U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 1999
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 1-8631
Dover Investments Corporation
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 94-1712121
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
100 Spear Street, Suite 520, San Francisco, CA 94105
(Address of Principal Executive Offices) (Zip Code)
(415) 777-0414
(Issuer's Telephone Number)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of each of the issuer's classes of common
stock, as of March 31, 1999, were as follows:
Class A Common Stock, $.01 par value 747,998 Shares of Common Stock
Class B Common Stock, $.01 par value 315,577 Shares of Common Stock
Transitional Small Business Disclosure Format
(Check one):
Yes No X
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
as of March 31, 1999 and December 31, 1998........................ 3
Consolidated Statements of Operations
for the Three Months Ended March 31, 1999 and 1998................ 4
Consolidated Statement of Stockholders'
Equity for the Three Months Ended March 31, 1999.................. 5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1999 and 1998................ 6
Notes to Consolidated Financial Statements........................ 7
Item 2. Management's Discussion and Analysis or Plan of Operation....... 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................. 10
Signatures ...................................................... 12
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOVER INVESTMENTS CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and December 31, 1998
(in thousands, except share amounts)
03-31-99 12-31-98
ASSETS
Cash and Cash Equivalents $ 11,387 $ 8,622
Restricted Cash 398 394
Homes Held for Sale 2,136 2,136
Property Held for Development 19,723 23,302
Notes Receivable 1,428 1,678
Other Assets 1,566 1,335
TOTAL ASSETS $36,638 $37,467
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Interest and Other Liabilities 2,451 1,800
Notes Payable 8,139 12,650
Minority Interest in Joint Venture 1,241 220
Income Taxes 163 -
TOTAL LIABILITIES 11,994 14,670
STOCKHOLDERS' EQUITY
Class A Common Stock, Par Value $.01
Per Share -- Authorized 2,000,000 Shares;
Issued 806,864 at 3/31/99 and 806,864
at 12/31/98 8 8
Class B Common Stock, Par Value $.01
Per Share -- Authorized 1,000,000 Shares;
Issued 320,137 at 3/31/99 and 320,137
at 12/31/98 3 3
Additional Paid-In Capital 20,895 20,441
Retained Earnings from January 1, 1993 4,069 2,682
Treasury Stock (58,866 at 3/31/99 and
60,066 at 12/31/98 of Class A Common Stock
and 4,560 of Class B Common Stock. (331) (337)
TOTAL STOCKHOLDERS' EQUITY 24,644 22,797
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,638 $37,467
See accompanying Notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1999 and 1998
(in thousands, except share amounts)
Three Months Ended
March 31,
1999 1998
Home Sales $15,860 $ 3,115
Lot Sales 1,107 -
Total Sales 16,967 3,115
Cost of Homes Sold $12,120 $ 2,589
Cost of Lot Sales 864 -
Total Cost of Sales 12,984 2,589
Minority Interest in Joint Ventures 1,021 -
GROSS PROFIT 2,962 526
Selling Expenses 706 107
General and Administrative Expenses 216 141
922 248
Operating Income 2,040 278
Other Income
Interest Income 158 47
Total Other Income 158 47
Income before Income Taxes 2,198 325
Provision for Income Taxes 811 130
NET INCOME $1,387 $ 195
Basic Earnings Per Share $ 1.30 $ 0.18
Diluted Earnings per Share $ 1.28 $ 0.17
See accompanying Notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 1999
(in thousands)
<CAPTION>
Additional Treasury
Common Stock Paid-In Retained Stock
Class A Class B Capital Earnings at Cost Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 $ 8 $ 3 $20,441 $ 2,682 $ (337) $22,797
Reissuance of Treasury
Stock - - (2) - 6 4
Realization of Prequasi-
reorganization Net Operating
Loss Tax Benefits - - 456 - - 456
Net Income - - - 1,387 - 1,387
Balance at March 31, 1999 $ 8 $ 3 $20,895 $ 4,069 $ (331) $24,644
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March, 31, 1999 and 1998
(in thousands)
Three Months
Ended March 31,
1999 1998
Cash Flows from Operating Activities:
Net Income $ 1,387 $ 195
Reconciliation of Net Income to Net
Cash Provided by (Used) in Operating
Activities:
Minority Interest 1,021 21
Income Taxes 163 97
Tax Benefit of Utilizing Prequasi-
reorganization Net Operating Losses 456 -
Changes in Assets and Liabilities:
Restricted Cash (4) 257
Property Held for Development 3,579 (579)
Other Assets (231) 226
Notes Receivable 250 -
Accrued Interest and Other
Liabilities, Net 651 (579)
Net Cash Provided by (Used in)
Operating Activities 7,272 (362)
Cash Flows from Financing Activities:
Net Proceeds from (Repayment of)
Notes Payable (4,511) (311)
Reissuance of Treasury Stock 4 326
Net Cash Provided by (Used in)
Financing Activities (4,507) 15
Net Increase (Decrease) in Cash and
Cash Equivalents 2,765 (347)
Cash and Cash Equivalents at
Beginning of Period 8,622 2,660
Cash and Cash Equivalents at
End of Period $11,387 $2,313
See accompanying Notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
Notes to Consolidated Financial Statements
March 31, 1999
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
balance sheets as of March 31, 1999, and December 31, 1998, the related
consolidated statements of operations for the three month periods ended
March 31, 1999 and 1998, the consolidated statement of stockholders' equity
for the three month period ended March 31, 1999, and consolidated statements
of cash flows for the three month periods ended March 31, 1999 and
1998, reflect all adjustments (consisting of normal recurring accruals and
elimination of significant inter-company transactions and balances) necessary
in order to make such financial statements not misleading.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, these statements
should be read in conjunction with the statements and notes thereto included
in the Company's 1998 Form 10-KSB and the Notes to the Consolidated Financial
Statements, included therein. The results of operations for the quarter ended
March 31, 1999, are not necessarily indicative of the results which may be
expected for the entire year.
2. NET INCOME PER SHARE
Basic income per share is computed, on a combined basis, for the two classes
of common stock, Class A and Class B. Computations are based upon the
weighted average number of common shares outstanding. The weighted
average number of Class A and Class B share equivalents used to compute basic
income per share was 1,063,575 at March 31, 1999, and 1,005,994 at
March 31, 1998. Diluted income per share took into consideration the
outstanding stock options.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company's investment in property held for development
and homes held for sale decreased by $3,579,000 from its carrying value at
December 31, 1998. This decrease resulted primarily from the sale of a
higher number of homes in San Leandro, California (the "Marina Vista"
property), and the sale of homes and lots in Tracy, California (the "Glenbriar
Joint Venture"). For the quarter ended March 31, 1999, the Company closed
the sale of thirteen homes at the Marina Vista and thirty two homes and thirty
two lots at the Glenbriar Estates project, compared to nine home sales at the
Marina Vista and no sales at the Glenbriar Estates project for the same
period in 1998.
REAL ESTATE DEVELOPMENT - MARINA VISTA.
At March 31, 1999, the Company is nearing completion of its Marina Vista
Development project in San Leandro, California. As of this date, the Company
has five model homes, twenty four homes under construction, of which
seventeen are sold, and twenty four remaining lots with all lot improvements
completed. The market for homes at Marina Vista has been very strong.
REAL ESTATE DEVELOPMENT - GLENBRIAR ESTATES.
The Company continues to develop the Glenbriar Estate Project in Tracy,
California, through three entities (the "Developers") that it has formed with
Westco Community Builders, Inc. [Glenbriar Joint Venture, a California
Partnership ("GJV"), Glenbriar Venture #2, LLC ("GV #2, LLC") and Tracy
Residential Venture Partners, LLC ("TRVP")]. At March 31, 1999, the Developers
have constructed major infra structure improvements, sold one hundred and
eighty unimproved lots to a merchant builder, completed lot improvements on
one hundred and sixty lots, commenced construction of single family homes on
one hundred and twenty three lots, sold all one hundred and twenty three homes,
and closed the sale on sixty one of the one hundred and twenty three homes.
The Developers own unimproved land for an additional one hundred and thirty
eight lots and have contracts to purchase approximately four hundred and
twenty additional lots. All of the land owned or under contract to purchase
by the Developers is covered by a vesting tentative subdivision map and
several final subdivision maps have been filed with the City of Tracy for
approval. The market for homes built by the Developers has been very strong
during 1998 and in the first quarter of 1999. The development of the project
during 1999 will depend largely upon the availability of Residential Growth
Allocations issued by the City of Tracy and the state of the economy generally
in the Bay Area.
REAL ESTATE DEVELOPMENT - HIGHER PRICED HOMES.
During 1997 and 1998, the Company entered into joint ventures to develop three
higher priced homes with Westco Community Builders, Inc. In January of 1999,
one of the three higher priced homes was sold and closed. Two other homes,
both located in Menlo Park, California, are currently under construction with
completion scheduled for June and September 1999, respectively.
During the three months ended March 31, 1999, the Company used its liquidity
to fund expenditures in connection with the Marina Vista property, the Tracy
Joint Venture, and its general and administrative expenses. The Company
met its funding requirements primarily from cash reserves and from revenues
from home sales. The Company also obtained construction financing from
private sources secured by the homes under construction. The Company's
primary source of liquidity in the future will continue to be from revenues
generated from home sales, lot sales, and from construction financing when
deemed appropriate. The Company believes that it has sufficient cash
available to complete the development and construction of the Marina Vista
property, as well as pay off the debt discussed below when it becomes due,
and make its required contributions to the Glenbriar Joint Ventures.
At March 31, 1999, the Company borrowed a total of $8,139,000, to pay for
home construction costs. The loans are secured by lots and homes under
construction and will be paid from the proceeds of home and lot sales. The
loans bear interest at the rate of prime plus 1.25 percent per annum maturity
dates through February 27, 2000. The Company also obtained an $802,000 loan
secured by four model homes. The loan bears interest at the rate of 11.25
percent per annum and matures on June 30, 1999.
RESULTS OF OPERATIONS
For the quarter ended March 31, 1999, the Company had net income of $1,387,000,
compared to $195,000 for the same period in 1998. The increase resulted from
an increase in home sales at the Marina Vista property, the home and lot sales
at the Glenbriar Estates project, and the sale of the higher priced home in
Los Gatos, California. Total sales for the quarter ended March 31, 1999,
were $16,967,000, resulting in a gross profit of $2,962,000, compared
to $3,115,000 in sales and a gross profit of $526,000 for the same period in
1998. As a percentage of sales, gross profit in 1999 is similar to 1998.
The market for homes in the San Francisco Bay area has been very strong.
Minority Interest in the first quarter of 1999 increased to $1,241,000,
compared to $220,000 at December 31, 1998. The increase in minority interest
is attributable to the sale of homes and lots at the Glenbriar Estates project
and the sale of the higher priced home located in Los Gatos, California.
The Company expects that the Marina Vista project and the Glenbriar Joint
Venture will provide a profit from the sale of homes and lots. Factors such
as interest rates and general economic conditions influence the prices at
which the Company is able to sell homes. In order to maintain it's market
share of new home sales, the Company keeps home prices competitive with other
builders of a similar product, in the vicinity of the project.
Interest income in the first quarter of 1999 increased to $158,000 compared
to $47,000 in 1998, due to higher cash balances from increased home sales.
For the three months ended March 31, 1999, general and administrative
expenses increased by $75,000 from those expenses incurred in the same period
in 1998. The increase in general and administrative expenses for the first
quarter resulted from an increase in professional fees, salaries and other
administrative expenses.
YEAR 2000 DISCLOSURE. The Company replaced its accounting software with
Solomon IV, which is year 2000 compliant. Personal Computers have been
replaced or upgraded and are also compliant. The expense, to become
Year 2000 compliant had no material effect on the Company's financial
position or results of operation. The Company believes all joint venture
entities and major suppliers are Year 2000 compliant.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed below are filed with this report.
Exhibit No. Description
10.14 Lease Agreement dated October 1, 1997
10.15 Sublease Agreement dated October 1, 1997
between the Company and Wilfred, Inc.
27.1 Financial Data Schedule for the Quarter Ended
March 31, 1999.
(b). Reports on Form 8-K
None.
EXHIBIT INDEX
Exhibit Number Description
10.14 Lease Agreement dated October 1, 1997
10.15 Sublease Agreement dated October 1, 1997
between the Company and Wilfred, Inc.
27.1 Financial Data Schedule for the Quarter Ended
March 31, 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DOVER INVESTMENTS CORPORATION
Date: May 7, 1999 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 11,785
<SECURITIES> 0
<RECEIVABLES> 1,428
<ALLOWANCES> 0
<INVENTORY> 21,859
<CURRENT-ASSETS> 35,072
<PP&E> 1,566
<DEPRECIATION> 0
<TOTAL-ASSETS> 36,638
<CURRENT-LIABILITIES> 3,855
<BONDS> 8,139
0
0
<COMMON> 11
<OTHER-SE> 24,633
<TOTAL-LIABILITY-AND-EQUITY> 36,638
<SALES> 2,256
<TOTAL-REVENUES> 17,125
<CGS> 14,711
<TOTAL-COSTS> 14,711
<OTHER-EXPENSES> 216
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,198
<INCOME-TAX> 811
<INCOME-CONTINUING> 1,387
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,387
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.28
</TABLE>
100 Spear Street
San Francisco, California
Basic Lease Information
Date: August, 1997
Landlord: 100 Spear Street Owners Corp., a Delaware
Corporation
Tenant: Dover Investments Corp., a Delaware Corporation
Premises (Section 1.1): Approximately 3,464 Rentable Square Feet
located on the fifth (5th) Floor of the Building
Term (Section 2.1): Five (5) Years
Commencement Date (Section 2.1): October 1, 1997
Expiration Date (Section 2.1): September 30, 2002
Interim Rent (Section 2.2 ): $20.59 Per Rentable Square Foot
Per Year (ie, $5,943.65 per month)
Base Rent (Section 3.1 (a)): Years 1-3: $20.59 Per Rentable
Square Foot Per Year (ie, $5,943.65
per month)
Years 4-5: $23.09 Per Rentable
Square Foot Per Year (ie, $6,665.31
per month)
Tenants Percentage Share (Section 4.1: 1.73%
Liability Insurance (Section 10.3): $1,000,000
Deposit (Section 21.1): $5,943.65
Landlord's Address (Section 23.1): 100 Spear Street Owners Corp.
C/O The Yarmouth Group, Inc.
One Embarcadero Center
Suite 2101
San Francisco, CA 94111
Attn.: Mr. Art Fong
Tenant's Address: Prior to Commencement Date:
350 California Street, Suite 1650
San Francisco, CA 94104
Attn.: Lawrence Weissberg
Following Commencement Date:
At the Premises
Real Estate Broker (Section 24.5: Landlord: CB Commercial Real
Estate Group, Inc.
Tenant: Belvedere Assoc., Inc.
Exhibit A - Plan(s) Outlining the Premises
Exhibit B - Initial Improvement of the Premises
Tenant's Plans Date (paragraph 2): August 21,1997
Exhibit C - Rules and Regulations
Exhibit D - Continuing Lease Guaranty (Guarantor: Wilfred, Inc.)
The foregoing Basic Lease Information is incorporated in and made a
part of the Lease to which it is attached. If there is any conflict
between the Basic Lease Information and the Lease, the Lease shall
control.
DOVER INVESTMENTS CORP., 100 SPEAR STREET a
a Delaware Corporation OWNERS CORP., a Delaware Corporation
By: Lawrence Weissberg By: THE YARMOUTH GROUP, INC.
Its: President Its: Authorized Agent
TABLE OF CONTENTS
Article Page(s)
1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Term . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 1
3 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4 Operating Expenses and Property Taxes . . . . . . . . . . . . 6
5 Other Taxes Payable by Tenant . . . . . . . . . . . . . . . . 8
6 Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7 Services . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8 Maintenance and Repairs . . . . . . . . . . . . . . . . . . 11
9 Alterations . . . . . . . . . . . . . . . . . . . . . . . . 11
10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 14
11 Compliance With Legal Requirements . . . . . . . . . . . . . 16
12 Assignment or Sublease . . . . . . . . . . . . . . . . . . . 16
13 Rules and Regulations . . . . . . . . . . . . . . . . . . . 19
14 Entry by Landlord . . . . . . . . . . . . . . . . . . . . . 19
15 Events of Default and Remedies . . . . . . . . . . . . . . . 20
16 Damage or Destruction . . . . . . . . . . . . . . . . . . . 23
17 Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . 24
18 Subordination, Merger and Sale . . . . . . . . . . . . . . . 26
19 Estoppel Certificate . . . . . . . . . . . . . . . . . . . . 26
20 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . 27
21 Security Deposit . . . . . . . . . . . . . . . . . . . . . . 27
22 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
23 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .28
24 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 29
Exhibit A - Plan(s) Outlining the Premises
Exhibit B - Initial Improvement of the Premises
Exhibit C - Rules and Regulations
Exhibit D - Continuing Lease Guaranty
OFFICE LEASE
THIS LEASE is made as of the date specified in the Basic
Lease Information by and between .100 SPEAR STREET OWNERS CORP.,
a Delaware corporation ("Landlord") , and the tenant specified in the Basic
Lease Information ("Tenant").
W I T N E S S E T H:
ARTICLE 1
Premises
1.1 Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, for the term and subject to the covenants hereinafter set forth,
to all of which Landlord and Tenant hereby agree, the space on the floor(s)
specified in the Basic Lease Information (the "Premises") , as outlined on the
floor plan(s) attached hereto as Exhibit A, in the building (the "Building")
known as 100 Spear Street, San Francisco, California, which includes the land
(Assessor's Lot 1, Block 3717) on which the Building is located. Tenant shall
have the right to use, in common with others, the entrances, lobbies and
elevators of the Building for access to the Premises. All of the windows and
outside decks, balconies and walls of the Building and any space in the
Premises used for shafts, stacks, pipes, conduits, ducts, electric or other
utilities, sinks or other Building facilities, and the use thereof and access
thereto through the Premises for the purposes of operation, maintenance and
repairs, are reserved to Landlord.
1.2 No easement for light, air or view is included with or appurtenant to
the Premises. Any diminution or shutting off of light, air or view by any
structure which may hereafter be erected (whether or not constructed by
Landlord) shall in no way affect this Lease or impose any liability on Landlord.
ARTICLE 2
Term
2.1 The term of this Lease shall be the term specified in the
Basic Lease Information, which shall commence on the commencement date
specified in the Basic Lease Information (the "Commencement Date") and,
unless sooner terminated-as hereinafter provided, shall end on the expiration
date specified in the Basic Lease Information (the "Expiration Date") .
Notwithstanding the foregoing, the term of this Lease shall not commence until
Landlord has substantially completed Landlord's Work (as defined in Exhibit
B attached hereto) and delivered possession of the Premises to Tenant in
accordance with Section 2.2 hereof. If Landlord, for any reason whatsoever,
does not substantially complete Landlord's work and deliver possession of the
Premises to Tenant on the Commencement Date in accordance with Section 2.2
hereof, this Lease shall not be void or voidable and Landlord shall not be
liable to Tenant for any loss or damage resulting therefrom, but, in such
event, the Commencement Date shall be postponed until the date on which
Landlord substantially completes Landlord's Work and delivers possession of
the Premises to Tenant in accordance with Section 2.2 hereof; provided,
however, that no delay in delivery of possession shall operate to extend the
term hereof.
2.2 Landlord shall construct or install in the Premises the
improvements to be constructed or installed by Landlord pursuant to Exhibit B.
The date of substantial completion of Landlord's Work shall be the date on
which construction is sufficiently complete, substantially in accordance with
the plans and specifications approved by Landlord, so Tenant can occupy the
Premises for the use permitted under this Lease. Landlord shall use reasonable
efforts to give notice to Tenant of the anticipated date of substantial
completion at least thirty (30) days prior to such date but the failure to
give such notice shall not constitute a default by Landlord. Landlord shall
deliver possession of the Premises to Tenant on the scheduled Commencement
Date or the date of substantial completion of Landlord's Work, whichever is
later, and Tenant shall accept such delivery of the Premises, which acceptance
shall constitute agreement by Tenant that the Premises are in the condition
required by this Lease, subject to normal punch list items specified by Tenant
in a written notice to Landlord within thirty (30) days after such acceptance.
Landlord shall correct or complete the items on such punch list promptly after
such written notice from Tenant. If Landlord is delayed in substantially
completing Landlord's Work by any cause of delay for which Tenant is
responsible as described in Exhibit B, then Tenant shall pay to Landlord, as
additional rent, the monthly interim rent specified in the Basic Lease
Information (the "Interim Rent") and the additional monthly rent payable under
Section 3.1 hereof, calculated on a per them basis, multiplied by the number
of days of such delay, which shall be due and payable on the Commencement Date
specified in the Basic Lease Information for such delay before such date and
monthly in arrears on the first day of each month thereafter for such delay
after such date.
2.3 If any part of the Premises is substantially complete and
ready for occupancy by Tenant prior to the scheduled Commencement Date,
Tenant may, with the prior written approval of Landlord, take early occupancy
of such part of the Premises prior to the scheduled Commencement Date but the
term of this Lease shall not commence until the scheduled Commencement Date.
If Tenant takes early occupancy of part of the Premises under this Section
2.3, such early occupancy shall be on and subject to all of the covenants
in this Lease, all of which shall be binding on and apply to Tenant during such
early occupancy, except Tenant shall pay to Landlord, as additional rent, the
Interim Rent and the additional monthly rent payable under Section 3.1 hereof,
calculated on a per them basis, pro rata in the proportion that the area in the
Premises occupied by Tenant bears to the total area in the Premises, for the
period from such early occupancy to the Commencement Date. Tenant shall
give Landlord written notice of Tenant's request to take early occupancy of any
part of the Premises at least ten (10) days prior to the requested date of such
early occupancy, which notice shall specify the requested date of early
occupancy and the part of the Premises to be occupied. Tenant shall pay the
Interim Rent and the additional monthly rent in respect of early occupancy
under this Section 2.3 to Landlord on the Commencement Date. If the entire
Premises is substantially complete and ready for occupancy by Tenant prior to
the Commencement Date, Tenant shall have the right to take early occupancy
of the entire Premises prior to the Commencement Date and the term of this
Lease shall commence on such date of early occupancy by Tenant, in which
event the Commencement Date shall be advanced to such date of early
occupancy; provided, however, that no such early occupancy shall operate to
advance the term hereof. Tenant shall give Landlord written notice of Tenant's
determination to take early occupancy of the entire Premises at least ten (10)
days prior to such early occupancy, which notice shall specify the date of such
early occupancy.
2.4 If the Commencement Date as determined in accordance
with Section 2.1 or 2.3 hereof would not be the first day of the month and the
Expiration Date would not be the last day of the month, then the
Commencement Date shall be the first day of the next calendar month following
the date so determined pursuant to Section 2.1 or 2.3 hereof and the Expiration
Date shall be the last day of the appropriate calendar month so the term of this
Lease shall be the full term specified in the Basic Lease Information. The
period of the fractional month between the date so determined pursuant to
Sections 2.1 and 2.3 hereof and the Commencement Date shall be on and subject
to all of the covenants in this Lease, all of which shall be binding on and
apply to Tenant during such period, except the term of this Lease shall not
commence until the Commencement Date and Tenant shall pay to Landlord, as
additional rent, the Interim Rent and the additional monthly rent payable
under Section 3.1 hereof, calculated on a per them basis, for such period.
Tenant shall pay the Interim Rent and the additional monthly rent in respect
of such period to Landlord on the Commencement Date. Landlord and Tenant each
shall, promptly after the Commencement Date and the Expiration Date have been
determined, execute and deliver to the other an amendment to this Lease which
sets forth the Commencement Date and the Expiration Date for this Lease, but
the Term of this Lease shall commence on the Commencement Date and end on the
Expiration Date whether or not such amendment is executed.
ARTICLE 3
Rent
3.1 Tenant shall pay to Landlord the following
amounts as rent for the Premises:
(a) During the term of this Lease, Tenant shall pay to Landlord,
as base monthly rent, the amount of monthly rent specified in the Basic Lease
Information (the "Base Rent").
(b) During the term of this Lease, Tenant shall pay to Landlord,
as additional monthly rent, Tenant's Percentage Share (as hereinafter defined)
of all Operating Expenses (as hereinafter defined) paid or incurred by Landlord
during the term of this Lease and Tenant's Percentage Share of all Property
Taxes (as hereinafter defined) paid or incurred by Landlord during the term of
this Lease.
(c) Throughout the term of this Lease, Tenant shall pay, as
additional rent, all other amounts of money and charges required to be paid by
Tenant under this Lease, whether or not such amounts of money or charges are
designated "additional rent." As used in this Lease, "rent" shall mean and
include all Interim Rent, Base Rent, additional monthly rent and additional rent
payable by Tenant in accordance with this Lease.
3.2 [INTENTIONALLY OMITTED]
3.3 The additional monthly rent payable by Tenant pursuant to
Section 3.1(b) hereof shall be calculated and paid in accordance with the
following procedures:
(a) on or before the Commencement Date, or as soon thereafter
as practicable, and on or before the first day of each subsequent calendar year
during the term of this Lease, or as soon thereafter as practicable, Landlord
shall give Tenant written notice of Landlord's estimate of the amount payable
under Section 3.1(b) hereof for the balance of the first calendar year after
the Commencement Date or for the ensuing calendar year, as the case may be.
Tenant shall pay such estimated amount to Landlord in equal monthly
installments, in advance, on or before the Commencement Date and on or before
the first day of each month during such balance of the first calendar year
after the Commencement Date or during such ensuing calendar year, as the case
may be. If such notice is not given for any calendar year, Tenant shall continue
to pay on the basis of the prior year's estimate until the month after such
notice is given, and subsequent payments by Tenant shall be based on Landlord's
current estimate. If at any time it appears to Landlord that the amount payable
under Section 3.1(b) hereof for the current calendar year will vary from
Landlord's estimate, Landlord may, by giving written notice to Tenant, revise
Landlord's estimate for such year, and subsequent payments by Tenant for such
year shall be based on such revised estimate.
(b) Within a reasonable time after the end of each calendar year, Landlord
shall give Tenant a written statement of the amount payable by Tenant
under Section 3.1(b) hereof for such calendar year certified by Landlord. If
such statement shows an amount owing by Tenant that is less than the estimated
payments for such calendar year previously made by Tenant, Landlord shall
credit the excess to the next succeeding monthly installments of the amount
payable by Tenant under Section 3.1(b) hereof. If such statement shows an
amount owing by Tenant that is more than the estimated payments for such
calendar year previously made by Tenant, Tenant shall pay the deficiency to
Landlord within ten (10) days after delivery of such statement. Tenant or
Tenant's authorized agent or representative shall have the right to inspect the
books of Landlord relating to Operating Expenses and Property Taxes, after
giving reasonable prior written notice to Landlord and during the business hours
of Landlord at Landlord's office in the Building or at such other location as
Landlord may designate, for the purpose of verifying the information in such
statement. Failure by Landlord to give any notice or statement to Tenant under
this Section 3.3 shall not waive Landlord's right to receive, or Tenant's
obligation to pay, the amount payable by Tenant under Section 3.1(b) hereof.
(c) If the term of this Lease ends on a day other than the last day
of a calendar year, the amount payable by Tenant under Section 3.1(b) hereof
applicable to the calendar year in which such term ends shall be prorated
according to the ratio which the number of days in such calendar year to and
including the end of the term bears to three hundred sixty-five (365).
Termination of this Lease shall not affect the obligations of Landlord and
Tenant pursuant to Section 3.3(b) hereof to be performed after such
termination.
3.4 It is the intention of Landlord and Tenant that the Base Rent
payable by Tenant to Landlord during the entire term of this Lease shall be
absolutely net of Tenant's Percentage Share of all Operating Expenses and all
Property Taxes, and the provisions of Sections 3.1 and 3.3 hereof are intended
to so provide. The provisions of this Lease for payment by Tenant of Tenant's
Percentage Share of all Operating Expenses and all Property Taxes are intended
to pass on to Tenant and to reimburse Landlord for all Operating Expenses and
all Property Taxes in connection with the Building. Landlord and Tenant agree
that statements in this Lease to the effect that Landlord is to perform certain
of its obligations hereunder at its own or sole cost or expense shall not be
interpreted as excluding any cost or expense from Operating Expenses or
Property Taxes Lf such cost or expense is an Operating Expense or a Property
Tax pursuant to this Lease.
3.5 Tenant shall pay all Base Rent and additional monthly rent
under Section 3.1 hereof to Landlord, in advance, on or before the first day of
each and every calendar month during the term of this Lease. Tenant shall pay
all rent to Landlord without notice, demand, deduction or offset, in lawful
money of the United States of America, at the address of Landlord specified in
the Basic Lease Information, or to such other person or at such other place as
Landlord may from time to time designate in writing.
ARTICLE 4
Operating Expenses and Property Taxes
4.1 As used in this Lease, "Tenant's Percentage Share" shall
mean the percentage specified in the Basic Lease Information.
4.2 As used in this Lease, "Operating Expenses" shall mean all
costs and expenses paid or incurred by Landlord in connection with the
ownership, management, operation, maintenance or repair of the Building or
providing services in accordance with this Lease, including the following:
salaries, wages, other compensation, taxes and benefits (including payroll,
social security, workers' compensation, unemployment, disability and similar
taxes and payments) for all personnel engaged in the management, operation,
maintenance or repair of the Building; uniforms provided to such personnel;
premiums and other charges for all property, earthquake, rental value, liability
and other insurance carried by Landlord; water and sewer charges or fees;
license, permit and inspection fees; electricity, chilled water, air
conditioning, gas, fuel, steam, heat, light, power and other utilities; sales,
use and excise taxes on goods and services purchased by Landlord; telephone,
delivery, postage, stationery supplies and other expenses; management fees and
expenses; equipment lease payments; repairs to and maintenance of the Building,
including Building systems and accessories thereto and repair and replacement
of worn-out or broken equipment, facilities, parts and installations, but
excluding the replacement of major Building systems; janitorial, window
cleaning, security, guard, extermination, water treatment, garbage and waste
disposal, rubbish removal, plumbing and other services; inspection or service
contracts for elevator, electrical, mechanical and other Building equipment and
systems; supplies, tools, materials and equipment; accounting, legal, consulting
and other professional fees and expenses (excluding legal fees incurred by
Landlord relating to disputes with specific tenants or the negotiation,
interpretation or enforcement of specific leases); painting the exterior or the
public or common areas of the Building and the cost of maintaining the
sidewalks, landscaping and other common areas of the Building; the cost,
reasonably amortized as determined by Landlord, with interest at the rate of ten
percent (10%) per annum, or such higher rate as Landlord may actually have to
pay on the unamortized balance of all furniture, fixtures, draperies, carpeting
and personal property (excluding paintings, sculptures or other works of fine
art) furnished by Landlord in common areas or public corridors of the Building
or in the Building office; all costs and expenses resulting from compliance with
any laws, ordinances, rules, regulations or orders applicable to the Building,
including compliance with requirements of the transportation management
program; Building office rent or rental value for office space reasonably
necessary for the proper management and operation of the Building; all costs
and expenses of contesting by appropriate legal proceedings any matter
concerning managing, operating, maintaining or repairing the Building, or the
validity or applicability of any law, ordinance, rule, regulation or order
relating to the Building, or the amount or validity of any Property Taxes;
reasonable depreciation as determined by Landlord on all machinery, fixtures
and equipment (including window washing machinery) used in the management,
operation, maintenance or repair of the Building and on window coverings
provided by Landlord; and the cost, reasonably amortized as determined by
Landlord, with interest at the rate of ten percent (10%) per annum, or such
higher annual rate as Landlord may actually have to pay, on the unamortized
balance, of all capital improvements made to the Building or capital assets
acquired by Landlord that are designed or intended to be a labor-saving or
energy-saving device, or to improve economy or efficiency in the management,
operation, maintenance or repair of the Building, or to reduce any item of
Operating Expenses, or that are reasonably necessary to comply with any
conservation program or required by any law, ordinance, rule, regulation or
order. Operating Expenses shall not include Property Taxes, the cost of any
goods and services (such as electricity) billed separately to and paid directly
by Tenant or another tenant of the Building, depreciation on the Building
(except as described above); costs of tenants' improvements, real estate
brokers' commissions, interest (except as described above) or capital items
(except as described above). Actual Operating Expenses for the first calendar
year and each calendar year shall be adjusted, if necessary, to equal Landlord's
reasonable estimate of Operating Expenses for a full calendar year with the
total area of the Building occupied during such full calendar year. The
determination of Operating Expenses shall be in accordance with generally
accepted accounting principles applied on a consistent basis.
4.3 As used in this Lease, "Property Taxes" shall mean all taxes,
assessments, excises, levies, fees and charges (and any tax, assessment, excise,
levy, fee or charge levied wholly or partly in lieu thereof or as a substitute
therefor or as an addition thereto) of every kind and description, general or
special, ordinary or extraordinary, foreseen or unforeseen secured or unsecured,
whether or not now customary or within the contemplation of Landlord and
Tenant, that are levied, assessed, charged, confirmed or imposed by any public
or government authority on or against, or otherwise with respect to, the
Building or any part thereof or any personal property used in connection with
the Building. Property Taxes shall not include net income (measured by the
income of Landlord from all sources or from sources other than solely rent),
franchise, documentary transfer, inheritance or capital stock taxes of
Landlord, unless levied or assessed against Landlord in whole or in part in
lieu of, as a substitute for, or as an addition to any Property Taxes.
Property Taxes shall not include any tax, assessment, excise, levy, fee or
charge paid by Tenant pursuant to Section 5.1 hereof.
ARTICLE 5
Other Taxes Payable by Tenant
5.1 In addition to all monthly rent and other charges to be paid
by Tenant under this Lease, Tenant shall reimburse Landlord upon demand for
all taxes, assessments, excises, levies, fees and charges, including all
payments related to the cost of providing facilities or services, whether or
not now customary or within the contemplation of Landlord and Tenant, that are
payable by Landlord and levied, assessed, charged, confirmed or imposed by any
public or government authority upon, or measured by, or reasonably attributable
to (a) the Premises, (b) the cost or value of Tenant's equipment, furniture,
fixtures and other personal property located in the Premises or the cost or
value of any leasehold improvements made in or to the Premises by or for
Tenant, regardless of whether title to such improvements is vested in Tenant
or Landlord, (c) any rent payable under this Lease, including, without
limitation, any gross income tax or excise tax levied by any public or
government authority with respect to the receipt of any such rent, (d) the
possession, leasing, operation, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises, or (e) this transaction or any
document to which Tenant is a party creating or transferring an interest or
an estate in the Premises. Such taxes, assessments, excises, levies, fees and
charges shall not include net income (measured by the income of Landlord from
all sources or from sources other than solely rent), franchise, documentary
transfer, inheritance or capital stock taxes of Landlord, unless levied or
assessed against Landlord in whole or in part in lieu of, as a substitute for,
or as an addition to any such taxes, assessments, excises, levies,
fees and charges. All taxes, assessments, excises, levies, fees and charges
payable by Tenant under this Section 5.1 shall be deemed to be, and shall be
paid as, additional rent.
ARTICLE 6
Use
6.1 The Premises shall be used for general office purposes and no other
purpose. Tenant shall not do or permit to be done in, on or about the Premises,
nor bring or keep or permit to be brought or kept therein, anything which is
prohibited by or will in any way conflict with any law, ordinance, rule,
regulation or order now in force or which may hereafter be enacted, or which
is prohibited by any insurance policy carried by Landlord for the Building, or
will in any way increase the existing rate of, or cause a cancellation of, or
affect any insurance for the Building. Tenant shall not bring or keep, or
permit to be brought or kept, in the Premises or the Building any toxic or
hazardous substance, material or waste or any other contaminant or pollutant.
Tenant shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of Landlord or
other tenants of the Building, or injure or annoy them. Tenant shall not use
or allow the Premises to be used for any improper, immoral, unlawful or
objectionable activity, nor shall Tenant cause, maintain or permit any
nuisance in, on or about the Premises or commit or suffer to be committed any
waste in, on or about the Premises.
Tenant shall not bring or keep in the Premises any furniture, equipment,
materials or other objects which overload the Premises or any portion thereof
in excess of fifty (50) pounds per square foot live or dead load, which is the
normal load-bearing capacity of the floors of the Building.
ARTICLE 7
Services
7. 1 Landlord shall supply the Premises during reasonable and
usual business hours, as determined by Landlord and subject to the Rules and
Regulations (as hereinafter defined) established by Landlord, with normal
electricity for lighting and the operation of desk top office machines, normal
heating, ventilating and air conditioning reasonably required for the use and
occupancy of the Premises, and normal water for lavatory and drinking
purposes. Landlord shall also furnish normal elevator service to the Premises
at all times, and lighting replacement for Building standard lights, restroom
supplies and window washing when needed, as determined by Landlord and
subject to the Rules and Regulations. Landlord shall also furnish normal
security service for the Building (not Tenant or the Premises) and normal
janitor service to the Premises during the times and in the manner that such
services are customarily furnished in comparable office buildings in the area.
Landlord shall not be liable for any criminal acts of others or for any direct,
consequential or other loss or damage related to any malfunction, circumvention
or other failure of such security service. Landlord shall not be in default
under this Lease or be liable for any damage or loss directly or indirectly
resulting from, nor shall the rent be abated or a constructive or other
eviction be deemed to have occurred by reason of, any installation, use or
interruption of use of any equipment in connection with the furnishing of any
of the foregoing services, any failure to furnish or delay in furnishing any
such services when such failure or delay is caused by accident or breakdown or
any condition beyond the reasonable control of Landlord or by the making of
repairs or improvements to the Premises or to the Building, any interruption
in telephone service to the Premises, or any limitation, curtailment, rationing
or restriction on use of water, electricity, gas or any resource or form of
energy serving the Premises or the Building, whether such results from
mandatory restrictions or voluntary compliance with guidelines. Landlord shall
use reasonable efforts to correct any interruption in the furnishing of such
services.
7.2 Tenant shall pay to Landlord (or to the utility supplier, if billed
directly), upon billing by Landlord (or by the utility supplier, if billed
directly) , as additional rent, the cost of all electricity furnished to the
Premises based on the meter measuring electrical usage for the floor(s) on
which the Premises are located and, in the case of a multi-tenant floor, with
an appropriate allocation among the tenants as reasonably determined by
Landlord. If Tenant uses heat generating machines, equipment or computers or
lighting other than Building standard lights in the Premises which affect the
temperature otherwise maintained by the air conditioning system, Landlord shall
have the right to install supplementary air conditioning units in the Premises
and Tenant shall pay to Landlord the cost thereof, including the costs of
installation, operation, maintenance and repair thereof, as reasonably
determined by Landlord, upon billing by Landlord. if Tenant installs lighting
requiring power in excess of that required for normal office use in the
Building or equipment or computers requiring power in excess of that required
for normal desk top office equipment, Tenant shall pay to Landlord, upon
billing by Landlord, the cost of such excess, as reasonably determined by
Landlord. Tenant shall pay to Landlord, upon billing by Landlord, the cost of
all additional services, electricity, power and energy consumed by Tenant, in
excess of the amount that would reasonably be incurred for a normal business
office operating during reasonable and usual business hours (which excess, in
the case of electricity, is defined as more than two and one half (2-1/2)
watts per square foot), as a result of the operation of Tenant's computers or
equipment, the number of hours Tenant operates, or any other feature of the
conduct of Tenant's business in - the-Premises, all as reasonably determined
by Landlord based on the actual additional cost incurred by Landlord. All costs
payable by Tenant under this Section 7.2 shall be deemed to be, and shall be
paid as, additional rent.
ARTICLE 8
Maintenance and Repairs
8.1 Landlord shall maintain and repair the public and common areas of the
Building, such as plazas, lobbies, stairs, corridors and restrooms, the roof
and exterior elements of the Building, and the elevator, mechanical (heating,
ventilating and air conditioning) and electrical systems of the Building
and keep such areas, elements and systems in reasonably good offer and
condition. Any damage in or to any such areas, elements or systems caused by
Tenant or any agent, officer, employee, contractor, licensee or invitee of
Tenant shall be repaired by Landlord at Tenant's expense and Tenant shall pay to
Landlord, upon billing by Landlord, as additional rent, the cost of such repairs
incurred by Landlord.
8.2 Tenant shall, at all times during the term of this Lease and
at Tenant's sole cost and expense, maintain and repair the Premises and every
part thereof and all equipment, fixtures and improvements therein and keep all
of the foregoing clean and in good order and operating condition, ordinary wear
and tear and damage thereto by fire or other casualty excepted. Tenant hereby
waives all rights under California Civil Code Section 1941 and all rights to
make repairs at the expense of Landlord or in lieu thereof to vacate the
Premises as provided by California Civil Code Section 1942 or any other law,
statute or ordinance now or hereafter in effect. Subject to Section 9.2 hereof,
Tenant shall, at the end of the term of this Lease, surrender to Landlord the
Premises and all alterations, additions, fixtures and improvements therein or
thereto in the same condition as when received, ordinary wear and tear and
damage thereto by fire or other casualty excepted.
ARTICLE 9
Alterations
9.1 Tenant shall not make any alterations, additions or
improvements in or to the Premises or any part thereof, or attach any fixtures
or equipment thereto, without Landlord's prior written consent. Notwithstanding
the preceding sentence, Tenant may make such alterations, additions or
improvements without Landlord's consent only if the total cost of such
alterations, additions or improvements is five thousand dollars ($5,000) or less
and such alterations, additions or improvements will not affect in any way the
structural, exterior or roof elements of the Building or the elevator,
mechanical, electrical, plumbing or life safety systems of the Building, but
Tenant shall give prior written notice of any such alterations, additions or
improvements to Landlord. All alterations, additions and improvements (except
the initial improvements to be constructed or installed in the Premises in
accordance with Exhibit B) in or to the Premises to which Landlord consents
shall be made by Landlord at Tenant's sole cost and expense as follows:
(a) Tenant shall submit to Landlord, for Landlord's written
approval, complete plans and specifications for all work to be done by Tenant.
Such plans and specifications shall be prepared by the licensed architect(s) and
engineer(s) designated in writing by Landlord, shall comply with all applicable
codes laws, ordinances, rules and regulations, shall not adversely affect the
Building shell or core or any systems, components or elements of the Building,
shall be in a form sufficient to secure the approval of all government
authorities with jurisdiction over the Building, and shall be otherwise
satisfactory to Landlord in Landlord's reasonable discretion. Landlord shall
notify Tenant in writing of the licensed architect(s) and engineer(s) whom
Tenant is required to engage to prepare such plans and specifications.
(b) Landlord shall notify Tenant promptly in writing whether
Landlord approves or disapproves such plans and specifications and, if Landlord
disapproves such plans and specifications, Landlord shall describe the reasons
for disapproval. Tenant may submit to Landlord revised plans and specifications
for Landlord's prior written approval. Tenant shall pay all costs, including the
fees and expenses of the licensed architect(s) and engineer(s), in preparing
such plans and specifications.
(c) All changes in the plans and specifications approved by
Landlord shall be subject to Landlord's prior written approval. If Tenant wishes
to make any such change in such approved plans and specifications, Tenant
shall have such architect (s) and engineer (s) prepare plans and specifications
for such change and submit them to Landlord for Landlord's written approval.
Landlord shall notify Tenant in writing promptly whether Landlord approves
or disapproves such change and, if Landlord disapproves such change, Landlord
shall describe the reasons for disapproval. Tenant may submit to Landlord
revised plans and specifications for such change for Landlord's written
approval. After Landlord's written approval of such change, such change shall
become part of the plans and specifications approved by Landlord.
(d) Landlord shall, through Landlord's licensed contractor, perform the
work substantially in accordance with the plans and specifications
approved in writing by Landlord. Tenant shall pay for all work (including the
cost of all utilities, permits, fees, taxes, and property and liability
insurance premiums in connection therewith) required to make the alterations,
additions and improvements. Tenant shall pay to Landlord, upon billing by
Landlord, as additional rent, the entire cost of the work for all alterations,
additions and improvements. Tenant shall pay to Landlord as additional rent,
any additional direct costs (beyond the normal services provided to tenants
in the Building) and shall reimburse Landlord, as additional rent, for all
expenses incurred by Landlord in connection with the review, approval
and supervision of any alterations, additions or improvements. Under no
circumstances shall Landlord be liable to Tenant for any damage, loss, cost
or expense incurred by Tenant on account of any plans and specifications,
contractors or subcontractors, design of any work, construction of any work,
or delay in completion of any work.
(e) Tenant shall give written notice to Landlord of the date on
which construction of any work will be commenced at least five (5) days prior
to such date. Tenant shall keep the Premises and the Building free from
mechanics', materialmen's and all other liens arising out of any work performed,
labor supplied, materials furnished or other obligations incurred by Tenant.
Tenant shall promptly and fully pay and discharge all claims on which any such
lien could be based. Landlord shall have the right to post and keep posted on
the Premises any notices that may be provided by law or which Landlord may deem
to be proper for the protection of Landlord, the Premises and the Building from
such liens, and to take any other action Landlord deems necessary to remove or
discharge liens or encumbrances at the expense of Tenant.
9.2 All alterations, additions, fixtures and carpeting and all
other improvements made pursuant to Exhibit B, whether temporary or
permanent in character, made in or to the Premises by Landlord or Tenant, shall
become part of the Building and Landlord's property. Upon termination of this
Lease, Landlord shall have the right, at Landlords' option, by giving written
notice to Tenant at any time before or within sixty (60) days after such
termination, to retain all such alterations, additions, fixtures and
improvements in the Premises, without compensation to Tenant, or to remove
and improvements from the Premises, repair all damage caused by any such
removal, and restore the Premises (including restoration of all openings or
holes, stairs and vertical penetrations in the Premises) to the condition in
which the Premises existed before such alterations, additions, fixtures
and improvements were made, and in the latter case Tenant shall pay to
Landlord, upon billing by Landlord, the cost of such removal, repair and
restoration (including a reasonable charge or Landlord's overhead and profit).
All movable furniture, equipment, trade fixtures, computers, office machines
and other personal property shall remain the property of Tenant. Upon
termination of this Lease, Tenant shall, at Tenant's expense, remove all such
movable furniture, equipment, trade fixtures, computers, office machines and
other personal property from the Building and repair all damage caused by any
such removal. Termination of this Lease, shall not affect the obligations of
Tenant pursuant to this Section 9.2 to be performed after such termination.
ARTICLE 10
Insurance
10.1 Landlord shall not be liable to Tenant for any damage to or loss or
theft of any property or for any bodily or personal injury, illness or
death of any person in, on or about the Premises or the Building arising at any
time and from any cause whatsoever, except to the extent caused by the
negligence or willful misconduct of Landlord. Tenant waives all claims against
Landlord arising from any liability described in this Section 10.1, except to
the extent caused by the negligence or willful misconduct of Landlord.
10.2 Tenant shall indemnify and defend Landlord against and
hold Landlord harmless from all claims, demands, liabilities, damages, losses,
costs and expenses, including reasonable attorneys, fees and disbursements,
arising from or related to any use or occupancy of the Premises, or any
condition of the Premises, or any default in the performance of Tenant's
obligations, or any damage to any property (including property of employees
and invitees of Tenant) or any bodily or personal injury, illness or death of
any person (including employees and invitees of Tenant) occurring in, on or
about the Premises or any part thereof arising at any time and from any cause
whatsoever (except to the extent caused by the negligence or willful misconduct
of Landlord) or occurring in, on or about any part of the Building other than
the Premises when such damage, bodily or personal injury, illness or death is
caused by any act or omission of Tenant or its agents, officers, employees,
contractors, invitees or licensees. This Section 10.2 shall survive the
termination of this Lease with respect to any damage, bodily or personal injury,
illness or death occurring prior to such termination.
10.3 Tenant shall, at all times during the term of this Lease and at
Tenant's sole cost and expense, obtain and keep in force comprehensive
general liability insurance, including contractual liability (specifically
covering this Lease) , fire legal liability, and premises operations ' with a
minimum combined single limit in the amount specified in the Basic Lease
Information per occurrence for bodily or personal injury to, illness of, or
death of persons and damage to property occurring in, on or about the Premises
or the Building. In addition, Tenant shall, at all times during the term of
this Lease and at Tenant's sole cost and expense, obtain and keep in force
workers' compensation insurance in amount not less than the minimum required
by applicable law. Tenant shall, at Tenant's sole cost and expense, be
responsible for insuring Tenant's furniture, equipment, fixtures, computers,
off ice machines and personal property.
10.4 All insurance required under this Article 10 and all renewals thereof
shall be issued by good and responsible companies qualified to do and doing
business in the State of California. Each policy shall expressly provide that
the policy shall not be cancelled or altered without thirty (30) days' prior
written notice to Landlord and shall remain in effect notwithstanding any such
cancellation or alteration until such notice shall have been given to Landlord
and such period of thirty (30) days shall have expired. All liability insurance
under this Article 10 shall name Landlord, The Yarmouth Group, Inc., and any
other parties designated by Landlord as an additional insured, shall be
primary and non-contributing with any insurance which may be carried by
Landlord, shall afford coverage for all claims based on any act, omission,
event or condition that occurred or arose (or the onset of which occurred or
arose) during the policy period, and shall expressly provide that Landlord,
although named as an insured, shall nevertheless be entitled to recover under
the policy for any loss, injury or damage to Landlord. Upon the issuance
thereof, Tenant shall deliver each such policy or a certified copy and a
certificate thereof to Landlord for retention by Landlord. If Tenant fails to
insure or fails to furnish to Landlord upon notice to do so any such policy
or certified copy and certificate thereof as required, Landlord shall have
the right from time to time to effect such insurance for the
benefit of Tenant or Landlord or both of them and all premiums paid by
Landlord shall be payable by Tenant as additional rent on demand.
10.5 Tenant waives on behalf of all insurers under all policies
of property, liability and other insurance (excluding workers' compensation)
now or hereafter carried by Tenant insuring or covering the Premises, or any
portion or any contents thereof, or any operations therein, all rights of
subrogation which any insurer might otherwise, if at all, have to any claims of
Tenant against Landlord. Landlord waives on behalf of all insurers under all
policies of property, liability and other insurance (excluding workers'
compensation) now or hereafter carried by Landlord insuring or covering the
Building or any portion or any contents thereof, or any operations therein, all
rights of subrogation which any insurer might otherwise, if at all, have to any
claims of Landlord against Tenant. Tenant shall, prior to or immediately after
the date of this Lease, procure from each of the insurers under all policies of
property, liability and other insurance (excluding workers' compensation) now
or hereafter carried by Tenant insuring or covering the Premises, or any portion
or any contents thereof, or any operations therein, a waiver of all rights of
subrogation which the insurer might otherwise, if at all, have to any claims of
Tenant against Landlord as required by this Section 10.5.
ARTICLE 11
Compliance with Legal Requirements
11.1 Tenant shall, at Tenant's sole cost and expense, promptly comply with
all laws, ordinances, rules, regulations, orders and other requirements of any
government or public authority now in force or which may hereafter be in
force, with all requirements of any board of fire underwriters or
other similar body now or hereafter constituted, and with all directions and
certificates of occupancy issued pursuant to any law by any governmental
agency or officer, insofar as any thereof relate to or are required by the
condition, use or occupancy of the Premises or the operation, use or
maintenance of any personal property, fixtures, machinery, equipment or
improvements in the Premises, but Tenant shall not be required to make
structural changes unless structural changes are related to or required by
Tenant's acts or use of the Premises or by improvements made by or for Tenant.
ARTICLE 12
Assignment or Sublease
12.1 Tenant shall not, directly or indirectly, without the prior
written consent of Landlord (which consent shall not be unreasonably withheld)
, assign this Lease or any interest herein or sublease the Premises or any part
thereof, or permit the use or occupancy of the Premises by any person or entity
other than Tenant. Tenant shall not, directly or indirectly, without the prior
written consent of Landlord, pledge, mortgage or hypothecate this Lease or any
interest herein. This Lease shall not, nor shall any interest herein, be
assignable as to the interest of Tenant involuntarily or by operation of law
without the prior written consent of Landlord. Any of the foregoing acts
without such prior written consent of Landlord shall be void and shall, at the
option of Landlord, constitute a default that entitles Landlord to terminate
this Lease. Without limiting or excluding other reasons for withholding
Landlord's consent, Landlord shall have the right to withhold consent if the
proposed assignee or subtenant or the use of the Premises to be made by the
proposed assignee or subtenant is not consistent with the character and nature
of other tenants and uses in the Building or is prohibited by this Lease or if
it is not demonstrated to the satisfaction of Landlord that the proposed
assignee or subtenant is financially able to perform all of the obligations of
Tenant under this Lease (as evidenced by financial statements and business and
credit references acceptable to Landlord). Tenant agrees that the instrument
by which any assignment or sublease to which Landlord consents is accomplished
shall expressly provide that the assignee or subtenant will perform all of the
covenants to be performed by Tenant under this Lease (in the case of a sublease,
only insofar as such covenants relate to the portion of the Premises subject to
such sublease) as and when performance is due after the effective date of the
assignment or sublease and that Landlord will have the right to enforce such
covenants directly against such assignee or subtenant. Any purported
assignment or sublease without an instrument containing the foregoing
provisions shall be void. Tenant shall in all cases remain liable for the
performance by any assignee or subtenant of all such covenants.
12.2 If Tenant wishes to assign this Lease or sublease all or any part of
the Premises, Tenant shall give written notice to Landlord
identifying the intended assignee or subtenant by name and address and
specifying all of the terms of the intended assignment or sublease. Tenant shall
give Landlord such additional information concerning the intended assignee or
subtenant (including complete financial statements and a business history) or
the intended assignment or sublease (including true copies thereof) as Landlord
requests. For a period of thirty (30) days after such written notice is given by
Tenant, Landlord shall have the right, by giving written notice to Tenant, (a)
to consent in writing to the intended assignment or sublease, unless Landlord
determines not to consent, or (b) to enter into an assignment of this Lease or a
sublease of the Premises, as the case may be, with Tenant upon the terms set
forth in such written notice, or (c) to terminate this Lease with respect to the
portion of the Premises that is the subject of such assignment or subletting,
which termination shall be effective as of the date on which the intended
assignment or sublease would have been effective if Landlord had not exercised
such termination right. If Landlord elects to enter into an assignment of this
Lease or a sublease of the Premises or to terminate this Lease, Landlord may
enter into a new lease or agreement covering the Premises or any portion
thereof with the intended assignee or subtenant on such terms as Landlord and
such assignee or subtenant may agree, or enter into a new lease or agreement
covering the Premises or any portion thereof with any other person or entity. In
such event, Tenant shall not be entitled to any portion of the profit, if any,
which Landlord may realize on account of such new lease or agreement. If
Landlord elects to terminate this Lease, then from and after the date of such
termination, Landlord and Tenant each shall have no further obligation to the
other under this Lease with respect to the portion of the Premises that is the
subject of such termination except for matters occurring or obligations arising
hereunder prior to the date of such termination. If Landlord exercises the
right to terminate this Lease with respect to a portion of the Premises or to
sublease a portion of the Premises as described above, Tenant shall be
responsible for the cost of any demising walls to be constructed between the
portion of the Premises so recaptured by Landlord and the remaining portion
of the Premises, as well as any code-related work associated therewith or
required as a result of the construction of such demising walls.
12.3 If Landlord consents in writing, Tenant may complete the
intended assignment or sublease subject to the following covenants: (a) the
assignment or sublease shall be on the same terms as set forth in the written
notice given by Tenant to Landlord, (b) no assignment or sublease shall be valid
and no assignee or subtenant shall take possession of the Premises or any part
thereof until an executed duplicate original of such assignment or sublease, in
compliance with Section 12.1 hereof, has been delivered to Landlord, (c) no
assignee or subtenant shall have a right further to assign or sublease, and (d)
all "excess rent" (as hereinafter defined) derived from such assignment or
sublease shall be paid to Landlord. Such excess rent shall be deemed to be, and
shall be paid by Tenant to Landlord as, additional rent. Tenant shall pay such
excess rent to Landlord immediately as and when such excess rent becomes due and
payable to Tenant. As used in this Section 12.3, "excess rent" shall mean the
amount by which the total money and other economic consideration to be paid
by the assignee or subtenant as a result of an assignment or sublease, whether
denominated rent or otherwise, exceeds, in the aggregate, the total amount of
rent which Tenant is obligated to pay to Landlord under this Lease (prorated to
reflect the rent allocable to the portion of the Premises subject to such
assignment or sublease), less only the reasonable costs paid by Tenant for
additional improvements installed in the portion of the Premises subject to such
assignment or sublease by Tenant at Tenant's sole cost and expense for the
specific assignee or subtenant in question and reasonable leasing commissions
paid by Tenant in connection with such assignment or sublease, without
deduction for carrying costs due to vacancy or otherwise. Such costs of
additional improvements and leasing commissions shall be amortized without
interest over the term of such assignment or sublease unless, with respect to
such additional improvements, such additional improvements have a useful life
greater than the term of such assignment or sublease, in which case such
additional improvements shall be amortized without interest over their useful
life.
12.4 No assignment or sublease whatsoever shall release Tenant
from Tenant's obligations and liabilities under this Lease or alter the primary
liability of Tenant to pay all rent and to perform all obligations to be paid
and performed by Tenant. The acceptance of rent by Landlord from any other
person or entity shall not be deemed to be a waiver by Landlord of any
provision of this Lease. Consent to one assignment or sublease shall not be
deemed consent to any subsequent assignment or sublease. If any assignee, sub-
tenant or successor of Tenant defaults in the performance of any obligation to
be performed by Tenant under this Lease, Landlord may proceed directly
against Tenant without the necessity of exhausting remedies against such
assignee, subtenant or successor. Landlord may consent to subsequent
assignments or subleases or amendments or modifications to this Lease with
assignees, subtenants or successors of Tenant, without notifying Tenant or any
successor of Tenant and without obtaining any consent thereto from Tenant or
any successor of Tenant, and such action shall not release Tenant from liability
under this Lease
ARTICLE 13
Rules and Regulations
13.1 Tenant shall faithfully observe and comply with the rules and
regulations (the "Rules and Regulations") set forth in Exhibit C attached
hereto and, after notice thereof, all modifications thereof and additions
thereto from time to time made in writing by Landlord. If there is any
conflict, this Lease shall prevail over the Rules and Regulations and any
modifications thereof or additions thereto. Landlord shall not be liable to
Tenant or responsible for the noncompliance by any other tenant or occupant
of the Building with any Rules and Regulations.
ARTICLE 14
Entry by Landlord
14.1 Landlord shall have the right to enter the Premises at any
time to (a) inspect the Premises, (b) exhibit the Premises to prospective
purchasers, lenders or tenants, (c) determine whether Tenant is performing all
of Tenant's obligations, (d) supply any service to be provided by Landlord, (e)
post notices of non-responsibility, and (f) make any repairs to the Premises, or
make any repairs to any adjoining space or utility services, or make any
repairs, alterations or improvements to any other portion of the Building,
provided all such work shall be done as promptly as reasonably practicable and
so as to cause as little interference to Tenant as reasonably practicable.
Tenant waives all claims for damages for any injury or inconvenience to or
interference with Tenant's business, any loss of occupancy or quiet enjoyment
of the Premises or any other loss occasioned by such entry. All locks for all
doors in, on or about the Premises (excluding Tenant's vaults, safes and
similar special security areas designated in writing by Tenant) shall be keyed
to the master system for the Building. Landlord shall at all times have a key
to unlock all such doors and Landlord shall have the right to use any and all
means which Landlord may deem proper to open such doors in an emergency to
obtain entry to the Premises. Any entry to the Premises obtained by Landlord
by any of such means shall not under any circumstances be construed or deemed
to be a forcible or unlawful entry into or a detainer of the Premises or an
eviction, actual or constructive, of Tenant from the Premises or any portion
thereof.
ARTICLE 15
Events of Default and Remedies
15.1 The occurrence of any one or more of the following events
("Event of Default") shall constitute a breach of this Lease by Tenant:
(a) Tenant fails to pay any Interim Rent or any Base Rent or
additional monthly rent under Section 3.1 hereof as and when such rent
becomes due and payable and such failure continues for more than three (3)
days after Landlord gives written notice thereof to Tenant; provided, however,
that after the second such failure in a calendar year, only the passage of time,
but no further notice, shall be required to establish an Event of Default in the
same calendar year; or
(b) Tenant fails to pay any additional rent or other amount of
money or charge payable by Tenant hereunder as and when such additional rent
or amount or charge becomes due and payable and such failure continues for
more than ten (10) days after Landlord gives written notice thereof to Tenant;
provided, however, that after the second such failure in a calendar year, only
the passage of time, but no further notice, shall be required to establish an
Event of Default in the same calendar year; or
(c) Tenant fails to perform or breaches any other agreement or
covenant of this Lease to be performed or observed by Tenant as and when
performance or observance is due and such failure or breach continues for more
than ten (10) days after Landlord gives written notice thereof to Tenant;
provided, however, that if, by the nature of such agreement or covenant, such
failure or breach cannot reasonably be cured within such period of ten (10)
days, an Event of Default shall not exist as long as Tenant commences with due
diligence and dispatch the curing of such failure or breach within such period
of ten (10) days and, having so commenced, thereafter prosecutes with
diligence and dispatch and completes the curing of such failure or breach; or
(d) Tenant (i) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy, insolvency or other debtors' relief law of any jurisdiction, (ii)
makes an assignment for the benefit of its creditors, (iii) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of Tenant or of any substantial part of Tenant's property, or (iv) takes
action for the purpose of any of the foregoing; or
(e) Without consent by Tenant, a court or government authority enters an
order, and such order is not vacated within thirty (30) days, (i) appointing
a custodian, receiver, trustee or other officer with similar powers with
respect to Tenant or with respect to any substantial part of Tenant's property,
or (ii) constituting an order for relief or approving a petition for relief
or reorganization or arrangement or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy, insolvency or other
debtors' relief law of any jurisdiction, or (iii) ordering the
dissolution, winding-up or liquidation of Tenant; or
(f) This Lease or any estate of Tenant hereunder is levied upon
under any attachment or execution and such attachment or execution is not
vacated within thirty (30) days; or
(g) Tenant intentionally abandons the Premises.
15.2 If an Event of Default occurs, Landlord shall have the right
at any time to give a written termination notice to Tenant and, on the date
specified in such notice, Tenant's right to possession shall terminate and this
Lease shall terminate. Upon such termination, Landlord shall have the right to
recover from Tenant:
(a) The worth at the time of award of all unpaid rent which had
been earned at the time of termination;
(b) The worth at the time of award of the amount by which all
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;
(c) The worth at the time of award of the amount by which all
unpaid rent for the balance of the term of this Lease after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; and
(d) All other amounts necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform all of Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom. The "worth at the time of award" of the amounts
referred to in clauses (a) and (b) above shall be computed by allowing interest
at the maximum annual interest rate allowed by law for business loans (not
primarily for personal, family or household purposes) not exempt from the
usury law at the time of termination or, if there is no such maximum annual
interest rate, at the rate of eighteen percent (18%) per annum. The "worth at
the time of award of the amount referred to in clause (c) above shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). For the
purpose of determining unpaid rent under clauses (a), (b) and (c) above, the
rent reserved in this Lease shall be deemed to be the total rent payable by
Tenant under Articles 3 and 5 hereof.
15.3 Even though Tenant has breached this Lease, Landlord shall also have
the right provided 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") which allows Landlord to continue this Lease
in effect for so long as Landlord does not terminate Tenants' right to
possession, and Landlord shall have the right to enforce all its rights and
remedies under this Lease, including the right to recover all rent as it
becomes due under this Lease. Acts of maintenance or preservation or efforts
to reflect the Premises or the appointment of a receiver upon initiative of
Landlord to protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession unless written notice of
termination is given by Landlord to Tenant. If Landlord exercises its rights
under California Civil Code Section 1951.4 as described herein, Landlord as
attorney-in-fact for Tenant may from time to time sublet the Premises or any
part thereof for such term or terms (which may extend beyond the term of this
Lease) and at such rent and upon such other terms as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs
to the Premises. Upon each such subletting, Tenant shall be immediately liable
for payment to Landlord of, in addition to Base Rent and additional rent due
hereunder, the cost of such subletting and such alterations and repairs
incurred by Landlord and the amount, if any, by which the Base Rent and
additional rent owing hereunder for the period of such subletting (to the
extent such period does not exceed the Term) exceeds the amount to be paid as
Base Rent and additional rent for the Premises for such period pursuant to
such subletting. For all purposes set forth in this Section 15.3, Landlord is
hereby irrevocably appointed attorney-in-fact for Tenant, with power of
substitution. No taking possession of the Premises by Landlord as attorney-in-
fact for Tenant shall be construed as an election on Landlord's part to
terminate this Lease or Tenant's right to possession unless
a written notice of such intention is given to Tenant. No action taken by
Landlord pursuant to this Section 15.3 shall be deemed a waiver of any default
by Tenant and, notwithstanding any such subletting without termination,
Landlord may at any time thereafter elect to terminate this Lease for such
previous default.
15.4 The remedies provided for in this Lease are in addition to
all other remedies available to Landlord at law or in equity by statute or
otherwise.
15.5 All agreements and covenants to be performed or observed by Tenant
under this Lease shall be at Tenant's sole cost and expense and without any
abatement of rent .If Tenant fails to pay any sum of money to be paid by
Tenant or to perform any other act to be performed by Tenant under this Lease,
Landlord shall have the right, but shall not be obligated, and without waiving
or releasing Tenant from any obligations of Tenant, to make any such payment
or to perform any such other act on behalf of Tenant in accordance with this
Lease. All sums so paid by Landlord and all necessary incidental costs shall
be deemed additional rent hereunder and shall be payable by Tenant to Landlord
on demand, together with interest on all such sums from the date of expenditure
by Landlord to the date of repayment by Tenant at the maximum annual interest
rate allowed by law for business loans (not primarily for personal, family or
household purposes) not exempt from the usury law at the date of expenditure
or, if there is no such maximum annual interest rate, at the rate of eighteen
percent (18%) per annum. Landlord shall have, in addition to all other rights
and remedies of Landlord, the same rights and remedies in the event of the
nonpayment of such sums plus interest by Tenant as in the case of default by
Tenant in the payment of rent.
15.6 If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any movable furniture, equipment, trade fixtures
or personal property belonging to Tenant and left in the Premises
shall be deemed to be abandoned, at the option of Landlord, and Landlord shall
have the right to sell or otherwise dispose of such personal property in any
commercially reasonable manner.
ARTICLE 16
Damage or Destruction
16.1 if the Building or the Premises, or any part thereof, is
damaged by fire or other casualty before the Commencement Date or during the
term of this Lease, and this Lease is not terminated pursuant to Section 16.2
hereof, Landlord shall repair such damage and restore the Building and the
Premises to substantially the same condition in which the Building and the
Premises existed before the occurrence of such fire or other casualty and this
Lease shall, subject to this Section 16.1, remain in full force and effect. If
such fire or other casualty damages the Premises or common areas of the Building
necessary for Tenant's use and occupancy of the Premises and if such damage
is not the result of the negligence or willful misconduct of Tenant or Tenant's
agents, officers, employees, contractors, licensees or invitees, then, during
the period the Premises are rendered unusable by such damage, Tenant shall be
entitled to a reduction in Base Rent in the proportion that the area of the
Prem-ises rendered unusable by such damage bears to the total area of the
Premises. Landlord shall not be obligated to repair any damage to, or to make
any replacement of, any movable furniture, equipment, trade fixtures or
personal property in the Premises. Tenant shall, at Tenant's sole cost and
expense, repair and replace all such movable furniture, equipment, trade
fixtures and personal property. Such repair and replacement by Tenant shall be
done in accordance with Article 9 hereof. Tenant hereby waives California
Civil Code Sections 1932(2) and 1933(4).
16.2 If the Building or the Premises, or any part thereof, is
damaged by fire or other casualty before the Commencement Date or during the
term of this Lease and (a) such fire or other casualty occurs during the last
twelve (12) months of the term of this Lease and the repair and restoration work
to be performed by Landlord in accordance with Section 16.1 hereof cannot, as
reasonably estimated by Landlord, be completed within two (2) months after
the occurrence of such fire or other casualty, or (b) the insurance proceeds
received by Landlord in respect of such damage are not adequate to pay the
entire cost, as reasonably estimated by Landlord, of the repair and restoration
work to be performed by Landlord in accordance with Section 16.1 hereof, or
(c) the repair and restoration work to be performed by Landlord in accordance
with Section 16. 1 hereof cannot, as reasonably estimated by Landlord, be
completed within six (6) months after the occurrence of such fire or other
casualty, then, in any such event, Landlord shall have the right, by giving
written notice to Tenant within sixty (60) days after the occurrence of such
fire or other casualty, to terminate this Lease as of the date of such notice.
If Landlord does not exercise the right to terminate this Lease in accordance
with this Section 16.2, Landlord shall repair such damage and restore the
Building and the Premises in accordance with Section 16.1 hereof and this Lease
shall, subject to Section 16.1 hereof, remain in full force and effect. A total
destruction of the Building shall automatically terminate this Lease effective
as of the date of such total destruction.
ARTICLE 17
Eminent Domain
17.1 If any part, but less than all, of the Premises is taken by
exercise of the power of eminent domain before the Commencement Date or
during the term of this Lease, Landlord and, if a substantial portion of the
Premises is taken and the remaining portion of the Premises is not reasonably
suitable for Tenant's purposes, Tenant each shall have the right, by giving
written notice to the other within thirty (30) days after the date of such
taking, to terminate this Lease. If either Landlord or Tenant exercises such
right to terminate this Lease in accordance with this Section 17.1, this Lease
shall terminate as of the date of such taking. If neither Landlord nor Tenant
exercises such right to terminate this Lease in accordance with this Section
17.1, this Lease shall terminate as to the portion of the Premises so taken as
of the date of such taking and shall remain in full force and effect as to the
portion of the Premises not so taken, and the Base Rent and Tenant's Percentage
Share shall be reduced as of the date of such taking in the proportion that the
area of the Premises so taken bears to the total area of the Premises. if all
of the Premises is taken by exercise of the power of eminent domain before the
Commencement Date or during the term of this Lease, this Lease shall
terminate as of the date of such taking.
17.2 If all or any part of the Premises is taken by exercise of the
power of eminent domain, all awards, compensation, damages, income, rent and
interest payable in connection with such taking shall, except as expressly set
forth in this Section 17.2, be paid to and become the property of Landlord, and
Tenant hereby assigns to Landlord all of the foregoing. Without limiting the
generality of the foregoing, Tenant shall have no claim against Landlord or the
entity exercising the power of eminent domain for the value of the leasehold
estate created by this Lease or any unexpired term of this Lease. Tenant shall
have the right to claim and receive directly from the entity exercising the
power of eminent domain only the share of any award determined to be owing to
Tenant for the taking of improvements installed in the portion of the Premises
so taken by Tenant at Tenant's sole cost and expense based on the unamortized
cost actually paid by Tenant for such improvements, for the taking of Tenant's
movable furniture, equipment, trade fixtures and personal property, for loss of
goodwill, for interference with or interruption of Tenant's business, or for
removal and relocation expenses.
17.3 Notwithstanding Sections 17.1 and 17.2 hereof to the contrary, if the
use of all or any part of the Premises is taken by exercise of the power of
eminent domain during the term of this Lease on a temporary basis for a period
less than the term of this Lease remaining after such taking, this Lease
shall continue in full force and effect, Tenant shall continue to pay all of the
rent and to perform all of the covenants of Tenant in accordance with this
Lease, to the extent reasonably practicable under the circumstances, and the
condemnation proceeds in respect of such temporary taking shall be paid to
Tenant.
17.4 As used in this Article 17, a "taking" means the acquisition
of all or part of the Premises for a public use by exercise of the power of
eminent domain and the taking shall be considered to occur as of the earlier of
the date on which possession of the Premises (or part so taken) by the entity
exercising the power of eminent domain is authorized as stated in an order for
possession or the date on which title to the Premises (or part so taken) vests
in the entity exercising the power of eminent domain. Tenant hereby waives
California (Code of Civil Procedure Sections 1265.110 through 1265.160.
ARTICLE 18
Subordination, Merger and Sale
18.1 This Lease shall be subject and subordinate at all times to
the lien of all mortgages and deeds of trust securing any amount or amounts
whatsoever which may now exist or hereafter be placed on or against the
Building or on or against Landlord's interest or estate therein, all without the
necessity of having further instruments executed by Tenant to effect such
subordination. Notwithstanding the foregoing, in the event of a foreclosure of
any such mortgage or deed of trust or of any other action or proceeding for the
enforcement thereof, or of any sale thereunder, this Lease shall not be
terminated or extinguished, nor shall the rights and possession of Tenant
hereunder be disturbed, if no Event of Default then exists under this Lease, and
Tenant shall attorn to the person who acquires Landlord's interest hereunder
through any such mortgage or deed of trust. Tenant agrees to execute,
acknowledge and deliver upon demand such further instruments evidencing
such subordination of this Lease to the lien of all such mortgages and deeds of
trust as may reasonably be required by Landlord, but Tenant's covenant to
subordinate this Lease to mortgages or deeds of trust hereafter executed is
conditioned upon each such senior mortgage or deed of trust, or a separate
subordination agreement, containing the commitments specified in the
preceding sentence.
18.2 The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger and shall, at the option
of Landlord, terminate all or any existing subleases or subtenancies or operate
as an assignment to Landlord of any or all such subleases or subtenancies.
18.3 If the original Landlord hereunder, or any successor owner of the
Building, sells or conveys the Building, all liabilities and obligations on
the part of the original Landlord, or such successor owner, under this Lease
accruing after such sale or conveyance shall terminate and the original
Landlord, or such successor owner, shall automatically be released therefrom,
and thereupon all such liabilities and obligations shall be binding upon the new
owner. Tenant agrees to attorn to such new owner.
ARTICLE 19
Estoppel Certificate
19.1 At any time and from time to Lime, Tenant shall, within ten (10) days
after written request by Landlord, execute, acknowledge and deliver to
Landlord a certificate certifying: (a) that this Lease is unmodified and in
full force and effect (or, if there have been modifications, that this Lease
is in full force and effect as modified, and stating the date and nature of each
modification); (b) the Commencement Date and the Expiration Date determined
in accordance with Article 2 hereof and the date, if any, to which all rent and
other sums payable hereunder have been paid; (c) that no notice has been
received by Tenant of any default by Tenant hereunder which has not been
cured, except as to defaults specified in such certificate; (d) that Landlord
is not in default under this Lease, except as to defaults specified in such
certificate; and (e) such other matters as may be reasonably requested by
Landlord or any actual or prospective purchaser or mortgage lender. Any such
certificate may be relied upon by Landlord and any actual or prospective
purchaser or mortgage lender of the Building or any part thereof. At any time
and from time to time, Tenant shall, within ten (10) days after written request
by Landlord, deliver to Landlord copies of all current financial statements
(including, without limitation, a balance sheet, an income statement, and an
accumulated retained earnings statement) , annual reports, and other financial
and operating information and data of Tenant prepared by Tenant in the course
of Tenant's business. Unless available to the public, Landlord shall disclose
such financial statements, annual reports and other information or data only
to actual or prospective purchasers or mortgage lenders of the Building or any
part thereof, and otherwise keep them confidential unless other disclosure is
required by law.
ARTICLE 20
Holding Over
20.1 If, without objection by Landlord, Tenant holds possession
of the Premises after expiration of the term of this Lease, Tenant shall become
a tenant from month to month upon the terms herein specified but at a Base
Rent equal to two hundred percent (2000%) of the Base Rent in effect at the
expiration of the term of this Lease pursuant to Article 3 hereof, payable in
advance on or before the first day of each month. Such month to month tenancy
may be terminated by either Landlord or Tenant by giving thirty (30) days'
written notice of termination to the other at any time. Additionally, Tenant
shall indemnify, defend, protect and hold Landlord harmless from and against any
and all loss, cost, damage or liability of any kind incurred by Landlord as a
result of such holding over including, without limitation, any loss of a
successor tenant.
ARTICLE 21
Security Deposit
21.1 Upon signing this Lease, Tenant. shall pay to Landlord (a)
an amount equal to the Base Rent, Operating Expenses, Property Taxes and
Tenant's utilities for the first month of the term of this Lease, which amount
Landlord shall apply to the Base Rent, Operating Expenses, Property Taxes and
Tenant's utilities for such first month, and (b) the amount of the deposit
specified in the Basic Lease Information (the "Deposit"). The Deposit shall be
held by Landlord as security for the performance by Tenant of all of the
covenants of this Lease to be performed by Tenant, and Tenant shall not be
entitled to interest thereon. If Tenant fails to perform any of the covenants of
this Lease to be performed by Tenant, then Landlord shall have the right, but
no obligation, to apply the Deposit, or so much thereof as may be necessary, to
cure any such failure by Tenant. If Landlord applies the Deposit or any part
thereof to cure any such failure by Tenant, then Tenant shall immediately pay
to Landlord the sum necessary to restore the Deposit to the full amount required
by this Section 21.1. Any remaining portion of the Deposit shall be returned to
Tenant upon termination of this Lease. Upon termination of the original
Landlord's or any successor owner's interest in the Premises or the Building,
the original Landlord or such successor owner shall be released from further
liability with respect to the Deposit upon the original Landlord's or such
successor owner's complying with California Civil Code Section 1950.7.
ARTICLE 22
Waiver
22.1 The waiver by Landlord or Tenant of any breach of any
covenant in this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or any other covenant in this Lease, nor shall any custom or
practice which may grow up between Landlord and Tenant in the administration
of this Lease be construed to waive or to lessen the right of Landlord or Tenant
to insist upon the performance by Landlord or Tenant in strict accordance with
this Lease. The subsequent acceptance of rent hereunder by Landlord or the
payment of rent by Tenant shall not waive any preceding breach by Tenant of
any covenant in this Lease, nor cure any Event of Default, nor waive any
forfeiture of this Lease or unlawful detainer action, other than the failure of
Tenant to pay the particular rent so accepted, regardless of Landlord's or
Tenant's knowledge of such preceding breach at the time of acceptance or
payment of such rent.
ARTICLE 23
Notices
23.1 All requests, approvals, consents, notices and other
communications given by Landlord or Tenant under this Lease shall be properly
given only if made in writing and either deposited in the United States mail,
postage prepaid, certified with return receipt requested, or delivered by hand
(which may be through a messenger or recognized delivery or courier service)
and addressed as follows: To Landlord at the address of Landlord specified in
the Basic Lease Information, or at such other place as Landlord may from time
to time designate in a written notice to Tenant; to Tenant, before the
Commencement Date, at the address of Tenant specified in the Basic Lease
Information, and after the Commencement Date, at the Premises, or at such
other place as Tenant may from time to time designate in a written notice to
Landlord; and to the guarantor(s) specified in the Basic Lease Information at
the address of such guarantor(s) specified in the Basic Lease Information, or
at such other place as such guarantor(s) may from time to time designate in a
written notice to Landlord. Such requests, approvals, consents, notices and
other communications shall be effective on the date of receipt (evidenced by the
certified mail receipt) if mailed or on the date of delivery if hand delivered.
ARTICLE 24
Miscellaneous
24.1 The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. The words"include","includes"and"including"
shall be deemed to be followed by the phrase "without limitation." Tenant shall
indemnify and defend Landlord against and hold Landlord harmless from all
claims, demands, liabilities, damages, losses, costs and expenses, including
reasonable attorneys' fees and disbursements, arising out of or resulting from
any failure by Tenant to perform any of, its obligations or any breach by Tenant
of any of its obligations or any breach by Tenant, representations or warranties
in accordance with this Lease. if there is more than one Tenant,
the obligations hereunder imposed upon Tenant shall be joint and several.
Time is of the essence of this Lease and each and all of its provisions.
Submission of this instrument for examination or signature by Tenant does not
constitute a reservation of or option for lease, and it is not effective as a
lease or otherwise until execution and delivery by both Landlord and Tenant.
Subject to Article 12 hereof, this Lease shall benefit and bind Landlord and
Tenant and the personal representatives, heirs, successors and assigns of
Landlord and Tenant. Tenant shall not use the name of the Building for any
purpose whatsoever other than as the address of Tenant at the Premises. If any
provision of this Lease is determined to be illegal or unenforceable, such
determination shall not affect any other provision of this Lease and all such
other provisions shall remain in full force and effect. If Tenant requests the
consent or approval of Landlord to any assignment, sublease or other action by
Tenant, Tenant shall pay to Landlord on demand, as additional rent, all costs
and expenses, including reasonable attorneys' fees and disbursements, incurred
by Landlord in connection therewith. This Lease shall be governed by and
construed in accordance with the laws of the State of California.
24.2 Tenant acknowledges that the late payment by Tenant of
any monthly installment of Base Rent or additional monthly rent will cause
Landlord to incur costs and expenses, the exact amount of which is extremely
difficult and impractical to fix. Such costs and expenses will include
administration and collection costs and processing and accounting expenses.
Therefore, if any monthly installment of Base Rent or additional monthly rent
is not received by Landlord within five (5) days after such installment is due,
Tenant shall immediately pay to Landlord a late charge equal to four percent
(4%) of such delinquent installment. Landlord and Tenant agree that such late
charge represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the loss suffered by Tenant's failure to make
timely payment. In no event shall such late charge be deemed to grant to Tenant
a grace period or extension of time within which to pay any monthly rent or
prevent Landlord from exercising any right or enforcing any remedy available
to Landlord upon Tenant's failure to pay each installment of monthly rent due
under this Lease in a timely fashion, including the right to terminate this
Lease. All amounts of money payable by Tenant to Landlord hereunder, if not paid
when due, shall bear interest from the due date until paid at the maximum
annual interest rate allowed by law for business loans (not primarily for
personal, family or household purposes) not exempt from the usury law at such
due date or, if there is no such maximum annual interest rate, at the rate of
eighteen percent (18%) per annum.
24.3 If there is any legal action or proceeding between Landlord
and Tenant to enforce this Lease or to protect or establish any right or remedy
under this Lease, the unsuccessful party to such action or proceeding shall pay
to the prevailing party all costs and expenses, including reasonable attorneys'
fees and disbursements, incurred by such prevailing party in such action or
proceeding and in any appeal in connection therewith. If such prevailing party
recovers a judgment in any such action, proceeding or appeal, such costs,
expenses and attorneys' fees and disbursements shall be included in and as a
part of such judgment.
24.4 Tenant shall cause the guarantor(s) specified in the Basic
Lease Information to execute the Continuing Lease Guaranty in the form of
Exhibit D attached hereto. Exhibit A (Plan (s) Outlining the Premises) , Exhibit
B (Initial Improvement- of the Premises), Exhibit C (Rules and Regulations),
Exhibit D (Continuing Lease Guaranty) and an Addendum to Lease are
attached to and made a part of this Lease.
24.5 Tenant warrants and represents to Landlord that Tenant has negotiated
this Lease directly with the real estate broker(s) specified in the
Basic Lease Information and has not authorized or employed, or acted by
implication to authorize or to employ, any other real estate broker or salesman
to act for Tenant in connection with this Lease.
24.6 If Tenant is a corporation, Tenant and each person
executing this Lease on behalf of Tenant represents and warrants to Landlord
that (a) Tenant is duly incorporated and validly existing under the laws of its
state of incorporation, (b) Tenant is qualified to do business in California,
(c) Tenant has full corporate right, power and authority to enter into this
Lease and to perform all of Tenant's obligations hereunder, and (d) each
person signing this Lease on behalf of the corporation is duly and validly
authorized to do so. Concurrently with signing this Lease, Tenant shall deliver
to Landlord a true and correct copy of resolutions duly adopted by the board
of directors of Tenant, certified by the secretary of Tenant to be true and
correct, unmodified and in full force, which authorize and approve this Lease
and authorize each person signing this Lease on behalf of Tenant to do so.
24.7 Landlord shall have the right, at any time and from time to time before
the Commencement Date and during the term of this Lease, by giving at least
thirty (30) days' prior written notice to Tenant, to substitute other
space in the Building (the "Substitute Premises") for the Premises and to
relocate Tenant to the Substitute Premises. Landlord shall designate the
effective date for the substitution of the Substitute Premises for the Premises
and the relocation of Tenant to the Substitute Premises in such notice. The area
of the Substitute Premises shall be approximately comparable to the area of the
Premises. Landlord shall, at Landlord's expense before such effective date,
construct and install in the Substitute Premises improvements substantially
similar in quality and quantity to the improvements in the Premises. Landlord
shall pay the reasonable costs of moving Tenant's movable furniture,
equipment, trade fixtures and personal property from the Premises to the
Substitute Premises. As of the effective date for the substitution of the
Substitute Premises for the Premises and the relocation of Tenant to the
Substitute Premises, Tenant shall vacate the Premises and move to the
Substitute Premises, and the Substitute Premises shall be substituted for the
Premises under this Lease. Landlord and Tenant each shall, promptly after such
effective date, execute and deliver to the other an amendment to this Lease
which sets forth the substitution of the Substitute Premises -for the Premises,
with an appropriate new Exhibit A, and the effective date of such substitution,
but the Substitute Premises shall be substituted for the Premises on such
effective date whether or not such amendment is executed.
24.8 There are no oral agreements between Landlord and
Tenant affecting this Lease, and this Lease supersedes and cancels any and all
previous negotiations, arrangements, brochures, offers, agreements and
understandings, oral or written, if any, between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease, the Premises or the Building. There are no representations between
Landlord and Tenant or between any real estate broker and Tenant other than
those expressly set forth in this Lease and all reliance with respect to any
representations is solely upon representations expressly set forth in this
Lease. This Lease may not be amended or modified in any respect whatsoever
except by an instrument in writing signed by Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed
this Office Lease as of the date first herein above written.
TENANT:
DOVER INVESTMENTS, CORPORATION,
a Delaware Corporation
By: Lawrence Weissberg
Its: President
LANDLORD:
100 SPEAR STREET OWNERS CORPORATION,
a Delaware Corporation
By: THE YARMOUTH GROUP, INC.
Its: Authorized Agent
EXHIBIT A
Floor 5 Plan - 100 Spear Street
EXHIBIT B
Initial Improvement of the Premises
1. Landlord's Work. Landlord, through Landlord's contractor, and at
Landlord's cost, shall construct and install in the Premises, substantially in
accordance with plans, working drawings and specifications ("Tenant's Plans")
prepared by the licensed architects and engineers designated in writing by
Landlord, also at Landlord's cost, the improvements ("Landlord's Work")
described in Tenant's Plans which are normally constructed and installed by
the construction trades. Tenant's Plan shall be based upon, and shall not
deviate from, that certain pricing plan (issue "B") for the Premises dated
August 4, 1997 prepared by RMW (the "Pricing Plan"). The costs of preparing
Tenant's Plans and performing Landlord's Work shall be allocated between, and
paid by, Landlord and Tenant as set forth in this Exhibit B. Landlord's Work
shall be performed in accordance with applicable laws; notwithstanding the
foregoing, Tenant acknowledges that the Premises contain existing improvements
which may or may not comply with applicable codes, laws, rules or regulations,
which Tenant will accept in their "as-is" condition, unless Tenant's Plans
reflect modifications of same and Landlord makes no warranty or representation
whatsoever regarding the compliance of such improvements with existing codes,
laws, rules or regulations. The quantities, character and manner of
construction and installation of Landlord's Work shall be subject to all
limitations and restrictions imposed by laws, regulations and guidelines
relating to health, safety, the environment, handicapped persons and
conservation of energy adopted by any public or government authority.
2. Tenant's Plans.
(a) As soon as reasonably possible but in any event on or before "Tenant's
Plans Date" specified in the Basic Lease Information, RMW shall submit Tenant's
Plans to Landlord for Landlord's written approval (which shall not
be unreasonably withheld). Tenant's Plans shall be prepared by RMW and shall
comply with all applicable codes, laws, ordinances, rules and regulations,
shall not adversely affect the Building shell or core or any systems,
components or elements of the Building, shall be in a form sufficient to secure
the approval of all government authorities with jurisdiction over the Building,
and shall be otherwise satisfactory to Landlord in Landlord's reasonable
discretion. Tenant shall furnish to RMW all information and data reasonably
necessary, and in sufficient time, to prepare Tenant's Plans on or before
Tenant's Plans Date. All materials used or shown in Tenant's Plans
shall be "Building Standard" items, unless expressly noted in the Pricing Plan.
Tenant's Plans shall be complete plans, working drawings and specifications
for the layout, improvement and finish of the Premises consistent with the
design and construction of the Building, including mechanical and electrical
drawings and decorating plans, showing the following:
(i) Location and type of all partitions;
(ii) Location and type of all doors, with hardware and keying schedule;
(iii) Ceiling plans, including light fixtures;
(iv) Location of telephone equipment room, with all special electrical
and cooling requirements;
(v) Location and type of all electrical outlets, switches, telephone
outlets, motion detectors (which are mandatory) and lights;
(vi) Location of all sprinklers;
(vii) Location and type of all equipment requiring special electrical
requirements;
(viii) Location, weight per square foot and description of any heavy
equipment or filing system exceeding fifty (50) pounds per square foot
live and dead load;
(ix) Requirements for special air conditioning or ventilation;
(x) Type and color of floor covering;
(xi) Location, type and color of wall covering;
(xii) Location, type and color of paint or finishes;
(xiii) Location and type of plumbing;
(xiv) Location and type of kitchen equipment;
(xv) Indicate critical dimensions necessary for construction; and
(xvi) Details showing all millwork with verified dimensions and dimensions
of all equipment to be built in, corridor entrances, bracing
or support of special walls or glass partitions, and any other items or
information requested by Landlord.
(b) Tenant's Plans shall be subject to Landlord's written approval (which
shall not be unreasonably withheld). If Landlord disapproves Tenant's Plans,
or any portion thereof, Landlord shall promptly give notice to Tenant
setting forth the reasons for disapproval. As promptly as reasonably possible
thereafter, but not later than five (5) business days after Landlord's notice,
Tenant shall submit to Landlord revised Tenant's Plans. Such revisions shall
be subject to Landlord's written approval (which shall not be unreasonably
withheld).
(c) All interior decorating services (except those provided by
RMW and limited to selection amongst "Building Standard" items), such as the
selection of wall paint colors and wall coverings, fixtures, carpeting and all
other decorator selection work, required by Tenant shall be provided by
Tenant at Tenant's expense.
3. Construction. Landlord's contractor shall complete Landlord's Work
in the Premises substantially in accordance with Tenant's Plans.
4. Changes. If Tenant requests any change in Tenant's Plans or Landlord's
Work, Tenant shall request such change in a written notice to Landlord.
Each such request shall be accompanied by proper plans and specifications
prepared by such architects or engineers, at Tenant's expense, necessary to
show and explain such change from the previously approved Tenant's Plans. All
changes in Tenant's Plans shall be subject to the prior written approval of
Landlord (which shall not be unreasonably withheld). If Landlord approves a
change, Landlord shall have Landlord's contractor give Tenant an estimate of
the construction cost, if any, which will be incurred for such change. Tenant
shall, within two (2) business days after receipt of such estimate, notify
Landlord in writing to proceed or not to proceed with such change. In the
absence of such written notice to proceed, Landlord shall not be
obligated to make the change requested by Tenant and Landlord shall proceed
with Landlord's Work in accordance with the previously approved Tenant's Plans.
5. Delay. Tenant shall be responsible and liable to Landlord for, and
shall pay all costs and expenses incurred by Landlord in connection with, all
delay in the commencement or completion of Landlord's Work caused by (a)
Tenant's failure to cooperate with RMW in order that Tenant's Plans may be
prepared and submitted within the time required in this Exhibit B or any
inadequacies in Tenant's Plans, (b) Tenant's failure to approve Landlord's
contractor's cost estimate within the time required in this Exhibit B, (c) any
changes in Tenant's Plans or Landlord's Work requested by Tenant, (d) Tenant's
requirement of any improvements, fixtures, equipment or other items which
cannot reasonably be fabricated, procured, constructed or installed within
the period of construction contemplated between Tenant's Plans Date and the
Commencement Date, (e) Tenant's failure to make any payment required under
this Exhibit B within the time required therefor, (f) Tenant's failure to take
any action required of Tenant under this Lease or this Exhibit B, (g) any
interruption, interference or delay caused by any of Tenant's architects,
planners, engineers, contractors, subcontractors, laborers, suppliers or
others acting on behalf of Tenant, or (h) any other delay requested or caused
by Tenant.
6. Other Work by Tenant. All work not within the scope of the normal
construction trades employed on the Building, such as the furnishing and
installing of furniture, telephone equipment, office equipment and wiring,
shall be furnished and installed by Tenant at Tenant's expense. Tenant shall
adopt a schedule in conformance with the schedule of Landlord's contractors
and conduct Tenant's work in such a manner as to maintain harmonious labor
relations and as not to interfere with or delay the work of Landlord's
contractors. Tenant's contractors, subcontractors, laborers and suppliers
shall be acceptable to and approved in writing by Landlord (which shall not
be unreasonably withheld) and shall be subject to the administrative
supervision of Landlord's general contractor. Contractors and subcontractors
engaged by Tenant shall employ workers and means to ensure so far as may be
possible the progress of Landlord's Work without interruption on account of
strikes, work stoppages or similar causes for delay. Landlord shall
provide reasonable access and entry to the Premises to Tenant and Tenant's
contractors and subcontractors and reasonable opportunity and time and
reasonable use of facilities to enable Tenant to adapt the Premises for
Tenant's use.
7. Requirements. All work performed at the Building or in the Premises by
Tenant or Tenant's contractors shall be subject to the following additional
requirements:
(a) Such work shall not proceed until Landlord has approved in writing:
(i) Tenant's contractor, (ii) the amount and coverage of public liability and
property damage insurance, with Landlord named as an additional insured,
carried by Tenant's contractor, (iii) complete and detailed plans and
specifications for such work, and (iv) a schedule for the work.
(b) All work shall be done in conformity with a valid permit when
required, a copy of which shall be furnished to Landlord before such work is
commenced. In any case, all such work shall be performed in accordance with
all applicable laws. Notwithstanding any failure by Landlord to object to any
such work, Landlord shall have no responsibility for Tenant's failure to
comply with applicable laws.
(c) All work by Tenant or Tenant's con tractor shall be done with
union labor in accordance with all union labor agreements applicable to
the trades being employed.
(d) All work by Tenant or Tenant's contractor shall be scheduled
through Landlord.
(e) Tenant or Tenant's contractor shall arrange for necessary utility,
hoisting and elevator service, on a nonexclusive basis, with Landlord's
contractor and shall pay such costs for such services as may be charged by
Landlord's contractor. Landlord shall have the right to require any necessary
movement of materials by the elevator to be done after regular working hours
at the expense of Tenant.
(f) Tenant's entry on the Premises for any purpose, including
inspection or performance of improvement work by Tenant, prior to the
Commencement Date shall be subject to all of the covenants of this Lease
except the payment of rent. Entry by Tenant shall include entry by Tenant's
officers, employees, agents, contractors, licensees or invitees.
(g) Tenant shall be responsible for cleaning the Premises and
removing all debris. All completed work shall be subject to inspection and
acceptance by Landlord. Tenant shall reimburse Landlord upon demand for all
extra expense incurred by Landlord by reason of faulty work done by Tenant or
Tenant's contractor, or by reason of any delays caused by work done by Tenant
or Tenant's contractor, or by reason of inadequate cleanup by Tenant or
Tenant's contractor.
EXHIBIT C
Rules and Regulations
1. Common Areas. The sidewalks, halls, passages, exits, entrances, elevators
and stairways of the Building shall not be obstructed by Tenant or used for any
purpose other than for ingress to and egress from the Premises. The halls,
passages, exits, entrances, elevators and stairways are not for the general
public and Landlord shall in all cases have the right to control and prevent
access thereto of all persons (including, without limitation, messengers or
delivery personnel not wearing uniforms) whose presence in the judgment of
Landlord would be prejudicial to the safety, character, reputation or interests
of the Building and its tenants. Neither Tenant nor any agent, employee,
contractor, invitee or licensee of Tenant shall go upon the roof of the
Building. Landlord shall have the right at any time, without the same
constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, to change the arrangement or location of
entrances or passageways, doors or doorways, corridors, elevators, stairs,
toilets and common areas of the Building.
2. Signs. No sign, placard, picture, name, advertisement or notice visible
from the exterior of the Premises shall be inscribed, painted, af fixed or
otherwise displayed by Tenant on any part of the Building or the Premises
without the prior written consent of Landlord. Landlord will adopt and furnish
to tenants general guidelines relating to signs inside the Building. Tenant
agrees to conform to such guidelines. All approved signs or lettering shall
be printed, painted, affixed or inscribed at the expense of Tenant by a
person approved by Landlord. Material visible from outside the Building will
not be permitted.
3. Prohibited Uses. The Premises shall not be used for the storage of
merchandise held for sale to the general public or for lodging. No cooking
shall be done or permitted on the Premises except that private use by Tenant
of microwave ovens and Underwriters' Laboratory approved equipment for brewing
coffee, tea, hot chocolate and similar beverages will be permitted, provided
that such use is in accordance with all applicable federal, state and
municipal laws, codes, ordinances, rules and regulations. Tenant shall not
place any load on the floors of the Building exceeding fifty (50) pounds per
square foot, live or dead load. Tenant shall not use electricity for lighting,
machines or equipment in excess of four (4) watts per square foot.
4. Janitorial Service. Tenant shall not employ any person other than the
janitor of Landlord for the purpose of cleaning the Premises unless otherwise
agreed to by Landlord in writing. Except with the written consent of Landlord,
no persons other than those approved by Landlord shall be permitted to enter
the Building for the purpose of cleaning the Premises. Tenant shall not cause
any unnecessary labor by reason of Tenant's carelessness or indifference in the
preservation of good order and cleanliness. Landlord shall not be responsible
to Tenant for any loss of property in the Premises, however occurring, or
for any damage done to the effects of Tenant by the janitor or any other
employee or any other person.
5. Keys. Landlord will furnish Tenant without charge with two (2) keys to
each door lock provided in the Premises by Landlord. Landlord may make a
reasonable charge for any additional keys. Tenant shall not have any such keys
copied or any keys made. Tenant shall not alter any lock or install a new or
additional lock or any bolt on any door of the Premises. Tenant, upon the
termination of this Lease, shall deliver to Landlord all keys to doors in
the Building.
6. Moving Procedures. Landlord shall designate appropriate entrances for
deliveries or other movement to or from the Premises of equipment, materials,
supplies, furniture or other property, and Tenant shall not use any other
entrances for such purposes. All moves shall be scheduled and carried out
during nonbusiness hours of the Building. All persons employed and means or
methods used to move equipment, materials, supplies, furniture or other
property in or out of the Building must be approved by Landlord prior to any
such movement. Landlord shall have the right to prescribe the maximum weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects shall, if considered necessary by
Landlord, stand on a platform of such thickness as is necessary properly to
distribute the weight. Landlord will not be responsible for loss of or damage
to any such property from any cause, and all damage done to the Building by
moving or maintaining such property shall be repaired at the expense of
Tenant.
7. No Nuisances. Tenant shall not use or keep in the Premises or the
Building any kerosene, gasoline or inflammable or combustible fluid or
material other than limited quantities thereof reasonably necessary for the
operation or maintenance of office equipment. Tenant shall not use any method
of heating or air conditioning other than that supplied by Landlord. Tenant
shall not use or keep or permit to be used or kept any foul or noxious gas or
substance in the Premises, or permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise, odors or
vibrations, or interfere in any way with other tenants or those
having business in the Building, nor shall any animals be brought or kept
in the Premises or the Building.
8. Change of Address. Landlord shall have the right, exercisable without
notice and without liability to Tenant, to change the name or street address
of the Building or the room or suite number of the Prem4Lses.
9. Business Hours. Landlord establishes the hours of 8 A.M. to 6 P.M.
Monday through Friday, except union holidays and legal holidays, as reasonable
and usual business hours for the purposes of Section 7.1 of this Lease. If
Tenant requests electricity or heat or air conditioning or any other services
during any other hours or on any other days, and if Landlord is able to
provide the same, Tenant shall pay Landlord such charge as Landlord shall
establish from time to time for providing such services during such hours.
Any such charges which Tenant is obligated to pay shall be deemed to be
additional rent under this Lease.
10. Access to Building. Landlord reserves the right to exclude from the
Building during the evening, night and early morning hours beginning at 6 P.M.
and ending at 8 A.M. Monday through Friday, and at all hours on Saturdays,
Sundays, union holidays and legal holidays, all persons who do not present
identification acceptable to Landlord. Tenant shall provide Landlord with a
list of all persons authorized by Tenant to enter the Premises and shall be
liable to Landlord for all acts of such persons. Landlord shall in no
case be liable for damages for any error with regard to the admission to or
exclusion from the Building of any person. In the case of invasion, mob, riot,
public excitement or other circumstances rendering such action advisable in
Landlord's opinion, Landlord reserves the right to prevent access to the
Building during the continuance of the same by such action as Landlord may
deem appropriate, including closing doors.
11. Building Directory. The directory of the Building will be provided for
the display of the name and location of Tenant and a reasonable number of the
principal officers and employees of Tenant at the expense of Tenant. Landlord
reserves the right to restrict the amount of directory space utilized by
Tenant.
12. Window Coverings. No curtains, draperies, blinds, shutters, shades,
screens or other coverings, hangings or decorations shall be attached to,
hung or placed in, or used in connection with any window of the Building
without the prior written consent of Landlord. In any event, with the prior
written consent of Landlord, such items shall be installed on the office side
of Landlord's standard window covering and shall in no way be visible from the
exterior of the Building. Tenant shall keep window coverings closed when
the effect of sunlight (or the lack thereof) would impose unnecessary loads
on the Building's air conditioning systems.
13. Food and Beverages. Tenant shall not obtain for use in the Premises ice,
drinking water, food, beverage, towel or other similar services, except at
such reasonable hours and under such reasonable regulations as may be
established by Landlord.
14. Procedures When Leaving. Tenant shall ensure that the doors of the
Premises are closed and locked and that all water faucets, water apparatus
and utilities are shut off before Tenant and its employees leave the Premises
so as to prevent waste or damage. For any default or carelessness in this
regard, Tenant shall be liable and pay for all damage and injuries sustained
by Landlord or other tenants or occupants of the Building. On multiple-tenancy
floors, Tenant shall keep the doors to the Building corridors closed at all
times except for ingress and egress.
15. Bathrooms. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they
were constructed, no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from
the violation of this rule shall be paid by Tenant if caused by Tenant or its
agents, employees, contractors, invitees or licensees.
16. Prohibited Activities. Except with the prior written consent of
Landlord, Tenant shall not sell at retail newspapers, magazines, periodicals,
theatre or travel tickets or any other goods or merchandise to the general
public in or on the Premises, nor shall Tenant carry on or permit or allow
any employee or other person to carry on the business of stenography,
typewriting, printing or photocopying or any similar business in or from the
Premises for the service or accommodation of occupants of any other portion
of the Building, nor shall the Premises be used for manufacturing of any kind,
or any business or activity other than that specifically provided for in this
Lease.
17. No Antenna. Tenant shall not install any radio or television antenna,
loudspeaker, or other device on the roof or exterior walls of the Building.
No television or radio or recorder shall be played in such a manner as to
cause a nuisance to any other tenant.
18. Vehicles. There shall not be used in any space, or in the public halls
of the Building, either by Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material handling
equipment as Landlord approves. No other vehicles of any kind shall be
brought by Tenant into the Building or kept in or about the Premises.
19. Trash Removal. Tenant shall store all its trash and garbage within the
Premises. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of office building trash and
garbage in the City and County of San Francisco without being in violation of
any law or ordinance governing such disposal. All garbage and refuse disposal
shall be made only through entryways and elevators provided for such
purposes and at such times as Landlord shall designate. Tenant shall crush and
flatten all boxes, cartons and containers. Tenant shall pay extra charges for
any unusual trash disposal.
20. No Soliciting. Canvassing, soliciting, distribution of handbills or any
other written material and peddling in the Building are prohibited, and
Tenant shall cooperate to prevent the same.
21. Services. The requirements of Tenant will be attended to only upon
application in writing at the office of the Building. Personnel of Landlord
shall not perform any work or do anything outside of their regular duties
unless under special instructions from Landlord.
22. Waiver. Landlord may waive any one or more of these Rules and
Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall be construed as a waiver of such Rules and
Regulations in favor of any other tenant or tenants, nor prevent Landlord
from thereafter enforcing any such Rules and Regulations against any or all
of the tenants of the Building.
23. Supplemental to Lease. These Rules and Regulations are in addition to,
and shall not be construed to in any way modify or amend, in whole or in part,
the covenants of this Lease.
24. Amendments and Additions. Landlord reserves the right to make such
other rules and regulations, and to amend or repeal these Rules and
Regulations, as in Landlord's judgment may from time to time be desirable for
the safety, care and cleanliness of the Building and for the preservation of
good order therein.
ADDENDUM TO OFFICE LEASE
THIS ADDENDUM TO OFFICE LEASE, is attached to and forms a part of that
certain Office Lease dated as of August 1997, by and between 100 SPEAR STREET
OWNERS CORP. ("Landlord" and DOVER INVESTMENTS, INC. ("Tenant") , for premises
located at 100 Spear Street, San Francisco, California. Words and terms that
are defined in the Lease shall have the same meaning in this Addendum as the
meaning provided in the Lease. In the event of any inconsistency between the
terms of this Addendum and the Lease, the terms of this Addendum shall control.
1. Operating Expenses and Property Taxes (Article 4).
(a) Appeal.
(i) As of the date of the Lease, Landlord is appealing the amount of
Property Taxes payable by the Building (the "Appeal"). Landlord currently
estimates that the aggregate 1997 Building Operating Expenses and Property
Taxes and Tenant utilities will equal $11.41 per rentable square foot (such
estimate assumes a successful result in the Appeal) and with respect to the
Base Rent rate set forth in the Lease was established by assuming an Operating
Expense /Property Tax/Tenant utilities burden for the calendar year 1997 as
set forth above, thus providing an initially projected fully serviced
equivalent rental rate for the calendar year 1997 for the Premises of $32.00
per rentable square foot.
(ii) Prior to the resolution of the Appeal, Tenant shall pay its Percentage
Share of Actual Operating Expenses, Tenant's share of utilities costs, and
Tenant's Percentage Share of Property Taxes for the Premises. Upon the
conclusion of the Appeal, Tenant shall continue to pay Tenant's Percentage
Share of actual Property Taxes and Operating Expenses for the Premises as
well as Tenant's share of utilities costs but, if the Appeal produces a
Property Tax rate for the calendar year 1997 which differs from $2.03 per
rentable square foot per year, Landlord shall adjust the Base Rent rate
payable by Tenant for the Premises upwards or downwards, as is necessary to
provide Tenant with an initially projectable fully serviced equivalent rental
rate for the calendar year 1997 equal to $32.00 per rentable square foot.
(iii) Notwithstanding any of the foregoing, in no event will the Base Rent
rate payable by Tenant for the Premises be adjusted as a result of any
increase or decrease in any component of Operating Expenses, Tenant utilities
or Property Taxes (all of which Tenant shall continue to pay in full) other
than solely due to increases or decreases in Property Taxes payable for 1997
and resulting solely and directly from the final determination of the Appeal.
4. Maintenance and Repairs (Article 8) . The following is hereby inserted
in the third (3rd) line of Section 8.2 of the Lease, immediately following
the word "thereof": "(except for structural portions of the Premises and
Building and those areas of the Building which are Landlord's responsibility
pursuant to the provisions of Section 8.1 above)".
5. Assignment or Sublease (Article 12).
(a) The phrase "fifty percent (50%) of" is hereby inserted in the tenth
(10th) line of Section 12.3 of the Lease immediately preceding the word "all".
(b) Notwithstanding anything to the contrary contained in Article
12 of the Lease, Tenant may sublease the Premises or assign its interest in
the Lease to any party which directly or indirectly W wholly owns or controls
Tenant, (ii) is wholly owned or controlled by Tenant, (iii) is under common
ownership or control with Tenant, or (iv) into which Tenant is merged,
consolidated or reorganized, or to which all or substantially all of
Tenant's assets are sold, without Landlord's consent, provided: (a) Landlord
shall receive a copy of the executed transfer document promptly after
execution, (b) Tenant shall remain liable under the Lease, (c) the transferee
shall expressly assume Tenant's obligations under the Lease and (d) the
transferee shall have a net worth or financial condition, as determined
in Landlord's reasonable determination, that satisfies Landlord's then-current
credit requirements for tenants of similar spaces within the Building.
(c) Notwithstanding anything to the contrary contained in Article 12 of the
Lease, Landlord shall use reasonable efforts to respond to any request by Tenant
and consent to a proposed assignment or sublease within fifteen (15) business
days following the receipt of such request.
6. Rules and Regulations (Article 13). The word "reasonable" is hereby
inserted in the third (3rd) line of Section 13.1 of the Lease, immediately
following the word "all".
7. Entry by Landlord (Article 14). Notwithstanding any of the provisions
of Section 14.1 of the Lease to the contrary, except for entries described in
clause (f) of Section 14.1 and for cases of emergency, Landlord shall use
reasonable efforts to provide Tenant with advanced telephonic notice before
any entry to the Premises.
8. Damage or Destruction (Article 16).
(a) The following is hereby inserted in the fourteenth (14th) line
of Section 16.1 of the Lease, immediately following the word "invitees""and
not covered by Landlord's property insurance".
(b) Notwithstanding the provisions of Article 16 of the Lease to the
contrary, if, pursuant to Landlord's determination, any damage caused by
casualty cannot be repaired and restored within nine (9) months after the
occurrence of such casualty, then Tenant shall have the right to terminate
the Lease by giving notice to Landlord delivered within ten (10) business
days following receipt by Tenant of Landlord's estimate of the time
required to repair such damage.
9. Option to Extend.
(a) Notwithstanding any terms of the Lease to the contrary, Landlord
hereby grants Tenant an option to extend the term of the Lease for one (1)
additional period of five (5) years, commencing immediately after the
expiration of the term of the Lease, upon the same terms and conditions
contained therein, except that (i) the Base Rent for the Premises shall be
equal to the fair market rent for the Premises determined in the manner set
forth in subparagraph (b) below, but in no event less than the Base Rent rate
payable by Tenant during the final year of the initial term of the Lease,
(ii) Tenant shall accept the Premises in an "as is" condition without any
obligation of Landlord to repaint, remodel, repair, improve or alter the
Premises, and (iii) there shall be no further options to extend the term of
the Lease. Tenant's election to exercise the option granted herein must be
given to Landlord in writing no less than 365 days and no more than 390 days
prior to the expiration of the term. If Tenant properly exercises the option
granted herein, references in the Lease to the term of the Lease shall be
deemed to mean the option term unless the context clearly provides otherwise.
Notwithstanding anything to the contrary contained herein, all option rights
of Tenant pursuant to this Addendum Paragraph 2 shall automatically terminate
without notice and shall be of no further force and effect, whether
or not Tenant has timely exercised the option granted herein, if (i) a
default on the part of Tenant exists under the Lease at the time of exercise
of the option or at the time of commencement of the option term, (ii) Landlord
has given Tenant two or more notices respecting a default on the part of
Tenant during the term of the Lease or (iii) Tenant has assigned its interest
in the Lease or subleased any portion of the Premises.
(b) If Tenant properly exercises its option to extend the term of the
Lease, the Base Rent during the option term shall be determined in the
following manner. The Base Rent shall be increased to an amount equal to the
fair market rent for the Premises as of the commencement of the option term
for a term equal to the option term, as specified by Landlord by notice to
Tenant not less than thirty (30) days prior to commencement of the
option term, subject to Tenant's right of arbitration as set forth below.
If Tenant believes that the fair market rent specified by Landlord exceeds
the actual fair market rent for the Premises as of commencement of the option
term, then Tenant shall so notify Landlord within ten (10) business days
following receipt of Landlord's notice. If Tenant fails to so notify Landlord
within said ten (10) business days, Landlord's determination of the fair
market rent for the Premises shall be final and binding upon the parties. If
the parties are unable to agree upon the fair market rent for the Premises
within ten (10) days after Landlord's receipt of notice of Tenant's objection,
the amount of Base Rent as of commencement of the option term shall be
determined as follows:
(i) Within 20 days after receipt of Landlord's notice specifying fair
market rent, Tenant, at its sole expense, shall obtain and deliver in writing
to Landlord a determination of the fair market basic rent for the Premises
for a term equal to the option term from a broker ("Tenant's Broker") licensed
in the State of California and engaged in the office brokerage business in
the City and County of San Francisco for at least the immediately preceding
five (5) years. If Landlord accepts such determination, the Base Rent for the
option term shall be increased to an amount equal to the amount determined by
Tenant's Broker.
(ii) if Landlord does not accept such determination, within 15 days after
receipt of the determination of Tenant's Broker, Landlord shall designate a
broker ("Landlord's Broker") licensed in the State of California and engaged
in the office brokerage business in the City and County of San Francisco for
at least the immediately preceding five (5) years. Landlord's Broker and
Tenant's Broker shall name a third broker (the "Third Broker"), similarly
qualified, within five (5) days after the appointment of Landlord's Broker.
Each of said three brokers shall determine the fair market rent for the
Premises as of the commencement of the option term for a term equal to the
option term of the Lease within 15 days after the appointment of the Third
Broker. The Base Rent payable by Tenant effective as of the commencement of
the option term shall be increased to an amount equal to the arithmetic
average of such three determinations; provided, however, that if any such
broker's determination deviates more than 10'6- from the median of such
determinations, the Base Rent payable shall be an amount equal to the average
of the two closest determinations; provided, however, that in no event shall
the Base Rent payable during the option term be less than the Base Rent rate
payable during the final year of the initial term of the Lease.
(iii) Landlord shall pay the costs and fees of Landlord's Broker in
connection with any determination hereunder, and Tenant shall pay the costs
and fees of Tenant's Broker in connection with such determination. The costs
and fees of any Third Broker shall be paid one-half by Landlord and one-half
by Tenant. Tenant expressly acknowledges that any costs and fees arising in
favor of any broker hired by Tenant to represent Tenant in the negotiation of
the extension of the term of the Lease shall be borne solely by Tenant.
(c) If the amount of the fair market rent is not known as of the
commencement of the option term, then Tenant shall continue to pay the Base
Rent in effect at the expiration of the initial term of the Lease until the
amount of the fair market basic rent is determined. When such determination
is made, Tenant shall pay to Landlord any deficiency to Landlord upon demand.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Addendum to Office Lease as of the date of the Lease.
TENANT:
DOVER INVESTMENTS CORPORATION
a Delaware Corporation
By: Lawrence Weissberg
Its: President
LANDLORD
100 SPEAR STREET OWNERS CORP.
a Delaware Corporation
By: THE YARMOUTH GROUP, INC.
Its: Authorized Agent
EXHIBIT D
Continuing Lease Guaranty
THIS GUARANTY, made as of the date specified in the Basic Lease
Information, by and between the guarantor(s) specified in the Basic Lease
Information ("Guarantor") and 100 SPEAR STREET OWNERS CORP., a Delaware
corporation ("Landlord").
W I T N E S S E T H:
1. For valuable consideration, receipt of which is acknowledged, and
to induce Landlord to enter into the Lease with Tenant, Guarantor hereby
absolutely, unconditionally and irrevocably guarantees to Landlord, and
agrees fully to pay, perform and discharge, as and when payment, performance
and discharge are due, all of the covenants, obligations and liabilities of
Dover Investments, Inc. ("Tenant") under the Lease and all amendments,
modifications, renewals, extensions, supplements, substitutions and
replacements of the Lease (the "Guaranteed Obligations"). Each individual
Guarantor under this Guaranty shall be jointly and severally liable for the
Guaranteed Obligations. The obligations of Guarantor under this Guaranty
shall be absolute, unconditional and irrevocable and shall continue and
remain in full force and effect until all of the Guaranteed Obligations have
been fully paid, performed and discharged.
2. The obligations of Guarantor under this Guaranty shall not be affected,
modified or impaired by the occurrence of any of the following events,
whether or not with notice to, or the consent of, Guarantor: (a) the waiver,
surrender, compromise, settlement, release or termination of any or all of the
Guaranteed Obligations; (b) the failure to give notice to Guarantor of the
occurrence of an event of default under the Guaranteed Obligations; (c) the
extension of the time for the payment, performance or discharge ot any or all
of the Guaranteed Obligations; (d) the amendment or modification (whether
material or otherwise) of the Lease or the Guaranteed Obligations in any
respect; (e) any failure, omission, delay or lack on the part of Landlord to
enforce, assert or exercise any right, power or remedy conferred
on Landlord under the Lease; (f) the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or adjustment of debts, or other
similar proceedings affecting Tenant or Guarantor or any of the assets
of either of them; (g) the release or discharge by operation of law of Tenant
from the payment, performance or discharge of any or all of the Guaranteed
Obligations; (h) the release or discharge by operation of law of Guarantor
from any or all of the obligations of Guarantor under this Guaranty;
or (i) the invalidity or unenforceability of any or all of the Guaranteed
obligations. Guarantor acknowledges that Landlord would not enter into the
Lease without this Guaranty and that Landlord is relying on this Guaranty.
3. The obligations of Guarantor under this Guaranty are independent
of the Guaranteed Obligations. Guarantor agrees that Landlord shall have the
right to proceed against Guarantor directly and independently of Tenant.
A separate action may be brought and prosecuted against Guarantor whether or
not an action is brought against Tenant or Tenant is joined in any such action.
Guarantor authorizes Landlord and Tenant, without notice to, demand of or
consent from Guarantor and without releasing or affecting Guarantor's liability
under this Guaranty, from time to time to amend, modify, renew, extend,
supplement or replace the Lease or the Guaranteed Obligations or otherwise
change the terms of the Lease or the Guaranteed Obligations, to take and hold
security for the Guaranteed Obligations, and to enforce, waive, surrender,
impair, compromise or release any such security or any or all of the
Guaranteed Obligations or any person or entity liable for any or all of the
Guaranteed Obligations. Guarantor shall be and remain bound under this Guaranty
notwithstanding any such act or omission by Tenant or Landlord. Guarantor
waives all rights under section 2845 of the California Civil Code and waives
the right to require Landlord to proceed against Tenant, to proceed against or
exhaust any security held by Landlord, or to pursue any other remedy in
Landlord's power. Landlord shall have the right to exercise any right or
remedy it may have against Tenant or any security held by Landlord. Guarantor
waives all rights under section 2849 of the California Civil Code and waives
the right, if any, to the benefit of, or to direct the application of, any
security held by Landlord. Guarantor waives (a) any defense arising out of
any alteration of the Guaranteed Obligations, (b) any defense arising out of
the absence, impairment or loss of any right of reimbursement or
subrogation or other right or remedy of Guarantor against Tenant or any
security held by Landlord, and (c) any defense arising by reason of any
disability or other defense of Tenant or by reason of the cessation or
reduction from any cause whatsoever of the liability of Tenant other than
full payment, performance and discharge of the Guaranteed Obligations.
The cessation or reduction of the liability of Tenant for any
reason other than full payment, performance and discharge of the Guaranteed
Obligations shall not release or affect in any way the liability of Guarantor
under this Guaranty.
4. If Tenant becomes insolvent or is adjudicated bankrupt or files a
petition for reorganization, arrangement, composition or similar relief under
any present or future provision of the Federal Bankruptcy Code, or if such a
petition is filed against Tenant, or Tenant makes a general assignment for
the benefit of creditors, and in any such proceeding any or all of the
Guaranteed Obligations are terminated or rejected or any or all of the
Guaranteed Obligations are modified or abrogated, Guarantor agrees that
Guarantor's liability hereunder shall not thereby be of nonperformance,
protests, notices of protest, notices of dishonor and notices of
acceptance of this Guaranty. Guarantor agrees to pay all costs and expenses,
including reasonable attorneys' fees, which are incurred by Landlord in the
enforcement of this Guaranty. If any provision of this Guaranty is held to be
invalid or unenforceable, the validity or enforceability of the other
provisions of this Guaranty shall not be affected. This Guaranty may not be
amended or modified in any respect except by a written instrument signed by
Guarantor and Landlord. As used in this Guaranty, the singular shall include
the plural. This Guaranty shall bind and inure to the benefit of Guarantor
and Landlord and their respective transferees, personal representatives,
heirs, successors and assigns. This Guaranty shall be governed by and
construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Guarantor and Landlord have executed
this Continuing Lease Guaranty as of the date first herein above written.
TENANT:
WILFRED, INC.
a Florida Corporation
By: Lawrence Weissberg
Its: President
LANDLORD:
100 SPEAR STREET OWNERS CORP.,
a Delaware Corporation
By: THE YARMOUTH GROUP, INC.
Its: Authorized Agent
SUBLEASE
This Sublease is executed as of the 1st day of October, 1997, by and
between Dover Investments Corporation, a Delaware corporation (the
"Sublessor"), whose address is 100 Spear Street, Suite 520, San Francisco,
California 94105, and Wilfred, Inc., a Florida corporation (the "Sublessee"),
whose address is 100 Spear Street, Suite 520, San Francisco, California 94105.
Recitals
A. Prentiss Properties, as Lessor ("Lessor"), and Sublessor, as lessee,
executed a lease on October 1, 1997, (the "Master Lease"). By the terms of
the Master Lease, the real property described as approximately 3,464 rentable
square feet of office space located on the north east side of the 5th floor
of 100 Spear Street, San Francisco, California 94105 (also known as Suite 520)
was leased to Sublessor for a term of six (5) years, commencing on October 1,
1997, and expiring on September 30, 2002, with an option to extend the term
for an additional period of five (5) years commencing immediately after the
expiration of the Master Lease.
B. Sublessor desires to sublease to Sublessee a portion of the property
currently occupied by Sublessor under the terms of the Master Lease, and
Sublessee desires to lease that property from Sublessor.
C. By the terms of Paragraph 5 of the Addendum to the Master Lease,
Lessor's consent to this Sublease is not necessary or required.
THEREFORE, Sublessor and Sublessee agree as follows:
1. Leasing and Description of Property. Subject to the terms, conditions
and covenants set forth in this Sublease, Sublessor hereby leases to Sublessee,
and Sublessee hereby leases from Sublessor, the property located in
San Francisco County, California described as follows: approximately 35% of
actual square footage of the 3,464 square feet of office space described in
Paragraph A of this sublease (the "Subleased Premises").
2. Term. This Sublease shall commence on October 1, 1997, and shall
end on the date on which the Master Lease expires or terminates, or on a date
thirty (30) days after written notice to terminate this Sublease is given by
either party hereto to the other, whichever is earlier.
3. Rent. Sublessee shall pay to Sublessor as rent for the Subleased
Premises a rental equal to 35% of the total Base Rent, Operating Expenses,
Property Taxes and other payments paid by Sublessor to Lessor under the
Master Lease. The rental shall commence on October 1, 1997 and shall be paid
on the first day of each calendar month throughout the term of this Sublease.
All such rental shall be paid to Sublessor at 100 Spear Street, Suite 520,
San Francisco, California 94105, or at any other place designated in writing
by Sublessor.
4. Use of Premises. Sublessee shall use the Subleased Premises for
business office purposes and for no other purpose.
5. Quiet Enjoyment. Sublessor covenants that Sublessee shall be
entitled to quiet enjoyment of Subleased Premises, provided that Sublessee
complies with the terms of this Sublease.
6. Condition of Premises. Sublessee agrees that its act of taking
possession will be an acknowledgment that the Subleased Premises are in a
tenantable and good condition. Sublessee will, at its own expense, maintain
the Subleased Premises in a thorough state of repair and in good and safe
condition.
7. Applicability of Master Lease. This Sublease is subject and
subordinate to the terms and conditions of the Master Lease.
8. Assumption. Sublessee hereby expressly assumes and agrees to perform
and comply with all the obligations required to be kept or performed by the
Lessee under the provisions of the Master Lease to the extent that they are
applicable to the Subleased Premises and as modified by this Sublease.
9. Termination of Master Lease. If the Master Lease is terminated, this
Sublease shall terminate simultaneously and the Sublessor and Sublessee shall
thereafter be released from all obligations under this Sublease, and
Sublessor shall refund to Sublessee any unearned rent paid in advance, except
as provided in Paragraph 10 of this Sublease.
10. Attorneys' Fees. If any action or other proceeding arising out of
this Sublease is commenced by either party to this Sublease concerning the
Subleased Premises, then as between Sublessor and Sublessee, the prevailing
party shall be entitled to receive from the other party, in addition to any
other relief that may be granted, the reasonable attorneys' fees, costs and
expenses incurred in the action or other proceeding by the prevailing party.
11. Duplicate Original Counterparts. This Sublease may be executed in
two or more counterparts, all of which when taken together shall constitute
one Sublease.
12. Defined Terms. Capitalized terms used in this Sublease shall have the
meaning given to them in the Master Lease, unless otherwise defined herein.
Executed at San Francisco, California, effective as of the date
specified in the first paragraph of this Sublease.
SUBLESSOR: DOVER INVESTMENTS CORPORATION,
a Delaware corporation
By: Erika Kleczek
Its: Principal Financial Officer
SUBLESSEE: WILFRED, INC.,
a Florida corporation
By: Lawrence Weissberg
Its: President
CONSENT TO SUBLEASE
THIS CONSENT TO SUBLEASE ("Consent to Sublease") is entered
into as of the day of ,1997 , by and among 100 SPEAR
STREET OWNERS CORP. ("Landlord") and Dover Investments Corporation, a
Delaware corporation ("Tenant") , and Wilfred, Inc, a Florida corporation
("Subtenant"), with reference to the following facts:
A. On October 1, 1997, Landlord and Tenant entered into an [Agreement of
Lease] ("Master Lease") under which Tenant leased 3,464 rentable
square feet on the 5th floor of the building located at 100 Spear Street,
San Francisco, California (the "Building"). [Include information about
prior subleases, if any, and amendments to Master Lease, if any.]
B. Tenant and Subtenant now desire to enter into a sublease (the
"Sublease") for approximately 1,212 rentable square feet on the 5th floor
(the "Sublet Premises") of the Building, a copy of which Sublease is
attached hereto as Exhibit A and incorporated herein.
C. Pursuant to the terms of the Master Lease, as the same may have been
amended to the date hereof, Tenant has requested Landlord's consent to
the Sublease.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord hereby consents to the Sublease subject to the following
express terms and conditions to each of which Tenant and Subtenant expressly
agree.
1. The Sublease is subject and subordinate to the Master Lease, and to all
of its terms, covenants, conditions, provisions and agreements.
2. Except for rent payable under the Master Lease, Subtenant shall perform
faithfully and be bound by all of the terms, covenants, conditions,
provisions and agreements of the Master Lease, for the period covered by
the Sublease, but only to the extent applicable to the Sublet Premises.
3. Neither the Sublease nor this Consent to Sublease thereto shall:
(a) release or discharge Tenant from any liability whether past,
present or future, under the Master Lease;
(b) operate as an approval by Landlord to or for any of the specific
terms, covenants, conditions, provisions or agreements of the
Sublease or as a representation or warranty by Landlord, and
Landlord shall not be bound or estopped thereby;
(c) be construed to modify, waive or affect any of the terms,
covenants, conditions, provisions or agreements of the Master
Lease, or to waive any present or future breach thereof, or any of
Landlord's rights, or to enlarge or increase Landlord's
obligations;
(d) be construed as a consent by Landlord to any further subletting
either by Tenant or by Subtenant or to any assignment by Tenant
of the Master Lease or assignment by Subtenant of the Sublease,
whether or not the Sublease purports to permit the same and,
without limiting the generality of the foregoing, both Tenant and
Subtenant agree that Subtenant has no right whatsoever to assign,
mortgage or encumber the Sublease nor to sublet any portion of
the Sublet Premises or permit any portion of the Sublet Premises
to be used or occupied by any other party; further, in connection
herewith, both Tenant and Subtenant agree that an assignment by
operation of law or a transfer of control of Subtenant (including
but not limited to transfer of the controlling interest of the stock
of Subtenant, if Subtenant is a corporation)shall be deemed to be
a prohibited assignment hereunder; or
(e) be deemed to create a privity of contract between Landlord and
Subtenant, to make Subtenant a third party beneficiary of the
provisions of the Master Lease, or to create or permit any direct
right of action by Subtenant against Landlord for breach of the
covenant of quiet enjoyment or any other covenant of Landlord
under the Master Lease.
4. Any breach or violation of any provision of the Master Lease by
Subtenant shall be deemed to be and shall constitute a default by Tenant
in fulfilling such provision. Tenant shall not be released from any
liability under the Master Lease because of Landlord's failure to give
notice of default under or in respect of any of the terms, covenants,
conditions, provisions or agreements of the Master Lease.
5. In the event of Tenant's default under the provisions of the Master
Lease, the rent due from Subtenant under the Sublease shall be deemed assigned
to Landlord and Landlord shall have the right, under such default, at any
time at its option, to give notice to subtenant of such assignment.
Landlord shall credit Tenant with any rent received by Landlord under
such assignment but the acceptance of any payment on account of rent
from Subtenant as the result of any such default shall in no manner
whatsoever serve to release Tenant from any liability under the terms,
covenants, conditions, provisions or agreements under the Master Lease.
6. Both Tenant and Subtenant shall be and continue to be liable for the
payment of (a) all bills rendered by Landlord for charges incurred by
Subtenant for services and materials supplied to the Sublet Premises
beyond that which is required by the terms of the Master Lease and (b)
any additional costs incurred by Landlord for maintenance and repair of
the Sublet Premises as the result of Subtenant (rather than Tenant)
occupying the Sublet Premises (including but not limited to any excess
cost to Master Landlord of services furnished to or for the Sublet
Premises resulting from the extent to which Subtenant uses them for
purposes other than as set forth in the Master Lease).
7. Notwithstanding anything to the contrary contained in the Sublease, all
requests for nay service to be supplied by Landlord to the Sublet
Premises, all requests to alter the Sublet Premises, all requests to further
sublet the Sublet Premises or assign the Sublease, and all other requests
for Landlord's consent or approval must be made by Tenant on behalf of
Subtenant.
8. The term of the Sublease shall expire and come to an end on its natural
expiration date or any premature termination date thereof or concurrently
with any premature or natural termination of the Master Lease (whether
by consent or other right, now or hereafter agreed to by Landlord or
Tenant, by operation of law, or at Landlord's option in the event of
default by Tenant) and Subtenant shall vacate the Sublet Premises on or
before such date. Notwithstanding the foregoing, in the event that the
Term (as defined in the Master Lease) of the Master Lease should
terminate prior to the Term (as defined in Section A of the Sublease) of
the Sublease, it is agreed that, at the option of Landlord, which option
shall be exercisable by written notice to Subtenant prior to or upon the
effective date of such termination, Subtenant shall be bound to Landlord
under the terms, covenants and conditions of the Sublease as provided in
subparagraph (x), below, for the remaining balance of the natural Term
of the Sublease (as opposed to early termination) thereof, with the same
force and effect as if Landlord were the sublessor under such Sublease,
and Subtenant does hereby agree to attorn to Master Landlord as its
landlord, such attornment to be effective and sefl-operative without the
execution of any further instruments on the part of any of the parties to
this Agreement, immediately upon Master Landlord's exercise of the
aforementioned option.
(x) In the event Landlord exercises its option of attornment as provided in
the paragraph immediately above, Subtenant shall observe and perform:
(i) each of the terms, covenants and conditions of the Sublease that
Landlord designates be observed and performed, and (ii) such other
terms, covenants and conditions to which the parties may agree. It is
further agreed that Landlord shall not be:
(a) liable for any act or omission of any prior sublandlord under the
Sublease; or
(b) obligated to cure any defaults of any prior sublandlord which
occurred prior to the term that Landlord succeeded to the interest of
Tenant under the Sublease; or
(c) subject to any offsets or defenses which Subtenant may be entitled to
assert against any prior sublandlord (including Tenant); or
(d) bound by any payment of rent or additional rent by Subtenant to any
prior sublandlord (including Tenant) for more than one month in
advance; or
(e) bound by any amendment or modification of the Sublease made
without the written consent of Landlord; or
(f) liable or responsible for or with respect to the retention, application
and/or return to Subtenant of any security deposit paid to any prior
sublandlord (including Tenant), whether or not still held by such prior
sublandlord, unless and until Landlord has actually received for its own
account as landlord the full amount of such security deposit.
9. In addition to Tenant's obligations under the Master Lease to maintain
insurance, Subtenant shall add and maintain Landlord as an additional
insured under Subtenant's insurance policies.
10. This Consent to Sublease is not assignable, nor shall this consent be a
consent to any amendment, modification, extension or renewal of the
Sublease, without Master Landlord's prior written consent.
11. Tenant covenants and agrees that under no circumstances shall Landlord
be liable for any brokerage commission or other charge or expense in
connection with the Sublease and Tenant agrees to indemnify, protect,
defend and hold Landlord harmless against same and against any cost or
expense (including bu not limited to counsel fees) incurred by Landlord
in resisting any claim for such brokerage commission. Further, Tenant
and Subtenant represent and warrant that they have dealt with no brokers
other than N/A, whose fees are to be paid by N/A. Subtenant agrees to
indemnify, protect, defend and hold Landlord harmless against any cost
or expense (including but not limited to counsel fees) incurred by
Landlord in resisting any claim for brokerage commissions of brokers
claiming through or as agent for Subtenant.
12. Tenant and Subtenant understand and acknowledge that Landlord's
consent hereto is not a consent to any improvement or alteration work
being performed in the Sublet Premises, that Landlord's consent for such
work must be separately sought and will not necessarily be given, and
that if such consent is given the same will be subject to Tenant and
Subtenant's execution of Landlord's standard form of agreement with
respect to work being performed in the Building by persons other than
Landlord unless otherwise agreed t in writing by Landlord.
13. In the event of any conflict between the provisions of this Consent of
Sublease and the provisions of the Sublease, the provisions of this
Consent to Sublease shall prevail.
14. This Consent to Sublease shall be construed in accordance with the laws
of the State of California and contains the entire agreement of the parties
hereto with respect to the subject matter hereof and may not be changed
or terminated orally or by course of conduct. Time is of the essence of
each provision of this Consent to Sublease.
15. Tenant and Subtenant agree, at any time, and from time to time, upon not
less that 15 days prior notice by Landlord to execute, acknowledge and
deliver to Landlord, a statement in writing certifying that the Sublease is
unmodified and in full force and effect (or, if ther have been
modifications, that the same is in full force and effect as modified and
stating the modifications), and the dates to which the [Annual Base
Rental], additional rent and other charges have been paid, and stating
whether or not to the best knowledge of the signer of such certificate,
Tenant or Subtenant is in default in performance of any covenant,
agreement, term, provision or condition contained in the Sublease and, if
so, specifying each such default of which the signer may have
knowledge, it being intended that any such statement delivered pursuant
hereto may be relied upon by Landlord and any prospective purchaser of
lessee of the Building, or any trustee of beneficiary under any deed of
trust effecting the Building. Tenant and Subtenant also agree to execute
and deliver from time to time such other estoppel certificates as an
institutional lender may require with respect to the Sublease.
16. In the event of any arbitration or action or proceeding at law or
in equity between or among the parties to this Consent to Sublease as a
consequence of any controversy, claim or dispute relating to this
agreement or the breach thereof or to enforce any of the provisions
and/or rights hereunder, the unsuccessful party or parties to such
arbitration, action or proceeding shall pay to the successful party or
parties all costs and expenses, including attorneys' fees incurred therein
by such successful party or parties, and if such successful party or parties
shall recover judgment in any such arbitration, action or proceeding, such
costs, expenses and fees shall be included in and as part of such
judgment.
17. The execution of a copy of this Consent to Sublease by Subtenant shall
constitute Subtenant's acknowledgment that it has received a copy of the
Master Lease from Tenant.
IN WITNESS WHEREOF, the parties have executed this Consent to
Sublease as of the date first written above.
LANDLORD: 100 SPEAR STREET OWNERS CORP.,
a Delaware corporation
By: Lend Lease, Inc.
Its: Authorized Agent
TENANT: DOVER INVESTMENTS CORPORATION
a Delaware corporation
By: Erika Kleczek
Its: Principal Financial Officer
SUBTENANT: Wilfred, Inc.,
a Florida corporation
By: Lawrence Weissberg
Its: President
