STANDARD OFFICE LEASE
BY AND BETWEEN
ARDEN REALTY FINANCE PARTNERSHIP, L.P.
a California limited partnership,
AS LANDLORD,
AND
DIGITAL INSIGHT CORPORATION,
a Delaware corporation,
AS TENANT
Suite 100
5601 LINDERO CANYON ROAD
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TABLE OF CONTENTS
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Page
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ARTICLE 1 BASIC LEASE PROVISIONS..................................... 1
ARTICLE 2 TERM/PREMISES.............................................. 2
ARTICLE 3 RENTAL..................................................... 2
(a) Basic Rental............................................... 2
(b) Increase in Direct Costs................................... 3
(c) Definitions................................................ 3
(d) Determination of Payment................................... 5
ARTICLE 4 SECURITY DEPOSIT........................................... 6
ARTICLE 5 HOLDING OVER............................................... 8
ARTICLE 6 PERSONAL PROPERTY TAXES.................................... 9
ARTICLE 7 USE........................................................ 9
ARTICLE 8 CONDITION OF PREMISES...................................... 9
ARTICLE 9 REPAIRS AND ALTERATIONS.................................... 10
ARTICLE 10 LIENS...................................................... 11
ARTICLE 11 PROJECT SERVICES........................................... 12
ARTICLE 12 RIGHTS OF LANDLORD......................................... 13
ARTICLE 13 INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY............ 13
(a) Indemnity.................................................. 13
(b) Exemption of Landlord from Liability....................... 14
ARTICLE 14 INSURANCE.................................................. 14
(a) Tenant's Insurance......................................... 14
(b) Form of Policies........................................... 14
(c) Landlord's Insurance....................................... 15
(d) Waiver of Subrogation...................................... 15
(e) Compliance with Law........................................ 15
ARTICLE 15 ASSIGNMENT AND SUBLETTING.................................. 15
ARTICLE 16 DAMAGE OR DESTRUCTION...................................... 18
ARTICLE 17 SUBORDINATION.............................................. 18
ARTICLE 18 EMINENT DOMAIN............................................. 19
ARTICLE 19 DEFAULT.................................................... 19
ARTICLE 20 REMEDIES................................................... 20
ARTICLE 21 TRANSFER OF LANDLORD'S INTEREST............................ 21
ARTICLE 22 BROKER..................................................... 22
ARTICLE 23 PARKING.................................................... 22
ARTICLE 24 WAIVER..................................................... 22
ARTICLE 25 ESTOPPEL CERTIFICATE....................................... 23
ARTICLE 26 LIABILITY OF LANDLORD...................................... 23
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ARTICLE 27 INABILITY TO PERFORM....................................... 23
ARTICLE 28 HAZARDOUS WASTE............................................ 24
ARTICLE 29 SURRENDER OF PREMISES; REMOVAL OF PROPERTY................. 25
ARTICLE 30 MISCELLANEOUS.............................................. 25
(a) Severability; Entire Agreement............................. 26
(b) Attorneys' Fees; Waiver of Jury Trial...................... 26
(c) Time of Essence............................................ 26
(d) Headings................................................... 26
(e) Reserved Area.............................................. 26
(f) NO OPTION.................................................. 26
(g) Use of Project Name; Improvements.......................... 27
(h) Rules and Regulations...................................... 27
(i) Quiet Possession........................................... 27
(j) Rent....................................................... 27
(k) Successors and Assigns..................................... 27
(l) Notices.................................................... 27
(m) Persistent Delinquencies................................... 27
(n) Right of Landlord to Perform............................... 27
(o) Access, Changes in Project, Facilities, Name............... 28
(p) Corporate Authority........................................ 28
(q) Identification of Tenant................................... 28
(r) Intentionally Deleted...................................... 29
(s) Survival of Obligations.................................... 29
(t) Confidentiality............................................ 29
(u) Exhibits and Addendum...................................... 29
(v) Americans With Disabilities Act and Seismic Requirements... 29
(w) Governing Law.............................................. 29
(x) Communication Equipment.................................... 29
ARTICLE 31 OPTION TO EXTEND........................................... 30
(a) Option Right............................................... 30
(b) Option Rent................................................ 30
(c) Exercise of Option......................................... 30
(d) Determination of Market Rent............................... 31
ARTICLE 32 RIGHT OF FIRST OFFER....................................... 31
(a) Procedure for Offer........................................ 32
(b) Procedure for Acceptance................................... 32
(c) Construction of First Offer Space.......................... 32
(d) Lease of First Offer Space................................. 32
(e) No Defaults................................................ 32
ARTICLE 33 SIGNAGE/DIRECTORY.......................................... 33
(a) Premises Identification/Monument Signage................... 33
(b) Building Top Sign.......................................... 33
(c) Miscellaneous Signage Provisions........................... 33
Exhibit "A" Premises
Exhibit "B" Rules and Regulations
Exhibit "C" Notice of Lease Term Dates and Tenant's Proportionate Share
Exhibit "D" Tenant Work Letter
Exhibit "E" Letter of Credit
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INDEX
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Page(s)
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Adjustment Dates................................................................ 7
Affiliate....................................................................... 17
Alterations..................................................................... 10
Applicant....................................................................... Exhibit E
Approved Working Drawings....................................................... Exhibit D
Architect....................................................................... Exhibit D
Base Year....................................................................... 1
Base, Shell and Core............................................................ Exhibit D
Basic Rental.................................................................... 1
Beneficiary..................................................................... Exhibit E
Brokers......................................................................... 2
Code............................................................................ Exhibit D
Commencement Date............................................................... 1
Comparison Area................................................................. 30
Construction Drawings........................................................... Exhibit D
Contractor...................................................................... Exhibit D
Control......................................................................... 17
Cosmetic Alterations............................................................ 10
Demolition Allowance............................................................ 1
Deposit Adjustment Dates........................................................ 6
Economic Terms.................................................................. 32
Engineers....................................................................... Exhibit D
Estimate........................................................................ 4
Estimate Statement.............................................................. 4
Estimated Direct Costs.......................................................... 4
Event of Default................................................................ 19
Expiration Date................................................................. 1
Final Retention................................................................. Exhibit D
Final Space Plan................................................................ Exhibit D
Final Working Drawings.......................................................... Exhibit D
First Month's Rent.............................................................. 2
First Offer Notice.............................................................. 31
First Offer Space............................................................... 31
Force Majeure................................................................... 23
Hazardous Material.............................................................. 24
HVAC System..................................................................... 12
Improvement Allowance........................................................... Exhibit D
Improvement Allowance Items..................................................... Exhibit D
Improvements.................................................................... 1
Increased Improvement Allowance................................................. Exhibit D
Interest Notice................................................................. 30
Landlord........................................................................ 1
Landlord Coordination Fee....................................................... Exhibit D
Landlord's Work................................................................. Exhibit D
Laws............................................................................ 24
Lease........................................................................... 1
Lease Year...................................................................... 2
Letter of Credit................................................................ 7
Market Rent..................................................................... 30
Monument Signage................................................................ 33
Operating Costs................................................................. 3
Option Rent..................................................................... 30
Option Rent Notice.............................................................. 30
Option Term..................................................................... 30
Options......................................................................... 30
Original Tenant................................................................. 30
Outside Agreement Date.......................................................... 31
Parking Passes.................................................................. 2
Partnership Tenant.............................................................. 28
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Permits......................................................................... Exhibit D
Permitted Assignee.............................................................. 17
Permitted Use................................................................... 1
Premises........................................................................ 1
Project......................................................................... 1
Real Property................................................................... 3
Rent Start Date................................................................. 2
Representative.................................................................. 23
Review Period................................................................... 5
Security Deposit................................................................ 1
Specifications.................................................................. Exhibit D
Square Footage.................................................................. 1
Standard Improvement Package.................................................... Exhibit D
Stated Amount................................................................... 7
Statement....................................................................... 5
Superior Lease.................................................................. 31
Superior Rights................................................................. 31
Tax Costs....................................................................... 3
Tenant.......................................................................... 1
Tenant Improvements............................................................. 10
Tenant's Acceptance............................................................. 30
Tenant's Agents................................................................. Exhibit D
Tenant's Proportionate Share.................................................... 1
Tenant's Signage................................................................ 33
Term............................................................................ 1
Transfer........................................................................ 16
Transfer Premium................................................................ 16
Transferee...................................................................... 16
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STANDARD OFFICE LEASE
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This Standard Office Lease ("Lease") is made and entered into as of this
6th day of March, 2000, by and between ARDEN REALTY FINANCE PARTNERSHIP, L.P., a
California limited partnership ("Landlord"), and DIGITAL INSIGHT CORPORATION, a
Delaware corporation ("Tenant").
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises known as Suite 100, and designated on the plan attached hereto and
incorporated herein as Exhibit "A" ("Premises"), located in the project
("Project") whose address is 5601 Lindero Canyon Road, Westlake Village,
California for the Term and upon the terms and conditions hereinafter set forth,
and Landlord and Tenant hereby agree as follows:
ARTICLE 1
BASIC LEASE PROVISIONS
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A. Term: The period from the Commencement Date
through the Expiration Date.
Commencement Date: The date of full execution and delivery of
this Lease. Upon Tenant's occupancy of the
Premises, Landlord and Tenant agree to
execute and deliver a Commencement Letter
in a form substantially similar to that
attached hereto as Exhibit "C".
Expiration Date: March 31, 2005 (as such date may be
extended by Section 5.5 of the Tenant Work
Letter).
B. Square Footage: 52,130 rentable square feet.
C. Basic Rental:
Annual Monthly Monthly Basic Rental
Lease Year Basic Rental Basic Rental Per Rentable Square Foot
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1-5 $844,506.00* 70,375.50* $1.35*
* Subject to abatement as set forth in Article 3 below and subject to increase
as provided in Section 2.1 of the Tenant Work Letter.
D. Base Year: Not applicable (Triple Net Lease)
E. Tenant's Proportionate Share: 49.26%
F. Security Deposit: A Letter of Credit or a cash Security
Deposit in the amount of $760,000.00 shall
be provided to Landlord upon Tenant's
execution of this Lease. Tenant will
deposit an additional Letter of Credit or
shall increase the amount of the existing
cash Security Deposit or Letter of Credit
in the event Tenant elects to exercise its
option pursuant to Section 2.1 of the
Tenant Work Letter.
G. Permitted Use: General office use, including data center
operations, storage and other legally
permitted uses attendant thereto so long
as such uses are compatible with an office
building of comparable quality in the
Comparison Area and do not conflict with
the terms of this Lease.
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H. Brokers: Cushman & Wakefield of California, Inc.
I. Parking Passes: Tenant shall have the use of two hundred
(200) unreserved parking passes, as
provided in Article 23 hereof.
J. First Month's Rent: An amount equal to $59,175.50 shall be due
and payable by Tenant to Landlord upon
Tenant's execution of this Lease and shall
be applied to monthly Basic Rental
pursuant to Article 3.
ARTICLE 2
TERM/PREMISES
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The Term of this Lease shall commence on the Commencement Date as set forth
in Article 1.A. of the Basic Lease Provisions and shall end on the Expiration
Date set forth in Article 1.A. of the Basic Lease Provisions. Notwithstanding
the fact that the Commencement Date has occurred, Tenant shall not be
responsible for the payment of rent during the period ("Abatement Period") from
the Commencement Date until the earlier of (i) the date Tenant commences to
conduct business from the Premises or (ii) April 1, 2000. For purposes of this
Lease, the term "Lease Year" shall mean each consecutive twelve (12) month
period during the Lease Term, with the first Lease Year commencing on the day
after the date of expiration of the Abatement Period; however, (a) if the day
after the date of expiration of the Abatement Period falls on a day other than
the first day of a calendar month, the first Lease Year shall end on the last
day of the eleventh (11th) month after the day after the date of expiration of
the Abatement Period and the second (2nd) and each succeeding Lease Year shall
commence on the first day of the next calendar month, and (b) the last Lease
Year shall end on the Expiration Date. If Landlord is unable to deliver
possession of the Premises to Tenant on or before the anticipated date of
expiration of the Abatement Period as a result of the failure of the existing
occupant to surrender all or any portion of such space or for any other reason,
Landlord shall not be subject to any liability for its failure to do so, and
such failure shall not affect the validity of this Lease nor the obligations of
Tenant hereunder. Landlord and Tenant hereby stipulate that the Premises
contains the number of rentable square feet specified in Section 1.B of the
Basic Lease Provisions.
ARTICLE 3
RENTAL
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(a) Basic Rental. Commencing upon expiration of the Abatement Period,
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Tenant agrees to pay to Landlord during the Term hereof, at Landlord's office or
to such other person or at such other place as directed from time to time by
written notice to Tenant from Landlord, the initial monthly and annual sums as
set forth in Article 1.C of the Basic Lease Provisions, payable in advance on
the first day of each calendar month, without demand, setoff or deduction, and
in the event this Lease commences or the date of expiration of this Lease occurs
other than on the first day or last day of a calendar month, the rent for such
month shall be prorated. Notwithstanding anything to the contrary contained
herein and provided that Tenant faithfully performs all of the terms and
conditions of this Lease, Landlord hereby agrees to abate Tenant's obligation to
pay monthly Basic Rental through August 31, 2000 ("Rent Start Date") (as such
date may be extended by an "Uncontrollable Delay" and/or by a "Landlord Delay")
as those terms are defined in Section 5.5 of the Tenant Work Letter), and
monthly Basic Rental for the month of September, 2000 (or the month after the
Rent Start Date if such date is extended pursuant to Section 5.5 of the Tenant
Work Letter) shall be partially abated such that the monthly Basic Rental for
September, 2000 (or such later month) shall be reduced by an amount equal to
Eleven Thousand Two Hundred and 00/100 Dollars ($11,200.00) (i.e., in the event
there are no Uncontrollable Delays, Tenant shall pay monthly Basic Rental in the
amount of Fifty-Nine Thousand One Hundred Seventy-Five and 50/100 Dollars
($59,175.50) for the month of September). During such abatement period, Tenant
shall still be responsible for the payment of all of its other monetary
obligations under the Lease including, without limitation, Tenant's
Proportionate Share (based on the full square footage of the Premises) of Direct
Costs.
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Notwithstanding the foregoing, the amount specified in Article 1.J. of the Basic
Lease Provisions shall be paid by Tenant to Landlord concurrently with Tenant's
execution of this Lease and shall be applied to Tenant's first obligations to
pay monthly Basic Rental under this Lease.
(b) Increase in Direct Costs. Tenant shall pay an additional sum for each
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subsequent calendar year equal to the product of the amount set forth in Article
1.E. of the Basic Lease Provisions multiplied by the amount of "Direct Costs."
In the event either the Premises and/or the Project is expanded or reduced, then
Tenant's Proportionate Share shall be appropriately adjusted, and as to the
calendar year in which such change occurs, Tenant's Proportionate Share for such
year shall be determined on the basis of the number of days during that
particular calendar year that such Tenant's Proportionate Share was in effect.
In the event this Lease shall terminate on any date other than the last day of a
calendar year, the additional sum payable hereunder by Tenant during the
calendar year in which this Lease terminates shall be prorated on the basis of
the relationship which the number of days which have elapsed from the
commencement of said calendar year to and including said date on which this
Lease terminates bears to three hundred sixty (360). Any and all amounts due and
payable by Tenant pursuant to Article 3(b),(c) and (d) hereof shall be deemed
"Additional Rent" and Landlord shall be entitled to exercise the same rights and
remedies upon default in these payments as Landlord is entitled to exercise with
respect to defaults in monthly Basic Rental payments.
(c) Definitions. As used herein the term "Direct Costs" shall mean the
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sum of the following:
(i) "Tax Costs", which shall mean any and all real estate taxes and
other similar charges on real property or improvements, assessments, water and
sewer charges, and all other charges assessed, reassessed or levied upon the
Project and appurtenances thereto and the parking or other facilities thereof,
or the real property thereunder (collectively the "Real Property") or
attributable thereto or on the rents, issues, profits or income received or
derived therefrom which are assessed, reassessed or levied by the United States,
the State of California or any local government authority or agency or any
political subdivision thereof, and shall include Landlord's reasonable legal
fees, costs and disbursements incurred in connection with proceedings for
reduction of Tax Costs or any part thereof; provided, however, if at any time
after the date of this Lease the methods of taxation now prevailing shall be
altered so that in lieu of or as a supplement to or a substitute for the whole
or any part of any Tax Costs, there shall be assessed, reassessed or levied (a)
a tax, assessment, reassessment, levy, imposition or charge wholly or partially
as a net income, capital or franchise levy or otherwise on the rents, issues,
profits or income derived therefrom, or (b) a tax, assessment, reassessment,
levy (including but not limited to any municipal, state or federal levy),
imposition or charge measured by or based in whole or in part upon the Real
Property and imposed upon Landlord, or (c) a license fee measured by the rent
payable under this Lease, then all such taxes, assessments, reassessments or
levies or the part thereof so measured or based, shall be deemed to be included
in the term "Direct Costs."
(ii) "Operating Costs", which shall mean all costs and expenses
incurred by Landlord in connection with the maintenance, operation, replacement,
ownership and repair of the Project, the equipment, the intrabuilding network
cable, adjacent walks, malls and landscaped and common areas and the parking
structure, areas and facilities of the Project, including, but not limited to,
salaries, wages, medical, surgical and general welfare benefits and pension
payments, payroll taxes, fringe benefits, employment taxes, workers'
compensation, uniforms and dry cleaning thereof for all persons who perform
duties connected with the operation, maintenance and repair of the Project, its
equipment, the intrabuilding network cable and the adjacent walks and landscaped
areas, including janitorial (for the common areas of the Project only),
gardening, security, parking, operating engineer, elevator, painting, plumbing,
electrical (for the common areas of the Project only), carpentry, heating,
ventilation, air conditioning, window washing, hired services, a reasonable
allowance for depreciation of the cost of acquiring or the rental expense of
personal property used in the maintenance, operation and repair of the Project,
accountant's fees incurred in the preparation of rent adjustment statements,
legal fees, real estate tax consulting fees, personal property taxes on property
used in the maintenance and operation of the Project, capital expenditures
incurred to effect economies of operation and capital expenditures required by
government regulations, laws, or ordinances including, but not limited to the
Americans with Disabilities Act, which legal requirements are not in effect as
of the Commencement Date or which are not to cure violations of law which exist
on or prior to the Commencement Date; the cost of all charges for electricity,
gas, water and other utilities
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furnished to the Project, including any taxes thereon; the cost of all charges
for fire and extended coverage, liability and all other insurance for the
Project carried by Landlord; the cost of all building and cleaning supplies and
materials; the cost of all charges for cleaning, maintenance and service
contracts and other services with independent contractors and administration
fees; a property management fee (which fee may be imputed if Landlord has
internalized management or otherwise acts as its own property manager) and
license, permit and inspection fees relating to the Project. In the event,
during any calendar year, the Project is less than ninety-five percent (95%)
occupied at all times, Operating Costs shall be adjusted to reflect the
Operating Costs of the Project as though ninety-five percent (95%) were occupied
at all times, and the increase or decrease in the sums owed hereunder shall be
based upon such Operating Costs as so adjusted. Notwithstanding anything to the
contrary set forth in this Article 3, when calculating Operating Costs for the
Base Year, unless and to the extent Operating Costs for the applicable
subsequent calendar year include the following items, Operating Costs shall
exclude (a) market-wide labor-rate increases due to extraordinary circumstances
including, but not limited to, boycotts and strikes, (b) utility rate increases
due to extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages, and (c) amortization of any
capital items including, but not limited to, capital improvements, capital
repairs and capital replacements (including such amortized costs where the
actual improvement, repair or replacement was made in prior years).
Notwithstanding anything above to the contrary, Operating Costs shall
not include (1) the cost of providing any service directly to and paid directly
by any tenant (outside of such tenant's Direct Cost payments); (2) the cost of
any items for which Landlord is reimbursed by insurance proceeds, condemnation
awards, a tenant of the Project, or otherwise to the extent so reimbursed; (3)
any real estate brokerage commissions or other costs incurred in procuring
tenants, or any fee in lieu of commission; (4) depreciation, amortization of
principal and interest on mortgages or ground lease payments (if any); (5) costs
of items considered capital repairs, replacements, improvements and equipment
under generally accepted accounting principles consistently applied except as
expressly included in Operating Costs pursuant to the definition above (i.e. the
only capital expenditures which may be included in Operating Costs are those
incurred to effect economies of operation and capital expenditures required by
government regulations, laws, or ordinances including, but not limited to the
Americans with Disabilities Act, which legal requirements are not in effect as
of the Commencement Date or which are not to cure violations of law which exist
on or prior to the Commencement Date); (6) costs incurred by Landlord due to the
violation by Landlord or any tenant of the terms and conditions of any lease of
space in the Project or any law, code, regulation, ordinance or the like; (7)
Landlord's general corporate overhead and general and administrative expenses;
(8) any compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord (other than in the parking facility for the
Project); (9) costs incurred in connection with upgrading the Project to comply
with disability, life, seismic, fire and safety codes, ordinances, statutes, or
other laws in effect prior to the Commencement Date, including, without
limitation, the ADA, including penalties or damages incurred due to such non-
compliance; and (10) costs incurred to (i) comply with laws relating to the
removal of any "Hazardous Material," as that term is defined in Article 28 of
this Lease, which was in existence on the Project prior to the Commencement
Date, and was of such a nature that a federal, state or municipal governmental
authority, if it had then had knowledge of the presence of such Hazardous
Material, in the state, and under the conditions that it then existed on the
Project, would have then required the removal of such Hazardous Material or
other remedial or containment action with respect thereto, and (ii) to remove,
remedy, contain, or treat any Hazardous Material, which Hazardous Material is
brought onto the Project after the date hereof by Landlord or any other tenant
of the Project and is of such a nature, at that time, that a federal, state or
municipal governmental authority, if it had then had knowledge of the presence
of such Hazardous Material, in the state, and under the conditions, that it then
exists on the Project, would have then required the removal of such Hazardous
Material or other remedial or containment action with respect thereto.
(d) Determination of Payment.
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(i) Landlord shall give Tenant a yearly expense estimate statement
(the "Estimate Statement") which shall set forth Landlord's reasonable estimate
(the "Estimate") of what the total amount of Direct Costs for the then-current
calendar year shall be the "Estimated Direct Costs". The failure of Landlord to
timely furnish the Estimate Statement for any calendar year shall not preclude
Landlord from enforcing its rights to collect any Estimated Direct Costs under
this Article 3. Tenant shall pay, with its next installment of Monthly Basic
Rental due, a
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fraction of the Estimated Direct Costs for the then-current calendar year
(reduced by any amounts paid pursuant to the last sentence of this Section
3(d)(ii)). Such fraction shall have as its numerator the number of months which
have elapsed in such current calendar year to the month of such payment, both
months inclusive, and shall have twelve (12) as its denominator. Until a new
Estimate Statement is furnished, Tenant shall pay monthly, with the Monthly
Basic Rental installments, an amount equal to one-twelfth (1/12) of the total
Estimated Direct Costs set forth in the previous Estimate Statement delivered by
Landlord to Tenant.
(ii) In addition, Landlord shall endeavor to give to Tenant on or
before the first day of April following the end of each calendar year, a
statement (the "Statement") which shall state the Direct Costs incurred or
accrued for such preceding calendar year. Upon receipt of the Statement for each
calendar year during the Term, if amounts paid by Tenant as Estimated Direct
Costs are less than Tenant's actual Proportionate Share of Direct Costs as
specified on the Statement, Tenant shall pay, with its next installment of
Monthly Basic Rental due, the full amount of Tenant's Proportionate Share of
Direct Costs for such calendar year, less the amounts, if any, paid during such
calendar year as Estimated Direct Costs. If, however, the Statement indicates
that amounts paid by Tenant as Estimated Direct Costs are greater than Tenant's
actual Proportionate Share of Direct Costs as specified on the Statement, such
overpayment shall be credited against Tenant's next installments of Estimated
Basic Rental. The failure of Landlord to timely furnish the Statement for any
calendar year shall not prejudice Landlord from enforcing its rights under this
Article 3. Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant's Proportionate Share of the
Direct Costs for the calendar year in which this Lease terminates, if an Excess
is present Tenant has underpaid Direct Costs, Tenant shall immediately pay to
Landlord an amount as calculated pursuant to the provisions of this Article
3(d), and if Tenant has overpaid Direct Costs, such excess shall be immediately
refunded to Tenant. The provisions of this Section 3(d)(iii) shall survive the
expiration or earlier termination of the Term.
(iii) Within one hundred twenty (120) days after receipt of a
Statement by Tenant ("Review Period"), if Tenant disputes the amount set forth
in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or regionally
recognized accounting firm), designated by Tenant, may, after reasonable notice
to Landlord and at reasonable times, inspect Landlord's records at Landlord's
offices, provided that Tenant is not then in default after expiration of all
applicable cure periods and provided further that Tenant and such accountant or
representative shall, and each of them shall use their commercially reasonable
efforts to cause their respective agents and employees to, maintain all
information contained in Landlord's records in strict confidence.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. Tenant's
failure to dispute the amounts set forth in any Statement within the Review
Period shall be deemed to be Tenant's approval of such Statement and Tenant,
thereafter, waives the right or ability to dispute the amounts set forth in such
Statement. If after such inspection, but within thirty (30) days after the
Review Period, Tenant notifies Landlord in writing that Tenant still disputes
such amounts, a certification as to the proper amount shall be made, at Tenant's
expense, by an independent certified public accountant selected by Landlord and
who is a member of a nationally or regionally recognized accounting firm.
Landlord shall cooperate in good faith with Tenant and the accountant to show
Tenant and the accountant the information upon which the certification is to be
based. However, if such certification by the accountant proves that the Direct
Costs set forth in the Statement were overstated by more than ten percent (10%),
then the cost of the accountant and the cost of such certification shall be paid
for by Landlord. Promptly following the parties receipt of such certification,
the parties shall make such appropriate payments or reimbursements, as the case
may be, to each other, as are determined to be owing pursuant to such
certification.
(iv) If the Project is a part of a multi-building development,
those Direct Costs attributable to such development as a whole (and not
attributable solely to any individual building therein) shall be allocated by
Landlord to the Project and to the other buildings within such development on an
equitable basis.
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ARTICLE 4
SECURITY DEPOSIT
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Concurrently with Tenant's execution of this Lease, Tenant shall elect to
do one of the following:
(a) Cash Security Deposit. Tenant may deposit with Landlord cash in the
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amount set forth in Article 1.F. of the Basic Lease Provisions as security for
the full and faithful performance of every provision of this Lease to be
performed by Tenant. Upon the dates specified below ("Deposit Adjustment
Dates"), the cash Security Deposit may be reduced to the following amounts (and
Landlord shall refund the excess to Tenant):
Month Security Deposit
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March 31, 2001 $608,000.00
March 31, 2002 $456,000.00
March 31, 2003 $304,000.00
March 31, 2004 $152,000.00
Further, in the event Tenant exercises its option to increase the
Improvement Allowance pursuant to Section 2.1 of the Tenant Work Letter, Tenant
shall increase the cash Security Deposit, subject to all terms set forth above
by an amount equal to the Increased Improvement Allowance (as defined in Section
2.1 of the Tenant Work Letter); provided, however, that upon the Deposit
Adjustment Dates specified below, the amount of the increase in cash Security
Deposit may be reduced to the following amounts (and Landlord shall refund the
excess to Tenant):
Amount of Increase in
Month Security Deposit
----- ----------------
March 31, 2001 80% of the amount of the
original increase
March 31, 2002 60% of the amount of the
original increase
March 31, 2003 40% of the amount of the
original increase
March 31, 2004 20% of the amount of the
original increase
However, if (i) an Event of Default by Tenant occurs under this Lease, or
(ii) circumstances exist that would, with notice or lapse of time, or both,
constitute an Event of Default by Tenant, and Tenant has failed to cure such
default within the time period permitted by Section 19 or such lesser time as
may remain before the relevant Deposit Adjustment Dates as provided above, the
cash Security Deposit shall not thereafter be reduced unless and until such
default shall have been fully cured pursuant to the terms of this Lease, at
which time the Security Deposit may be reduced as hereinabove described. If
Tenant breaches any provision of this Lease, including but not limited to the
payment of rent, Landlord may use all or any part of the Security Deposit for
the payment of any rent or any other sums in default, or to compensate Landlord
for any other loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion of said deposit is so used or applied, Tenant shall,
within five (5) days after written demand therefor, deposit cash with Landlord
in an amount sufficient to restore the Security Deposit to the amount prior to
such use or application. Tenant agrees that Landlord shall not be required to
keep the Security Deposit in trust, segregate it or keep it separate from
Landlord's general funds but Landlord may commingle the Security Deposit with
its general funds and Tenant shall not be entitled to interest on such deposit.
At the expiration of the Lease Term, and provided there exists no Event of
Default (after expiration of any applicable notice and cure period) by Tenant
hereunder, the Security Deposit or any balance thereof shall be returned to
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Tenant (or, at Landlord's option, to Tenant's assignee), provided that
subsequent to the expiration of this Lease, Landlord may retain from said
security deposit any and all amounts permitted by law or this Article 4. Tenant
hereby waives the provisions of Section 1950.7 of the California Civil Code and
all other provisions of law, now or hereafter in effect, which provide that
Landlord may claim from a security deposit only those sums reasonably necessary
to remedy defaults in the payment of rent, to repair damage caused by Tenant or
to clean the Premises, it being agreed that Landlord may, in addition, claim
those sums specified in this Article 4 above and/or those sums reasonably
necessary to compensate Landlord for any other loss or damage, foreseeable or
unforeseeable, caused by the acts or omissions of Tenant or any officer,
employee, agent, contractor or invitee of Tenant.
(b) Letter of Credit. In the alternative, Tenant may deliver to Landlord
----------------
an unconditional, irrevocable and renewable letter of credit ("Letter of
Credit") in favor of Landlord in the form attached hereto as Exhibit E, issued
by a bank reasonably satisfactory to Landlord with a branch located in Southern
California, in the principal amount ("Stated Amount") specified below, as
security for the faithful performance and observance by Tenant of the terms,
provisions and conditions of this Lease. Tenant shall pay all expenses, points
and/or fees incurred by Tenant in obtaining the Letter of Credit. The Stated
Amount shall initially be Seven Hundred Sixty Thousand Dollars ($760,000.00);
provided, however, that upon the dates specified below ("Adjustment Dates"), the
Stated Amount may be reduced to the following amounts:
Month Stated Amount
----- -------------
March 31, 2001 $608,000.00
March 31, 2002 $456,000.00
March 31, 2003 $304,000.00
March 31, 2004 $152,000.00
Further, in the event Tenant exercises its option to increase the
Improvement Allowance pursuant to Section 2.1 of the Tenant Work Letter, Tenant
shall deposit with Landlord a second Letter of Credit, subject to all terms set
forth above (or shall increase the amount of the initial Letter of Credit). The
Stated Amount with respect to such second Letter of Credit (or the increased
amount of the initial Letter of Credit) shall initially be equal to the
Increased Improvement Allowance (as defined in Section 2.1 of the Tenant Work
Letter); provided, however, that upon the Adjustment Dates specified below, the
Stated Amount as to such second Letter of Credit (or the increased amount of the
initial Letter of Credit) may be reduced to the following amounts:
Month Stated Amount
----- -------------
March 31, 2001 80% of the
Stated Amount
March 31, 2002 60% of the
Stated Amount
March 31, 2003 40% of the
Stated Amount
March 31, 2004 20% of the
Stated Amount
However, if (i) an Event of Default by Tenant occurs under this Lease, or
(ii) circumstances exist that would, with notice or lapse of time, or both,
constitute an Event of Default by Tenant, and Tenant has failed to cure such
default within the time period permitted by Section 19 or such lesser time as
may remain before the relevant Adjustment Date as provided above, the Stated
Amount(s) shall not thereafter be reduced unless and until such default shall
have been fully cured pursuant to the terms of this Lease, at which time the
Stated Amount(s) may be reduced as hereinabove described. The Letter(s) of
Credit shall state that an authorized officer or other representative of
Landlord may make demand on Landlord's behalf for the Stated
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Amount(s) of the Letter(s) of Credit, or any portion thereof, and that the
issuing bank must immediately honor such demand, without qualification or
satisfaction of any conditions, except the proper identification of the party
making such demand. In addition, the Letter(s) of Credit shall indicate that it
is transferable in its entirety by Landlord as beneficiary and that upon
receiving written notice of transfer, and upon presentation to the issuing bank
of the original Letter(s) of Credit, the issuer or confirming bank will reissue
the Letter(s) of Credit naming such transferee as the beneficiary. If the term
of the Letter(s) of Credit held by Landlord will expire prior to the last day of
the Lease Term and it is not extended, or a new Letter(s) of Credit for an
extended period of time is not substituted, within thirty (30) days prior to the
expiration of the Letter(s) of Credit, and after providing Tenant with at least
three (3) business days prior written notice, Landlord shall be entitled to make
demand for the Stated Amount of said Letter(s) of Credit and, thereafter, to
hold such funds in accordance with this Article 4. The Letter(s) of Credit and
any such proceeds thereof shall be held by Landlord as security for the faithful
performance by Tenant of all of the terms, covenants and conditions of this
Lease. If an Event of Default by Tenant exists with respect to any provision of
this Lease, Landlord may (but shall not be required to) draw upon all or any
portion of the Stated Amount(s) of the Letter(s) of Credit, and Landlord may
then use, apply or retain all or any part of the proceeds for the payment of any
sum which is in default, or for the payment of any other amount which Landlord
may spend or become obligated to spend by reason of such Event of Default or to
compensate Landlord for any loss or damage which Landlord may suffer by reason
of such Event of Default. If any portion of the Letter(s) of Credit proceeds are
so used or applied, Tenant shall, within ten (10) days after demand therefor,
post an additional Letter of Credit in an amount to cause the aggregate amount
of the unused proceeds and such new Letter of Credit to equal the Stated
Amount(s) required in this Article 4 above. Landlord shall not be required to
keep any proceeds from the Letter(s) of Credit separate from its general funds.
Should Landlord sell its interest in the Premises during the Lease Term and if
Landlord deposits with the purchaser thereof the Letter(s) of Credit or any
proceeds of the Letter(s) of Credit, thereupon Landlord shall be discharged from
any further liability with respect to the Letter(s) of Credit and said proceeds.
Any remaining proceeds of the Letter(s) of Credit held by Landlord after
expiration of the Lease Term, after any deductions described in this Article 4
above, shall be returned to Tenant or, at Landlord's option, to the last
assignee of Tenant's interest hereunder, within thirty (30) days following the
expiration of the Lease Term. Notwithstanding anything contained in this Article
4, in the event Tenant initially elects to deposit a cash Security Deposit with
Landlord, Tenant may thereafter provide Landlord with a Letter of Credit meeting
the requirements of this Article 4, and upon delivery of such Letter of Credit,
Landlord shall promptly refund an unused portion of the cash Security Deposit to
Tenant.
(c) Reduction of Security Deposit. Notwithstanding anything to the
-----------------------------
contrary contained herein, in the event that at any time during the term of this
Lease, Tenant provides Landlord with reasonable written evidence which shows
that Tenant has achieved a net worth equal to $125,000,000.00 (exclusive of
goodwill), calculated in accordance with generally accepted accounting
principles, the schedules set forth in Sections 4(a) and 4(b) above shall be
amended to provide that the amount of the cash Security Deposit or the Stated
Amount of the then existing Letter of Credit (as applicable) shall thereafter be
reduced as of the annual dates set forth in such schedules, on a straight line
basis, so that upon expiration of the fourth (4th) Lease Year, the amount of the
cash Security Deposit or the Stated Amount of the Letter of Credit (as
applicable) shall be Seventy Thousand Three Hundred Seventy-Five and 50/100
Dollars ($70,375.50), which amount shall be maintained for the remainder of the
Term.
ARTICLE 5
HOLDING OVER
------------
Should Tenant, without Landlord's written consent, hold over after
termination of this Lease, Tenant shall become a tenant from month to month,
only upon each and all of the terms herein provided as may be applicable to a
month to month tenancy and any such holding over shall not constitute an
extension of this Lease. During such holding over, Tenant shall pay in advance,
monthly, rent at two one hundred fifty percent (150%) of the rate in effect for
the last month of the Term of this Lease, in addition to, and not in lieu of,
all other payments required to be made by Tenant hereunder including but not
limited to Tenant's Proportionate Share of any increase in Direct Costs.
Nothing contained in this Article 5 shall be construed as consent by Landlord to
any holding over of the Premises by Tenant, and Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord as
provided in this
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Lease upon the expiration or earlier termination of the Term. If Tenant fails to
surrender the Premises upon the expiration or termination of this Lease, Tenant
agrees to indemnify, defend and hold Landlord harmless from all costs, loss,
expense or liability, including without limitation, claims made by any
succeeding tenant and real estate brokers claims and attorney's fees.
ARTICLE 6
PERSONAL PROPERTY TAXES
-----------------------
Tenant shall pay, prior to delinquency, all taxes assessed against or
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant located in the Premises. In the event any or all of Tenant's
trade fixtures, furnishings, equipment and other personal property shall be
assessed and taxed with property of Landlord, or if the cost or value of any
leasehold improvements in the Premises exceeds the cost or value of a Project-
standard buildout as determined by Landlord and, as a result, real property
taxes for the Project are increased, Tenant shall pay to Landlord its share of
such taxes within ten (10) days after delivery to Tenant by Landlord of a
statement in writing setting forth the amount of such taxes applicable to
Tenant's property or above-standard improvements. Tenant shall assume and pay
to Landlord at the time of paying Basic Rental any excise, sales, use, rent,
occupancy, garage, parking, gross receipts or other taxes (other than net income
taxes) which may be imposed on or on account of letting of the Premises or the
payment of Basic Rental or any other sums due or payable hereunder, and which
Landlord may be required to pay or collect under any law now in effect or
hereafter enacted. Tenant shall pay directly to the party or entity entitled
thereto all business license fees, gross receipts taxes and similar taxes and
impositions which may from time to time be assessed against or levied upon
Tenant, as and when the same become due and before delinquency. Notwithstanding
anything to the contrary contained herein, any sums payable by Tenant under this
Article 6 shall not be included in the computation of "Tax Costs."
ARTICLE 7
USE
---
Tenant shall use and occupy the Premises only for the use set forth in
Article 1.G. of the Basic Lease Provisions and shall not use or occupy the
Premises or permit the same to be used or occupied for any other purpose without
the prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion, and Tenant agrees that it will use the
Premises in such a manner so as not to interfere with or infringe the rights of
other tenants in the Project. Tenant shall, at its sole cost and expense,
promptly comply with all laws, statutes, ordinances and governmental regulations
or requirements now in force or which may hereafter be in force relating to or
affecting (i) the condition, use or occupancy of the Premises or the Project
excluding structural changes to the Project not related to Tenant's particular
use of the Premises, and (ii) improvements installed or constructed in the
Premises by or for the benefit of Tenant. Tenant shall not do or permit to be
done anything which would invalidate or increase the cost of any fire and
extended coverage insurance policy covering the Project and/or the property
located therein and Tenant shall comply with all rules, orders, regulations and
requirements of any organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance underwriters.
Tenant shall promptly upon demand reimburse Landlord for any additional premium
charges for any such insurance policy assessed or increased by reason of
Tenant's failure to comply with the provisions of this Article.
ARTICLE 8
CONDITION OF PREMISES
---------------------
Tenant hereby agrees that, except as otherwise provided herein and in the
Tenant Work Letter attached hereto as Exhibit "D", the Premises shall be taken
"as is", "with all faults", "without any representations or warranties", and
Tenant hereby agrees and warrants that it has investigated and inspected the
condition of the Premises and the suitability of same for Tenant's purposes, and
Tenant does hereby waive and disclaim any objection to, cause of action based
upon, or claim that its obligations hereunder should be reduced or limited
because of the condition of the Premises or the Project or the suitability of
same for Tenant's purposes. Tenant acknowledges that neither Landlord nor any
agent nor any employee of Landlord has made any
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<PAGE>
representations or warranty with respect to the Premises or the Project or with
respect to the suitability of either for the conduct of Tenant's business and
Tenant expressly warrants and represents that Tenant has relied solely on its
own investigation and inspection of the Premises and the Project in its decision
to enter into this Lease and let the Premises in an "As Is" condition. The
existing leasehold improvements in the Premises as of the date of this Lease,
together with the improvement work to be performed pursuant to the Tenant Work
Letter, may be collectively referred to herein as the "Tenant Improvements." The
taking of possession of the Premises by Tenant shall conclusively establish that
the Premises and the Project were at such time in satisfactory condition. Tenant
hereby waives Sections 1941 and 1942 of the Civil Code of California or any
successor provision of law.
Landlord reserves the right from time to time, but subject to payment by
and/or reimbursement from Tenant as otherwise provided herein: (i) to install,
use, maintain, repair, replace and relocate for service to the Premises and/or
other parts of the Project pipes, ducts, conduits, wires, appurtenant fixtures,
and mechanical systems, wherever located in the Premises or the Project, (ii) to
alter, close or relocate any facility in the Premises or the Common Areas or
otherwise conduct any of the above activities for the purpose of complying with
a general plan for fire/life safety for the Project or otherwise and (iii) to
comply with any federal, state or local law, rule or order with respect thereto
or the regulation thereof not currently in effect. Landlord shall attempt to
perform any such work with the least inconvenience to Tenant as possible, but in
no event shall Tenant be permitted to withhold or reduce Basic Rental or other
charges due hereunder as a result of same or otherwise make claim against
Landlord for interruption or interference with Tenant's business and/or
operations.
ARTICLE 9
REPAIRS AND ALTERATIONS
-----------------------
(a) Repairs and Alterations. Landlord shall maintain the structural
-----------------------
portions of the Project including the foundation, floor/ceiling slabs, roof,
curtain wall, exterior glass (including water leaks), columns, beams, shafts,
stairs, stairwells, elevator cabs and common areas and shall also maintain and
repair the basic mechanical, electrical, lifesafety, plumbing, sprinkler systems
and heating, ventilating and air-conditioning systems (provided, however, that
Landlord's obligation with respect to any such systems shall be to repair and
maintain those portions of the systems located in the core of the Project or in
other areas outside of the Premises, but Tenant shall be responsible to repair
and maintain any distribution of such systems throughout the Premises, except
the existing HVAC System in the Premises, the responsibility for repair and
maintenance of which shall be as provided in Article 11 hereof). Except as
expressly provided as Landlord's obligation in this Article 9, Tenant shall keep
the Premises in good condition and repair. A Subject to the provisions of
Article 14 hereof, all damage or injury to the Premises or the Project resulting
from the act or negligence of Tenant, its employees, agents or visitors, guests,
invitees or licensees or by the use of the Premises shall be promptly repaired
by Tenant, at its sole cost and expense, to the satisfaction of Landlord;
provided, however, that for damage to the Project as a result of casualty or for
any repairs that may impact the mechanical, electrical, plumbing, heating,
ventilation or air-conditioning systems of the Project, Landlord shall have the
right (but not the obligation) to select the contractor and oversee all such
repairs. Landlord may make any repairs which are not promptly made by Tenant
after Tenant's receipt of written notice and the reasonable opportunity of
Tenant to make said repair within five (5) business days from receipt of said
written notice, and charge Tenant for the cost thereof, which cost shall be paid
by Tenant within five (5) days from invoice from Landlord. Tenant shall be
responsible for the design and function of all non-standard improvements of the
Premises, whether or not installed by Landlord at Tenant's request. Tenant
waives all rights to make repairs at the expense of Landlord, or to deduct the
cost thereof from the rent. Tenant shall make no alterations, changes or
additions in or to the Premises (collectively, "Alterations") without Landlord's
prior written consent, and then only by contractors or mechanics approved by
Landlord in writing and upon the approval by Landlord in writing of fully
detailed and dimensioned plans and specifications pertaining to the Alterations
in question, to be prepared and submitted by Tenant at its sole cost and
expense. Notwithstanding anything to the contrary contained herein, Tenant may
make strictly cosmetic changes to the finish work in the Premises (the "Cosmetic
Alterations"), without Landlord's consent, provided that the aggregate cost of
any such alterations does not exceed Fifty Thousand Dollars ($50,000.00) in any
twelve (12) month period, and further provided that such alterations do not (i)
require any structural or other substantial modifications to the Premises, (ii)
require any changes to, nor adversely affect, the systems and equipment, and
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<PAGE>
(iii) affect the exterior appearance of the Project. Tenant shall give Landlord
at least thirty (30) days prior notice of such Cosmetic Alterations, which
notice shall be accompanied by reasonably adequate evidence that such changes
meet the criteria contained in this Article 9. Tenant shall at its sole cost
and expense obtain all necessary approvals and permits pertaining to any
Alterations approved by Landlord. If Landlord, in approving any Alterations,
specifies a commencement date therefor, Tenant shall not commence any work with
respect to such Alterations prior to such date. Tenant hereby indemnifies,
defends and agrees to hold Landlord free and harmless from all liens and claims
of lien, and all other liability, claims and demands arising out of any work
done or material supplied to the Premises by or at the request of Tenant in
connection with any Alterations. If permitted Alterations are made, they shall
be made at Tenant's sole cost and expense and shall be and become the property
of Landlord, except that Landlord may, by written notice to Tenant given at
least thirty (30) days prior to the end of the Term, require Tenant at Tenant's
expense to remove all partitions, counters, railings and other Alterations
installed by Tenant, and to repair any damages to the Premises caused by such
removal. Any and all costs attributable to or related to the applicable
building codes of the city in which the Project is located (or any other
authority having jurisdiction over the Project) arising from Tenants plans,
specifications, improvements, alterations or otherwise shall be paid by Tenant
at its sole cost and expense. With regard to repairs, Alterations or any other
work arising from or related to this Article 9, Landlord shall be entitled to
receive an administrative/supervision fee (which fee shall vary depending upon
whether or not Tenant orders the work directly from Landlord) sufficient to
compensate Landlord for all overhead, general conditions, fees and other costs
and expenses arising from Landlord's involvement with such work.
(b) Backup Generator. Subject to Landlord's prior approval of all plans
----------------
and specifications, which approval shall not be unreasonably withheld, Landlord
shall permit Tenant to install and maintain, at Tenant's sole cost and expense,
a backup diesel-powered generator at a location designated by Landlord. Such
backup generator shall be used by Tenant only during (i) testing and regular
maintenance, and (ii) any period of electrical power outage in the Project.
Tenant shall be entitled to operate the generator for testing and regular
maintenance only upon notice to Landlord and at times reasonably approved by
Landlord. Tenant shall submit the specifications for design, operation,
installation and maintenance of the backup generator for Landlord's consent,
which consent shall not be unreasonably withheld or delayed and may be
conditioned on Tenant complying with such reasonable requirements imposed by
Landlord, based on the advice of Landlord's structural and mechanical engineers,
so that the Project's systems and equipment are not adversely affected. In
addition, Tenant shall ensure that the backup generator does not result in any
Hazardous Materials being introduced to the Project, and Section 28(a) will
apply to Tenant's use of the backup generator. Further, Tenant shall be
responsible for ensuring that the backup generator does not interfere with the
use of the Project by other tenants. In the event another tenant of the Project
or of a neighboring project complains of problems caused by the generator,
Tenant shall take whatever steps are reasonably necessary to remedy the problem
complained of, including removal of the backup generator if another solution is
not available. Tenant shall ensure that the design and installation of the
backup generator is performed in a manner so as to minimize or eliminate any
noise or vibration cause by such generator. The vent for the generator must be
higher than the roof line of the Project. Any repairs and maintenance of such
generator shall be the sole responsibility of Tenant and Landlord makes no
representation or warranty with respect to such generator. Tenant shall, at
Tenant's sole cost and expense, remove such generator upon the expiration or
earlier termination of the Lease Term and repair all damage to the Project
resulting from such removal. Such generator shall be deemed to be a part of the
Premises for purposes of Article 14 of this Lease.
ARTICLE 10
LIENS
-----
Tenant shall keep the Premises and the Project free from any mechanics'
liens, vendors liens or any other liens arising out of any work performed,
materials furnished or obligations incurred by Tenant, and agrees to defend,
indemnify and hold harmless Landlord from and against any such lien or claim or
action thereon, together with costs of suit and reasonable attorneys' fees
incurred by Landlord in connection with any such claim or action. Before
commencing any work of alteration, addition or improvement to the Premises,
Tenant shall give Landlord at least ten (10) business days' written notice of
the proposed commencement of such work (to afford Landlord an opportunity to
post appropriate notices of non-responsibility). In the event that there shall
be recorded against the Premises or the Project or the property of which the
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Premises is a part any claim or lien arising out of any such work performed,
materials furnished or obligations incurred by Tenant and such claim or lien
shall not be removed or discharged, by bond or otherwise, within ten (10) days
of Tenant's receipt of notice of such filing, Landlord shall have the right but
not the obligation to pay and discharge said lien without regard to whether such
lien shall be lawful or correct or to require that Tenant deposit with Landlord
in cash, lawful money of the United States, one hundred fifty percent (150%) of
the amount of such claim, which sum may be retained by Landlord until such claim
shall have been removed of record or until judgment shall have been rendered on
such claim and such judgment shall have become final, at which time Landlord
shall have the right to apply such deposit in discharge of the judgment on said
claim and any costs, including attorneys' fees incurred by Landlord, and shall
remit the balance thereof to Tenant.
ARTICLE 11
PROJECT SERVICES
----------------
(a) Tenant shall be solely responsible for performing due diligence with
regard to all building systems and utilities to ensure the same are adequate for
Tenant's intended use. Landlord shall provide electric current for normal
lighting and normal office machines, elevator service and water on the same
floor as the Premises for lavatory and drinking purposes in such reasonable
quantities as in the judgment of Landlord is reasonably necessary for general
office use. Effective as of April 1, 2000, all such electricity shall be
separately metered at Tenant's sole cost and expense and Tenant shall make
payment directly to the entity providing such electricity. All other utilities
used by Tenant in the Premises shall be separately metered at Tenant's sole cost
and expense and Tenant shall make payment directly to the entity providing such
utilities. Tenant shall have the right to reasonably designate the entity which
will provide electricity to the Premises, so long as there is no interference
with, or interruption of, the electricity to other tenants of the Project caused
by such designation or the providing of service by Tenant's designated provider.
Landlord shall have the right to approve any work to be done by such utility
provider prior to the commencement of such work in accordance with the terms and
conditions of Article 9 above. Tenant shall be responsible for employing a
janitorial and maintenance service, which contractor shall be reasonably
approved by Landlord, and Tenant hereby acknowledges that Landlord shall have no
obligation whatsoever to provide such services in the Premises. Landlord and
Tenant hereby acknowledge that an independent heating, ventilation and air
conditioning system ("HVAC System") is installed in the Premises and that Tenant
shall, at Tenant's sole cost and expense, maintain a service and/or maintenance
contract for such HVAC System with a contractor designated by Landlord in its
reasonable discretion, which contractor shall perform all maintenance and
repairs on the HVAC System, as such maintenance and repairs are reasonably
deemed necessary by Landlord. In addition to separately metered electricity and
the repair and maintenance obligations for such HVAC System, Tenant shall pay to
Landlord the sum of Two Hundred Twenty-Seven and 00/100 Dollars ($227.00) per
month, which sum represents Landlord's reasonable estimate of the amount of
increased wear and tear on the HVAC System caused by Tenant's above-standard
use. The parties hereby acknowledge that the above number is an estimate of the
wear and tear caused by Tenant's intended level of use and Tenant hereby agrees
that Tenant will not use more than one-third (1/3) of the HVAC System on a
twenty-four (24) hour per day, seven (7) day per week schedule, and the
remaining two-thirds (2/3) of the HVAC System capacity shall be used during
normal business hours (e.g. 8:00 a.m. - 6:00 p.m. Monday through Friday and 8:00
a.m. - 1:00 p.m. on Saturday). In the event Tenant's use of the HVAC System
exceeds the referenced amounts, Landlord shall adjust the monthly amount to
reflect such increased usage. Landlord shall cause such HVAC System (but not the
two (2) chillers on the north side of the Project) to be in good working order
as of the Commencement Date. For purposes of this Lease, the two (2) chillers on
the north side of the Project, together with the enclosed area which contains
the chillers shall be a part of the Premises and Tenant shall be responsible, at
Tenant's sole cost and expense, for any and all repairs and maintenance of such
chillers necessary for Tenant's use of such chillers. Neither Landlord nor
Tenant shall have any obligation to replace or retrofit the chillers in the
event such replacement or retrofit is necessary during the Term, or upon
expiration, of this Lease. Further, in the event Tenant desires to remove the
chillers from the Project, Tenant may do so at Tenant's sole cost and expense,
only after first providing written notice to Landlord and allowing Landlord a
reasonable opportunity to remove or take possession of such chillers. In the
event Tenant elects to remove the chillers and Landlord does not elect to remove
or take possession of the chillers, Tenant shall repair any damage to the
Premises or Project caused by
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such removal. Tenant shall comply with all rules and regulations which Landlord
may reasonably establish for the proper functioning and protection of the common
area air conditioning, heating, elevator, electrical intrabuilding network cable
and plumbing systems. Landlord shall not be liable for, and there shall be no
rent abatement as a result of, any stoppage, reduction or interruption of any
such services caused by governmental rules, regulations or ordinances, riot,
strike, labor disputes, breakdowns, accidents, necessary repairs or other cause.
Except as specifically provided in this Article 11, Tenant agrees to pay for all
utilities and other services utilized by Tenant and additional building services
furnished to Tenant not uniformly furnished to all tenants of the Project at the
rate generally charged by Landlord to tenants of the Project.
(b) Tenant will not, without the prior written consent of Landlord, use
any apparatus or device in the Premises which will in any way increase the
amount of water usually furnished or supplied for use of the Premises as general
office space; nor connect any apparatus, machine or device with water pipes for
the purpose of using water.
(c) Landlord may impose a reasonable charge for any utilities or services
(other than electric current and heating, ventilation and/or air conditioning
which shall be governed by Articles 11(a) and (b) above) utilized by Tenant in
excess of the amount or type that Landlord reasonably determines is typical for
general office use.
(d) Tenant shall have the right to use the existing fiber optic cable in
the Project, or Tenant may elect to install new fiber optic cable; provided that
the installation of such new fiber optic cable does not interfere with any other
tenants of the Project, and further provided that Landlord shall have the right
to approve any work to be done by such fiber optics provider prior to the
commencement of such work in accordance with the terms and conditions of
Article 9 above.
(e) Subject to Landlord's security requirements, repairs made by
Landlord to the Project and Articles 16 and 18 below, Tenant shall have access
to the Premises twenty-four (24) hours per day, seven (7) days per week
throughout the Term.
ARTICLE 12
RIGHTS OF LANDLORD
------------------
Landlord and its agents shall have the right to enter the Premises at all
reasonable times upon twenty-four (24) hours prior notice (except in the case of
an emergency) for the purpose of cleaning the Premises, examining or inspecting
the same, serving or posting and keeping posted thereon notices as provided by
law, or which Landlord deems necessary for the protection of Landlord or the
Property, showing the same to prospective tenants (during the last nine (9)
months of the Term only), lenders or purchasers of the Project, in the case of
an emergency, and for making such alterations, repairs, improvements or
additions to the Premises or to the Project as Landlord may deem necessary or
desirable. If Tenant shall not be personally present to open and permit an
entry into the Premises at any time when such an entry by Landlord is necessary
or permitted hereunder, Landlord may enter by means of a master key or may enter
forcibly, only in the case of an emergency, without liability to Tenant and
without affecting this Lease. In exercising Landlord's rights under this
Article 12, Landlord shall use commercially reasonable efforts not to interfere
with Tenant's business operations.
ARTICLE 13
INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY
-----------------------------------------------
(a) Indemnity. Tenant shall indemnify, defend and hold Landlord
---------
harmless from any and all claims arising from Tenant's use of the Premises or
the Project or from the conduct of its business or from any activity, work or
thing which may be permitted or suffered by Tenant in or about the Premises or
the Project and shall further indemnify, defend and hold Landlord harmless from
and against any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under this Lease
or arising from any negligence of Tenant or any of its agents, contractors,
employees or invitees, patrons, customers or members in or about the Project and
from any and all costs, attorneys' fees, expenses and liabilities incurred in
the defense of any claim or any action or proceeding brought
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thereon, including negotiations in connection therewith. Tenant hereby assumes
all risk of damage to property or injury to persons in or about the Premises
from any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, excepting where the damage is caused solely by the gross negligence or
willful misconduct of Landlord.
(b) Exemption of Landlord from Liability. Landlord shall not be liable
------------------------------------
for injury to Tenant's business, or loss of income therefrom, or for damage that
may be sustained by the person, goods, wares, merchandise or property of Tenant,
its employees, invitees, customers, agents, or contractors, or any other person
in, on or about the Premises directly or indirectly caused by or resulting from
fire, steam, electricity, gas, water, or rain which may leak or flow from or
into any part of the Premises, or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, light fixtures, or mechanical or electrical systems or from
intrabuilding network cable, whether such damage or injury results from
conditions arising upon the Premises or upon other portions of the Project or
from other sources or places and regardless of whether the cause of such damage
or injury or the means or repairing the same is inaccessible to Tenant, except
in connection with damage or injury resulting from the gross negligence or
willful misconduct of Landlord, or its authorized agents. Landlord shall not be
liable to Tenant for any damages arising from any act or neglect of any other
tenant of the building.
Tenant acknowledges that Landlord's election to provide mechanical
surveillance or to post security personnel in the Project is solely within
Landlord's discretion; Landlord shall have no liability in connection with the
decision whether or not to provide such services and Tenant hereby waives all
claims based thereon. Landlord shall not be liable for losses due to theft,
vandalism, or like causes. Tenant shall defend, indemnify, and hold Landlord
harmless from any such claims made by any employee, licensee, invitee,
contractor, agent or, other person whose presence in, on or about the Premises
or the Project is attendant to the business of Tenant.
ARTICLE 14
INSURANCE
---------
(a) Tenant's Insurance. Tenant, shall at all times during the Term of
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this Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage: (i) Commercial General Liability Insurance with a
combined single limit for bodily injury and property damages of not less than
Two Million Dollars ($2,000,000) per occurrence and Three Million Dollars
($3,000,000) in the annual aggregate, including products liability coverage if
applicable, covering the insuring provisions of this Lease and the performance
of Tenant of the indemnity and exemption of Landlord from liability agreements
set forth in Article 13 hereof; (ii) a policy of standard fire, extended
coverage and special extended coverage insurance (all risks), including a
vandalism and malicious mischief endorsement, sprinkler leakage coverage and
earthquake sprinkler leakage where sprinklers are provided in an amount equal to
the full replacement value new without deduction for depreciation of all (A)
Tenant Improvements, Alterations, fixtures and other improvements in the
Premises and (B) trade fixtures, furniture, equipment and other personal
property installed by or at the expense of Tenant; (iii) Worker's Compensation
coverage as required by law; and (iv) business interruption, loss of income and
extra expense insurance covering failure of Tenant's telecommunications
equipment and covering all other perils, failures or interruptions. Tenant shall
carry and maintain during the entire Lease Term (including any option periods,
if applicable), at Tenant's sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Article 14 and such
other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant's operations therein, as may be reasonably
required by Landlord.
(b) Form of Policies. The aforementioned minimum limits of policies and
----------------
Tenant's procurement and maintenance thereof shall in no event limit the
liability of Tenant hereunder. The Commercial General Liability Insurance policy
shall name Landlord, Landlord's property manager, Landlord's lender(s) and such
other persons or firms as Landlord specifies from time to time, as additional
insureds' with an appropriate endorsement to the policy(s). All such insurance
policies carried by Tenant shall be with companies having a rating of not less
than A-VIII in Best's Insurance Guide. Tenant shall furnish to Landlord, from
the insurance companies, or cause the insurance companies to furnish,
certificates of coverage. No such policy shall be cancelable or subject to
reduction of coverage or other modification or cancellation except after
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thirty (30) days prior written notice to Landlord by the insurer. All such
policies shall be endorsed to agree that Tenant's policy is primary and that any
insurance covered by Landlord is excess and not contributing with any Tenant
insurance requirement hereunder. Tenant shall, at least twenty (20) days prior
to the expiration of such policies, furnish Landlord with renewals or binders.
Tenant agrees that if Tenant does not take out and maintain such insurance or
furnish Landlord with renewals or binders, Landlord may (but shall not be
required to) procure said insurance on Tenant's behalf and charge Tenant the
cost thereof, which amount shall be payable by Tenant upon demand with interest
(at the rate set forth in Section 20(e) below) from the date such sums are
extended. Tenant shall have the right to provide such insurance coverage
pursuant to blanket policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required by this
Lease.
(c) Landlord's Insurance. Landlord shall, as a cost to be included in
--------------------
Operating Costs, procure and maintain at all times during the Term of this
Lease, a policy or policies of insurance covering loss or damage to the Project
in the amount of the full replacement costs without deduction for depreciation
thereof (exclusive of Tenant's trade fixtures, inventory, personal property and
equipment), providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage, and special extended coverage on
building. Additionally, Landlord may (but shall not be required to) carry: (i)
Bodily Injury and Property Damage Liability Insurance and/or Excess Liability
Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii)
Rental Income Insurance at its election or if required by its lender from time
to time during the Term hereof, in such amounts and with such limits as Landlord
or its lender may deem appropriate. The costs of such insurance shall be
included in Operating Costs.
(d) Waiver of Subrogation. Landlord and Tenant each agree to have their
---------------------
respective insurers issuing the insurance described in Sections 14(a)(ii),
14(a)(iv) and the first sentence of Section 14(c) waive any rights of
subrogation that such companies may have against the other party.
Notwithstanding anything to the contrary contained in this Lease, Tenant hereby
waives any right that Tenant may have against Landlord and Landlord hereby
waives any right that Landlord may have against Tenant as a result of any loss,
liability or damage to the extent such loss, liability or damage is or normally
would be insurable under such policies or any other property insurance carried
by either party with respect to the Project.
(e) Compliance with Law. Tenant agrees that it will not, at any time,
-------------------
during the Term of this Lease, carry any stock of goods or do anything in or
about the Premises that will in any way tend to increase the insurance rates
upon the Project. Tenant agrees to pay Landlord forthwith upon demand the amount
of any increase in premiums for insurance against loss by fire that may be
charged during the Term of this Lease on the amount of insurance to be carried
by Landlord on the Project resulting from the foregoing, or from Tenant doing
any act in or about said Premises that does so increase the insurance rates,
whether or not Landlord shall have consented to such act on the part of Tenant.
If Tenant installs upon the Premises any electrical equipment which constitutes
an overload of electrical lines of the Premises, Tenant shall at its own cost
and expense in accordance with all other Lease provisions, and subject to the
provisions of Article 9, 10 and 11, hereof, make whatever changes are necessary
to comply with requirements of the insurance underwriters and any governmental
authority having jurisdiction thereover, but nothing herein contained shall be
deemed to constitute Landlord's consent to such overloading. Tenant shall, at
its own expense, comply with all requirements of the insurance authority having
jurisdiction over the Project necessary for the maintenance of reasonable fire
and extended coverage insurance for the Premises, including without limitation
thereto, the installation of fire extinguishers or an automatic dry chemical
extinguishing system.
ARTICLE 15
ASSIGNMENT AND SUBLETTING
-------------------------
Tenant shall have no power to, either voluntarily, involuntarily, by
operation of law or otherwise, sell, assign, transfer or hypothecate this Lease,
or sublet the Premises or any part thereof, or permit the Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's employees
without the prior written consent of Landlord which shall not be unreasonably
withheld. If Tenant is a corporation, unincorporated association, partnership
or limited liability company, the sale, assignment, transfer or hypothecation of
any class of stock or other ownership interest in such corporation, association,
partnership or limited liability
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company in excess of twenty-five percent (25%) in the aggregate shall be deemed
an assignment within the meaning and provisions of this Article 15. Tenant may
transfer its interest pursuant to this Lease only upon the following express
conditions, which conditions are agreed by Landlord and Tenant to be reasonable:
(a) That the proposed transferee shall be subject to the prior written
consent of Landlord, which consent will not be unreasonably withheld but,
without limiting the generality of the foregoing, it shall be reasonable for
Landlord to deny such consent if:
(i) The use to be made of the Premises by the proposed transferee
is (a) not generally consistent with the character and nature of all other
tenancies in the Project, or (b) a use which conflicts with any so-called
"exclusive" then in favor of, or for any use which is the same as that stated in
any percentage rent lease to, another tenant of the Project or any other
buildings which are in the same complex as the Project, or (c) a use which would
be prohibited by any other portion of this Lease (including but not limited to
any Rules and Regulations then in effect);
(ii) The financial responsibility of the proposed transferee is not
reasonably satisfactory to Landlord or in any event not at least equal to those
which were possessed by Tenant as of the date of execution of this Lease;
(iii) The proposed transferee is either a governmental agency or
instrumentality thereof; or
(iv) Either the proposed transferee or any person or entity which
directly or indirectly controls, is controlled by or is under common control
with the proposed transferee (A) occupies space in the Project at the time of
the request for consent, or (B) is negotiating with Landlord or has negotiated
with Landlord during the six (6) month period immediately preceding the date of
the proposed transfer, to lease space in the Project.
(b) Whether or not Landlord consents to any such transfer, Tenant shall
pay to Landlord reasonable attorneys' fees incurred in connection with the
proposed transfer up to the sum of $1,500.00;
(c) That the proposed transferee shall execute an agreement pursuant to
which it shall agree to perform faithfully and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease applicable to
that portion of the Premises so transferred; and
(d) That an executed duplicate original of said assignment and assumption
agreement or other transfer on a form reasonably approved by Landlord, shall be
delivered to Landlord within five (5) days after the execution thereof, and that
such transfer shall not be binding upon Landlord until the delivery thereof to
Landlord and the execution and delivery of Landlord's consent thereto. It shall
be a condition to Landlord's consent to any subleasing, assignment or other
transfer of part or all of Tenant's interest in the Premises (hereinafter
referred to as a "Transfer") that (i) upon Landlord's consent to any Transfer,
Tenant shall pay and continue to pay fifty percent (50%) of any "Transfer
Premium" (defined below), received by Tenant from the transferee; (ii) any
sublessee of part or all of Tenant's interest in the Premises shall agree that
in the event Landlord gives such sublessee notice that Tenant is in default
under this Lease, such sublessee shall thereafter make all sublease or other
payments directly to Landlord, which will be received by Landlord without any
liability whether to honor the sublease or otherwise (except to credit such
payments against sums due under this Lease), and any sublessee shall agree to
attorn to Landlord or its successors and assigns at their request should this
Lease be terminated for any reason, except that in no event shall Landlord or
its successors or assigns be obligated to accept such attornment; (iii) any such
Transfer and consent shall be effected on forms supplied by Landlord and/or its
legal counsel; (iv) Landlord may require that Tenant not then be in default
hereunder in any respect; and (v) Tenant or the proposed subtenant or assignee
(collectively, "Transferee") shall agree to pay Landlord, upon demand, as
additional rent, a sum equal to the additional costs, if any, incurred by
Landlord for maintenance and repair as a result of any change in the nature of
occupancy caused by such subletting or assignment. "Transfer Premium" shall mean
all rent, additional rent or other consideration payable by a Transferee in
connection with a Transfer in excess of the rent and Additional Rent payable by
Tenant under this Lease during the term of the Transfer and if such Transfer is
less than all of the Premises, the Transfer Premium shall be calculated on a
rentable square foot basis. "Transfer Premium" shall
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<PAGE>
also include, but not be limited to, key money, bonus money or other cash
consideration paid by a transferee to Tenant in connection with such Transfer,
and any payment in excess of fair market value for services rendered by Tenant
to the Transferee and any payment in excess of fair market value for assets,
fixtures, inventory, equipment, or furniture transferred by Tenant to the
Transferee in connection with such Transfer. Any sale assignment, hypothecation,
transfer or subletting of this Lease which is not in compliance with the
provisions of this Article 15 shall be void and shall, at the option of
Landlord, terminate this Lease. In no event shall the consent by Landlord to an
assignment or subletting be construed as relieving Tenant, any assignee, or
sublessee from obtaining the express written consent of Landlord to any further
assignment or subletting, or as releasing Tenant from any liability or
obligation hereunder whether or not then accrued and Tenant shall continue to be
fully liable therefor. No collection or acceptance of rent by Landlord from any
person other than Tenant shall be deemed a waiver of any provision of this
Article 15 or the acceptance of any assignee or subtenant hereunder, or a
release of Tenant (or of any successor of Tenant or any subtenant).
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under this Article 15 or otherwise has breached or acted
unreasonably under this Article 15, their sole remedies shall be a declaratory
judgment and an injunction for the relief sought without any monetary damages,
and Tenant hereby waives all other remedies, including, without limitation, any
right at law or equity to terminate this Lease, on its own behalf and, to the
extent permitted under all applicable laws, on behalf of the proposed
Transferee.
(e) The term "Affiliate" shall mean (i) any entity that is controlled by,
controls or is under common control with, Tenant or (ii) any entity that merges
with, is acquired by, or acquires Tenant through the purchase of stock or assets
and where the net worth of the surviving entity as of the date such transaction
is completed is at least equal to the net worth of Tenant as of the date of this
Lease calculated under generally accepted accounting principles. Notwithstanding
anything to the contrary contained in this Article 15, an assignment or
subletting of all or a portion of the Premises to an Affiliate of Tenant shall
not be deemed a Transfer under this Article 15, provided that Tenant notifies
Landlord of any such assignment or sublease and promptly supplies Landlord with
any documents or information requested by Landlord regarding such assignment or
sublease, and further provided that such assignment or sublease is not a
subterfuge by Tenant to avoid its obligations under this Lease. An assignee to
whom Tenant's entire interest in this Lease is assigned pursuant to this Section
15(e) may be referred to herein as a "Permitted Assignee." "Control," as used in
this Section 15(e), shall mean the ownership, directly or indirectly, of greater
than fifty percent (50%) of the voting securities of, or possession of the right
to vote, in the ordinary direction of its affairs, of greater than fifty percent
(50%) of the voting interest in, an entity.
Notwithstanding anything to the contrary contained in this Article 15,
Landlord shall have the option, by giving written notice to Tenant within thirty
(30) days after Landlord's receipt of a request for consent to a proposed
Transfer in which either (i) the proposed Transfer is for a period of eighteen
(18) months or longer or (ii) the Transfer consists of more than twenty-five
percent (25%) of the rentable square footage of the initial Premises, to
terminate this Lease as to the portion of the Premises that is the subject of
the Transfer; provided, however, that Tenant shall have the option to withdraw
such request and remain in possession of the Premises by giving written notice
of such election to Landlord within ten (10) days after receipt of Landlord's
election to terminate. If this Lease is so terminated with respect to less than
the entire Premises, the Basic Rental and Tenant's Proportionate Share shall be
prorated based on the number of rentable square feet retained by Tenant as
compared to the total number of rentable square feet contained in the original
Premises, and this Lease as so amended shall continue thereafter in full force
and effect, and upon the request of either party, the parties shall execute
written confirmation of the same.
ARTICLE 16
DAMAGE OR DESTRUCTION
---------------------
If the Project is damaged by fire or other insured casualty and the
insurance proceeds have been made available therefor by the holder or holders of
any mortgages or deeds of trust covering the Premises or the Project, the damage
shall be repaired by Landlord to the extent such insurance proceeds are
available therefor and provided such repairs can, in Landlord's sole opinion, be
completed within two hundred seventy (270) days after the necessity for repairs
as a result of such damage becomes known to Landlord without the payment of
overtime or other
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premiums, and until such repairs are completed rent shall be abated in
proportion to the part of the Premises which is unusable by Tenant in the
conduct of its business (but there shall be no abatement of rent by reason of
any portion of the Premises being unusable for a period equal to one (1) day or
less). However, if the damage is due to the fault or neglect of Tenant, its
employees, agents, contractors, guests, invitees and the like, there shall be no
abatement of rent except to the extent of any rental loss insurance maintained
by Landlord with respect to the Premises. 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 Section 14(a)(ii)(A)
above; provided, however, that if the cost of repair of improvements within the
Premises by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant's insurance carrier, as so assigned by Tenant, such excess
costs shall be paid by Tenant to Landlord prior to Landlord's repair of such
damage. If repairs cannot, in Landlord's opinion, be completed within two
hundred seventy (270) days after the necessity for repairs as a result of such
damage becomes known to Landlord without the payment of overtime or other
premiums, Landlord may, at its option, either (i) make them in a reasonable time
and in such event this Lease shall continue in effect and the rent shall be
abated, if at all, in the manner provided in this Article 16, or (ii) elect not
to effect such repairs and instead terminate this Lease, by notifying Tenant in
writing of such termination within sixty (60) days after Landlord learns of the
necessity for repairs as a result of damage, such notice to include a
termination date giving Tenant sixty (60) days to vacate the Premises. In
addition, Landlord may elect to terminate this Lease if the Project shall be
damaged by fire or other casualty or cause, whether or not the Premises are
affected, and the damage is not fully covered, except for deductible amounts, by
Landlord's insurance policies. Finally, if the Premises or the Project is
damaged to any substantial extent during the last twelve (12) months of the
Term, then notwithstanding anything contained in this Article 16 to the
contrary, Landlord shall have the option to terminate this Lease by giving
written notice to Tenant of the exercise of such option within sixty (60) days
after Landlord learns of the necessity for repairs as the result of such damage;
provided, however, that Landlord shall not have such option if Tenant, at the
time of such damage, has an express option to extend the Term, and Tenant
exercises such option by written notice to Landlord in accordance with the terms
and conditions of Article 31 hereof, within twenty (20) days following Tenant's
receipt of Landlord's notice of termination. A total destruction of the Project
shall automatically terminate this Lease. Except as provided in this Article 16,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant's business or property arising from
such damage or destruction or the making of any repairs, alterations or
improvements in or to any portion of the Project or the Premises or in or to
fixtures, appurtenances and equipment therein. Tenant understands that Landlord
will not carry insurance of any kind on Tenant's furniture, furnishings, trade
fixtures or equipment, and that Landlord shall not be obligated to repair any
damage thereto or replace the same. Except for proceeds relating to Tenant's
furniture, furnishings, trade fixtures and equipment, Tenant acknowledges that
Tenant shall have no right to any proceeds of insurance relating to property
damage. With respect to any damage which Landlord is obligated to repair or
elects to repair, Tenant, as a material inducement to Landlord entering into
this Lease, irrevocably waives and releases its rights under the provisions of
Sections 1932 and 1933 of the California Civil Code.
ARTICLE 17
SUBORDINATION
-------------
Landlord agrees to use commercially reasonable efforts to obtain a
commercially reasonable nondisturbance agreement in favor of Tenant from the
current lender of the Project. This Lease is subject and subordinate to all
ground or underlying leases, mortgages and deeds of trust which affect the
property or the Project, including all renewals, modifications, consolidations,
replacements and extensions thereof; provided, however, if the lessor under any
such lease or the holder or holders of any such mortgage or deed of trust shall
advise Landlord that they desire or require this Lease to be prior and superior
thereto, upon written request of Landlord to Tenant, Tenant agrees to promptly
execute, acknowledge and deliver any and all documents or instruments which
Landlord or such lessor, holder or holders deem necessary or desirable for
purposes thereof. Landlord shall have the right to cause this Lease to be and
become and remain subject and subordinate to any and all ground or underlying
leases, mortgages or deeds of trust which may hereafter be executed covering the
Premises, the Project or the property or any renewals, modifications,
consolidations, replacements or extensions
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thereof, for the full amount of all advances made or to be made thereunder and
without regard to the time or character of such advances, together with interest
thereon and subject to all the terms and provisions thereof; provided, however,
that Landlord obtains from the lender or other party in question a written
subordination, non-disturbance and attornment agreement in favor of Tenant to
the effect that such lender or other party will not disturb Tenant's right of
possession under this Lease if Tenant is not then or thereafter in breach of any
covenant or provision of this Lease. Tenant agrees, within ten (10) days after
Landlord's written request therefor, to execute, acknowledge and deliver upon
request any and all documents or instruments requested by Landlord or necessary
or proper to assure the subordination of this Lease to any such mortgages, deed
of trust, or leasehold estates. Tenant agrees that in the event any proceedings
are brought for the foreclosure of any mortgage or deed of trust or any deed in
lieu thereof, to attorn to the purchaser or any successors thereto upon any such
foreclosure sale or deed in lieu thereof as so requested to do so by such
purchaser and to recognize such purchaser as the lessor under this Lease; Tenant
shall, within five (5) days after request execute such further instruments or
assurances as such purchaser may reasonably deem necessary to evidence or
confirm such attornment. Tenant agrees to provide copies of any notices of
Landlord's default under this Lease to any mortgagee or deed of trust
beneficiary whose address has been provided to Tenant and Tenant shall provide
such mortgagee or deed of trust beneficiary a commercially reasonable time after
receipt of such notice within which to cure any such default. Tenant waives the
provisions of any current or future statute, rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the obligations of the Tenant hereunder in the event of
any foreclosure proceeding or sale.
ARTICLE 18
EMINENT DOMAIN
--------------
If the whole of the Premises or the Project or so much thereof as to render
the balance unusable by Tenant shall be taken under power of eminent domain, or
is sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such condemnation, or as of the date possession is
taken by the condemning authority, at Landlord's option. No award for any
partial or entire taking shall be apportioned, and Tenant hereby assigns to
Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof; provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property and trade
fixtures belonging to Tenant and removable by Tenant at the expiration of the
Term hereof as provided hereunder or for the interruption of, or damage to,
Tenant's business. In the event of a partial taking described in this Article
18, or a sale, transfer or conveyance in lieu thereof, which does not result in
a termination of this Lease, the rent shall be apportioned according to the
ratio that the part of the Premises remaining useable by Tenant bears to the
total area of the Premises. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of the California Code of Civil
Procedure.
ARTICLE 19
DEFAULT
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Each of the following acts or omissions of Tenant or of any guarantor of
Tenant's performance hereunder, or occurrences, shall constitute an "Event of
Default":
(a) Failure or refusal to pay Basic Rental, Additional Rent or any other
amount to be paid by Tenant to Landlord hereunder within five (5) calendar days
after notice that the same is due or payable hereunder; said five (5) day period
shall be in lieu of, and not in addition to, the notice requirements of
Section 1161 of the California Code of Civil Procedure or any similar or
successor law;
(b) Except as set forth in items (a) above and (c) through and including
(f) below, failure to perform or observe any other covenant or condition of this
Lease to be performed or observed within thirty (30) days following written
notice to Tenant of such failure. Such thirty (30) day notice shall be in lieu
of, and not in addition to, any required under Section 1161 of the California
Code of Civil Procedure or any similar or successor law;
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(c) The taking in execution or by similar process or law (other than by
eminent domain) of the estate hereby created;
(d) The filing by Tenant or any guarantor hereunder in any court pursuant
to any statute of a petition in bankruptcy or insolvency or for reorganization
or arrangement for the appointment of a receiver of all or a portion of Tenant's
property; the filing against Tenant or any guarantor hereunder of any such
petition, or the commencement of a proceeding for the appointment of a trustee,
receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of
the property of either, or a proceeding by any governmental authority for the
dissolution or liquidation of Tenant or any guarantor hereunder, if such
proceeding shall not be dismissed or trusteeship discontinued within thirty (30)
days after commencement of such proceeding or the appointment of such trustee or
receiver; or the making by Tenant or any guarantor hereunder of an assignment
for the benefit of creditors. Tenant hereby stipulates to the lifting of the
automatic stay in effect and relief from such stay for Landlord in the event
Tenant files a petition under the United States Bankruptcy laws, for the purpose
of Landlord pursuing its rights and remedies against Tenant and/or a guarantor
of this Lease;
(e) Tenant's failure to cause to be released, by bond or otherwise, any
mechanics liens filed against the Premises or the Project within twenty (20)
days after the date that Tenant receives notice that the same shall have has
been filed or recorded; or
(f) Tenant's failure to observe or perform according to the provisions of
Articles 17 or 25 within five (5) business days after notice from Landlord.
All defaults by Tenant of any covenant or condition of this Lease shall be
deemed by the parties hereto to be material.
ARTICLE 20
REMEDIES
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(a) Upon the occurrence of an Event of Default under this Lease as
provided in Article 19 hereof, Landlord may exercise all of its remedies as may
be permitted by law, including but not limited to the remedy provided by Section
1951.4 of the California Civil Code, and including without limitation,
terminating this Lease, reentering the Premises and removing all persons and
property therefrom, which property may be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects
to terminate this Lease, Landlord shall be entitled to recover from Tenant the
aggregate of all amounts permitted by law, including but not limited to (i) the
worth at the time of award of the amount of any unpaid rent which had been
earned at the time of such termination; plus (ii) the worth at the time of award
of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, specifically
including but not limited to, brokerage commissions and advertising expenses
incurred, expenses of remodeling the Premises or any portion thereof for a new
tenant, whether for the same or a different use, and any special concessions
made to obtain a new tenant; and (v) at Landlord's election, such other amounts
in addition to or in lieu of the foregoing as may be permitted from time to time
by applicable law. The term "rent" as used in this Article 20(a) shall be deemed
to be and to mean all sums of every nature required to be paid by Tenant
pursuant to the terms of this Lease, whether to Landlord or to others. As used
in items (i) and (ii), above, the "worth at the time of award" shall be computed
by allowing interest at the rate set forth in item (e), below, but in no case
greater than the maximum amount of such interest permitted by law. As used in
item (iii), above, the "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
(b) Nothing in this Article 20 shall be deemed to affect Landlord's right
to indemnification for liability or liabilities arising prior to the termination
of this Lease for
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personal injuries or property damage under the indemnification clause or clauses
contained in this Lease.
(c) Notwithstanding anything to the contrary set forth herein, Landlord's
re-entry to perform acts of maintenance or preservation of or in connection with
efforts to relet the Premises or any portion thereof, or the appointment of a
receiver upon Landlord's initiative to protect Landlord's interest under this
Lease shall not terminate Tenant's right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease, this
Lease shall continue in full force and effect and Landlord may enforce all of
Landlord's rights and remedies hereunder including, without limitation, the
remedy described in California Civil Code Section 1951.4 (lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes due, if Lessee has the right to sublet or assign, subject only to
reasonable limitations). Accordingly, if Landlord does not elect to terminate
this Lease on account of any default by Tenant, Landlord may, from time to time,
without terminating this Lease, enforce all of its rights and remedies under
this Lease, including the right to recover all rent as it becomes due.
(d) All rights, powers and remedies of Landlord hereunder and under any
other agreement now or hereafter in force between Landlord and Tenant shall be
cumulative and not alternative and shall be in addition to all rights, powers
and remedies given to Landlord by law, and the exercise of one or more rights or
remedies shall not impair Landlord's right to exercise any other right or
remedy.
(e) Any amount due from Tenant to Landlord hereunder which is not paid
when due shall bear interest at the lower of eighteen percent (18%) per annum or
the maximum lawful rate of interest from the due date until paid, unless
otherwise specifically provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease. In addition to such
interest: (a) if Basic Rental is not paid within ten (10) days after the same is
due, a late charge equal to ten percent (10%) of the amount overdue or $100,
whichever is greater, shall be assessed and shall accrue for each calendar month
or part thereof until such rental, including the late charge, is paid in full,
which late charge Tenant hereby agrees is a reasonable estimate of the damages
Landlord shall suffer as a result of Tenant's late payment and (b) an additional
charge of $25 shall be assessed for any check given to Landlord by or on behalf
of Tenant which is not honored by the drawee thereof; which damages include
Landlord's additional administrative and other costs associated with such late
payment and unsatisfied checks and the parties agree that it would be
impracticable or extremely difficult to fix Landlord's actual damage in such
event. Such charges for interest and late payments and unsatisfied checks are
separate and cumulative and are in addition to and shall not diminish or
represent a substitute for any or all of Landlord's rights or remedies under any
other provision of this Lease.
ARTICLE 21
TRANSFER OF LANDLORD'S INTEREST
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In the event of any transfer or termination of Landlor