Office Lease - South Beach Development Company

OFFICE LEASE
BASIC LEASE INFORMATION


Lease Date: September 1, 1997


Landlord: SOUTH BEACH DEVELOPMENT COMPANY,
a California general partnership


Address of Landlord. 501 Second Street, Suite 214
San Francisco, Ca 94107


Tenant: The Virtual Mall, Inc., California corporation
dba Greet Street


Address of Tenant: 123 Townsend Street, 3rd Floor
San Francisco, Ca 94107


Building: 501 Second Street, San Francisco, California


SECTION 1.1 Floor(s) and/or Suite(s): Suite 114
Rentable Area of Premises: 8,553 square feet


SECTION 2.1 Commencement Date: October 1, 1997
Expiration Date: September 30, 1999


SECTION 3.1 Monthly Rent, 19ee Exhibits B, E and F


SECTION 3.2 Advance Rent S 17,106.00


SECTION 3.5 Security Deposit S 18,175.13


SECTION 4.1(a) Tenant's Percentage Share' 4.53%


SECTION 4.1(b) Base Year 1998 calendar year


SECTION 5.1 Tenants Share of Improvement Costs: See Exhibit C


SECTION 17.2 Insurance: $1,500,000


SECTION 24.1 Parking Spaces: five(5) spaces in the Garage and
zero spaces in the Federal Street
Parking Area


SECTION 24.2 Rentable Area of Storage Space- N/A


SECTION 26.14 Broker General Atlantic Properties, Inc.


EXHIBITS Exhibit A-Floor Plans
ATTACHED: Exhibit B-Monthly Premises Rent
Exhibit C-Tenant Improvements
Exhibit D-Rules and Regulations
Exhibit E-Monthly Parking Rent
Exhibit F-Monthly Storage Rent


ADDENDUMS
ATTACHED: None


The foregoing Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective information hereinabove set forth and shall be construed to incorporate all of the terms provided under the particular Lease section pertaining to such information. In the event of any conflict between any Basic Lease Information and the Lease, the latter shall control.


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STANDARD OFFICE LEASE


THIS LEASE is made and entered into this 1st day of September, 1997 by and between SOUTH BEACH DEVELOPMENT COMPANY, a California general partnership (herein called "landlord"), and The Virtual Mall, Inc., a California corporation, dba Greet Street (herein called "Tenant").


WITNESSETH:


Landlord and Tenant hereby covenant and agree as follows:


1. PREMISES


1.1 Upon and subject to the terms, covenants, and conditions hereinafter set forth, Landlord leases to Tenant and Tenant hires from Landlord, those premises (herein called the "Premises") in the building commonly known as 501 Second Street, San Francisco, California (the "Building"), comprising the area substantially as shown on the floor plan or plans that have been initialed by Landlord and Tenant and are attached hereto as Exhibit A. The Premises contain the rentable area specified in the Basic Lease Information and are located on the floor(s) of the Building that is (are) specified in the Basic Lease Information. The Building contains seven (7) occupied floors ("Floors 1-7") plus one floor of storage and auxiliary use (the "Terrace") and one floor of parking (the "Garage"). Additional parking is located along the south side of the Building adjacent to Federal Street (the "Federal Street Parking Area"). The Building the land upon which the Building stands, together with utilities, facilities, drives walkways and other amenities appurtenant to or servicing the Building are herein sometimes collectively called the "Real Property." The Real Property and certain adjacent parcels comprise the "Complex." Covenants (the "Complex Covenants") dealing with various shared facilities and services as well as other matters encumber the Real Property and the other Is in the Complex.


1.2 The purpose of Exhibit A is to show the approximate location of the Premises in the Building only, and such Exhibit is not meant to constitute an agreement as to the construction of the Premises, the rentable area thereof, or the specific location of the common area or the elements thereof or of the accessways to the Premises or the Building.


2. TERM


2.1 The Premises are leased for a term (herein called the "Term") which commences on the "Commencement Date" and terminates on the "Expiration Date," which dates are collectively specified in the Basic Lease Information, unless the Term shall sooner terminate as hereinafter provided. Notwithstanding the foregoing, if Landlord, for any reason beyond its reasonable control, is unable to deliver possession of the Premises to Tenant on or prior to the Commencement Date set forth in the Basic Lease Information, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, but in that event, Rent and Additional Charges (as defined in Article 3) shall be abated for the period of time between the Commencement Date set forth in the Basic Lease Information and the time when Landlord can deliver possession as provided in Section 5 below. No delay in delivery of possession shall operate to extend the Expiration Date beyond the date specified in the Basic Lease Information.


2.2 In the event that Tenant takes occupancy of the Premises prior to the Commencement Date, Tenant's obligations, including the obligation to pay rent, under this Lease shall commence upon such occupancy, and shall continue until the Expiration Date. Notwithstanding the above, following execution of this Lease, Tenant shall have access to the Premises for purposes of installing furniture, cabling and other equipment, provided it does not interfere with the construction of the Tenant Improvements at the Premises. Such access shall not obligate Tenant to pay any rent under the Lease.


2.3 Notwithstanding anything to the contrary herein contained, in the event that possession of the Premises has not been delivered to Tenant within two (2) months after the Commencement Date, then this Lease shall be automatically terminated without any further act of either party hereto and both parties hereto shall be released from all obligations hereunder, and all prepaid rents and deposits shall be returned to Tenant.


3. RENT, ADDITIONAL CHARGES AND SECURITY DEPOSIT


3.1 Tenant shall pay to Landlord during the Term the monthly rent specified in Exhibits B, E and F (collectively referred to herein as "Rent"), which sums shall be payable by Tenant on or before the first day of each month, in advance, at the address specified for Landlord in the Basic Lease Information, or such other place as Landlord shall designate, without any prior demand therefor and without any deductions or setoff whatsoever. If the Commencement Date should occur on a day other than the first day of a calendar month, or the Expiration Date should occur on a day other than the last day of a calendar month, then the rental for such fractional month shall be prorated upon a daily basis based upon a thirty (30) day calendar month.


3.2 Upon the execution hereof, Tenant shall pay to Landlord the sum of "Advance Rent" specified in the Basic Lease Information. Such Advance Rent shall be applied to the first Rent due pursuant to Section 3.1.


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3.3 Tenant shall pay to Landlord all charges and other amounts specified in this Lease (herein called "Additional Charges"), including, without limitation, any increase in the Rent resulting from the provisions of Article 4 hereof. All such amounts and charges shall be payable to Landlord at the place where the Rent is payable. Landlord shall have the same remedies for a default in the payment of Additional Charges as for a default in the payment of Rent.


3.4 If Tenant shall fail to pay any Rent or Additional Charges within ten (10) days after the date same are due and payable, such unpaid amounts shall be subject to a late payment charge equal to five percent (5%) of such unpaid amounts in each instance to cover Landlord's additional administrative costs resulting from Tenant's failure. Such late payment charge shall be paid to Landlord together with such unpaid amounts. Any payment to Landlord following the service upon Tenant a three (3) day notice to pay Rent or quit shall be in the form of a certified or cashier's check.


3.5 By execution of this Lease, Landlord acknowledges receipt of Tenant's security deposit (the "Security Deposit") in the amount set forth in the Basic Lease Information. The Security Deposit shall be held by Landlord as security for Tenant's faithful performance of all terms, covenants and conditions of this Lease. Tenant agrees that Landlord may, without waiving any of Landlord's other rights and remedies under this Lease upon the occurrence of any of the events of default described in Article 16 hereof, apply the Security Deposit to remedy any failure by Tenant to repair or maintain the Premises or to perform any other terms, covenants or conditions contained herein. Landlord will within thirty (30) days following the termination hereof return said sum to Tenant or the last permitted assignee of Tenant's interest hereunder, less any amounts retained by Landlord to cure any default by Tenant. Should Landlord use any portion of the Security Deposit to cure any default by Tenant hereunder, Tenant shall within five (5) days after written demand therefor deposit cash with Landlord sufficient to restore the Security Deposit to its original amount. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest thereon.


4. TENANT'S SHARE OF INCREASED COSTS


4.1 For purposes of this Lease, the following terms shall have the meanings hereinafter set forth


(a) "Tenants Percentage Sham" shall mean the percentage figure so specified in the Basic Lease Information. Tenant's Percentage Share has been computed by dividing the rentable area of the Premises by the total rentable area of Floor 1-7 and multiplying the resulting quotient by 100. In the event that either the rentable area of the Premises or the total rentable area of Floors 1-7 is changed, Tenants Percentage Share will be appropriately adjusted


(b) "Base Year" shall mean the twelve-month period commencing on January I of the year identified as the Base Year in, the Basic Lease Information.


(c) "Real Estate Taxes" shall mean all taxes, assessments and charges levied upon or with respect to the Real Property or any personal property of Landlord used in the operation thereof or Landlord's interest in the Real Property or such personal property. Real Estate Taxes shall include, without limitation, all general real property taxes and general and special assessments charges, fees or assessments for transit, housing, police, fire or other governmental services or purported benefits to the Real Property, service payments in lieu of taxes, and any tax, fee or excise on the act of entering into this Leas or any other lease of space in the Building, or on the use or occupancy of the Real Property or any part thereof, or on the rent payable under any lease or in connection with the business of renting space in the Building, that are now or hereafter levied or assessed against Landlord by the United States of America, the State of California, or any political subdivision, public corporation, district or other political or public entity, and shall also include any other tax, fee or other excise, however described, that may be levied or assessed as a substitute for, in whole or in part, any other Real Estate Taxes, whether or not now customary or in the contemplation of the parties on the date of this Lease. Real Estate Taxes shall not include late charges or interest on Real Estate Taxes, franchise, transfer, inheritance, capital stock or income taxes unless, due to a change in the method of taxation, any of such taxes is levied or assessed against Landlord as a substitute for, any other tax that would otherwise constitute a Real Estate Tax. Real Estate Taxes shall also include reasonable legal fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Estate Taxes.


4.4 As soon after the close of each calendar year as practicable, landlord shall deliver to Tenant a statement of the actual Operating Expenses for such calendar year. If the Actual Operating Expenses are less than the estimated payments for such calendar year previously made by Tenant and Tenant is not in default in the performance or observance of any of the terms, covenants or conditions of this Lease at the time such statement is delivered, Landlord shall credit the excess to the next payment of Rent falling due under this Lease. If the Actual Operating Expenses are more than the estimated payments for such calendar year previously made by Tenant, Tenant shall pay the deficiency to Landlord within thirty (30) days after delivery of such statement The respective obligations of Landlord and Tenant under this Section 4.4 shall survive the expiration or other termination of the term of this Lease, and if the term of this 1,ease shall. expire or terminate on a day other ban the last day of the calendar year, the adjustment in Rent pursuant to this Section 4.4 for the calendar year in which the term expires or otherwise terminates shall be prorated in the proportion that the number of days in such year preceding expiration or termination of the lease bears to the number 365.


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5. CONSTRUCTION IN THE PREMISES


5.1 Prior to the Commencement Date, Landlord will substantially complete work in the Premises as set forth in Exhibit C attached hereto and made a part hereof (such work being herein called "Tenant Improvements"). Substantial completion and delivery of possession of the Premises to Tenant shall be deemed to have occurred when Landlord delivers to Tenant (i) the Premises with all Tenant Improvements completed except for minor items of the type typically found on an architect's punchlist and (ii) a temporary certificate of occupancy or similar governmental approval. It is agreed that by occupying the Premises, Tenant acknowledges that the Premises are in the condition called for hereunder, subject to normal punchlist items specified by Tenant to landlord in writing within ten ( 10) days after the date of such occupancy (which Landlord will complete within ten (10) days of receipt) and subject to Landlord's warranty that the Tenant Improvements will be free of defects in materials and installation for a period of one (1) year after substantial completion. The cost of Tenant Improvements shall be paid by Landlord and Tenant as set forth in Exhibit C.


5.2 Landlord reserves the right, at any time and from time to time, to make alterations, additions, repairs or improvements to or in or to decrease the size or area of all or any part of the Building and the Complex, the fixtures and equipment therein and the arcades, plazas, and walkways outside the Building, including without limitation the heating, ventilating, air conditioning plumbing, electrical, fire protection, life safety, security, and other mechanical, electrical, and communications systems of the Building (herein called the "Building Systems"), and the common areas in all other parts of the Building and the Complex, and to change the arrangement and/or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, toilets and other public parts of the Building and the Complex; provided, however, that any such alterations or additions shall not materially diminish the quality or quantity of services being provided to the Premises or adversely affect the functional utilization of the Premises.


6. USE AND COMPLIANCE WITH LAW


6.1 Tenant shall use the Premises for general office purposes and shall not use or permit the premises to be used for any other purpose without the prior written consent of Landlord. Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything therein which will in any way increase the existing rate of or affect any fire or other insurance upon the Building or any of its contents, or cause cancellation of any insurance policy covering said Building or any part thereof of any of its contents. 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 other tenants or occupants of the Building or injure or annoy them or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer to be committed any waste in or upon the Premises.


6.2 Tenant, at Tenant's cost and expense, shall comply with (a) all laws, orders, regulations, and directions of federal, state, county and municipal authorities that impose any duty upon Tenant with respect to Tenant's particular use of the Premises or the use or occupancy thereof, and (b) all reciprocal easement agreements and declarations of conditions, covenants, and restrictions that are recorded against and affect the Building or the Premises; provided, however, that Tenant shall not be required to make any modifications to the Premises in order to comply unless such modifications to the Premises shall be necessitated or occasioned, in whole or in part, by the misconduct or negligence of Tenant or any person claiming through or under Tenant, or any of their servants, employees contractors, agents, visitors or licensees. Any work or installations made or performed by or on behalf of Tenant or any person claiming through or under Tenant pursuant to the provisions of this Article 6 shall be made in conformity with, and subject to the provisions of, Section 8.2 hereof.


7. ALTERATIONS AND ADDITIONS


7.1 Subsequent to the completion of improvements to be performed as outlined in Exhibit C, Tenant shall not make or suffer to be made any alterations, additions or improvements (collectively, "Alterations"), to or of the Premises or any part thereof, or attach any fixtures or equipment thereto, without first obtaining landlord's written consent which consent shall not be unreasonably withheld. Any Alterations to the Premises consented to by Landlord shall be made by Landlord or an agent or contractor designated by Landlord for Tenants account and Tenant shall reimburse Landlord for the cost thereof (including a reasonable charge for Landlord's overhead) within ten (10) days after receipt of a bill therefor. All Alterations shall immediately become Landlord's property and, at the end of the term hereof, shall remain on the Premises without compensation to Tenant unless Landlord elects by notice to Tenant to have Tenant remove the same, in which event Tenant shall promptly, restore the Premises to their condition prior to the installation of such Alterations.


7.2 All furniture, furnishings, and articles of movable personal property installed in the Premises by or for the account of Tenant, without expense to Landlord, and which can be removed without structural or other material damage to the Building (all of which are herein called "Tenant's Property") shall be and remain the property of Tenant and may be removed by it at any time during the Term; provided, however, that any equipment or other property for which Landlord has granted any allowance or credit to Tenant or which is a replacement for items originally provided by Landlord at Landlord's expense shall not be considered Tenant's Property. Upon the expiration or earlier termination of this Lease, Tenant shall remove from the Premises all of Tenant's Property except such items as the parties shall have agreed are to remain and become the property of Landlord and Tenant shall repair or pay the costs of repairing any damage to the Premises or to the Building resulting from such


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removal. Tenants obligations under this Section 7.2 shall survive the termination of this Lease. Any items of Tenant's Property that remain in the Premises after the expiration or earlier termination of this Lease may, at the option of Landlord, be deemed abandoned and in such case may either be retained by Landlord as its property or be disposed of without accountability, at Tenant's expense in such manner as Landlord may see fit.


8. REPAIRS


8.1 Tenant shall, at all times during the term hereof and at Tenant's sole cost and expense, keep the Premises and every part thereof in good condition and repair, ordinary wear and tear excepted, and except as is Landlord's obligation pursuant to Section 8.2.


Tenant shall at the end of the term hereof surrender to Landlord the
Premises and all Alterations in the same condition as when received,
ordinary wear and tear and damage by fire, earthquake, act of God or the
elements excepted. Landlord has no obligation and has made no promise to
alter, remodel, improve, repair, decorate or paint the Premises or any
part thereof, except as specifically set forth elsewhere in this Law.


8.2 Landlord shall repair and maintain the structural portions of the Building, including the plumbing, heating, air conditioning, ventilating and electrical systems, installed or furnished by Landlord, unless the necessity for such maintenance and repairs is in any way caused by the neglect, fault or omission of any duty by Tenant, its agents, servants, employees or invitees, in which case Tenant shall pay to Landlord the reasonable cost of such maintenance and repairs, subject to Section 17.4 hereof. Landlord shall not be liable for any failure to make any such repairs or to perform any maintenance unless Landlord receives written notice of the need for such repairs or maintenance from Tenant and fails to make such repairs or perform such maintenance for a reasonable period of time following such notice by Tenant. There shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant's business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Premises or in or to fixtures, appurtenances and/or equipment therein, provided such repairs are being diligently pursued by Landlord.


9. LIENS


9.1 Tenant shall keep the Premises free from any liens arising out of any work performed, material furnished, or obligations incurred by or for Tenant or any person or entity claiming through or under Tenant. In the event that Tenant shall not, within ten (10) days after the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right but not the obligation to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be considered Additional Charges and shall be payable to it by Tenant on demand. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or that Landlord shall deem proper, for the protection of Landlord, the Premises, the Building, and any other party having an interest therein, from mechanics' and materialmen's liens, and Tenant shall give to Landlord at least ten (10) business days' prior notice of commencement of any construction on the Premises.


10. SUBORDINATION AND ATTORNMENT


10.1 Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination Tenant agrees that this, Lease shall be subject and subordinate at all times to (a) all ground leases or underlying leases that may now exist or hereafter be executed affecting the Building or the Real Property or both, and (b) the lien of any mortgage or deed of trust that may now exist or hereafter be executed in any amount for which the Building, the Real Property, ground leases or underlying leases, or Landlord's interest or estate in any of said items is specified as security. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. In the event that any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination of any ground lease, underlying lease or Hen to this Lease, attorn to and become the Tenant of the successor in interest to Landlord; provided that such successor in interest shall recognize all of Tenant's rights hereunder. Tenant covenants and agrees to execute and deliver, within ten (10) days of demand by Landlord and in the form reasonably requested by landlord, any additional documents evidencing the priority or subordination of this Lease with respect to any such ground leases or underlying leases or the lien of any such mortgage or deed of trust.


11. INABILITY TO PERFORM


11.1 If Landlord is unable to perform, or is delayed in performing, any construction, installations, decorations, repairs, alterations, additions or improvements, under this Lease, or is unable to fulfill or is delayed in fulfilling any of Landlord's other obligations under this Lease, including the furnishing of utilities or other services pursuant to Article 15, by reason of acts of God, governmental actions, accidents, breakage, repairs, strikes, lockouts, other labor disputes, limitation, curtailment, rationing or restrictions on the use of utilities or materials, or any other reason beyond Landlord's reasonable control, then no


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such inability or delay by Landlord shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of Rent or Additional Charges, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its agents by reason of inconvenience, annoyance, interruption, injury or loss to or interference with Tenant's business or use and occupancy or quiet enjoyment of the Premises or any loss or damage occasioned thereby.


12. DAMAGE OR DESTRUCTION


12.1 If (i) the Premises are damaged by fire or other casualty for which insurance coverage is available to Landlord, (h) insurance proceeds in an amount sufficient to repair such casualty are made available to Landlord and (iii) in Landlord's judgment such repairs can be completed within one hundred eighty (180) days after the date of such damage, then Landlord shall repair such damage and this Lease shall remain in full force and effect except that Tenant shall be entitled to a reduction of Rent and Additional Charges while such repairs are being made in the proportion that the rentable area of the Premises rendered untenantable (as pertains to Tenant's specific business in particular) by such damage bears to the total rentable area of the Premises. Within thirty (30) days after the date of such damage, Landlord shall notify Tenant whether or not such repairs can be completed within one hundred eighty (180) days after the date of such damage, and Landlord's determination shall be binding on Tenant. If (x) such damage is caused by an uninsured casualty, or (y) such damage is caused by an insured casualty for which insurance proceeds sufficient to repair such damage are not made available to Landlord and/or W such repairs cannot be made within one hundred eighty (ISO) days after the date of such ...