Exhibit 10.3
325 LYTTON AVENUE
PALO ALTO, CALIFORNIA
COMMERCIAL LEASE SUMMARY
The information contained in this "Office Commercial Lease Summary" is
incorporated into the terms of the attached "Commercial" Lease.
I. LANDLORD: Mercury Property Investments, LLC
II. TENANT: WebTV Networks, Inc.
III. PREMISES: 325 Lytton Avenue, the entire building consisting of
approximately 10,000 rentable square feet
IV. TERM:
Lease Term Approximately Thirty-six (36) months
Landlord's Right to Terminate After the 24th month with 180 days prior
written notice
Lease Commencement: The Lease Term shall commence August 10th, 1996
Lease Expiration: The Lease Term shall expire July 31st, 1999
V. OPTION TO EXTEND: None
VI. RENT AND REIMBURSEMENTS:
Initial Full Service Rent: Monthly Full Service Rent is Twenty Eight Thousand
Seven Hundred Dollars ($28,700) approximately equal
to $2.87 per rentable foot per month("Base Rent").
Rental Adjustment Schedule: See Exhibit B
Security Deposit: Twenty Eight Thousand Seven Hundred Dollars
($28,700)
VII. TENANT USE: General Office Uses Consistent With Section 4.1 of
This Lease Agreement
LANDLORD INITIALS 1 TENANT INITIALS
VIII. EXECUTION: The Landlord and Tenant agree to the provisions of the
Commercial Lease, including the attached Exhibits.
Landlord: Mercury Property Investments, LLC
By:
Date: __________________, 1996
Tenant N Inc.
By:
Date:
LANDLORD INITIALS 2 TENANT INITIALS
TABLE OF CONTENTS
Page
1. Premises 6
1.1 Description of Premises 6
1.2 Landlord's Work 6
1.3 Surrender of Premises 6
2. Term 6
2.1 Postponement 6
2.2 Option to Extend 6
2.3 Landlord's Right To Terminate 6
3. Rent 7
3.1 Payment of Rent 7
3.2 Additional Rent 7
3.3 Late Payment; Interest 7
3.4 Security Deposit 7
4. Uses 7
4.1 Use of the Premises 7
4.2 No Exterior Uses 8
4.3 Hazardous Materials 8
5. Alterations and Additions 8
6. Maintenance and Repair 9
6.1 Tenant's Obligations 9
6.2 Landlord's Obligations 9
7. Taxes 9
7.1 Tenant's Personal Property Taxes 9
8. Utilities and Services 10
9. Indemnity 10
10. Waiver of Claims 10
11. Insurance 10
11.1 Tenant's Liability Insurance 10
11.2 Tenant's Property Insurance 10
11.3 Landlord's Liability Insurance 10
11.4 Landlord's Property Insurance 11
11.5 Waiver of Subrogation 11
11.6 Insurance Policies 11
12. Damage 12
LANDLORD INITIALS 3 TENANT INITIALS
Page
12.1 Tenant's Property 12
12.2 Waiver 12
13. Condemnation 12
14. Advertisements and Signs 12
15. Entry by Landlord 12
16. Assignment and Subletting 12
16.1 Landlord's Consent Required 12
16.2 Documentation 13
16.3 Terms and Conditions 13
16.4 Landlord's Remedies 13
17. Default 13
17.1 Event of Default 13
17.2 Remedies 13
17.3 No Relief From Forfeiture After Default 14
17.4 Landlord's Right to Perform Tenant's Obligations 14
17.5 Remedies Not Exclusive 15
17.6 Termination, Surrender and Abandonment 15
17.7 Landlord's Default 15
18. Effect of Conveyance 15
19. Instruments Required by Lender 15
20. Tenant's Estoppel Certificate 15
21. Subordination Attornment and Quiet Enjoyment 15
22. Notices 16
23. No Accord and Satisfaction 16
24. Attorneys Fees 16
25. Holding Over 16
26. Landlord Liability 16
27. General Provisions 17
27.1 Entire Agreement 17
27.2 Timeliness 17
27.3 Captions 17
27.4 California Law
27.5 Partial Invalidity 17
27.6 No Warranties 17
27.7 Joint and Several Liability 17
27.8 Binding on Successors 17
27.9 Authority
LANDLORD INITIALS 4 TENANT INITIALS
Page
27.10 No Light, Air or View Easement 17
27.11 Brokers
27.12 Force Majeure 18
Exhibits 20
A Premises 21
B Rent Adjustment Schedule
LANDLORD INITIALS 5 TENANT INITIALS
COMMERCIAL LEASE
325 LYTTON AVENUE
PALO ALTO, CALIFORNIA
This Lease is made and entered by and between "Landlord" and "Tenant" as
these terms are defined in the ''Commercial Lease Summary", which Commercial
Lease Summary constitutes and is numbered as page 1 of this Lease.
1. Premises.
1.1 Description of Premises. Landlord leases the "Premises" (as
hereinafter defined) to Tenant for Tenant's exclusive use, and Tenant leases the
Premises from Landlord for the term, at the rental, and upon all of the
conditions set forth herein and in the Lease Summary. A floor plan showing the
"Premises" is attached as Exhibit A. The Premises consist of the entire building
of approximately 10,000 rentable square feet. The land upon which the Building
is located is referred to herein as the "Property".
1.2 Landlord's Work. Landlord shall provide the Premises to Tenant in
as is condition and makes no representation that the existing conditions are
free from defects.
1.3 Surrender of Premises. At the end of the term of this Lease or
upon any earlier termination pursuant to this Lease, Tenant shall surrender the
Premises to Landlord in the same condition as existed on the Commencement Date,
subject to reasonable wear and tear except that all articles of personal
property and all business and trade fixtures, machinery, equipment, furniture
owned by Tenant and installed by Tenant at its expense in the Premises shall
remain the Property of the Tenant and may be removed by Tenant at any time
during the Lease term. If Tenant fails to remove all of Tenant's Property from
the Premises upon termination of the Lease for any cause whatsoever, Landlord
may, at its option, any time within thirty (30) days of the lease termination
and after ten (10) days written notice to Tenant of its intention to remove
Tenant's Property, remove same in any manner Landlord shall choose and store
such effects without liability to Tenant for loss thereof, and Tenant shall pay
Landlord upon demand any and all reasonable expenses incurred in connection with
such removal, including court costs, reasonable attorney fees, and reasonable
storage charges incurred which such effects were in Landlord's possession.
1.5 Parking. Landlord shall provide Tenant 25 dedicated parking spaces
or more if available in the parking lot on the Property behind and to the side
of the Building during the Lease Term.
2. Term. This Lease shall begin on August 10th, 1996, the "Commencement
Date" and shall continue for a term of approximately thirty six (36) months,
expiring July 31st, 1999 as stated in the Lease Summary, in accordance with the
following:
2.1 Postponement. Intentionally Omitted
2.2 Option to Extend. Intentionally Omitted
2.3 Landlord's Right to Terminate. At any time after the twenty
fourth (24) month of the initial term, Landlord shall have the right to
terminate this agreement with 180 days prior written notice to Tenant.
LANDLORD INITIALS 6 TENANT INITIALS
3. Rent.
3.1 Payment of Rent. Tenant shall pay to Landlord the Rent as stated
in the Lease Summary, without deduction, offset, prior notice or demand, in
advance on the first day of each calendar month of the term of this Lease. Rent
shall be payable in lawful money of the United States to Landlord at such place
as Landlord may designate in writing. Tenant's obligation to pay rent for the
initial and any subsequent partial month shall be prorated on the basis of a
thirty (30) day month.
3.2 Additional Rent.
(a) Tenant shall pay to Landlord during the term hereof, in addition
to Rent, as additional rent (the "Additional Rent") all charges, costs and
expenses which Tenant is required to pay hereunder, together with all late
charges, interest, costs and expenses including attorneys' fees, that may accrue
thereto in the event of Tenant's failure to pay such amounts, and all damages,
reasonable costs and expenses which Landlord may incur by reason of Tenant's
default or breach of this Lease.
(b) In the event of nonpayment by Tenant of Additional Rent, Landlord
shall have all the rights and remedies with respect thereto as Landlord has for
nonpayment of Base Rent.
3.4 Late Payment: Interest. If any installment of Rent, Additional
Rent or any other sum due from Tenant is not received by Landlord within ten
(10) days after the due date, Tenant shall pay to Landlord as liquidated damages
an additional sum equal to five percent (5%) of the amount overdue (but not to
exceed One Thousand Five Hundred Dollars ($1500) for any single event of late
payment) to compensate Landlord for reasonably foreseeable processing and
accounting charges, and any charges that may be incurred by Landlord with regard
to any financing secured by the Property. Should Tenant fail to make any payment
within the specified time limits, then Landlord's acceptance of any late charge
shall not constitute a waiver by Landlord of Tenant's default with respect to
the overdue amount.
3.5 Security Deposit:. Tenant has deposited the Security Deposit with
Landlord as security for the full and faithful performance by Tenant of every
term and covenant of this Lease. In the event Tenant defaults in the performance
of any of its obligations hereunder, Landlord may use or apply any portion of
the Security Deposit to cure the default or to compensate Landlord for its
damages from the default, in which event Tenant shall promptly deposit with
Landlord the sum necessary to restore the Security Deposit to its original
amount. Upon termination of this Lease and performance of all of Tenant's
obligations hereunder, Landlord shall return the Security Deposit or any balance
thereof to Tenant Tenant shall not be entitled to any interest on the Security
Deposit, and Landlord shall be entitled to commingle the Security Deposit with
its general funds.
4. Uses.
4.1 Use of the Premises. The Premises shall be used only for general
office uses or any other lawful purpose consistent with the City Of Palo Alto
zoning and use ordinance for the Premises. Tenant will engage in no activity on
the Premises that would, in the judgment of any insurer of the Premises,
increase the premium on any of Landlord's insurance over the amount otherwise
charged therefor or cause such insurance to be canceled. Tenant will comply with
all applicable laws and governmental regulations pertaining to its use and
occupancy of the Premises. Tenant will not cause any excessive loads to be
placed upon the floor slabs or the walls of the Premises by the placement of its
furnishings or equipment or otherwise. Tenant will commit no nuisance or waste
on the Premises and will not cause any unreasonable odors, noise, smoke,
vibration, electronic emissions, or any other item to emanate from the Premises
so as to damage the Property or any other person's property.
LANDLORD INITIALS 7 TENANT INITIALS
4.2 No Exterior Uses. No area outside of the Building or the exterior
of the Building is leased to or may be used by Tenant except for signage in
accordance with Paragraph 14 and parking and access. No rubbish containers may
be stored outside of the Premises except in areas specifically identified by
Landlord. No materials may be stored outside of the Premises by Tenant.
4.3 Hazardous Materials.
(a) Tenant shall not cause or permit to be discharged from or about
the Premises or the Building any materials identified by any federal, state, or
local governmental body or agency as hazardous materials (collectively,
"Hazardous Materials"). Tenant shall at its sole expense comply with all
applicable governmental rules, regulations, codes, ordinances, statutes and
other requirements respecting Hazardous Materials in connection with Tenant's
activities on or about the Premises or the Property. Tenant shall at its sole
cost perform all clean-up and remedial actions which may be required of Tenant
by any governmental authority pertaining to any discharge of such materials by
Tenant.
(b) Tenant shall indemnify and hold Landlord harmless from all costs,
claims, judgments, losses, demands, causes of action, proceedings or hearings,
including without limitation Landlord's reasonable attorneys' fees and court
costs, relating to the storage, placement or use of Hazardous Materials by
Tenant on or about the Premises, including without limitation (i) losses in or
reductions to rental income resulting from Tenant's use, storage, or disposal of
Hazardous Materials; (ii) all costs of clean-up or other alterations to the
Premises necessitated by Tenant's use, storage, or disposal of Hazardous
Materials; and (iii) any diminution in the fair market value of the Property
caused by Tenant's use, storage, or disposal of Hazardous Materials. The
obligations of Tenant under this Paragraph 4.3 shall survive the expiration of
the Lease term.
(c) Tenant hereby acknowledges the asbestos or building materials
containing asbestos may be present in the Premises as follows:
(i) In the linoleum and tile under carpet in conference room, kitchen, and
corridors (ii) In the roofing materials (iii) In the exterior soffit
materials.
Tenant further acknowledges that it shall be incumbent upon Tenant to conduct
its own investigation as to the presence or absence of asbestos in the Premises.
Landlord shall have absolutely no liability to Tenant with regard to the
presence and/or release of asbestos in the Premises. Notwithstanding anything to
the contrary contained herein, Landlord shall, at its sole cost, assume full
responsibility for any removal or encapsulation of asbestos required by any
governmental or regulatory agency due to Tenant's use or occupancy of the
Premises, and any and all removal or encapsulation shall be conducted in
compliance with the provisions of this Section 4.3.
(d) Landlord shall indemnify and hold Tenant harmless from all costs,
claims, judgments, losses, damages, demands, causes of action, proceedings and
hearings, including without limitation, Tenant's reasonable attorney's fees and
court costs, arising out of or resulting from any Hazardous Materials on the
Property or alleged to be on the Property and that were not brought on to the
Property by Tenant or Tenant's agents or employees. The obligations of Landlord
under this paragraph 4.4 survive the expiration of the Lease term.
5. Alterations and Additions. Tenant shall not make any alteration,
addition or utility installation (collectively "Changes") to the Premises
without Landlord's prior written consent which can be exercised using its sole
descretion. Notwithstanding the immediately preceding sentence, Tenant
LANDLORD INITIALS 8 TENANT INITIALS
shall have the right to make interior, non structural alterations within the
Premises without Landlord's approval, provided that (i) such alterations do not
exceed Twenty Thousand Dollars ($20,000) in cost per project; (ii) prior to
commencing such alterations, Tenant shall give 30 days prior written notice to
Landlord specifying the work to be done and the area of the Premises affected by
such work; and (iii) Tenant shall obtain all necessary governmental permits and
approvals prior to commencing such work. In making any changes hereunder, Tenant
shall comply with all applicable building codes and other governmental
requirements. Tenant shall be solely responsible for any requirements imposed on
the Building due to City, County, State or Federal regulations as a consequence
of such alterations. Unless Landlord has specifically waived this provision in
writing prior to the installation of the Changes, such Changes (i) shall be
removed from the Premises, and all damage resulting from such removal repaired
by Tenant prior to the expiration or sooner termination of the Lease term, or
(ii) shall remain on the Premises at the end of the Lease term and become the
property of the Landlord, at Landlord's sole election. In making all Changes,
Tenant shall hold Landlord harmless from mechanics' liens and all other
liability resulting therefrom. Tenant shall not proceed to make any changes
until five (5) days after receipt of Landlord's written consent, in order that
Landlord may post on the Premises appropriate notices to avoid any liability or
liens by reason thereof.
6. Maintenance and Repair.
6.1 Tenant's Obligations. Except for those portions of the Building
which Landlord is obligated to maintain and repair pursuant to Paragraph 6.2
below, Tenant, at its sole cost, shall maintain in good working order and repair
the non-structural portions of the Premises (pre-existing latent defects
excepted which defects shall be the sole responsibility of Landlord to repair
and correct) and every part thereof. Tenant's obligation will include, but not
be limited to; regular janitorial service for the maintenance of the interior
and exterior of the Premises, HVAC system maintenance including a regular
service contract, maintenance of the fiber optic cabling, general repairs based
on Tenant use of the premises and regular landscape service. If Tenant refuses
or neglects to make repairs and/or maintain the Premises, or any part thereof,
in a manner and within a time period reasonably satisfactory to Landlord,
Landlord shall have the right, upon giving Tenant reasonable written notice of
its election to do so, to make such repairs or perform such maintenance on
behalf of and for the account of Tenant. In such event the reasonable cost of
such work shall be paid by Tenant promptly upon Landlord's presentation of
reasonable evidence of the costs actually incurred.
6.2 Landlord's Obligations. Subject to Tenant's obligations pursuant
to Paragraph 6.1, and the provisions of this Lease dealing with damage or
destruction and condemnation, Landlord shall repair and maintain in good working
order the roof, roof membrane, and all structural portions of the Premises and
the Building, the heating, ventilation, air-conditioning equipment serving the
Premises (exclusive for routine maintenance which is a Tenant obligation) and
electrical systems and equipment(including utility lines and conduits), exterior
surfaces or the Building, sidewalks, and the parking lot for the Building.
Tenant hereby waives the benefit of any statute now or hereinafter in effect
which would otherwise afford Tenant the right to make repairs at Landlord's
expense or to terminate this Lease because of Landlord's failure to keep the
Premises in good condition, order and repair. Tenant specifically waives all
rights it may have under Sections 1932(1),1941, and 1942 of the California Civil
Code, and any similar or successor statute or law.
7. Taxes.
7.1 Tenant's Personal Property Taxes. Tenant shall pay prior to
delinquency all taxes, license fees, and public charges assessed or levied
against Tenant, Tenant's estate in this Lease or Tenant's leasehold
improvements, trade fixtures, furnishings, equipment and other personal
property.
LANDLORD INITIALS 9 TENANT INITIALS
8. Utilities and Services. All utilities metered to the Tenant's Premises
shall be paid by the Tenant directly to the charging authority. Any utilities
not separately metered to the Tenant but serving the Premises shall be allocated
to Tenant as "additional rent". No failure or interruption of any such utilities
or service shall entitle Tenant to terminate this Lease or to withhold rent or
other sums due hereunder and Landlord shall not be liable to Tenant for any such
failure or interruption unless caused by the willful misconduct of Landlord.
Landlord shall not be responsible for providing any security protection for all
or any portion of the Property and Tenant shall at its own expense provide or
obtain any security services that it desires.
9. Indemnity.
(a) Tenant hereby agrees to indemnify and hold Landlord harmless from
and against any and all claims, demands, liabilities, and expenses, including
reasonable attorneys' fees, arising from Tenant's use of the Premises or from
any act permitted, or any omission to act, in or about the Premises or the
Property by Tenant or its agents, employees, contractors, or invitees, or from
any breach or default by Tenant of this Lease, or from any injury to person or
property, except to the extent caused by the gross negligence or willful
misconduct of Landlord or Landlord's agents, contractors, or employees. In the
event any action or proceeding shall be brought against Landlord by reason of
any such claim, Tenant shall defend the same at Tenant's expense by counsel
reasonably satisfactory to Landlord.
(b) Landlord hereby agrees to indemnify and hold Tenant harmless from
all costs, claims, judgments, losses, damages, demands, causes of action,
proceedings and hearings, including without limitation, Tenant's reasonable
attorney's fees and court costs, arising from the gross negligence or willful
misconduct of Landlord or Landlord's agents, contractors, or employees, or from
the material breach or default by Landlord of this Lease.
10. Waiver of claims Tenant hereby waives any claims against Landlord for
injury to Tenant's business or any loss of income therefrom, for damage to
Tenant's property, or for injury or death of any other person in or about the
Premises or the Property from any cause whatsoever, except to the extent caused
only by Landlord's gross negligence or willful misconduct.
11. Insurance.
11.1 Tenant's Liability Insurance. Tenant shall, at its expense,
obtain and keep in force during the term of this Lease a policy of comprehensive
public liability insurance insuring Landlord and Tenant against any liability
arising out of the operation of Tenant's business and the condition, use,
occupancy or maintenance of the Premises. Such insurance policy shall have a
combined single limit for both bodily injury and property damage in an amount
not less than Two Million Dollars ($2,000,000), which amount shall be increased
from time to time as reasonably required by Landlord. The policy shall contain
cross liability endorsements (to the extent available on commercially reasonable
terms) and shall insure performance by Tenant of the indemnity provisions of
Paragraph 9 above. The limits of said insurance shall not limit the liability of
Tenant hereunder.
11.2 Tenant's Property Insurance. Tenant shall, at its expense, keep
in force during the term of this Lease, a policy of fire and property damage
insurance, including protection for glass and windows to the Premises, in an
"all risk" form, insuring Tenant's inventory, fixtures, equipment, personal
property, and leasehold improvements within the Premises (whether installed by
Landlord or Tenant) for the full replacement value thereof. Tenant also shall
obtain and maintain business interruption insurance in an amount adequate to
provide for payment of Base Rent and other amounts due Landlord under this Lease
during a one year interruption of Tenant's business due to fire or other
casualty.
LANDLORD INITIALS 10 TENANT INITIALS
11.3 Landlord's Liability Insurance. Landlord shall maintain a policy
of comprehensive general liability insurance in an amount of coverage the
Landlord deems advisable insuring Landlord (and such other entities as
designated by Landlord) against liability for personal injury, bodily injury or
death and damage to property occurring or resulting from an occurrence in, on,
or about the Property with such coverage as Landlord may from time to time deem
advisable.
11.4 Landlord's Property Insurance. Landlord shall maintain a policy
or policies of insurance covering loss or damage to the Property, including
protection from rental loss and coverage for operating expenses resulting from
loss or damage to the Building, and such other hazards in the industry in such
amounts and with such coverage as Landlord deems advisable, but in no event for
less than 90% of replacement value (except for earthquake coverage). All
proceeds under such policies shall be payable exclusively to Landlord.
11.5 Waiver of Subrogation. Tenant and Landlord each hereby waives,
and shall cause their respective insurers to similarly waive, any and all rights
of recovery against the other, or against the officers, employees, partners,
agents and representatives of the other, for loss of or damage to the property
of the waiving party or the property of others under its control, to the extent
such loss or damage is (or would have been) insured against under any insurance
policy carried (or required to be carried) by Landlord or Tenant hereunder.
11.6 Insurance Policies. All of Tenant's insurance shall be primary
insurance written in a form satisfactory to Landlord by companies acceptable to
Landlord and shall specifically provide by endorsements reasonably acceptable to
Landlord that such policies shall: (i) not be subject to cancellation or other
change except after at least thirty (30) days' prior written notice to Landlord;
(ii) be primary insurance; (iii) specifically waive subrogation pursuant to this
Lease. All liability policies maintained by Tenant hereunder shall name Landlord
and Landlord's property management company as additional insured parties. Copies
of the policies or certificates evidencing the policies, together with
satisfactory evidence of payment of premiums shall be deposited with Landlord on
or prior to the Commencement Date, and upon each renewal of such policies, which
shall be effected not less than thirty (30) days prior to the expiration date of
the term of such coverage.
12. Damage. Except as provided for Paragraph 12.1, if damage occurs to any
portion of the Premises that Landlord is obligated to maintain, providing that
(i) such damage is insured against or required to be insured against, (ii) such
damage does not render the Premises unusable, and (iii) such damage does not
occur within the last twelve (12) months of the lease term, Landlord will cause
such damage to be repaired with reasonable diligence, subject to delays in the
obtaining and disbursement of insurance proceeds and delays caused by inclement
weather, governmental action or inaction, and shortage of materials or services.
If such damage is not required to be insured against, or if the damage occurs
within the last twelve (12) months of the lease term, Landlord may elect, at its
option exercised by written notice to Tenant within sixty (60) days of the date
that Landlord learns of the damage, to either complete the repair at its expense
or elect to terminate this Lease as of the date of damage. If at any time a
portion of the Premise that Landlord is obligated to maintain is damages or
destroyed by any cause thereby rendering the Premises unusable, even if such
damage is required to be insured against pursuant to Paragraph 11 above,
Landlord shall notify Tenant in writing as to the estimated time for repairing
the damage within sixty (60) days of the date on which Landlord learns of the
damage. If Landlord reasonably estimates that the time required for repair
exceeds six (6) months, then either Landlord or Tenant shall be entitled to
terminate this Lease by delivering written notice of termination to the other
party within 10 (ten) days after receipt of the estimation. Regardless of the
total repair time, if this lease is not terminated, rent will abate during the
period until the Premises are repaired and ready for Tenant's full use and
occupancy. Under no scenario will Landlord have liability on account of the
damage.
LANDLORD INITIALS 11 TENANT INITIALS
12.1 Tenant's Property. Landlord's obligation to rebuild or restore
shall not include Tenant's trade fixtures, equipment, merchandise, or any
improvements, alterations or additions made by Tenant to the Premises.
12.2 Waiver. Tenant waives the provisions of California Civil Code
Sections 1932(2) and 1933(4), and any similar or successor statutes relating to
termination of leases in the event of damage or destruction, and agrees that the
parties' rights and obligations in such event shall instead be governed by this
Lease.
13. Condemnation. If any part of the Premises shall be taken for any
public, or quasi-public use, under any statute or by right of eminent domain or
purchase in lieu thereof, and a part thereof remains which is susceptible to
occupation hereunder, this Lease shall, as to the part so taken, terminate as of
the date title shall vest in the condemnor or purchaser, and the rent payable
hereunder shall be adjusted so that Tenant shall be required to pay for the
remainder of the Lease term only such portion of such rent as the value of the
part remaining after such taking bears to the value of the entire Premises prior
to such taking; but in such event Landlord shall have the option to terminate
this Lease as of the date when title to the part so taken vests in the condemnor
or purchaser. If all of the Premises, or such part thereof be taken so that
there does not remain a portion susceptible to occupation hereunder, this Lease
shall thereupon terminate. All compensation awarded upon any taking hereunder
shall belong exclusively to the Landlord. Notwithstanding any provision to the
contrary contained herein, Tenant shall have the right to make a separate claim
against the appropriate governmental authority for condemnation proceeds
allocable to the unamortized costs of the leasehold improvements made at the
cost of Tenant, the removal of Tenant's trade fixtures or removable personal
property, and relocation expenses if and only to the extent that such separate
claim does not diminish Landlord's condemnation award.
14. Advertisements and Signs. Tenant shall not place or maintain any sign,
advertisement, notice or other marking whether temporary or permanent on the
exterior or visible from the exterior of the Premises or the Property, without
the approval of the City of Palo Alto and the prior written consent of Landlord.
The Landlord's consent shall not be unreasonably withheld.
15. Entry by Landlord. Landlord and its agents shall have the right to
enter the Premises on reasonable prior written notice (except in an emergency)
to Tenant at the Premises, subject to Tenant's security requirements, only for
the purpose of inspecting the same, showing the premises to prospective
purchasers or others, posting notices of non- responsibility, or making repairs,
alterations or additions to any portion of the Building (but not to the
Premises, except when Landlord is required to do so by this Lease or by law). In
making any such entry, Landlord shall minimize its interference with Tenant's
use and occupancy to the extent reasonable under the circumstances surrounding
such entry. Landlord and its agents may, at any time within ninety (90) days
prior to the expiration of the lease term, place upon Premises "For Lease" signs
and, on reasonable written or oral notice to Tenant at the Premises only,
exhibit the Premises to prospective tenants.
16. Assignment and Subletting.
16.1 Landlord's Consent Required. Tenant shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Tenant's interest in the Lease or in the Premises,
without Landlord's prior written consent, which shall not be unreasonably
withheld or delayed. It shall be reasonable for Landlord to deny consent if (a)
the use to be made of the Premises by the proposed assignee or sublessee would
be prohibited by any other term of this Lease; or (b) the character, reputation
and financial condition of the proposed assignee or sublessee are not
satisfactory to Landlord.
LANDLORD INITIALS 12 TENANT INITIALS
16.2 Documentation. Prior to any assignment or sublease, Tenant shall
provide to Landlord the proposed assignee's or sublessee's name, address,
financial statements for the previous three (3) years, (if available) and copies
of all documents relating to Tenant's proposed assignment or sublease.
16.3 Terms and Conditions. In connection with any proposed assignment
or sublease, Tenant shall pay to Landlord all processing costs and attorneys'
fees incurred by Landlord (not to exceed One Thousand Dollars ($1,000)),
regardless of whether Landlord consents to such assignment or sublease . Each
assignment or sublease shall be in form satisfactory to Landlord and shall be
subject and subordinate to the provisions of this Lease. Once approved by
Landlord, such assignment or sublease shall not be modified without Landlord's
prior written consent. Each assignee or sublessee shall agree to perform all of
the obligations of Tenant hereunder and shall acknowledge that the termination
of this Lease shall, at Landlord's sole election, constitute a termination of
every such assignment or sublease. Notwithstanding any assignment or sublease,
Tenant for the then current lease term not including any option periods shall
remain primarily liable for all obligations and liabilities of Tenant under this
Lease. Landlord may accept Rent from a proposed assignee or sublessee without
waiving its right to withhold consent to a proposed assignment or subletting.
16.4 Landlord's Remedies. Any assignment or sublease without
Landlord's prior written consent where such consent is required shall be void,
and shall constitute a default under this Lease. The consent by Landlord to any
assignment or sublease shall not constitute a waiver of the provisions of this
Paragraph 16 with respect to any subsequent assignment or sublease.
17. Default.
17.1 Event of Default. The occurrence of any of the following events
(an "Event of Default") shall constitute a default and breach of this Lease by
Tenant:
(a) The failure by Tenant to make any payment of rent or any other
required payment, as and when due, and such failure shall not have been cured
within five (5) days after written notice thereof from Landlord;
(b) Tenant's failure to perform any other term, covenant or condition
contained in this Lease and such failure shall have continued for thirty (30)
days after written notice of such failure is given to Tenant; provided that
where such failure cannot reasonably be cured within said thirty (30) day
period, Tenant shall not be in default if Tenant commences such cure within said
thirty (30) day period and thereafter diligently pursues all reasonable efforts
to complete said cure until completion thereof;
(c) Tenant's assignment of its assets for the benefit of its
creditors; the filing of a petition by or against Tenant, where such action is
not dismissed within thirty (30) days, seeking adjudication or reorganization
under the Bankruptcy Code; the appointment of a receiver to take possession of,
or a levy by way of attachment or execution upon, substantially all of Tenant's
assets at the Premises.
(d) Tenant abandons the Premises.
17.2 Remedies. Upon any Event of Default, which is not cured, Landlord
shall have the following remedies, in addition to all other remedies now or
hereafter provided by law or equity:
LANDLORD INITIALS 13 TENANT INITIALS
(a) Landlord shall be entitled to keep this Lease in full force and
effect and Landlord may enforce all of its rights and remedies under this Lease,
including the right to recover rent and other sums as they become due, plus
interest at the highest rate then allowed by law, from the due date of each
installment of rent or other sum until paid; or
(b) Landlord may terminate Tenant's right to possession by giving
Tenant written notice of termination, whereupon this Lease and all of Tenant's
rights in the Premises shall terminate. Any termination under this paragraph
shall not release Tenant from the payment of any sum then due Landlord or from
any claim for damages or rent accrued.
In the event this Lease is terminated pursuant to this Paragraph 17.2(b),
Landlord may recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including but not limited to: (i) The cost of recovering
possession of the Premises; (ii) Expenses of reletting, including necessary
renovation and alteration of the Premises; (iii) Reasonable attorneys' fees, any
real estate commissions actually paid and that portion of any leasing commission
paid by Landlord applicable to the unexpired term of this Lease; (iv) The worth
at the time of award of the unpaid rent which had been earned at the time of
termination; (v) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss for the same period that Tenant
proves could have been reasonably avoided; (vi) The worth at the time of award
of the amount by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss for the same period that
Tenant proves could be reasonably avoided; and (vii) Any other amount necessary
to compensate Landlord for all the detriment proximately caused by Tenant's
failure to perform Tenant's obligations under this Lease, or which in the
ordinary course of things would be likely to result therefrom except for
utilities and other expenses that would cease with the closure of the restaurant
business.
The "worth at the time of award" of the amounts referred to in
subparagraphs (iv) and (v) of this Paragraph 17.2(b) shall be computed by
allowing interest at the maximum rate then permitted by law. The "worth at the
time of award" of the amount referred to in subparagraph (vi) of this Paragraph
17.2(b) 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%). The term "rent" as used in this paragraph shall include all sums required
to be paid by Tenant to Landlord pursuant to the terms of this Lease.
17.3 No Relief From Forfeiture After Default. Tenant waives all rights
of redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, and under any other present or future law, in the event
Tenant is evicted or Landlord otherwise lawfully takes possession of the
Premises by reason of any Event of Default.
17.4 Landlord's Right to Perform Tenant's Obligations. If Tenant shall
at any time fail to perform any obligation required of Tenant hereunder, and
provided Tenant has been provided a thirty (30) day notice from Landlord
concerning such obligation, then Landlord may, at its option, perform such
obligation to the extent Landlord deems desirable, and may pay any and all
expenses incidental thereto and employ counsel. No such action by Landlord shall
be deemed a waiver by Landlord of any of Landlord's rights or remedies, or a
release of Tenant from performance of such obligation. All sums so paid by
Landlord shall be due and payable by Tenant to Landlord on the day immediately
following Landlord's payment thereof. Landlord shall have the same rights and
remedies for the nonpayment of any such sums as for default by Tenant in the
payment of rent.
17.5 Remedies Not Exclusive. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies available.
LANDLORD INITIALS 14 TENANT INITIALS
17.6 Termination. Surrender and Abandonment. No act or conduct of
Landlord, including, without limitation, efforts to relet the Premises, an
action in unlawful detainer or service of notice upon Tenant or surrender of
possession by Tenant pursuant to such notice or action, shall extinguish the
liability of Tenant to pay rent or other sums due hereunder or terminate this
Lease, unless Landlord notifies Tenant in writing of Landlord's election to
terminate this Lease. No act or conduct of Landlord, including the acceptance of
the keys to the Premises, other than a written acknowledgment of acceptance of
surrender signed by Landlord, shall be deemed to be or constitute an acceptance
of the surrender of the Premises by Tenant prior to the expiration of the Lease
term. The surrender of this Lease by Tenant, voluntarily or otherwise, shall, at
Landlord's option, operate as an assignment to Landlord of any and all existing
assignments and subleases, or Landlord may elect to terminate any or all of such
assignments and subleases by notifying the assignees and subleases of its
election within fifteen (15) days after such surrender.
17.7 Landlord's Default. In the event of any failure by Landlord to
perform any of Landlord's obligations under this Lease, Tenant will give
Landlord written notice specifying such default with particularity, and Landlord
shall thereupon have thirty (30) days in which to cure any such default. Unless
and until Landlord fails to so cure any default after such notice, Tenant shall
not have any remedy or cause of action by reason thereof. If a default by
Landlord remains uncured after the expiration of the thirty (30) day period
(except for obligations of Landlord which reasonably require greater than thirty
(30) days to fulfill, and provided Landlord has initiated performance of any
such obligation within such thirty (30) day period and has thereafter diligently
acted to fulfill any such obligation), then Tenant shall have the right, as
Tenant's sole and exclusive remedies, to either (i) bring an action for damages.
All obligations of Landlord hereunder will be construed as covenants, not
conditions; and all such obligations will be binding upon Landlord only during
the period of Landlord's ownership of the building and not thereafter.
18. Effect of Conveyance. The term "Landlord" as used in this Lease, means
only the current owner(s) of the Building so that in the event of any sale or
other transfer of the Building, the transferor shall be deemed to be relieved of
all obligations of the Landlord hereunder from and after the date of such sale,
and the transferee shall be deemed to have assumed and agreed to perform any and
all obligations of Landlord hereunder arising from and after said date.
19. Instruments Required by Lender. Upon written request from Landlord,
Tenant agrees to forthwith execute and deliver to Landlord, such instruments,
including a current statement of Tenant's financial condition, as may be
reasonably required by any mortgagee or holder of a deed of trust or other
encumbrance on the Property.
20. Tenant's Estoppel Certificate. Tenant shall, from time to time, within
ten (10) days after receipt by Tenant from Landlord of written request therefor,
deliver a duly executed and acknowledged and factually accurate estoppel
certificate to Landlord in a form reasonably satisfactory to Landlord and
Tenant.
21. Subordination Attornment and Quiet Enjoyment. Tenant agrees that this
Lease may, at the option of Landlord, be subject and subordinate to any
mortgage, deed of trust, any other instrument of security, or ground lease which
has been or shall be placed on the Property, provided, so long as tenant is not
in default under this Lease, no foreclosure or other right or remedy exercised
by the lender holding such security shall terminate this Lease. This
subordination is hereby made effective without any further act of Tenant. Tenant
shall, at any time hereafter, on demand, execute any instruments, releases, or
other documents that may be required by any mortgagee, mortgagor, or trustor or
beneficiary under any security instrument for the purpose of subjecting and
subordinating this lease to the lien of such instrument, provided, so long as
tenant is not in default under this Lease, no foreclosure or other right or
remedy exercised by the mortgagee, mortgagor, or trustor or beneficiary shall
terminate this
LANDLORD INITIALS 15 TENANT INITIALS
Lease. Tenant shall attorn any third party purchasing or otherwise acquiring the
Premises at any sale or other proceeding or pursuant to the exercise of any
rights, powers or remedies under any instruments of security or ground leases
now or hereafter encumbering all or any part of the Premises, as if such third
party had been named as Landlord under this Lease.
22. Notices. All notices, demands or requests to be given to Tenant or
Landlord shall be in writing, delivered personally or by commercial courier or
by United States mail, postage prepaid, certified return receipt requested and
addressed (a) to Tenant at the Premises, or (b) to Landlord at 435 Tasso Street,
Suite 300, Palo Alto, CA 94301 or any subsequent address as it may from time to
time designate to Tenant in writing. Each such notice, demand or request shall
be deemed to have been received by Tenant or Landlord upon actual delivery.
23. No Accord and Satisfaction. No payment by Tenant, or receipt by
Landlord, of an amount which is less than the full amount of Base Rent and all
other sums payable by Tenant hereunder at such time shall be deemed to be other
than on account of (a) the earliest of such other sums due and payable, and
thereafter (b) to the earliest Base Rent or other sum due and payable hereunder.
No endorsement or statement on any check or any letter accompanying any payment
of Base Rent or such other sums shall be deemed an accord and satisfaction, and
Landlord may accept any such check or payment without prejudice to Landlord's
right to receive payment of the balance of such rent and/or other sums, or
Landlord's right to pursue Landlord's remedies.
24. Attorneys' Fees. If any action or proceeding at law or in equity, or an
arbitration proceeding (collectively, an "Action"), shall be brought to recover
any rent under this Lease, or for or on account of any breach of or to enforce
or interpret any of the terms, covenants, or conditions of this Lease, or for
the recovery of possession of the Premises, the "Prevailing Party" shall be
entitled to recover from the other party as a part of such action or in a
separate action brought for that purpose, its reasonable attorneys' fees and
costs and expenses incurred in connection with the prosecution or defense of
such action. 'prevailing Party" within the meaning of this paragraph shall
include, without limitation, a party who brings an action against the other
after the other is in breach or degault, if such action is dismissed upon the
other's payment of the sums alledgedly due or upon the performance of the
covenants alleged breached, or if the commencing such action or
proceeding obtains substantially the relief sought by it in such action, whether
or not such action proceeds to a final judgment or determination. In addition,
each party agrees to reimburse the other party for all of such other party's
legal fees and expenses incurred in the enforcement and protection of all of
such other party's rights under the Lease and applicable laws, whether or not an
action has been brought, including reasonable attorneys' fees without limitation
and costs incurred in any out-of-court settlement or in connection with the
filing of a bankruptcy petition by or against the first party.
25. Holding Over. This Lease shall terminate without further notice at the
expiration of the lease term. Any holding over after the expiration of the lease
term, with the prior written approval of Landlord, shall be construed to be a
tenancy from month to month, at a monthly rental of one hundred ten percent
(110%) of the last applicable Base Rent, and shall otherwise be on the terms and
conditions herein specified. If however, Landlord does not consent to continued
occupancy by the Tenant after the lease termination date with prior written
approval, such hold over shall be construed to be a tenancy from month to month,
at a monthly rental of one hundred fifty percent (150%) of the last applicable
Base Rent, and shall otherwise be on the terms and conditions herein specified
26. Landlord Liability. Tenant agrees that if Landlord shall fail to
perform any covenant or obligation on its part to be performed, and as a
consequence thereof, or if on any other claim by Tenant concerning the Premises
or this Lease, Tenant shall recover a money judgment against Landlord, then such
judgment shall be satisfied only out of Landlord's estate in the Property, and
Landlord shall have no personal or further liability whatsoever with respect to
any such default or judgment.
LANDLORD INITIALS 16 TENANT INITIALS
27. General Provisions.
27.1 Entire Agreement. This instrument, together with the exhibits
attached hereto, constitutes the entire agreement made between the parties
hereto and may not be modified orally or in any manner other than by an
agreement in writing signed by all of the parties hereto or their respective
successors in interest.
27.2 Timeliness. Time is of the essence with respect to the
performance of each and every provision of this Lease in which time of
performance is a factor. Whenever the provisions of this Lease provide that the
consent of the party must be obtained, except as otherwise specifically
provided, such party agrees to act reasonably and in a timely manner in
determining whether to grant or withhold its consent.
27.3 Captions. The captions of the numbered paragraphs of this Lease
are inserted solely for the convenience of the parties hereto and shall have no
effect upon the construction or interpretation of any part hereof.
27.4 California Law. This Lease shall be construed and interpreted in
accordance with the laws of the State of California.
27.5 Partial Invalidity. If any provision of this Lease is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall nonetheless continue in full force and
effect.
27.6 No Warranties. Any agreements, warranties or representations not
expressly contained herein shall not bind either Landlord or Tenant.
27.7 Joint and Several Liability. If Landlord or Tenant is more than
one person or entity, each such person or entity shall be jointly and severally
liable under the Lease.
27.8 Binding on Successors. The covenants and conditions herein
contained, subject to the provisions as to assignment, shall apply to and be
binding upon the parties hereto and their respective successors in interest.
27.9 Authority. The parties hereby represent and warrant that they
have all necessary power and authority to execute and deliver this Lease on
behalf of Landlord and Tenant, respectively.
27.10 No Light. Air or View Easement. Any diminution or shutting off
of light, air or view by any structure which may be erected on lands adjacent to
or in the vicinity of the Building shall in no way affect this Lease, entitle
Tenant to any reduction of rent or impose any liability upon Landlord.
27.11 Brokers. Landlord agrees to pay a brokerage commission to
Premier Properties Management, Inc., a California corporation and Spallino Reid
under separate agreement. Neither Landlord nor Tenant have engaged any other
broker, finder or agent. Each party hereby agrees to indemnify and hold the
other harmless from any claims for commissions arising from its dealings with
any other broker or agent.
27.12 Force Majeure. If either party hereto shall be delayed or
prevented from the performance of any act required hereunder by reason of acts
of God, strikes, inability to procure
LANDLORD INITIALS 17 TENANT INITIALS
materials, restrictive governmental laws or regulations, delay by the other
party hereto or other cause without fault and beyond the control of the party
obligated to perform (financial inability excepted), then upon notice to the
other party, the performance of such act shall be excused for the period of the
delay and the period for the performance of such act shall be extended for a
period equal to the period of such delay; provided, however, the party so
delayed or prevented from performing shall exercise good faith efforts to remedy
any such cause of delay or cause preventing performance, and nothing in this
Section shall excuse Tenant from the prompt payment of any rental or other
charges required of Tenant except as may be expressly provided elsewhere in this
Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the
dates specified below immediately adjacent to their respective signatures.
Delivery of this Lease to Landlord, duly executed by Tenant, constitutes an
offer by Tenant to lease the Premises as herein set forth, and under no
circumstances shall such delivery be deemed to create an option or reservation
to lease the Premises for the benefit of Tenant. This Lease shall only become
effective and binding upon execution of this Lease by Landlord and delivery of a
signed copy to Tenant.
Landlord: Mercury Property Investments, LLC
By:
Date:
Tenant: WebTV Networks
By:
Date: / 6 . 1996
LANDLORD INITIALS: TENANT INITIALS