.3 Vendors'
Insurance..................................................
33
14.4 Landlord's
Insurance................................................
33
15. Waiver of Subrogation
Rights............................................. 33
16. Tenant's Waiver of Liability and
Indemnification......................... 33
16.1 Waiver and
Release..................................................
33
16.2 Indemnification
of Landlord......................................... 34
16.3 Indemnification
of Tenant........................................... 35
17. Assignment and
Subletting................................................
35
17.1 Compliance
Required.................................................
35
17.2 Request by
Tenant; Landlord Response................................
35
17.3 Standards and
Conditions for Landlord Approval...................... 37
17.4 Costs and
Expenses..................................................
37
17.5 Payment of Excess
Rent and Other Consideration...................... 38
17.6 Assumption of
Obligations........................................... 38
</TABLE>
ii
<PAGE>
<TABLE>
<S>
<C>
17.7 No
Release..........................................................
39
17.8 No Encumbrance;
No Change in Permitted Use.......................... 39
17.9 Right to Assign
or Sublease Without Landlord's Consent.............. 39
18. Rules and
Regulations....................................................
40
19. Entry of Premises by Landlord;
Modification to Common Areas.............. 40
19.1 Entry of
Premises...................................................
40
19.2 Modifications to
Common Areas....................................... 41
19.3 Waiver of
Claims....................................................
41
20. Default and
Remedies.....................................................
42
20.1 Events of
Default...................................................
42
20.2 Tenant Cure
Periods.................................................
43
20.3 Landlord's
Remedies Upon Occurrence of Event of Default.............
43
20.4 Damages Upon
Termination............................................
43
20.5 Computation of
Certain Rent for Purposes of Default................. 43
20.6 Landlord's Right
to Cure Defaults................................... 43
20.7 Waiver of
Forfeiture................................................
44
20.8 Remedies
Cumulative.................................................
44
20.9 Landlord's
Default..................................................
44
21. Subordination, Attornment and
Nondisturbance............................. 44
21.1 Subordination and
Attornment........................................ 44
21.2 Notice to
Encumbrancer..............................................
45
21.3 Rent Payment
Direction..............................................
45
22. Sale or Transfer by Landlord; Lease
Non-Recourse......................... 46
22.1 Release of
Landlord on Transfer.....................................
46
22.2 Lease Nonrecourse
to Landlord; Limitation of Liability.............. 46
23. Estoppel
Certificate.....................................................
47
23.1 Procedure and
Content............................................... 47
23.2 Effect of
Certificate...............................................
47
24. No Light, Air, or View
Easement.......................................... 47
25. Holding
Over.............................................................
48
26.
Reserved.................................................................
48
27.
Waiver...................................................................
48
28. Notices; Tenant's Agent for
Service...................................... 48
29. Tenant's
Authority.......................................................
49
30.
Parking..................................................................
49
</TABLE>
iii
<PAGE>
<TABLE>
<S>
<C>
30.1 Lease of Parking
Spaces............................................ 49
30.2 Management of Project Parking
Garage............................... 49
30.3 Waiver of
Liability................................................
50
31.
Miscellaneous............................................................
50
31.1 No Joint
Venture...................................................
50
31.2 Successors and
Assigns............................................. 50
31.3 Construction and
Interpretation.................................... 50
31.4
Severability.......................................................
51
31.5 Entire
Agreement...................................................
51
31.6 Governing
Law......................................................
51
31.7 Costs and
Expenses.................................................
51
31.8 Standards of Performance and
Approvals............................. 52
31.9
Brokers............................................................
53
31.10 Memorandum of
Lease................................................ 53
31.11 Quiet
Enjoyment....................................................
53
31.12 Force
Majeure......................................................
53
31.13 Surrender of
Premises.............................................. 53
31.14 Building
Directory.................................................
54
31.15 Name of
Building; Address..........................................
54
31.16
Exhibits...........................................................
54
31.17 Survival of
Obligations............................................
54
31.18 Time of the
Essence................................................
54
31.19 Waiver of Trial By Jury;
Waiver of Counterclaim.................... 54
31.20 Consent to
Venue...................................................
55
31.21 Financial
Statements...............................................
55
31.22 Subdivision;
Future Ownership...................................... 55
31.23 Modification of
Lease.............................................. 55
31.24 Intentionally
deleted.............................................. 56
31.25 No
Option..........................................................
56
31.26 Independent
Covenants..............................................
56
31.27 First Source
Hiring Program........................................ 56
31.28 Compliance with
Anti-Terrorism Law................................. 56
31.29 Bankruptcy of
Tenant............................................... 56
31.30 Rent Not Based
on Income........................................... 57
31.31
Counterparts.......................................................
57
32. Communications and Computer Lines and
Equipment.......................... 57
32.1 Lines and
Equipment................................................
57
32.2
Interference.......................................................
58
32.3 General
Provisions.................................................
58
33. Option To
Extend.........................................................
60
33.1 Grant of Extension
Option.......................................... 60
33.2 Terms Applicable to Premises
During Extension Term................. 60
33.3 Prevailing Market
Rate............................................. 60
33.4 Procedure for Determining
Prevailing Market Rate................... 61
</TABLE>
iv
<PAGE>
<TABLE>
<S>
<C>
33.5 General
Provisions.................................................
63
34. Option To
Expand.........................................................
64
34.1 Grant of Expansion
Option.......................................... 64
34.2 Offering
Notice....................................................
64
34.3 Terms Applicable to Expansion
Space................................ 64
34.4 Prevailing Market
Rate............................................. 65
34.5 General
Provisions.................................................
65
35.
Signage..................................................................
66
36. Satellite
Dish...........................................................
67
36.1 Grant of
License...................................................
67
36.2 Permitted Use; Equipment;
Location................................. 67
36.3 Tenant's Roof
Area................................................. 67
36.4 Rooftop Installation
Work.......................................... 67
36.5 General
Requirements...............................................
68
36.6
Services...........................................................
69
36.7 Roof
Damage........................................................
69
36.8 Compliance With
Requirements....................................... 69
36.9 Radio Frequency Emitting
Equipment................................. 69
36.10 Temporary
Removal; Relocation......................................
70
36.11 Termination;
Equipment As Property of Tenant....................... 70
36.12 Landlord
Exculpation...............................................
70
36.13
Insurance..........................................................
70
36.14 Waiver of
Claims...................................................
70
36.15 Roof
Repairs.......................................................
71
36.16 Rights Personal
to Tenant.......................................... 71
</TABLE>
v
<PAGE>
OFFICE LEASE
POST MONTGOMERY CENTER
ONE MONTGOMERY TOWER
San Francisco, California
BASIC LEASE INFORMATION
Lease Date:
March 31, 2005
Landlord:
Post-Montgomery Associates,
a California general partnership
Tenant:
First Albany Companies,
a New York corporation
Premises:
19,620 square feet of rentable area located on the
24th Floor, commonly referred to as Suite 2400, as
shown on the Floor Plan attached to this Lease as
Exhibit A
Term:
Approximately One Hundred Twenty-Four (124) months,
commencing on the Commencement Date
Commencement Date:
The date Landlord delivers possession of the Premises
to Tenant, which shall be immediately following mutual
execution and delivery of this Lease.
Target Delivery Date: April 1,
2005
Rent Commencement Date: December 1, 2005
Expiration Date:
July 31, 2015
vi
<PAGE>
Base Rent:
<TABLE>
<CAPTION>
Rentable Square
Annual Base
Dates
Feet
Rent/Sq. Ft.
Annual Base Rent Monthly
Base Rent
<S>
<C>
<C>
<C>
<C>
December 1, 2005
19,620
$32.50
$637,650.00
$53,137.50
through
July 31, 2007
August 1, 2007
19,620
$34.50
$676,890.00
$56,407.50
through
July 31, 2009
August 1, 2009
19,620
$36.50
$716,130.00
$59,677.50
through
July 31, 2011
August 1, 2011
19,620
$38.50
$755,370.00
$62,947.50
through
July 31, 2013
August 1, 2013
19,620
$40.50
$794,610.00
$66,217.50
through
July 31, 2015
</TABLE>
Base Year:
2005
Tenant's Percentage Share: 2.90%
Permitted Use:
General corporate and administrative offices
consistent with first-class office buildings in
the San Francisco downtown financial district
Security Deposit:
None
Building Directory Spaces: Ten (10) directory
strips, which shall be
proportionately increased if Tenant leases
additional space
Parking Spaces:
Four (4)
vii
<PAGE>
Tenant's Address:
Prior to Commencement Date:
First Albany Companies
677 Broadway
Albany, NY 12207
Attn: Counsel
On and after Commencement Date:
First Albany Companies
677 Broadway
Albany, NY 12207
Attn: Counsel
With a copy to:
Post Montgomery Center
One Montgomery Street, Suite 2400
San Francisco, CA
94104
Attn: Phil Johnston --
Managing Director of
Salestrading
Landlord's Address:
Post Montgomery Center
One Montgomery Street, Suite 3220
San Francisco, CA
94104
Brokers:
Landlord's Broker:
Cushman &
Wakefield of California, Inc.
Tenant's Broker: Tory Corporate
R/E Advisors (dba The Staubach
Company)
Exhibits:
Exhibit A: Floor Plan
of Premises
Exhibit B: Rules and
Regulations
Exhibit C: Work
Letter
Schedule 1: Base
Building Improvements
Exhibit D:
Confirmation of Lease Term
viii
<PAGE>
OFFICE LEASE
THIS LEASE is made and entered
into by and between Landlord and Tenant as
of the Lease Date.
Landlord
and Tenant hereby agree as follows:
1.
Definitions.
1.1 Terms Defined. The following terms have the meanings set
forth
below. Certain other terms have the
meanings set forth elsewhere in this Lease.
Alterations: Any alterations, additions, changes or other
improvements to the Premises made by or on
behalf of Tenant (other than the
initial leasehold improvements, if any,
made by or on behalf of Tenant pursuant
to the Work Letter). All references to
Alterations shall mean both Minor
Alterations and Major Alterations.
Anti-Terrorism Law: Any Requirements relating to terrorism,
anti-terrorism, money-laundering or
anti-money laundering activities, including
without limitation the United States Bank
Secrecy Act, the United States Money
Laundering Control Act of 1986, Executive
Order No. 13224, and Title 3 of the
USA Patriot Act, and any regulations
promulgated under any of them.
Appraisal Panel: Appraisal Panel shall have the meaning set forth
in
Section 33.4(d).
Bankruptcy Code: Bankruptcy Code shall mean the United States
Bankruptcy Code.
Base Building Operating Expenses: The Building Operating
Expenses
allocable to the Base Year.
Base Building Property Taxes: The Building Property Taxes
allocable
to the Base Year.
Base Year: Base Year shall have the meaning set forth in the
Basic
Lease Information.
Building: The high-rise office portion of the Project, commonly
known as One Montgomery Tower, including
related Common Areas. The Building does
not include the Galleria.
Building Holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day,
the day after Thanksgiving, and Christmas
Day.
1
<PAGE>
Building Operating Expenses: Operating Expenses allocable to
the
Building. Landlord, in its reasonable
discretion, shall determine the portion of
Operating Expenses allocable to the
Building in accordance with its operating
principles and practices for the Project
and/or the Building, as determined by
Landlord from time to time; provided,
however, that Landlord shall make such
allocation in a consistent and
nondiscriminatory manner. If less than one
hundred percent (100%) of the rentable area
of the Building is occupied during
the Base Year or any subsequent calendar
year during the Term, then actual
Building Operating Expenses for the Base
Year and each such subsequent calendar
year shall be adjusted to reflect
Landlord's reasonable estimate of Building
Operating Expenses as if one hundred
percent (100%) of the entire rentable area
of the Building had been occupied.
Landlord's reasonable "gross up" of such
Building Operating Expenses shall be final
and binding on Tenant, in the absence
of manifest error. Notwithstanding any
provision in this Lease to the contrary,
in no event shall the amount of Building
Operating Expenses for any calendar
year subsequent to the Base Year be deemed
to be less than the amount of Base
Building Operating Expenses.
Building Property Taxes: Eighty-eight and Four Tenths Percent
(88.4%) of Real Estate Taxes, except that
to the extent the Building, or a
portion thereof, is separately assessed,
then One Hundred Percent (100%) of such
separately assessed Real Estate Taxes.
Notwithstanding any provision in this
Lease to the contrary, in no event shall
the amount of Building Property Taxes
for any calendar year subsequent to the
Base Year be deemed to be less than the
amount of Base Building Property Taxes.
Building Standard Hours: 7:00 a.m. to 6:00 p.m. on weekdays and
8:00
a.m. to 2:00 p.m. on Saturdays (except
Building Holidays).
Building Systems: The life-safety, electrical, mechanical,
heating,
ventilation, airconditioning, plumbing,
fireprotection, telecommunications, or
other utility systems serving the Premises,
the Building, the Project or the
Galleria, as applicable.
Casualty: Fire, earthquake, or any other event of a sudden,
unexpected, or unusual nature.
Casualty Discovery Date: Casualty Discovery Date shall have the
meaning set forth in Section 12.1.
Claims: Any and all obligations, losses, claims, actions
(including
remedial or enforcement actions of any kind
and administrative or judicial
proceedings, suits, orders or judgments),
causes of action, liabilities,
penalties, damages (including consequential
and punitive damages), costs and
expenses (including reasonable attorneys'
and consultants' fees and expenses).
Common Areas: Those areas of the Project designated by Landlord,
in
its reasonable discretion, from time to
time for the nonexclusive use of
occupants of the Project, and their agents,
employees, customers, invitees and
licensees, and other members of the public,
including the rooftop garden terrace
located in the Project. Common Areas do not
include the exterior windows and
walls and the roof of the Project (other
than the rooftop garden terrace), or
any space in the Project (including in the
Premises) used for common shafts,
stacks, pipes,
2
<PAGE>
conduits, ducts, electrical or other
utilities, telecommunication systems, or
other installations for Building Systems
serving the Project.
Comparison Buildings: Comparison Buildings shall have the
meaning
set forth in Section 33.3.
Comparison Leases:
Comparison Leases shall have the meaning set
forth in Section 33.3.
Confidential Information: Confidential Information shall have
the
meaning set forth in Section 31.24.
Construction Guide: The Post Montgomery Center Construction
&
Remodeling Guide, as updated, revised
and/or superseded from time to time.
Consumer Price Index: The United States Department of Labor,
Bureau
of Labor Statistics ("Bureau"), Consumer
Price Index (All Urban Consumers, All
Items, 19821984 = 100) for the Metropolitan
Area of which San Francisco,
California, is a part. If the Consumer
Price Index is discontinued or revised,
the Consumer Price Index shall mean the
index designated as the successor or
substitute index by the Bureau, or its
successor agency, and if none is
designated, a comparable index as
determined by Landlord in its sole discretion,
which would likely achieve a comparable
result to that achieved by the use of
the Consumer Price Index. If the base year
of the Consumer Price Index is
changed, then the conversion factor
specified by the Bureau, or successor
agency, shall be utilized to determine the
Consumer Price Index.
Contemplated Transfer Date: Contemplated Transfer Date shall
have
the meaning set forth in Section
17.2(b).
Control: Ownership of more than fifty percent (50%) of all of
the
voting stock of a corporation or more than
fifty percent (50%) of all of the
legal and equitable interest in any other
business entity.
Default Interest Rate: The greater of (i) ten percent (10%) per
annum, or (ii) the Prime Rate plus five
percent (5%) per annum; provided,
however, that if such rate of interest
shall exceed the maximum rate allowed by
law, the Default Interest Rate shall be
automatically reduced to the maximum
rate of interest permitted by applicable
law.
Dish Cable Path: Dish Cable Path shall have the meaning set forth
in
Section 36.2(b).
Dish Connections: Dish Connections shall have the meaning set
forth
in Section 36.2(b).
Dish Equipment: Dish Equipment shall have the meaning set forth
in
Section 36.2(b).
3
<PAGE>
Dish Roof Area: Dish Roof Area shall have the meaning set forth
in
Section 36.2(a).
Dispute Notice: Dispute Notice shall have the meaning set forth
in
Section 5.6(a).
Encumbrance: Any ground lease or underlying lease, or the lien
of
any mortgage, deed of trust, or any other
security instrument now or hereafter
affecting or encumbering the Project, or
any part thereof or interest therein.
Encumbrancer: The holder of the beneficial interest under an
Encumbrance.
Environmental Laws: All laws, ordinances, rules, regulations,
orders, decrees, permits, and requirements
of courts and governmental
authorities now or hereafter in effect
relating to the environment, health and
safety, or the use, generation, handling,
emission, release, discharge, storage
or disposal of Hazardous Materials.
Equipment: Equipment shall have the meaning set forth in
Section
32.1.
Escalation Rent: Tenant's Percentage Share of the total dollar
increase, if any, in Building Operating
Expenses allocable to each calendar
year, or part thereof, after the Base Year,
over the amount of Base Building
Operating Expenses, and Tenant's Percentage
Share of the total dollar increase,
if any, in Building Property Taxes
allocable to the tax year or years occurring
in each such calendar year over the Base
Building Property Taxes for the tax
year or years occurring in the Base
Year.
Essential Services: Essential Services shall have the meaning
set
forth in Section 8.3.
Event of Default: Event of Default shall have the meaning set
forth
in Section 20.1.
Excess Rent: Excess Rent shall have the meaning set forth in
Section
17.5(a).
Executive Order No. 13224: Executive Order No. 13224 on
Terrorist
Financing effective September 24, 2001, and
relating to "Blocking Property and
Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support
Terrorism," as may be amended from time to
time.
Expansion Option: Expansion Option shall have the meaning set
forth
in Section 34.1.
Expansion Option Notice: Expansion Option Notice shall have the
meaning set forth in Section 34.2(a).
Expansion Space: Expansion Space shall have the meaning set forth
in
Section 34.1.
4
<PAGE>
Expansion Term: Expansion Term shall have the meaning set forth
in
Section 34.3.
Expiration Date: The Expiration Date shall have the meaning set
forth in the Basic Lease Information.
Extension Option: Extension Option shall have the meaning set
forth
in Section 33.1.
Extension Term: Extension Term shall have the meaning set forth
in
Section 33.1.
FAA: The Federal Aviation Administration.
FCC: The Federal Communications Commission.
Floor: The entire rentable area of any floor in the Building.
FSHP: The First Source Hiring Program, as described in Section
31.27.
Galleria: The retail shopping center portion of the Project,
commonly known as The Crocker Galleria,
including related Common Areas and the
Project parking garage.
Hazardous Materials: Petroleum, asbestos, polychlorinated
biphenyls,
radioactive materials, radon gas, mold, or
any chemical, material or substance
now or hereafter defined as or included in
the definition of "hazardous
substances," "hazardous wastes," "hazardous
materials," "pollutants,"
"contaminants," "extremely hazardous
waste," "restricted hazardous waste" or
"toxic substances," or words of similar
import, under any Environmental Laws,
including those materials identified in
Sections 66680 through 66685 of Title 22
of the California Administrative Code,
Division 4, Chapter 30, as they may be
amended from time to time.
Impositions: Taxes, assessments, charges, excises and levies,
business taxes, license, permit, inspection
and other authorization fees,
transit development fees, assessments or
charges for housing funds, service
payments in lieu of taxes and any other
fees or charges of any kind at any time
levied, assessed, charged or imposed by any
Federal, State or local entity, (i)
upon, measured by or reasonably
attributable to the cost or value of Tenant's
equipment, furniture, fixtures or other
personal property located in the
Premises, or the cost or value of any
Alterations; (ii) upon, or measured by,
any Rent payable hereunder, including any
gross receipts tax; (iii) upon, with
respect to or by reason of the development,
possession, leasing, operation,
management, maintenance, alteration,
repair, use or occupancy by Tenant of the
Premises, or any portion thereof; or (iv)
upon this Lease transaction, or any
document to which Tenant is a party
creating or transferring any interest or
estate in the Premises. Impositions do not
include franchise, transfer,
inheritance or capital stock taxes, or
income taxes measured by the net income
of Landlord from all sources, unless any
such taxes are levied or assessed
against Landlord as a substitute for, in
whole or in part, any Imposition.
Indemnitees: Indemnitees shall have the meaning set forth in
Section
16.1.
5
<PAGE>
Intention to Transfer Notice: Intention to Transfer Notice
shall
have the meaning set forth in Section
17.2(b).
Interest Rate: The Prime Rate plus two percent (2%); provided,
however, that if such rate of interest
shall exceed the maximum rate allowed by
law, the Interest Rate shall be
automatically reduced to the maximum rate of
interest permitted by applicable law.
Interference: Interference shall have the meaning set forth in
Section 32.1.
Interim Leases: Interim Leases shall have the meaning set forth
in
Section 34.1.
Interruption Notice: Interruption Notice shall have the meaning
set
forth in Section 8.3.
Land: The parcel of land shown as Lots 4, 5, 6, 7, 8, 14, 15 and
16
on that certain Parcel Map, filed February
13, 1981, at Page 6, in Book 19, of
Parcel Maps, of the Official Records of the
City and County of San Francisco,
California.
Landlord's Determination: Landlord's Determination shall have
the
meaning set forth in Section 33.4(b).
Landlord's Statement: Landlord's Statement shall have the
meaning
set forth in Section 5.2.
Lease Year: Each consecutive twelve (12) month period during
the
Term of this Lease, provided that the last
Lease Year shall end on the
Expiration Date.
License: License shall have the meaning set forth in Section
36.1.
Lines: Lines shall have the meaning set forth in Section 32.1.
Major Alterations: Alterations which (i) may affect the
structural
portions of the Project, (ii) may affect or
interfere with the Project roof,
walls, elevators, heating, ventilating, air
conditioning, electrical, plumbing,
telecommunications, security, life-safety
or other Building Systems, (iii) may
adversely affect the use and enjoyment by
other tenants or occupants of the
Project of their premises, (iv) may be
visible from outside the Premises, (v)
utilize materials or equipment which are
inconsistent with Landlord's standard
building materials and equipment for the
Project, (vi) result in the imposition
on Landlord of any requirement to make any
alterations or improvements to any
portion of the Project (including handicap
access and life safety requirements)
in order to comply with Requirements, or
(vii) increase the cost to clean,
maintain or repair the Premises.
Minor Alterations: Alterations (i) that are not Major
Alterations,
(ii) that do not require the issuance of a
building or other governmental
permit, authorization or approval, (iii)
that do not require work to be
performed outside the Premises in order to
comply with Requirements, and (iv)
the cost of which does not exceed
Twenty-Five Thousand Dollars ($25,000.00) in
any one instance.
6
<PAGE>
Monthly Base Rent: The monthly installment of annual Base Rent
(as
defined in the Basic Lease Information) to
be paid by Tenant from time to time
during the Term.
Negotiation Period: Negotiation Period shall have the meaning
set
forth in Section 33.4(b).
Net Worth: The excess of total assets over total liabilities,
determined in accordance with generally
accepted accounting principles,
excluding, however, from the determination
of total assets, goodwill and other
intangibles.
Offering Notice: Offering Notice shall have the meaning set forth
in
Section 34.2.
Operating Expenses: All costs of management, operation,
ownership,
maintenance and repair of the Project,
including: (i) salaries, wages,
reasonable bonuses and other reasonable
compensation of employees engaged in the
management, operation, maintenance or
repair of the Project, (ii) all payroll
burden, social security, worker's
compensation, unemployment and similar taxes
and impositions with respect to such
employees, (iii) the cost of providing
disability or other benefits imposed by law
or otherwise with respect to such
employees; (iv) property management fees
and expenses, including Landlord's fees
and expenses for any management performed
by it; provided, however, that any
property management fees shall not exceed
three percent (3%) of the annual gross
revenues of the Project; (v) rental and
other costs and expenses for Landlord's
and property management offices providing
services to the Project; (vi)
electricity, natural gas, water, waste
disposal and recycling, sewer, heating,
lighting, air conditioning and ventilating
and other utilities; (vii)
janitorial, maintenance, security, life
safety and other services, such as alarm
service, window cleaning, elevator
maintenance, landscaping and uniforms (and
the cleaning and/or replacement thereof)
for personnel providing services to the
Project; (viii) materials, supplies, tools
and rental equipment needed in the
operation, repair, replacement and
maintenance of the Project; (ix) license,
permit and inspection fees and costs; (x)
insurance premiums and costs
(including earthquake and/or flood if so
elected by Landlord in its sole
discretion), and the deductible portion of
any insured loss under Landlord's
insurance or the amount that would be the
deductible portion of such loss but
for selfinsurance thereof by Landlord,
provided that the deductible amounts
included in Operating Expenses under
Landlord's commercial general liability
policy and "all risk" property insurance
policies or such selfinsurance amounts
shall not exceed commercially reasonable
amounts, taking into consideration
market pricing at the time such insurance
policies were purchased, and provided
further, that the deductible amounts
payable by Tenant with respect to any
earthquake, flood or terrorism policy shall
not, in the aggregate, exceed Two
Dollars ($2.00) per rentable square foot of
the Premises during any calendar
year; (xi) sales, use and excise taxes
imposed on items that otherwise are
included as Operating Expenses; (xii)
legal, accounting and other professional
services for the Project, including costs,
fees and expenses of contesting the
validity or applicability of any law,
ordinance, rule, regulation or order
relating to the Project; (xiii) the cost of
supplies and services such as
telephone, courier services, postage and
stationery supplies; (xiv) normal
repair and replacement of wornout
equipment, facilities and installations; (xv)
depreciation on personal property,
including exterior window draperies provided
by Landlord and Common Area floor
coverings, and/or rental costs of leased
furniture, fixtures, and equipment; and
(xvi) expenditures
7
<PAGE>
for capital improvements or modifications
made at any time to the Project (A)
that are intended in Landlord's judgment as
labor saving devices, or to reduce
or eliminate other Operating Expenses or to
effect other economies in the
operation, maintenance, or management of
the Project, or (B) that are necessary
or appropriate in Landlord's reasonable
judgment for the health and safety of
occupants of the Project, or (C) that are
necessary under any Requirements which
were not applicable to the Project at the
time it was constructed, or (D) that
are replacements of items which Landlord is
obligated to maintain, all amortized
over such reasonable period as Landlord
shall determine at the Interest Rate,
or, if applicable, the rate paid by
Landlord on funds borrowed for the purpose
of constructing or installing such capital
improvements. Notwithstanding
subsection (x) above, if during any
calendar year after the Base Year Landlord
incurs expenses relating to insurance
premiums for earthquake, flood or
terrorism insurance coverage and Landlord
did not insure against such peril
during the Base Year, or, if Landlord
insured against such peril during the Base
Year, but the extent of the coverage
carried by Landlord during any calendar
year after the Base Year is materially
increased from the coverage carried by
Landlord during the Base Year with respect
to such peril (e.g. Landlord changes
from an earthquake policy based on the
probable maximum loss to an earthquake
policy for full replacement cost ),
Operating Expenses for the Base Year shall
be deemed increased by the amount Landlord
would have incurred during the Base
Year had such insurance been in effect
during the Base Year. Conversely, if
Landlord incurs expenses during the Base
Year relating to insurance premiums for
earthquake, flood or terrorism insurance,
and Landlord elects not to insure
against such peril during any calendar year
after the Base Year, or, if after
the Base Year Landlord materially decreases
the extent of its insurance coverage
with respect to any such peril resulting in
a reduction in insurance premiums,
Operating Expenses for the Base Year shall
be deemed reduced by the amounts
Landlord incurred during the Base Year with
respect to such discontinued
insurance coverage or greater insurance
coverage that was in effect during the
Base Year. Operating Expenses do not
include: (1) Real Estate Taxes; (2) legal
fees, real estate sale or brokers'
commissions or other costs incurred in the
negotiation, termination, or extension of
leases or in proceedings involving a
specific tenant, including lease marketing
and advertising expenses,
concessions, lease takeover or rental
assumption obligations, architectural
costs, engineering fees and other similar
professional costs and fees in
connection with lease negotiations; (3)
depreciation, except as set forth in
subsection (xv) above; (4) principal and
interest payments on loans secured by
deeds of trust recorded against the
Project, except as set forth in subsection
(xvi) above; (5) the cost of capital
improvements or modifications characterized
as such using generally accepted real
estate accounting practices, except as set
forth in subsection (xvi) above; (6) costs
paid for directly by Tenant or any
other tenant of the Project; provided,
however, that if any tenant of the
Project contracts directly with Landlord or
a third party for services the cost
of which would otherwise be included in
Operating Expenses, the total amount of
Operating Expenses shall be "grossed up" to
reflect what those costs would have
been had such tenants not directly
contracted for such services; (7) the cost of
additional or extraordinary services
provided to other tenants of the Project
and not offered to Tenant without
additional charge; (8) officer and executive
salaries of personnel employed by Landlord
above the level of the manager of the
Project; (9) costs payable by proceeds of
insurance or other third parties; (10)
the cost of repairs or other work to the
extent Landlord is reimbursed by
insurance or condemnation proceeds; (11)
the cost of tenant allowances or
inducements made for tenants of the
Project, including permit, license and
inspection fees and any other contribution
by Landlord to the cost of tenant
improvements; (12) except for legal and
accounting costs attributed to the
8
<PAGE>
normal operation of the Project, monetary
damages, awards, judgments or
settlement amounts paid by Landlord as a
result of disputes with other tenants,
occupants or third parties relating to the
Project; (13) expenditures for
repairing or replacing any defect in the
design or construction of the Project,
to the extent such expenditures are
actually recovered by warranty for such
work; (14) the costs of any Hazardous
Materials removal or remediation required
to be performed by Landlord, except for the
disposal, removal or remediation of
Hazardous Materials customarily found in
other first class office buildings
(e.g., janitorial supplies, light bulbs,
and computer equipment); (15) any bad
debt loss, rent loss, or reserves for bad
debts or rent loss; (16) costs
relating to maintaining Landlord's legal
existence, either as a corporation,
partnership or other entity; (17) all costs
of Landlord's general corporate and
general administrative and overhead
expenses; (18) ground rent, if any; (19)
costs and expenses incurred in connection
with enforcement of leases, including
court costs, accounting fees, auditing
fees, attorneys' fees in connection with
any summary proceeding to dispossess any
tenant; (20) Landlord's franchise,
transfer, inheritance, estate, succession
and capital stock taxes; and (21)
costs and expenses attributable to any
property other than the Project.
Option Notice: Option Notice shall have the meaning set forth
in
Section 33.1.
OSHA: The U.S. Occupational Safety and Health Administration.
Permitted Use: Permitted Use shall have the meaning set forth in
the
Basic Lease Information.
Pre-Existing Hazardous Materials: Hazardous Materials (classified
as
such on the Commencement Date) existing in
or on the Premises on the date
possession thereof is delivered to
Tenant.
Prevailing Market Rate: Prevailing Market Rate shall have the
meaning set forth in Section 33.3.
Prime Rate: The prime rate (or base rate) reported in the Money
Rates column or section of The Wall Street
Journal as being the base rate on
corporate loans at large U.S. money center
commercial banks (whether or not such
rate has actually been charged by any such
bank) on the first day on which The
Wall Street Journal is published in the
month in which the subject sums are
payable or incurred.
Prohibited Person: (i) A person or entity that is listed in the
Annex to Executive Order No. 13224, or a
person or entity owned or controlled by
an entity that is listed in the Annex to
Executive Order No. 13224; (ii) a
person or entity with whom Landlord is
prohibited from dealing or otherwise
engaging in any transaction by any
Anti-Terrorism Law; or (iii) a person or
entity that is named as a "specially
designated national and blocked person" on
the most current list published by the U.S.
Treasury Department Office of
Foreign Assets Control at its official
website,
http://www.treas.gov/ofac/t11sdn.pdf or at
any replacement website or other
official publication of such list.
Project: The Land, all buildings and other improvements at any
time
located on the Land (including the Building
and the Galleria), and all
appurtenances related thereto,
9
<PAGE>
including the rooftop garden terrace and
loading dock area, collectively
commonly known as Post Montgomery
Center.
Real
Estate Taxes: Taxes, assessments and charges now or hereafter
levied or assessed upon, or with respect
to, the Project, or any personal
property of Landlord used in the operation
thereof or located therein, or
Landlord's interest in the Project or such
personal property, by any Federal,
State or local entity, including: (i) all
real property taxes and general,
special, supplemental and escape
assessments applicable to the respective
accounting period; (ii) charges, fees or
assessments for transit, public
improvements, employment, job training,
housing, day care, open space, art,
police, fire or other governmental services
or benefits imposed by any Federal,
State or local governmental or
quasi-governmental entity; (iii) service payments
in lieu of taxes; (iv) any tax, fee or
excise on the use or occupancy of any
part of the Project; (v) any tax,
assessment, charge, levy or fee for
environmental matters, or as a result of
the imposition of mitigation measures,
such as parking taxes, employer parking
regulations or fees, charges or
assessments due to the treatment of the
Project, or any portion thereof or
interest therein, as a source of pollution
or stormwater runoff, provided that
the same are generally applicable to
comparable buildings; (vi) any other tax,
fee or excise, however described, that may
be levied or assessed as a substitute
for, or as an addition to, in whole or in
part, any other Real Estate Taxes; and
(vii) consultants' and attorneys' fees and
expenses reasonably incurred in
connection with proceedings to contest,
determine or reduce Real Estate Taxes.
Real Estate Taxes do not include: (A)
franchise, transfer, inheritance, estate,
succession or capital stock taxes, or
income taxes measured by the net income of
Landlord from all sources, unless any such
taxes are levied or assessed against
Landlord as a substitute for, in whole or
in part, any Real Estate Tax; and (B)
penalties, fines, interest or charges due
for late payment of Real Estate Taxes
by Landlord. If any Real Estate Taxes are
payable, or may at the option of the
taxpayer be paid, in installments, such
Real Estate Taxes shall, together with
any interest that would otherwise be
payable with such installment, be deemed to
have been paid in installments, amortized
over the maximum time period allowed
by applicable law.
Recapture Notice: Recapture Notice shall have the meaning set
forth
in Section 7.2(b).
Related Company: (i) An entity which controls, is controlled by,
or
is under common control with Tenant; (ii)
an entity into or with which Tenant is
merged or consolidated; or (iii) an entity
to which at least eighty percent
(80%) of Tenant's assets are
transferred.
Remedial Work: Any investigation or monitoring of site conditions
or
any cleanup, containment, restoration,
removal or remediation of Hazardous
Materials.
Rent: Base Rent, Escalation Rent and all other additional
charges
and amounts payable by Tenant in accordance
with this Lease.
Rent Payment Direction: Rent Payment Direction shall have the
meaning set forth in Section 21.3.
Repair Estimate: Repair Estimate shall have the meaning set forth
in
Section 12.1.
10
<PAGE>
Requirements: All laws, including Environmental Laws,
ordinances,
rules, regulations, orders, decrees,
permits, and requirements of courts and
governmental authorities now or hereafter
in effect, including the Americans
With Disabilities Act (42 U.S.C. Section
12101 et seq.) and Title 24 of the
California Code of Regulations and all
regulations and guidelines promulgated
thereunder; the provisions of any insurance
policy carried by Landlord or Tenant
on any portion of the Project, or any
property therein; the requirements of any
independent board of fire underwriters; any
directive or certificate of
occupancy issued pursuant to any law by any
public officer or officers
applicable to the Project; the provisions
of all recorded documents affecting
any portion of the Project (including the
Declaration of Crocker Properties,
Inc., regarding building electric lighting,
recorded August 26, 1981, as
modified by Amended and Restated
Declaration, dated December 5, 1984, recorded
December 5, 1984), as any such document may
be amended from time to time; and
all life safety programs, procedures and
rules from time to time or at any time
implemented or promulgated by Landlord.
Roof Repairs: Roof Repairs shall have the meaning set forth in
Section 36.15.
Rooftop Installation Work: Rooftop Installation Work shall have
the
meaning set forth in Section 36.4.
Rooftop Survey: Rooftop Survey shall have the meaning set forth
in
Section 36.9.
Satellite Dish: Satellite Dish shall have the meaning set forth
in
Section 36.2.
Six Month Period: Six Month Period shall have the meaning set
forth
in Section 7.2(b).
Substantial Completion Date: Substantial Completion Date shall
have
the meaning set forth in the Work
Letter.
Target Delivery Date: Target Delivery Date shall have the
meaning
set forth in the Basic Lease
Information.
Taxable Value: Taxable Value shall have the meaning set forth
in
Section 5.5.
Tenant Parties: Tenant, all persons or entities claiming by,
through
or under Tenant, and their respective
employees, agents, contractors, licensees,
invitees, representatives, officers,
directors, shareholders, partners, and
members.
Tenant's Accountant: Tenant's Accountant shall have the meaning
set
forth in Section 5.6(a).
Tenant's Determination: Tenant's Determination shall have the
meaning set forth in Section 33.4(b).
Tenant's Percentage Share: The percentage set forth in the
Basic
Lease Information as Tenant's Percentage
Share, as adjusted from time to time to
take into account changes in the physical
size of the Premises.
11
<PAGE>
Term: Term shall have the meaning set forth in the Basic Lease
Information.
USA Patriot Act: The "Uniting and Strengthening America by
Providing
Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001"
(Public Law 10756), as may be amended from
time to time.
Wattage Allowance: 4.5 watts times the rentable area in the
Premises
divided by 1,000, multiplied by the
Building Standard Hours, with respect to
connected load for general purposes, and
1.5 watts times the rentable area in
the Premises divided by 1,000, multiplied
by the Building Standard Hours, with
respect to lighting, which shall result in
kilowatt hours.
Work Letter: The agreement attached hereto as Exhibit C, which
sets
forth the respective responsibilities of
Landlord and Tenant regarding the
design and construction of alterations,
additions and improvements to prepare
the Premises for occupancy by Tenant.
1.2 Basic Lease Information. The Basic Lease Information is
incorporated into and made a part of this
Lease. Each reference in this Lease to
any Basic Lease Information shall mean the
applicable information set forth in
the Basic Lease Information, except that in
the event of any conflict between an
item in the Basic Lease Information and
this Lease, this Lease shall control.
1.3 Certain Defined Terms. The parties acknowledge that (i) the
rentable area of the Premises and the
Building have been finally determined by
the parties for all purposes under this
Lease, including the calculation of
Tenant's Percentage Share and will not,
except as otherwise provided in this
Lease, be changed, and (ii) the percentage
for allocation of Building Property
Taxes is conclusive and binding on the
parties. The rentable areas of the
Premises and the Building have been
measured substantially in accordance with
the Standard Method for Measuring Floor
Area in Office Buildings, ANSI Z65.1
1996. If any space is added to or deleted
from the Premises, or any abatement of
Rent is based on rentable area, the
rentable area for the added or deleted
space, or such abatement, shall be
reasonably determined by Landlord utilizing
the preceding standard.
2. Lease
of Premises. Landlord leases to Tenant and Tenant leases from
Landlord the Premises, together with the
nonexclusive right to use, in common
with others, the Common Areas, subject to
the terms, covenants and conditions
set forth in this Lease. Landlord reserves
from the leasehold estate hereunder
(i) all exterior walls and windows bounding
the Premises, (ii) all space located
within the Premises for common shafts,
stacks, pipes, conduits, ducts,
utilities, telecommunications systems, and
other installations for Building
Systems, the use thereof and access
thereto, and (iii) the right to install,
remove or relocate any of the foregoing for
service to any part of the Project,
including the premises of other tenants of
the Building, provided that unless
necessary to comply with applicable
Requirements, such action shall not
materially reduce the usable area of the
Premises or require any Alterations to
be made or paid for by Tenant. Landlord
shall have no right to relocate Tenant
from the Premises.
12
<PAGE>
3. Term;
Condition and Acceptance of Premises.
3.1 Delivery of Premises; Term Commencement.
(a) This Lease shall be effective as of the Lease Date. The
Term of this Lease shall commence on the
Commencement Date and end on the
Expiration Date, unless sooner terminated
or extended pursuant to the provisions
of this Lease. The design and construction
of any alterations, additions or
improvements that Tenant may deem necessary
or appropriate to prepare the
Premises for occupancy by Tenant shall be
governed by the Work Letter. Except as
specifically provided in this Lease
(including the Work Letter), Tenant agrees
to accept the Premises in their "as-is"
condition, without any representations
or warranties by Landlord, and with no
obligation of Landlord to make any
alterations or improvements to the Premises
or to provide any tenant improvement
allowance. Landlord shall exercise
commercially reasonable efforts to deliver
possession of the Premises to Tenant on the
Target Delivery Date. If Landlord,
for any reason whatsoever, cannot deliver
possession of the Premises to Tenant
on the Target Delivery Date, this Lease
shall not be void or voidable, and
Landlord shall not be in default or liable
to Tenant for any loss or damage
resulting therefrom. Tenant's commencing
business operations in all or any
portion of the Premises shall constitute
Tenant's acceptance of the Premises in
the condition required by this Lease.
Within thirty (30) days after request,
Tenant shall execute and deliver to
Landlord a Confirmation of Lease Term in the
form of Exhibit D attached hereto.
(b) Landlord represents to Tenant that, as of the Substantial
Completion Date (as defined in the Work
Letter), to Landlord's knowledge, the
structural elements of the Building and the
Building Systems serving the
Premises shall be in good working condition
and repair. If it is determined that
the foregoing representation was untrue as
of the Substantial Completion Date,
Landlord shall not be liable to Tenant for
any damages, but as Tenant's sole
remedy, Landlord, at no cost to Tenant,
shall perform such work or take such
other action as may be necessary to place
the structural elements of the
Building and the Building Systems serving
the Premises in good working condition
and repair.
(c) Tenant acknowledges and agrees that Landlord may perform
work on the structural elements of the
Building or the Building Systems serving
the Premises on or after the Commencement
Date, which work may create noise,
dust, vibration, odors or leave debris in
the Premises and/or the Project.
Without limiting the generality of Section
16.1 below, Tenant hereby agrees that
Landlord's activities under this Section
3.1(c) shall in no way constitute an
actual or constructive eviction of Tenant
nor entitle Tenant to any abatement of
Rent. Landlord shall not be liable to
Tenant for any direct or indirect injury
to or interference with Tenant's business
arising from Landlord's activities
under this Section 3.1(c), nor shall Tenant
be entitled to any compensation or
damages from Landlord for loss of the use
of the whole or any part of the
Premises or of Tenant's personal property
or improvements resulting from
Landlord's activities hereunder, or for any
inconvenience or annoyance
occasioned by such activities; provided,
however, that Landlord shall exercise
commercially reasonable efforts to minimize
interference (without any obligation
to engage overtime labor) with Tenant's
performance of the Tenant Improvements
or Tenant's business in the Premises.
13
<PAGE>
3.2 Early Entry. If Tenant enters into the Premises prior to
the
Commencement Date for any reason, including
for the purposes of preparing the
Premises for Tenant's occupancy pursuant to
the Work Letter, such entry shall be
subject to all of the terms, covenants and
conditions of this Lease, including
Tenant's insurance obligations contained in
Article 14 and Tenant's indemnity
obligations contained in Article 16, but
excluding Tenant's obligation to pay
Base Rent or Escalation Rent.
4.
Rent.
4.1 Obligation to Pay Base Rent.
(a) Tenant shall pay Base Rent to Landlord during the Term, in
advance, in equal monthly installments,
commencing on the Rent Commencement
Date, and thereafter on or before the first
day of each calendar month during
the Term; provided, however, that upon
signing this Lease, Tenant shall pay to
Landlord an amount equal to the Monthly
Base Rent for the month in which the
Rent Commencement Date occurs, which amount
shall be applied to the Base Rent
owing for the month in which the Rent
Commencement Date occurs. If the Rent
Commencement Date is other than the first
day of a calendar month, the
installment of prepaid Base Rent for the
month in which the Rent Commencement
Date occurs shall be prorated on the basis
of a thirty (30) day month, and the
balance shall be credited to Base Rent
owing for the month of the Term following
the month in which the Rent Commencement
Date occurs. If the Expiration Date is
other than the first day of a calendar
month, or if this Lease shall be
terminated as of a day other than the last
day of a calendar month (except in
the case of an Event of Default), the
installment of Base Rent for the last
fractional month of the Term shall be
prorated on the basis of a thirty (30) day
month.
(b)
Notwithstanding any provision in this Section 4.1 to the
contrary, Base Rent and Escalation Rent
shall abate, and Tenant shall not be
required to pay Base Rent or Escalation
Rent, until the Rent Commencement Date.
4.2 Manner of Rent Payment. All Rent shall be paid by Tenant
without
notice, demand, abatement, deduction or
offset, in lawful money of the United
States of America, and if payable to
Landlord, at Landlord's Address, or to such
other person or at such other place as
Landlord may from time to time designate
by notice to Tenant.
4.3 Additional Rent. All Rent not characterized as Base Rent or
Escalation Rent shall constitute additional
rent, and if payable to Landlord
shall, unless otherwise specified in this
Lease, be due and payable thirty (30)
days after Tenant's receipt of Landlord's
invoice therefor.
4.4 Late Payment of Rent; Interest. Tenant acknowledges that
late
payment by Tenant of any Rent will cause
Landlord to incur administrative costs
not contemplated by this Lease, the exact
amount of which is extremely difficult
and impracticable to ascertain based on the
facts and circumstances pertaining
as of the Lease Date. Accordingly, if
Tenant fails to pay Rent when due (and
such failure continues for a period of five
(5) business days after receipt of a
notice of such failure), then Tenant shall
pay to Landlord a late charge equal
to three percent (3%) of such Rent;
provided, however, that the foregoing notice
and grace period shall not apply
14
<PAGE>
during the remainder of any twelve (12)
month period if Landlord has previously
sent to Tenant a notice of failure to pay
any Rent one (1) time in such twelve
(12) month period. Any Rent, other than
late charges, due Landlord under this
Lease, if not paid when due, shall also
bear interest at the Default Interest
Rate from the date due until paid. The
parties acknowledge that such late charge
and interest represent a fair and
reasonable estimate of the administrative
costs and loss of use of funds Landlord
will incur by reason of a late Rent
payment by Tenant, but Landlord's
acceptance of such late charge and/or interest
shall not constitute a waiver of an Event
of Default with respect to such Rent
or prevent Landlord from exercising any
other rights and remedies provided under
this Lease.
5.
Calculation and Payments of Escalation Rent. During each full
or
partial calendar year of the Term
subsequent to the Base Year, Tenant shall pay
to Landlord Escalation Rent in accordance
with the following procedures:
5.1 Payment of Estimated Escalation Rent. During December of
the
Base Year and December of each subsequent
calendar year, or as soon thereafter
as practicable, Landlord shall give Tenant
notice of its good faith, written
estimate of Escalation Rent due for the
ensuing calendar year. On or before the
first day of each month during each ensuing
calendar year, Tenant shall pay to
Landlord in advance, in addition to Base
Rent, one-twelfth (1/12th) of such
estimated Escalation Rent, unless such
notice is not given by December tenth
(10th) of any calendar year, in which event
Tenant shall continue to pay on the
basis of the prior calendar year's estimate
until the month after such notice is
given, and subsequent payments by Tenant
shall be based on Landlord's notice.
With the first monthly payment based on
Landlord's notice, Tenant shall also pay
the difference, if any, between the amount
previously paid for such calendar
year and the amount which Tenant would have
paid through the month in which such
notice is given, based on Landlord's
noticed estimate. If at any time Landlord
reasonably determines that the Escalation
Rent for the current calendar year
will vary from Landlord's estimate,
Landlord may, by notice to Tenant, revise
its estimate for such calendar year, and
subsequent payments by Tenant for such
calendar year shall be based upon such
revised estimate.
5.2 Escalation Rent Statement and Adjustment. Within one
hundred
twenty (120) days after the close of each
calendar year, or as soon thereafter
as practicable, Landlord shall deliver to
Tenant a statement of the actual
Escalation Rent for such calendar year,
showing in reasonable detail (i) the
Building Operating Expenses and the
Building Property Taxes comprising the
actual Escalation Rent, and (ii) payments
made by Tenant on account of Building
Operating Expenses and Building Property
Taxes for such calendar year
("Landlord's Statement"). If Landlord's
Statement shows that Tenant owes an
amount that is more than the payments
previously made by Tenant for such
calendar year, Tenant shall pay the
difference to Landlord within thirty (30)
days after delivery of the statement. If
Landlord's Statement shows that Tenant
owes an amount that is less than the
payments previously made by Tenant for such
calendar year, Landlord shall credit the
difference first against any sums then
owed by Tenant to Landlord and then against
the next payment or payments of Rent
due Landlord, except that if a credit
amount is due Tenant after the termination
of this Lease, Landlord shall pay to
Tenant, within thirty (30) days after
delivery of Landlord's Statement, any
excess remaining after Landlord credits
such amount against any sums owed by Tenant
to Landlord. Notwithstanding any
provision in this Lease to the contrary,
however, in no event shall any decrease
in Building
15
<PAGE>
Operating Expenses or Building Property
Taxes below the Base Building Operating
Expenses or Base Building Property Taxes,
respectively, entitle Tenant to any
refund, decrease in Base Rent, or any
credit against sums due under this Lease.
All annual statements shall be conclusive
and binding upon Tenant; provided,
however, that Landlord may revise the
Landlord's Statement for any calendar year
if Landlord first receives invoices from
third parties, tax bills or other
information relating to adjustments to
Building Operating Expenses or Building
Property Taxes allocable to such calendar
year after the initial issuance of
such Landlord's Statement, and/or the
amount of Building Operating Expenses or
Building Property Taxes allocable to the
Base Year is subsequently adjusted.
5.3 Proration for Partial Year. If the Commencement Date is
other
than the first day of a calendar year or if
this Lease terminates other than on
the last day of a calendar year (other than
due to an Event of Default), the
amount of Escalation Rent for such
fractional calendar year shall be prorated on
the basis of twelve 30day months in each
calendar year. Upon such termination,
Landlord may, at its option, calculate the
adjustment in Escalation Rent prior
to the time specified in Section 5.2
above.
5.4 Abatement of Escalation Rent. Notwithstanding any provision
in
this Lease to the contrary, Escalation Rent
shall abate, and Tenant shall not be
required to pay Escalation Rent, until July
1, 2006.
5.5 Building Property Taxes. Notwithstanding anything to the
contrary set forth in this Lease, the
Building Property Taxes for the Base Year
and any subsequent calendar year during the
Term shall be calculated assuming
the Project is assessed at its taxable
value as determined under Section
51(a)(1) (but excluding Section 51(a)(2))
of the California Revenue and Taxation
Code ("Taxable Value") without taking into
account any decreases in real estate
taxes obtained in connection with
Proposition 8 or an assessed value lower than
the Taxable Value, and, therefore, the
Building Property Taxes payable under
this Lease may be greater than those
actually incurred by Landlord. Tax refunds
under Proposition 8 or otherwise shall not
be deducted from Real Property Taxes
nor refunded to Tenant, but rather shall be
the sole property of Landlord.
5.6 Audit Right.
(a) Landlord shall respond to any informal inquiries by Tenant
regarding the Escalation Rent within thirty
(30) days after receipt of same. In
addition, Tenant shall have ninety (90)
days after receipt of Landlord's
Statement to notify Landlord in writing
that Tenant disputes the correctness of
Landlord's Statement ("Dispute Notice"). If
Tenant timely delivers a Dispute
Notice to Landlord, Tenant's accountant
("Tenant's Accountant") shall have the
right, upon reasonable prior notice, during
normal business hours, to examine
all relevant records of Landlord concerning
the year that is covered by
Landlord's Statement at the Building
management office or other location in San
Francisco designated by Landlord. Tenant's
Accountant shall be subject to
Landlord's prior written approval, which
shall not be unreasonably, withheld or
delayed. Without limiting the generality of
the preceding sentence, Tenant's
Accountant must have at least seven (7)
years of experience reviewing financial
operating records of comparable office
buildings in the San Francisco downtown
financial district and must not be retained
on a contingency fee basis. The
inspection of Landlord's
16
<PAGE>
records must be completed within five (5)
business days after Tenant's
Accountant commences its inspection and
within sixty (60) days after Landlord's
receipt of the Dispute Notice. Tenant
agrees to keep, and to cause Tenant's
Accountant to keep, all information
obtained by Tenant or Tenant's Accountant
confidential. If requested by Landlord,
Tenant shall require Tenant's Accountant
to sign and deliver a confidentiality
agreement to Landlord, reasonably
acceptable in form and content to Landlord,
prior to Landlord making its books
and records available for inspection. If
Tenant fails to deliver a Dispute
Notice to Landlord within ninety (90) days
after receipt of Landlord's
Statement, Tenant shall have no further
right to dispute the correctness of
Landlord's Statement.
(b) If,
following the examination of Landlord's records by
Tenant's Accountant, Tenant continues to
object to Landlord's Statement, the
parties shall meet and attempt in good
faith to resolve the dispute. If it is
finally determined (by agreement between
the parties, voluntary mediation or
arbitration, settlement or court order)
that Landlord's Statement was incorrect,
the appropriate party shall pay to the
other party the deficiency or
overpayment, as applicable, within thirty
(30) days after said determination, or
at Landlord's option, any overpayment by
Tenant shall be credited against the
next installment(s) of Rent payable by
Tenant. All costs and expenses of
Tenant's Accountant shall be paid by Tenant
unless it is finally determined that
Landlord's Statement overstated the actual
Operating Expenses and Real Estate
Taxes for the applicable calendar year by
five percent (5%) or more, in which
case Landlord shall pay the reasonable
costs of Tenant's Accountant for the
audit of Landlord's records, up to a
maximum amount of Fifteen Thousand Dollars
($15,000.00).
6.
Impositions Payable by Tenant. Tenant shall pay all Impositions
directly billed to Tenant prior to
delinquency. If billed directly, Tenant shall
pay such Impositions and concurrently
present to Landlord satisfactory evidence
of such payments. If any Impositions are
billed to Landlord or included in bills
to Landlord for Real Estate Taxes, then
Tenant shall pay to Landlord all such
amounts within thirty (30) days after
receipt of Landlord's invoice therefor. If
applicable law prohibits Tenant from
reimbursing Landlord for an Imposition, but
Landlord may lawfully increase the Base
Rent to account for Landlord's payment
of such Imposition, the Base Rent payable
to Landlord shall be increased to net
to Landlord the same return without
reimbursement of such Imposition as would
have been received by Landlord with
reimbursement of such Imposition.
7. Use of
Premises.
7.1 Permitted Use. The Premises shall be used solely for the
Permitted Use and for no other use or
purpose.
7.2 No Violation of Requirements. Tenant shall not do or permit
to
be done, or bring or keep or permit to be
brought or kept, in or about the
Premises, or any other portion of the
Project, anything which (i) is prohibited
by, will in any way conflict with, or would
invalidate any Requirements; or (ii)
would cause a cancellation of any insurance
policy carried by Landlord or
Tenant, or give rise to any defense by an
insurer to any claim under any such
policy of insurance, or increase the
existing rate of or adversely affect any
insurance policy carried by Landlord, or
subject Landlord to any liability or
responsibility for injury to any person or
property; or (iii) will in any way
obstruct or interfere with the rights of
other tenants or
17
<PAGE>
occupants of the Project, or injure or
annoy them. If Tenant does or permits
anything to be done which increases the
cost of any policy of insurance carried
by Landlord, or which results in the need,
in Landlord's reasonable judgment,
for additional insurance to be carried by
Landlord or Tenant with respect to any
portion of the Project, then Tenant shall
reimburse Landlord, upon demand, for
any such additional premiums or costs,
and/or procure such additional insurance,
at Tenant's sole cost and expense.
Invocation by Landlord of such right shall
not limit or preclude Landlord from
prohibiting Tenant's impermissible use that
gives rise to the additional insurance
premium or requirement or from invoking
any other right or remedy available to
Landlord under this Lease. Subject to
Section 7.6 below, Tenant shall not bring
into the Premises or any portion
thereof, any furniture, fixtures and/or
equipment, and/or make any Alterations
to the Premises, the aggregate weight of
which would exceed the specified live
load capacity of the Floor or Floors on
which the Premises are located.
7.3 Compliance with Requirements.
(a) Landlord represents to Tenant that, as of the date hereof,
Landlord has not received any written
notice from any governmental authority
that the Building Systems serving the
Premises or the Common Areas of the
Building, including the path of travel to
the Premises, are in violation of
Requirements as currently interpreted,
which violation remains uncured. If any
existing violation of applicable
Requirements relating to the Building Systems
or Common Areas prevents Tenant from
obtaining a certificate of occupancy for
the Premises or otherwise materially,
adversely affects Tenant's use of or
access to the Premises, Landlord shall not
be liable to Tenant for any damages,
but Landlord, at no cost to Tenant, shall,
as Tenant's sole remedy (except for
the potential abatement of Base Rent and
Escalation Rent as provided below in
this Section 7.3(a)), perform such work or
take such other action as may be
necessary to cure the violation of
Requirements that existed as of the date
hereof, provided that nothing contained
herein shall be deemed to prohibit
Landlord from obtaining a variance or
relying upon a grandfathered right in
order to achieve compliance with
Requirements. Further, if solely as a result of
the failure of the Building Systems serving
the Premises (but not any heating,
ventilation or air conditioning units
located in or exclusively serving the
Premises) or the Common Areas to comply
with applicable Requirements, Tenant is
prohibited by local authorities from
legally occupying the Premises, Base Rent
and Escalation Rent (if applicable) shall
abate one (1) day for each day after
the Rent Commencement Date that such
violation prevents Tenant from legally
occupying the Premises. Notwithstanding the
foregoing, Landlord shall have the
right to contest any alleged violation in
good faith, including, without
limitation, the right to apply for and
obtain a waiver or deferment of
compliance, the right to assert any and all
defenses allowed by law, and the
right to appeal any decisions, judgments or
rulings to the fullest extent
permitted by law, and Landlord's obligation
to perform work or take such other
action to cure a violation under this
Section 7.3(a) shall apply after the
exhaustion of any and all rights to appeal
or contest. In addition,
notwithstanding any provision in this
Section 7.3(a) to the contrary, Landlord's
obligation under this Section 7.3(a) shall
not apply to the life safety systems
located wholly within the Premises, and
Tenant, at its sole cost, shall perform
any work to ensure the compliance of the
life safety systems serving the
Premises with applicable Requirements.
(b) Except to the extent of Landlord's obligations, Tenant, at
its cost and expense, shall promptly comply
with all Requirements applicable to
Tenant's use or
18
<PAGE>
occupancy of, or business conducted in, the
Premises, and shall maintain the
Premises and all portions thereof in
compliance with all applicable
Requirements. The judgment of any court of
competent jurisdiction, or the
admission of Tenant in any action or
proceeding involving Tenant, whether or not
Landlord is party thereto, that Tenant is
in noncompliance with any Requirement
shall be conclusive of that fact. In
addition, Tenant shall make all
modifications to any portion of the Project
outside the Premises (including
whether structural or capital in nature),
which are necessitated by (i) Tenant's
use or occupancy of, or business conducted
in, the Premises (other than
investment banking and securities trading,
so long as such activities are
consistent with classification of the
Premises as a "commercial facility" and
not a "public accommodation" under the
Americans With Disabilities Act), (ii)
any acts or omissions of Tenant or any
other Tenant Parties, or (iii) any
Alterations (subject to Landlord's
obligations pursuant to Section 7.3(a)
above), or Landlord may elect to perform
such modifications at Tenant's expense.
7.4 No Nuisance. Tenant shall not (i) do or permit anything to
be
done in or about the Premises, or any other
portion of the Project, which would
injure or annoy, or obstruct or interfere
with the rights of, Landlord or other
occupants of the Project, or others
lawfully in or about the Project; (ii) use
or allow the Premises to be used in any
manner inappropriate for a firstclass
office building and the Project, or for any
improper or objectionable purposes,
or do or permit any act which in Landlord's
reasonable judgment might damage the
reputation of the Project; or (iii) cause,
maintain or permit any nuisance or
waste in, on or about the Premises, or any
other portion of the Project.
7.5 Compliance With Environmental Laws; Use of Hazardous
Materials.
(a) Environmental Laws. Without limiting the generality of
Section 7.3 above, Tenant and all other
Tenant Parties shall at all times comply
with all applicable Environmental Laws with
respect to the use and occupancy of
any portion of the Project pursuant to this
Lease.
(b) Prohibition Against Hazardous Materials. Except as
outlined in Paragraph 26 of the Rules and
Regulations and in the third (3rd)
sentence of this Section 7.5(b), Tenant
shall not cause or permit any Hazardous
Materials to be brought upon, produced,
stored, used, discharged or disposed of
in or near the Project without Landlord's
prior written consent, which Landlord
may give or withhold in its sole
discretion. Any handling, transportation,
storage, treatment, disposal or use of any
Hazardous Materials in or about the
Project by Tenant or any other Tenant
Parties shall strictly comply with all
applicable Environmental Laws. Tenant shall
be solely responsible for obtaining
and complying with all permits necessary
for the maintenance and operation of
its business in the Premises, and the
installation, maintenance and operation of
equipment in the Premises, including,
without limitation, the gas fire
suppression system, FM 200 system, and UPS
unit that may be installed by Tenant
pursuant to Section 7.6 below, and all
permits governing the use, handling,
storage, treatment, transport, discharge
and disposal of Hazardous Materials.
Tenant shall indemnify, defend and hold
Landlord harmless from and against any
Claims (including, without limitation,
diminution in value of the Premises or
the Project, damages for the loss or
restriction on use of rentable space or of
any amenity of the Premises or the Project,
damages arising from any adverse
impact on marketing of space in the
Project, Remedial Work, and sums paid in
settlement of Claims) which result from or
arise out of the use, storage,
treatment, transportation, release, or
disposal of any Hazardous Materials
19
<PAGE>
on or about the Project by Tenant or any
other Tenant Parties. If, as a result
of Tenant's use, handling, storage,
treatment, transportation, discharge or
disposal of Hazardous Materials, any
Encumbrancer or governmental agency shall
require testing for Hazardous Materials in
the Premises, Tenant shall pay for
such testing. Tenant's obligations under
this Section shall survive the
expiration or earlier termination of this
Lease until all Claims within the
scope of this Section are fully, finally,
and absolutely barred by the
applicable statutes of limitations.
(c) Landlord Notification. Tenant shall promptly provide
Landlord with complete copies of all
documents, correspondence and other written
materials directed to or from Tenant
concerning environmental issues at the
Premises or the Project, including, without
limitation, documents relating to
the release, potential release,
investigation, compliance, cleanup and abatement
of Hazardous Materials, and any Claims
related to same. Within twenty-four (24)
hours after Tenant has actual knowledge of
any unauthorized release, spill or
discharge of Hazardous Materials in, on, or
about the Premises or Project,
Tenant shall provide written notice to
Landlord fully describing the event.
Tenant shall also provide Landlord with a
copy of any document or correspondence
submitted by or on behalf of Tenant to any
regulatory agency as a result of or
in connection with the unauthorized
release, spill or discharge. Within
twenty-four (24) hours after receipt by
Tenant of any warning, notice of
violation, permit suspension or similar
disciplinary measure relating to
Tenant's actual or alleged failure to
comply with any Environmental Law, Tenant
shall provide written notice thereof to
Landlord.
(d) Remedial Work. If any Remedial Work is required under any
Environmental Laws as a result of any act
or omission of Tenant or any other
Tenant Parties, then Tenant shall perform
or cause to be performed the Remedial
Work in compliance with Environmental Laws
or, at Landlord's option, Landlord
may cause such Remedial Work to be
performed and Tenant shall reimburse Landlord
for the reasonable costs thereof within
thirty (30) days after demand therefor.
All Remedial Work performed by Tenant shall
be performed by one or more
contractors, selected by Tenant and
approved in advance in writing by Landlord,
which approval shall not be unreasonably
withheld, conditioned or delayed, and
under the supervision of a consulting
engineer selected by Tenant and approved
in advance in writing by Landlord, which
approval shall not be unreasonably
withheld, conditioned or delayed. All costs
and expenses of such Remedial Work
shall be paid by Tenant, including, without
limitation, the charges of such
contractor(s), the consulting engineer and
Landlord's reasonable attorneys' and
experts' fees and costs incurred in
connection with the monitoring or review of
such Remedial Work.
(e) Tenant as Generator. In no event shall Landlord be
designated as the "generator" on, nor shall
Landlord be responsible for
preparing, any manifest relating to
Hazardous Materials generated or used by
Tenant or any other Tenant Parties.
(f) Pre-Existing Hazardous Materials. Landlord shall be
responsible for the clean up, removal or
remediation of PreExisting Hazardous
Materials in or at the Premises or the
Project in accordance with applicable
Requirements. Notwithstanding anything to
the contrary contained in this
Article, in no event shall Tenant be
required to clean up, remove or remediate
any PreExisting Hazardous Materials in or
at the Premises or the Project, except
to the extent that any hazard posed by such
PreExisting Hazardous Materials is
knowingly exacerbated by, or the cost to
clean up, remove or remediate such
PreExisting Hazardous
20
<PAGE>
Materials is knowingly increased as a
result of, the acts or omissions of Tenant
or any other Tenant Parties.
7.6 Gas Fire Suppression System; UPS Unit. Tenant shall have
the
right to install, at Tenant's sole cost and
expense, a gas fire suppression
system or FM 200 system in its server/IT
room. In addition, Tenant shall have
the right to install, at Tenant's sole cost
and expense, a UPS unit in the
Premises in a location reasonably approved
by Landlord. Tenant, at Tenant's sole
cost and expense, shall structurally
reinforce a portion of the floor of the
Premises, to the extent reasonably required
by Landlord to accommodate the
equipment described in this Section. All
work under this Section shall comply
with Article 10 and all other applicable
provisions of this Lease.
8.
Building Services.
8.1 Maintenance of Project. Landlord shall keep and maintain
the
Common Areas, all exterior landscaping, the
windows in the Building, the skin of
the Building, the parking garage,
elevators, the mechanical, plumbing and
electrical equipment serving the Building,
the telephone cable distribution
system serving the Building to the
telephone terminal on each Floor, the common
shafts, stacks, pipes, conduits, and ducts
containing such equipment and systems
and the space containing them, and the
structure of the Building, in good order
and condition consistent with a first-class
office building, except for ordinary
wear and tear, damage by Casualty or
condemnation, or damage occasioned by the
act or omission of Tenant or any other
Tenant Parties, which damage shall be
repaired by Landlord at Tenant's expense,
except as provided in Article 12.
Landlord shall have the right, exercised by
Landlord in its reasonable
discretion, in connection with its
maintenance of the Project hereunder, (i) to
change the arrangement and/or location of
any Common Area amenity, installation
or improvement, or other public parts of
the Project, and (ii) to utilize
portions of the Common Areas from time to
time for entertainment, displays,
product shows, leasing of kiosks or such
other uses that Landlord may determine
are desirable.
8.2 Building-Standard Services. Landlord shall cause to be
furnished
to Tenant: (i) tepid and cold water to
those points of supply and in volumes
provided for general use of tenants in the
Building; (ii) electricity up to the
Wattage Allowance (on a daily,
noncumulative basis) for lighting and the
operation of electrically powered office
equipment; (iii) heat, ventilation and
air conditioning as reasonably determined
by Landlord during Building Standard
Hours; (iv) passenger elevator service; (v)
freight elevator service subject to
then applicable Building-standard
procedures and scheduling; (vi) lighting
replacement for Building-standard lights;
(vii) restroom supplies; (viii) window
washing as determined by Landlord, but in
all events not less than twice per
year; and (ix) janitor service on a five
(5) day per week basis (excluding
Building holidays), except Landlord shall
not be required to clean portions of
the Premises used for preparing or
consuming food or beverages or provide
special treatment or services for
above-standard tenant improvements. Landlord
may establish in the Premises or other
portions of the Project such measures as
it deems necessary or appropriate to
conserve energy, including automatic
switching of lights and/or more efficient
forms of lighting. When and if so
elected by Landlord, in its reasonable
discretion from time to time or at any
time, Landlord may also provide security
services for the Project (but not
individually for Tenant or the Premises) of
such scope and type as Landlord may
determine in its sole discretion.
Landlord
21
<PAGE>
shall not be liable in any manner to Tenant
or any other Tenant Parties for any
acts (including criminal acts) of others,
or for any direct, indirect, or
consequential damages, or any injury or
damage to, or interference with,
Tenant's business, including, but not
limited to, loss of profits, loss of rents
or other revenues, loss of business
opportunity, loss of goodwill or loss of
use, or other loss or damage, bodily injury
or death, related to any
malfunction, circumvention or other failure
of any security services which
Landlord elects to provide, or on account
of Landlord's election not to provide
any security service or services, or for
the failure of any security services to
prevent bodily injury, death, or property
damage, or loss, or to apprehend any
person suspected of causing such injury,
death, damage or loss. Landlord shall
provide Tenant, at no charge to Tenant,
with up to a maximum of one hundred
twenty (120) access cards for the Building
for occupants of the Premises. Tenant
shall pay Landlord's standard charge for
replacement or additional access cards.
If Tenant elects to install a security
system in the Premises, and such system
is compatible with the then-current
Building security system (if any), the same
access cards may be utilized with respect
to both security systems at no cost to
Tenant for such dual usage. However,
Landlord shall have no responsibility or
liability whatsoever with respect to
Tenant's security system. Tenant, at
Tenant's expense, shall be solely
responsible for installing, monitoring,
maintaining, operating and, at Landlord's
election, removing Tenant's security
system at the expiration or earlier
termination of this Lease.
8.3 Interruption or Unavailability of Services. Landlord shall
not
be in default hereunder or liable for any
damages directly or indirectly
resulting from, Rent shall not be abated,
no constructive or other eviction
shall be construed to have occurred, and
Tenant shall not be relieved from any
of its obligations under this Lease, by
reason of the failure to furnish or
delay in furnishing any maintenance or
services under this Article 8, regardless
of the cause of such failure. Landlord
shall use commercially reasonable efforts
promptly to remedy any failure or
interruption in the furnishing of such
maintenance or services. Landlord makes no
warranty or representation to Tenant
regarding the adequacy or fitness of the
heating, air conditioning or
ventilation equipment in the Project or the
Premises to maintain temperatures
that may be required for, or because of,
any of Tenant's fixtures or equipment
which uses other than the fractional
horsepower normally required for standard
office equipment and Landlord shall have no
liability for loss or damage
suffered by Tenant or others in connection
therewith. Notwithstanding anything
contained in this Section 8.3 to the
contrary, if (i) there is an interruption
in the Essential Services (as defined
below) and Tenant supplies Landlord with
written notice thereof (the "Interruption
Notice"), (ii) such interruption is
not the result of an act or omission of
Tenant or Tenant's Parties, (iii) such
interruption is not the result of a
Casualty (in which case Article 12 of this
Lease shall apply), (iv) the repair or
restoration of the Essential Service is
within the reasonable control of Landlord,
and (v) as a result of such
interruption the Premises, or a material
portion thereof, is rendered
untenantable and is in fact not used by
Tenant for five (5) consecutive business
days, then Tenant's sole remedy for such
interruption shall be as follows:
commencing on the sixth (6th) consecutive
business day following the later to
occur of the date Tenant ceases to use the
Premises (or a material portion
thereof) and the date Tenant provides
Landlord with an Interruption Notice, the
Base Rent and Escalation Rent payable under
this Lease shall abate in proportion
to the portion of the Premises that is
rendered untenantable on a per diem basis
for each day thereafter until the date the
Premises becomes tenantable again.
Such failures or delays or diminution shall
never be deemed to constitute an
eviction or disturbance of Tenant's use and
possession of the Premises or excuse
Tenant from performing any of its
obligations under this Lease. For the purposes
of this Section 8.3, "Essential
Services"
22
<PAGE>
shall mean services provided by the
heating, ventilation and air conditioning
systems, life safety systems, mechanical
systems, elevator, plumbing and waste
disposal systems and electrical systems as
are reasonably necessary to operate
the Premises for its Permitted Use as set
forth in Section 7.1 above, to the
extent Landlord is required to provide the
same under this Lease.
8.4 Tenant's Use of Excess Electricity and Water. Tenant shall
not,
without Landlord's prior consent, which
shall not be unreasonably withheld,
conditioned or delayed, install in the
Premises: (A) lighting, equipment, and/or
apparatus, the aggregate average monthly
power usage of which exceeds the
Wattage Allowance, or which requires a
voltage other than 110 volts
single-phase; (B) heat-generating or
heat-sensitive equipment, or lighting other
than Building-standard lights; (C)
supplementary air conditioning facilities;
(D) Alterations which reconfigure the
Premises, or fixtures or equipment
therein, affecting the temperature
otherwise maintained by the Building-standard
heating, ventilation and air conditioning
system; or (E) equipment that requires
a separate temperature-controlled room. If
Landlord consents to any installation
pursuant to this Section 8.4, Landlord may,
at Landlord's election after notice
to Tenant or upon Tenant's request, install
supplementary air conditioning
facilities in the Premises, or otherwise
modify the heating, ventilation and air
conditioning system serving the Premises,
and/or increase the supply of
electricity to the Premises, in order to
maintain the temperature otherwise
maintained by the Building heating,
ventilation, and air conditioning system,
and/or to supply any increase in the
electricity demand of the Premises, and/or
to serve any separate
temperature-controlled room. Tenant shall pay the cost of
any transformers, additional risers, panel
boards, and all other facilities if,
when and to the extent installed hereunder
or required to furnish power for, and
all costs of supplying and maintaining, any
supplementary air conditioning
facilities or modified ventilating and air
conditioning equipment. The capital,
maintenance and service costs of
installing, supplying, and maintaining any such
facilities, utilities, and modifications
shall be paid by Tenant as Rent.
Landlord, at its election and at Tenant's
expense, may also install and maintain
an electric current meter or water meter
(together with all necessary wiring and
related equipment) at the Premises to
measure the power and/or water usage of
electricity and/or such ventilation and air
conditioning equipment, or may
otherwise cause such usage to be measured
by reasonable methods.
8.5 Provision of Additional Services. If Tenant desires services
in
amounts additional to or at times different
from those set forth in Section 8.2
above, or any other services that are not
provided for in this Lease, Tenant
shall make a request for such services to
Landlord with such advance notice as
Landlord may reasonably require. If
Landlord provides such services to Tenant,
Tenant shall pay Landlord's reasonable
charges for such services (including
engineers' expenses, a reasonable allowance
for wear and tear on the Building
Systems, and a reasonable administrative
fee), with no minimum usage or startup
charges, within thirty (30) days after
Tenant's receipt of Landlord's invoice.
8.6 Tenant's Supplemental Air Conditioning. If Landlord consents
to
Tenant's installation of supplementary air
conditioning facilities under Section
8.4 above or the Work Letter, Tenant shall
have access to and use of the
Building's condenser water up to and not to
exceed ten (10) tons for such
facilities. Tenant shall reimburse Landlord
for (i) Landlord's charges for
Tenant's usage of such condenser water, and
(ii) Tenant's Percentage Share of
Landlord's charges for maintaining the
system that supplies such condenser
water, within thirty (30) days after
Tenant's receipt of Landlord's invoice.
Landlord shall have the right to install,
at
23
<PAGE>
Tenant's cost and expense, meters to
measure Tenant's usage hereunder for
purposes of calculating the charges payable
by Tenant for such condenser water.
9.
Maintenance of Premises. Tenant shall, at Tenant's cost and
expense,
keep the Premises in good condition and
repair, except for ordinary wear and
tear, damage by Casualty or condemnation,
and the maintenance and repair to be
performed by Landlord pursuant to Section
8.1 above. Except as specifically set
forth in this Lease, Landlord (i) has no
obligation to alter, remodel, improve,
repair, decorate or paint the Premises, or
any part thereof, and (ii) has no
obligation respecting the condition,
maintenance and repair of the Premises or
any other portion of the Project. Tenant
hereby waives all rights, including
under Subsection 1 of Section 1932 and
Sections 1941 and 1942 of the California
Civil Code and under any similar law now or
hereafter in effect, to make repairs
which are Landlord's obligation under this
Lease at the expense of Landlord or
to receive any setoff or abatement of Rent
or in lieu thereof to vacate the
Premises or terminate this Lease.
10.
Alterations to Premises. All Alterations shall be made in
accordance
with the Construction Guide, the
Building-standard procedures, specifications,
and details (including the standard for
construction and quality of materials in
the Project) as then established by
Landlord, all applicable Requirements, and
the provisions of this Article 10. In the
event of any conflict between this
Article 10 and the Construction Guide, the
Building-standard procedures,
specifications or details then in effect,
the provisions of this Article 10
shall govern.
10.1 Landlord Consent; Procedure. Tenant shall not make or permit
to
be made any Major Alterations without
Landlord's prior written consent, which
shall not be unreasonably withheld,
conditioned or delayed. If Landlord has not
responded to Tenant's request for approval
of proposed Major Alterations within
thirty (30) days after receipt of Tenant's
request, Tenant may give Landlord a
second notice requesting approval. The
second notice must specifically reference
this Section 10.1 and prominently state in
capital or bold letters that the
proposed Major Alterations previously
submitted by Tenant shall be deemed
approved unless Landlord objects thereto
within five (5) business days after
receipt of such second notice. If Landlord
fails to respond within five (5)
business days after receipt of such second
notice, Landlord shall be deemed to
have approved of the proposed Major
Alterations. If Landlord disapproves of any
proposed Major Alterations, such
disapproval shall state with reasonable
particularity the reasons for such
disapproval. Further, upon Tenant's written
request expressly referring to this Section
10.1, Landlord shall advise Tenant
at the time of Landlord's approval of any
Major Alterations, or within ten (10)
business days after such written request by
Tenant with respect to Minor
Alterations, whether Landlord will require
the removal of the applicable
Alterations and restoration of the Premises
to its previous condition at the
expiration or earlier termination of this
Lease. If Landlord fails to respond to
such written request by Tenant seeking to
confirm Tenant's removal obligation,
Tenant may give Landlord a second notice
inquiring about Tenant's removal
obligation. The second notice must
specifically reference this Section 10.1 and
prominently state in capital or bold
letters that Tenant will not be obligated
to remove the Major Alterations or Minor
Alterations described in Tenant's
earlier notice and restore the Premises to
its previous condition unless
Landlord notifies Tenant of such removal
requirement within five (5) business
days after receipt of such second notice.
If Landlord fails to respond within
five (5) business days after receipt of
such second notice, Tenant shall have no
obligation to remove the applicable
Alterations and restore the Premises to its
previous condition.
24
<PAGE>
10.2 General Requirements.
(a) Except as otherwise provided in the Work Letter with
respect to the initial leasehold
improvements to the Premises (if any), all
Alterations shall be designed and performed
by Tenant at Tenant's cost and
expense; provided, however, that if any
Alterations require work to be performed
outside the Premises, Landlord may elect to
perform such work at Tenant's
expense.
(b) All Alterations shall be performed only by contractors,
engineers or architects approved by
Landlord, and shall be made in accordance
with complete and detailed architectural,
mechanical and engineering plans and
specifications approved in writing by
Landlord. Landlord shall not unreasonably
withhold or delay its approval of any such
contractors, engineers, architects,
plans or specifications; provided, however,
that Landlord may specify
contractors, engineers or architects to
perform work affecting the structural
portions of the Project or the Building
Systems. Tenant shall engage only labor
that is harmonious and compatible with
other labor working in the Project. In
the event of any labor disturbance caused
by persons employed by Tenant or
Tenant's contractor, Tenant shall
immediately take all actions necessary to
eliminate such disturbance.
(c) Prior to commencement of the Alterations, Tenant shall
deliver to Landlord (i) any building or
other permit required by Requirements in
connection with the Alterations; (ii) a
copy of executed construction
contract(s); and (iii) written
acknowledgments from all materialmen,
contractors, artisans, mechanics, laborers
and any other persons furnishing to
Tenant with respect to the Premises any
labor, services, materials, supplies or
equipment in excess of Twenty-Five Thousand
Dollars ($25,000.00) in the
aggregate that they will look exclusively
to Tenant for payment of any sums in
connection therewith and that Landlord
shall have no liability for such costs.
In addition, Tenant shall require its
general contractor to carry and maintain
the following insurance at no expense to
Landlord, and Tenant shall furnish
Landlord with satisfactory evidence thereof
prior to the commencement of
construction of the Alterations: (A)
commercial general liability insurance with
limits of not less than Two Million Dollars
($2,000,000.00) combined single
limit for bodily injury and property
damage, including personal injury and
death, and contractor's protective
liability, and products and completed
operations coverage in an amount not less
than Five Million Dollars
($5,000,000.00) in the aggregate; (B)
commercial automobile liability insurance
with a policy limit of not less than Five
Million Dollars ($5,000,000.00) each
accident for bodily injury and property
damage, providing coverage at least as
broad as the Insurance Services Office
(ISO) Business Auto Coverage form
covering Automobile Liability, code 1 "any
auto," and insuring against all loss
in connection with the ownership,
maintenance and operation of automotive
equipment that is owned, hired or nonowned;
and (C) worker's compensation with
statutory limits and employer's liability
insurance with a limit of not less
than One Million Dollars ($1,000,000.00)
per occurrence. All insurance required
by this Article 10 shall be issued by
solvent companies qualified to do business
in the State of California, and with a Best
& Company rating of A:VIII or
better. All such insurance policies (except
workers' compensation insurance)
shall (i) provide that Landlord, Landlord's
managing agent, any Encumbrancer,
and any other person requested by Landlord
is designated as an additional
insured with respect to liability arising
out of work performed by or for
Tenant's general contractor without
limitation as to coverage afforded under
such policy pursuant to an endorsement
providing coverage at least as broad as
ISO form CG 20 37 10 01 or
25
<PAGE>
its equivalent, (2) specify that such
insurance is primary and that any
insurance or selfinsurance maintained by
Landlord shall not contribute with it,
and (3) provide that the insurer agrees not
to cancel the policy without at
least thirty (30) days' prior written
notice to all additional insureds (except
in the event of a cancellation as a result
of nonpayment, in which event the
insurer shall give all additional insureds
at least ten (10) days' prior
notice). Tenant shall cause Tenant's
general contractor to notify Landlord
within ten (10) days after any material
modification of any policy of insurance
required under this Article. Landlord may
inspect the original policies of such
insurance coverage at any time. Upon
Landlord's request, Tenant shall deliver
complete certified copies of such policies.
Tenant's general contractor shall
furnish Landlord evidence of insurance for
its subcontractors as may be
reasonably required by Landlord. Tenant
acknowledges and agrees that Landlord
may require other types of insurance
coverage and/or increase the insurance
limits set forth above if Landlord
determines such increase is required to
protect adequately the parties named as
insureds or additional insureds under
such insurance.
(d) Tenant shall give Landlord at least ten (10) days' prior
written notice of the date of commencement
of any construction on the Premises
to afford Landlord the opportunity of
posting and recording appropriate notices
of nonresponsibility. Tenant shall comply
with the requirements of Section
3110.5 of the California Civil Code as the
contracting owner, to the extent
applicable, and prior to commencement of
construction, Tenant shall provide
Landlord with evidence of compliance with
said statute. Tenant acknowledges that
the contractual waiver of the benefits of
California Civil Code Section 3110.5
is expressly declared to be against public
policy.
(e) Tenant shall promptly commence construction of
Alterations, cause such Alterations to be
constructed in a good and workmanlike
manner and in such a manner and at such
times so that any such work shall not
unreasonably disrupt or interfere with the
use, occupancy or operations of other
tenants or occupants of the Project, and
complete the same with due diligence as
soon as possible after commencement. All
trash which may accumulate in
connection with Tenant's construction
activities shall be removed by Tenant at
its own expense from the Premises and the
Project.
(f) In addition to the foregoing, as a condition of its
consent to Alterations hereunder, Landlord
may impose any reasonable
requirements that Landlord reasonably
considers necessary or desirable,
including a requirement that Tenant provide
Landlord with a surety bond, a
letter of credit, or other financial
assurance that the cost of the Alterations
exceeding Two Hundred Fifty Thousand
Dollars ($250,000.00) will be paid when
due.
10.3 Landlord's Right to Inspect. Landlord or its agents shall
have
the right (but not the obligation) to
inspect the construction of Alterations,
and to require corrections of faulty
construction or any material deviation from
the plans for such Alterations as approved
by Landlord; provided, however, that
no such inspection shall (i) be deemed to
create any liability on the part of
Landlord, or (ii) constitute a
representation by Landlord that the work so
inspected conforms with such plans or
complies with any applicable Requirements,
or (iii) give rise to a waiver of, or
estoppel with respect to, Landlord's
continuing right at any time or from time
to time to require the correction of
any faulty work or any material deviation
from such plans. In addition, under no
circumstances shall Landlord be liable to
Tenant for any damage, loss, cost or
26
<PAGE>
expense incurred by Tenant on account of
Tenant's plans and specifications,
Tenant's contractors, mechanics or
engineers, design or construction of any
Alteration, or delay in completion of any
Alteration.
10.4 Tenant's Obligations Upon Completion. Promptly following
completion of any Alterations, Tenant shall
(i) furnish to Landlord "as-built"
drawings and specifications in CAD format
showing the Alterations as made and
constructed in the Premises, (ii) cause a
timely notice of completion to be
recorded in the Office of the Recorder of
the County of San Francisco in
accordance with Civil Code Section 3093 or
any successor statute, and (iii)
deliver to Landlord evidence of full
payment and unconditional final waivers of
all liens for labor, services, or materials
in excess of Five Thousand Dollars
($5,000.00) in the aggregate (or record a
release bond in accordance with
California Civil Code Section 3143 where
there is a good faith dispute as to
cost).
10.5 Repairs. If any part of the Building Systems shall be
damaged
during the performance of Alterations,
Tenant shall promptly notify Landlord,
and Landlord may elect to repair such
damage at Tenant's expense. Alternatively,
Landlord may require Tenant to repair such
damage at Tenant's sole expense using
contractors approved by Landlord.
10.6 Ownership and Removal of Alterations.
(a) Ownership. All Alterations shall be surrendered at the
expiration or earlier termination of the
Term, unless Tenant shall be required
to remove any such Alterations as otherwise
provided in this Article 10;
provided, however, that equipment and
movable furniture shall remain the
property of Tenant.
(b) Removal. If required by Landlord, subject to the
provisions of Section 10.1 above, Tenant,
prior to the expiration of the Term or
termination of this Lease, shall, at
Tenant's sole cost and expense, (i) remove
any or all Alterations, (ii) restore the
Premises to the condition existing
prior to the installation of such
Alterations, and (iii) repair all damage to
the Premises or Project caused by the
removal of such Alterations. Tenant shall
use a contractor designated by Landlord for
such removal and repair. If Tenant
fails to remove, restore and repair under
this Section, then Landlord may remove
such Alterations and perform such
restoration and repair, and Tenant shall
reimburse Landlord for costs and expenses
incurred by Landlord in performing
such removal, restoration and repair.
Subject to the foregoing provisions
regarding removal, all Alterations shall be
Landlord's property and at the
expiration of the Term or termination of
this Lease shall remain on the Premises
without compensation to Tenant.
10.7 Minor Alterations. Notwithstanding any provision in
Section
10.1 above, Tenant may construct Minor
Alterations in the Premises without
Landlord's prior written consent, but with
prior notification to Landlord.
Before commencing construction of Minor
Alterations, Tenant shall submit to
Landlord such documentation as Landlord may
reasonably require to determine
whether Tenant's proposed Alterations
qualify as Minor Alterations. Except to
the extent inconsistent with this Section
10.7, Minor Alterations shall
otherwise comply with the provisions of
this Article 10. All references in this
Lease to "Alterations" shall mean and
include Minor Alterations, unless
specified to the contrary.
27
<PAGE>
10.8 Landlord's Fee. In connection with installing Major
Alterations
or removing Minor Alterations or Major
Alterations, Tenant shall pay Landlord's
reasonable charges for review and approval
of Tenant's plans, specifications and
working drawings, and administration by
Landlord of the construction,
installation or removal of Alterations, and
restoration of the Premises to their
previous condition, provided that
Landlord's review and administrative charges
shall not exceed, in the aggregate, two
percent (2%) of the hard costs of
installing or constructing the applicable
Alterations. If reasonably required
due to the nature of the proposed
Alterations, Landlord may hire third parties
to review Tenant's plans, specifications
and working drawings and/or to
supervise the construction, installation or
removal of Alterations from the
Premises, in which event Tenant shall also
reimburse Landlord for the reasonable
fees and costs charged by such third
parties. Tenant shall pay the amount of all
reasonable fees and costs owing pursuant to
this Section 10.8 within thirty (30)
days after receipt from Landlord of a
statement or invoice therefor.
11. Liens.
Tenant shall keep the Project free from any liens arising out
of any work performed or obligations
incurred by or for, or materials furnished
to, Tenant pursuant to this Lease or
otherwise. Landlord shall have the right to
post and keep posted on the Premises any
notices permitted or required by law or
which Landlord may deem to be proper for
the protection of Landlord and the
Project from such liens. If Tenant does
not, within ten (10) days following the
recording of notice of any such lien, cause
the same to be released of record or
bonded against, Landlord shall have, in
addition to all other remedies provided
herein and by law, the right, but not the
obligation, to cause the same to be
released by any means as Landlord shall
deem proper, including by payment of the
claim giving rise to such lien. All sums
paid by Landlord for such purpose, and
all expenses incurred by it in connection
therewith, shall be payable to
Landlord by Tenant, as additional rent, on
demand, together with interest at the
Default Interest Rate from the date such
expenses are incurred by Landlord to
the date of the payment thereof by Tenant
to Landlord. The bond permitted under
this Article shall be issued by a company
reasonably acceptable to Landlord.
12. Damage
or Destruction.
12.1 Obligation to Repair. Except as otherwise provided in this
Article 12, if the Premises, or any other
portion of the Project necessary for
Tenant's use and occupancy of the Premises,
are damaged or destroyed by
Casualty, Landlord shall, within sixty (60)
days after Landlord obtains actual
knowledge of such damage or destruction
("Casualty Discovery Date"), notify
Tenant of the estimated time, in Landlord's
reasonable judgment, required to
repair such damage or destruction ("Repair
Estimate"). If the Repair Estimate
indicates that the necessary repairs can be
completed within three hundred
sixty-five (365) days after the Casualty
Discovery Date, then subject to the
other provisions of this Article 12, (i)
Landlord shall repair the Premises,
and/or the portion of the Project necessary
for Tenant's use and occupancy of
the Premises, to substantially the
condition existing immediately before such
damage or destruction, to the extent
commercially reasonable and as permitted by
and subject to then applicable
Requirements; (ii) this Lease shall remain in
full force and effect; and (iii) Base Rent
and Escalation Rent shall abate for
such part of the Premises rendered unusable
by Tenant in the conduct of its
business during the time such part is so
unusable, in the proportion that the
rentable area contained in the unusable
part of the Premises bears to the total
rentable area of the Premises.
28
<PAGE>
12.2 Landlord's Election. If the Repair Estimate indicates that
the
necessary repairs cannot be completed (when
such repairs are made without the
payment of overtime or other premiums)
within three hundred sixty-five (365)
days after the Casualty Discovery Date,
Landlord may elect, in its Repair
Estimate, to terminate this Lease or to
repair the Premises and any portion of
the Project necessary for Tenant's use and
occupancy of the Premises in
accordance with the applicable provisions
of Section 12.1 above. In addition, if
(A) (i) any Encumbrancer requires, and in
Landlord's good faith judgment is
entitled to require, that insurance
proceeds be applied to the payment of debt
encumbering all or any portion of the
Project or (ii) material damage to the
Project occurs (whether or not the Premises
are affected) that is not fully
covered by insurance proceeds (excluding
deductibles), and (B) Landlord, in its
sole discretion, does not intend in the
reasonably foreseeable future to rebuild
the Project in substantially the same form
as existed before the fire or other
casualty, Landlord may elect, in its Repair
Estimate, to terminate this Lease or
repair the Premises and any portion of the
Project necessary for Tenant's use
and occupancy of the Premises; provided,
however, that Landlord shall not
exercise its termination right pursuant to
subsection (ii) above unless Landlord
also terminates the leases of other tenants
in the Building similarly affected
by the casualty and with respect to which
Landlord has comparable termination
rights. If Landlord terminates this Lease,
then this Lease shall terminate as of
the date specified in Landlord's
notice.
12.3 Tenant's Election. If Landlord does not elect to terminate
this
Lease pursuant to Section 12.2 above, and
the Repair Estimate indicates that
repairs cannot be completed within three
hundred sixty-five (365) days after the
Casualty Discovery Date, Tenant may elect
to terminate this Lease by giving
written notice of such election to Landlord
within ten (10) business days after
receipt of the Repair Estimate. If Tenant
terminates this Lease, then this Lease
shall terminate as of the date specified in
Tenant's notice, but in no event
later than thirty (30) days after
Landlord's receipt of Tenant's termination
notice.
12.4 Cost of Repairs. Upon the occurrence of any damage to the
Premises, Tenant shall assign to Landlord
(or to any party designated by
Landlord) all insurance proceeds payable to
Tenant under the insurance policies
Tenant is required to carry under
subsections (ii) and (iii) of Section 14.1(c).
If neither party elects to terminate this
Lease pursuant to the provisions of
this Article 12, Landlord shall repair the
Building Systems and any portion of
the Project necessary for Tenant's use and
occupancy of the Premises and, to the
extent Landlord receives insurance proceeds
therefor, all improvements in the
Premises, including Alterations. Tenant
shall replace or repair, at Tenant's
cost and expense, Tenant's furniture,
equipment, trade fixtures and other
personal property in the Premises.
12.5 Damage at End of Term. Notwithstanding anything to the
contrary
contained in this Article 12, if the
Premises, or any portion thereof or of the
Project, are damaged or destroyed by
Casualty within the last twelve (12) months
of the Term, and the Repair Estimate
indicates that the necessary repairs cannot
be completed (when such repairs are made
without the payment of overtime or
other premiums) so that at least six (6)
full calendar months will remain in the
Term following completion of the repairs,
then either party shall have the
right, in its sole discretion, to terminate
this Lease by notice to the other
party. Landlord's notice of termination
shall be included in the Repair
Estimate. Tenant's notice of termination
must be given to Landlord within ten
(10) days after Tenant's receipt of the
Repair Estimate. Such termination
29
<PAGE>
shall be effective on the date specified in
either party's termination notice to
the other party, but in no event later than
thirty (30) days after Tenant's
receipt of the Repair Estimate.
12.6 Waiver of Statutes. The respective rights and obligations
of
Landlord and Tenant in the event of any
damage to or destruction of the
Premises, or any other portion of the
Project, are governed exclusively by this
Lease. Accordingly, Tenant hereby waives
the provisions of any law to the
contrary, including California Civil Code
Sections 1932(2) and 1933(4),
providing for the termination of a lease
upon destruction of the leased
property.
13.
Eminent Domain.
13.1 Effect of Taking. Except as otherwise provided in this
Article
13, if all or any part of the Premises is
taken as a result of the exercise of
the power of eminent domain or condemned
for any public or quasipublic purpose,
or if any transfer is made in avoidance of
such exercise of the power of eminent
domain (collectively, "taken" or a
"taking"), this Lease shall terminate as to
the part of the Premises so taken as of the
effective date of such taking. On a
taking of a portion of the Premises,
Landlord and Tenant shall each have the
right to terminate this Lease by notice to
the other given within sixty (60)
days after the effective date of such
taking, if the portion of the Premises
taken is of such extent and nature so as to
materially impair Tenant's operation
of its business in the balance of the
Premises. Such termination shall be
operative as of the effective date of the
taking. Landlord may also terminate
this Lease on a taking of any portion of
the Project if Landlord determines in
its sole discretion that (i) such taking is
of such extent and nature as to
render the operation of the remaining
Project economically infeasible or to
require a substantial alteration or
reconstruction of such remaining portion, or
(ii) the amount of the award payable to
Landlord under Section 13.2 below, after
deducting all costs and expenses incurred
by Landlord in connection with such
taking, is not sufficient to restore the
Project (including the Premises)
pursuant to Section 13.3 below and Landlord
does not then intend to restore the
Project. Landlord shall elect termination
under clause (i) or (ii) above by
notice to Tenant given within ninety (90)
days after the effective date of such
taking or as soon thereafter as possible,
and such termination shall be
operative as of the effective date of such
taking. Upon a taking of the Premises
which does not result in a termination of
this Lease (other than as to the part
of the Premises so taken), the Base Rent
shall thereafter be reduced as of the
effective date of such taking in the
proportion that the rentable area of the
Premises so taken bears to the total
rentable area of the Premises.
13.2 Condemnation Proceeds. All compensation awarded or received
in
connection with a taking shall be the
property of Landlord, and Tenant hereby
assigns to Landlord any and all elements of
said compensation which Tenant
would, in the absence of said assignment,
have been entitled to receive.
Specifically, and without limiting the
generality of the foregoing, said
assignment is intended to include: (i) the
"bonus value" represented by the
difference, if any, between Rent under this
Lease and market rent for the
unexpired Term of this Lease, (ii) the
value of improvements to the Premises,
whether said improvements were paid for by
Landlord or by Tenant, and (iii) the
value of any and all other items and
categories of property for which payment of
compensation may be made in any such
taking. Notwithstanding the foregoing,
Tenant shall be entitled to receive any
award of compensation for (1) loss of or
damage to the goodwill of Tenant's business
(but only to the extent the same
does not constitute "bonus value"), (2) any
loss incurred by Tenant in removing
Tenant's furniture, trade fixtures and
30
<PAGE>
equipment and (3) any business interruption
or relocation expenses which Tenant
is entitled under the law to recover
directly from the public agency which
acquires the Premises.
13.3 Restoration of Premises. On a taking of the Premises which
does
not result in a termination of this Lease
(other than as to the part of the
Premises so taken), Landlord and Tenant
shall restore the Premises to
substantially the condition existing
immediately before such taking, to the
extent commercially reasonable and as
permitted by and subject to then
applicable Requirements. Landlord and
Tenant shall perform such restoration in
accordance with the applicable provisions
and allocation of responsibility for
repair and restoration of the Premises on
damage or destruction pursuant to
Article 12 above, and both parties shall
use any awards received by such party
attributable to the restoring of the
Premises for such purpose.
13.4 Taking at End of Term. Notwithstanding anything to the
contrary
contained in this Article 13, if the
Premises, or any portion thereof or of the
Project, are taken within the last twelve
(12) months of the Term, then either
party shall have the right, in its sole
discretion, to terminate this Lease by
notice to the other party given within
thirty (30) days after the date of such
taking. Such termination shall be effective
on the date specified in either
party's notice to the other party, but in
no event later than the end of such
30day period.
13.5 Tenant Waiver. The rights and obligations of Landlord and
Tenant on any taking of the Premises or any
other portion of the Project are
governed exclusively by this Lease.
Accordingly, Tenant hereby waives the
provisions of any law to the contrary,
including California Code of Civil
Procedure Sections 1265.120 and 1265.130,
or any similar successor statute.
14.
Insurance.
14.1 Tenant's Insurance. Tenant, at its cost and expense, shall
procure and maintain, from the Lease Date
and throughout the Term, the following
insurance:
(a) Commercial General Liability Insurance. Tenant shall
maintain a policy(ies) of commercial
general liability insurance written on an
"occurrence" basis, with limits of
liability, in the aggregate, of not less than
Five Million Dollars ($5,000,000.00). Such
policy(ies) shall cover bodily
injury, property damage, personal injury,
and advertising injury arising out of
or relating (directly or indirectly) to
Tenant's business operations, conduct,
assumed liabilities, or use or occupancy of
the Premises or the Project, and
shall include all the coverages typically
provided by the Broad Form Commercial
General Liability Endorsement, including
broad form property damage coverage
(which shall include coverage for completed
operations). Tenant's liability
coverage shall further include
premises-operations coverage, products liability
coverage (if applicable),
products-completed operations coverage, owners and
contractors protective coverage (when
reasonably required by Landlord), and
blanket contractual coverage including both
oral and written contracts. It is
the parties' intent that Tenant's
contractual liability coverage provide
coverage to the maximum extent possible of
Tenant's indemnification obligations
under this Lease.
(b) Tenant's Workers' Compensation and Employer Liability
Coverage. Tenant shall maintain workers'
compensation insurance as required by
law and
31
<PAGE>
employer's liability insurance with limits
of no less than One Million Dollars
($1,000,000.00) per occurrence.
(c) Tenant's Property Insurance. Tenant shall maintain
property insurance coverage for (i) all
office furniture, trade fixtures, office
equipment, merchandise, and all other items
of Tenant's property in, on, at, or
about the Premises and the Project, (ii)
the Tenant Improvements, as that term
is defined in the Work Letter (including
during installation and after
completion), and any other improvements
which exist in the Premises as of the
date of this Lease, and (iii) all
Alterations (including during installation and
after completion). Such policy shall (A) be
written on the broadest available
"all risk" (special-causes-of-loss) policy
form or an equivalent form acceptable
to Landlord, (B) include an agreed-amount
endorsement for no less than the full
replacement cost (new without deduction for
depreciation) of the covered items
and property, and (C) include vandalism and
malicious mischief coverage,
sprinkler leakage coverage, and earthquake
sprinkler leakage coverage.
(d) Business Interruption, Loss of Income, and Extra Expense
Coverage. Tenant shall maintain business
interruption, loss of income, and extra
expense insurance, to the extent such
insurance is commercially available at
reasonable terms, covering all direct or
indirect loss of income and charges and
costs incurred arising out of all perils,
failures, or interruptions covered
under the broadest available "all risk"
policy, including any failure or
interruption of Tenant's business equipment
(including, without limitation,
telecommunications equipment), and the
prevention of, or denial of use of or
access to, all or part of the Premises or
the Project, as a result of those
perils, failures, or interruptions. The
business interruption, loss of income,
and extra expense coverage shall provide
coverage for no less than twelve (12)
months and shall be carried in amounts
necessary to avoid any coinsurance
penalty that could apply. The business
interruption, loss of income and extra
expense coverage shall be issued by the
insurer that issues Tenant's property
insurance under Section 14.1(c) above.
(e) Other Tenant Insurance Coverage. Not more often than once
every year and upon not less than thirty
(30) days' prior written notice,
Landlord may require Tenant, at Tenant's
sole cost and expense, to procure and
maintain other types of insurance coverage
and/or increase the insurance limits
set forth above if Landlord reasonably
determines such increase is required to
protect adequately the parties named as
insureds or additional insureds under
such insurance.
14.2 Form of Policies. The minimum limits of policies and
Tenant's
procurement and maintenance of such
policies described in Section 14.1 shall in
no event limit the liability of Tenant
under this Lease. All insurance required
by this Article 14 shall be issued on an
occurrence basis by solvent companies
qualified to do business in the State of
California, and with a Best & Company
rating of A:VIII or better. Any insurance
policy under this Article 14 may be
maintained under a "blanket policy,"
insuring other parties and other locations,
so long as the amount and coverage required
to be provided hereunder is not
thereby diminished. No policy maintained by
Tenant under this Article 14 shall
contain a deductible greater than
Twenty-Five Thousand Dollars ($25,000.00).
Tenant shall provide Landlord a certificate
of each policy of insurance required
hereunder certifying that the policies
contain the provisions required. Tenant
shall deliver such certificates to Landlord
within thirty (30) days after the
Lease Date, but in no event later than the
date that Tenant or any other Tenant
Parties first enter
32
<PAGE>
the Premises and, upon renewal, not fewer
than ten (10) days prior to the
expiration of such coverage. In addition,
Tenant shall deliver to Landlord a
copy of each policy of insurance required
hereunder upon Landlord's request. All
Tenant's liability insurance shall provide
(i) that Landlord, Landlord's
managing agent, any Encumbrancer, and any
other person requested by Landlord, is
designated as an additional insured without
limitation as to coverage afforded
under such policy pursuant to an
endorsement
