MISSION HERITAGE
OFFICE LEASE
between
McMorgan Institutional Real Estate Fund I, LLC
LANDLORD,
and
Auxilio, Inc., a Nevada Corporation
TENANT
TABLE OF CONTENTS
Page
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ARTICLE 1: PREMISES.........................................................1
1.1 Lease of Premises.....................................1
1.2 Basic Terms...........................................1
1.3 Tenant's Acceptance of Premises.......................2
1.4 Rights Reserved to Landlord...........................2
ARTICLE 2: LEASE TERM.......................................................2
2.1 Commencement Date.....................................2
2.2 Expiration Date.......................................3
2.3 Possession............................................3
2.4 Delays Caused By Tenant...............................3
ARTICLE 3: RENT.............................................................3
3.1 Base Rent.............................................3
3.2 Additional Rent.......................................4
3.3 Determination and Payment of Additional Rent..........4
3.4 Utilities.............................................6
3.5 Late Charges..........................................7
3.6 Interest on Past Due Obligations......................7
3.8 Taxes to be paid by Tenant............................7
ARTICLE 4: SECURITY DEPOSIT.................................................7
4.1 Security Deposit......................................7
4.2 Security Deposit increases............................7
ARTICLE 5: INDEMNITY; LEGAL COSTS...........................................7
5.1 Indemnity.............................................8
5.2 Legal Proceedings.....................................8
5.3 Landlord's Consent....................................8
ARTICLE 6: USE OF PROPERTY..................................................8
6.1 Permitted Use.........................................8
6.2 Restrictions on Use...................................8
6.3 Compliance with Governmental and Insurance
Regulations; Assumption of Risk of Noncompliance......9
6.4 Landlord's Access.....................................9
ARTICLE 7: MAINTENANCE, REPAIRS, AND ALTERATIONS............................9
7.1 Tenant's Obligations..................................9
7.2 Landlord's Obligations................................9
7.3 Alterations, Additions, and Improvements.............10
7.4 Condition Upon Termination...........................10
ARTICLE 8: DAMAGE OR DESTRUCTION...........................................11
8.1 Damage to Premises or Building.......................11
8.2 Abatement of Rent....................................11
ARTICLE 9: CONDEMNATION....................................................11
ARTICLE 10: ASSIGNMENT AND SUBLETTING......................................12
10.1 Landlord's Consent Required..........................12
10.2 Tenant Affiliate.....................................12
10.3 No Release of Tenant.................................12
10.4. Procedures for Requesting Authorization..............12
10.5 Landlord's Option....................................12
10.6 Conditions to Consent................................13
(a) Standards of Reasonableness....................13
(b) Further Transfers..............................13
(c) Rent or Other Premiums.........................13
10.7 Assignment of Sublease Rents.........................13
10.8 Processing Costs and Fees............................13
10.9 Prohibited Transfers.................................13
ARTICLE 11: DEFAULTS AND REMEDIES..........................................14
11.1 Covenants and Conditions.............................14
11.2 Defaults.............................................14
11.3 Remedies.............................................14
11.4 Landlord's Cure of Tenant's Default..................16
ARTICLE 12: PROTECTION OF LENDERS..........................................16
12.1 Subordination........................................16
12.2 Attornment...........................................16
12.3 Signing of Documents.................................16
12.4 Estoppel Certificates................................16
12.5 Tenant's Financial Condition.........................16
ARTICLE 13: INSURANCE; INDEMNITY; WAIVERS...................................17
13.1 Liability Insurance..................................17
13.2 Property Insurance: Landlord.........................17
13.3 Property Insurance: Tenant..........................17
13.4 Insurance Policies...................................17
13.5 Waiver of Subrogation................................17
ARTICLE 14: MISCELLANEOUS PROVISIONS.......................................18
14.1 Landlord's Liability; Certain Duties.................18
14.2 Relocation Right.....................................18
14.3 Modification of the Building.........................18
14.4 Parking in the Building..............................19
14.5 Severability.........................................19
14.6 Interpretation.......................................19
14.7 Incorporation of Prior Agreement; Modifications......19
14.8 Notices..............................................19
14.9 Waivers..............................................19
14.10 No Recordation.......................................19
14.11 Binding Effect; Choice of Law........................19
14.12 Corporate Authority; Partnership Authority...........19
14.13 Joint and Several Liability..........................20
14.14 Force Majeure........................................20
14.15 Rules and Regulations................................20
14.16 Plurals and Genders. ...............................20
14.17 "Persons" Defined....................................20
14.18 Covenants and Agreements--Time of the Essence........20
14.19 Severability.........................................20
14.20 Counterparts.........................................20
14.21 Applicable Law and Venue.............................20
14.22 Incorporation of Exhibits............................20
14.23 Building Name Change.................................20
14.24 Multiple Parties.....................................20
14.25 No Violation of Other Agreements.....................21
14.26 Confidentiality......................................21
14.27 Modification of Lease................................21
14.28 Transportation Management............................21
14.29 Quiet Enjoyment......................................21
14.30 Security.............................................21
ARTICLE 15: BROKERS........................................................21
15.1 Indemnity............................................21
15.2 Broker's Commission..................................21
ARTICLE 16: ADDITIONAL PROVISIONS..........................................22
ADDENDUM
EXHIBIT A Outline of Premises
EXHIBIT B Notice of Lease Commencement
EXHIBIT C Rules and Regulations
EXHIBIT D Work Letter
OFFICE LEASE
THIS OFFICE LEASE ("Lease") is made and entered into as of August 5,
2004, by and between McMorgan Institutional Real Estate Fund I, LLC,
("Landlord"), and Auxilio, Inc., a Nevada Corporation ("Tenant").
ARTICLE 1: PREMISES
1.1 Lease of Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord those certain premises (the "Premises") which
Premises are situated in that certain building (the "Building") located at 00000
Xxx Xxxxx, Xxxx xx Xxxxxxx Xxxxx, Xxxxxx of Orange, State of California, upon
and subject to the terms, covenants and conditions set forth herein. For the
purposes of this Lease the Premises consist of approximately six thousand six
hundred seventy-two (6,672) rentable square feet of office space designated as
Suite 100 located on the first floor of the Building. An outline of the Premises
is attached hereto as Exhibit A. The areas above the drop ceiling, the interior
of floors and walls are not included in the Premises. This Lease shall be upon
the provisions as hereinafter set forth, which include the following:
1.2 Basic Terms.
(a) Tenant's Trade Name: Auxilio, Inc.
(b) Lease Term: Sixty-two (62) months
(c) Scheduled Commencement Date: November 1, 2004
(d) Scheduled Expiration Date: December 31, 2009
(e) Permitted Use: General office use
(f) Rentable Square Feet of Premises: Approximately 6,672.
The final square footage ("Final Square Footage") shall
be based on the final space plan.
(g) Base Rent: Tenant shall pay to Landlord the sum of One
Hundred Fifty-Six Thousand One Hundred Twenty-Four and
80/100 Dollars ($156,124.80) per annum in twelve (12)
equal monthly installments of Thirteen Thousand Ten and
40/100 Dollars ($13,010.40), except that provided Tenant
is not in default and has fully performed the provisions
of this Lease, Tenant shall have no obligation to pay
Base Rent for two (2) months, from and including the
first (1st) and second (2nd) months of the Lease Term.
The rent shall be adjusted proportionately based on the
Final Square Footage.
(h) Adjustment Date: The first (1st) anniversary of the
commencement date the Base Rent shall increase to
Thirteen Thousand Three Hundred Forty-Four and No/100
Dollars ($13,344.00). The second (2nd ) anniversary of
the commencement date the Base Rent shall increase to
Thirteen Thousand Six Hundred Seventy-Seven and 60/100
Dollars ($13,677.60). The third (3rd) anniversary of the
commencement date the Base Rent shall increase to
Fourteen Thousand Eleven and 20/100 Dollars
($14,011.20). The fourth (4th) anniversary of the
commencement date the Base Rent shall increase to
Fourteen Thousand Three Hundred Forty-Four and 80/100
Dollars ($14,344.80). The rent shall be adjusted
proportionately based on the Final Square Footage.
(i) Tenant's Proportionate Share: 9.4%
(j) Security Deposit: Fifteen Thousand Seven Hundred
Seventy-Nine and 28/100 Dollars ($15,779.28).
(k) Vehicle Parking Allotted to Tenant: 26 spaces. Tenant
may convert up to five (5) spaces to reserved at a rate
of $25.00 per stall, per month.
(l) Addresses for Notice:
Tenant: Auxilio, Inc., a Nevada Corporation
00000 Xxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, President
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Landlord: McMorgan Institutional Real Estate Fund I, LLC
x/x XX Xxxxxxx Xxxxx
00000 Sky Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxxx
(m) Landlord's Broker: CB Xxxxxxx Xxxxx
(n) Tenant's Broker: Xxxxxxx & Wakefield
(o) Base Year: 2005
(p) Tenant Improvements: Landlord shall construct Tenant
Improvements in accordance with the attached Exhibit D.
All Tenant Improvements are to be with building standard
materials and finishes.
(q) Early Occupancy: Following completion of the Tenant
Improvements, Landlord shall grant a period of two (2)
weeks early occupancy to fixturize the Premises, which
would include but not be limited to installation of
furniture systems, fixtures, and equipment (FF&E),
telecommunications and computer cabling.
1.3 Tenant's Acceptance of Premises. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises or the Building or with respect to the
suitability of either for the conduct of Tenant's business. The taking of
possession of the Premises by Tenant shall conclusively establish that the
Premises and the Building were at such time in a good and tenantable condition,
except that Landlord shall repair or replace, as necessary, such defective items
furnished or constructed by Landlord of which items Tenant has advised Landlord
in writing not later than thirty (30) days after the Commencement Date. Tenant
hereby waives any claim or rights it may have on account of the condition of the
Premises as accepted, and agrees that, except as otherwise provided in Section
7.2, Landlord shall not be required to make any improvements, alterations,
changes or repairs in or to the Premises or the Building. For the purposes of
this Lease, it is mutually agreed that the Premises and the Building have the
number of rentable square feet designated in Article 1.2 above.
1.4 Rights Reserved to Landlord. Landlord reserves the right to
install and to repair utilities and appurtenances necessary or convenient in
connection therewith in, over, upon, and through the Premises or any part
thereof, and to enter the Premises for any and all such purposes. Landlord shall
conduct its entry at reasonable times, upon reasonable notice and in such a
manner as to not unreasonably interfere with the conduct of Tenant's business or
operations in the Premises.
ARTICLE 2: LEASE TERM
2.1 Commencement Date. The term of this Lease ("Lease Term") shall
commence on the Scheduled Commencement Date set forth in Article 1.2 or on such
earlier date as Tenant first takes delivery of the Premises, or such other date
which is established pursuant to the terms hereof. The date upon which the Lease
Term actually commences shall be the "Commencement Date." At the sole election
of the Landlord, the Landlord may elect to require the Commencement Date to be
specified in Landlord's notice of lease commencement (the "Notice of Lease
Commencement") in the form of Exhibit "B" which is attached and made a part
hereof. The Notice of Lease Commencement shall be binding on the Tenant unless
Tenant objects to the Notice of Lease Commencement in writing, served upon the
Landlord, within five (5) days of Tenant's receipt of the Notice of Lease
Commencement.
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2.2 Expiration Date. The Lease Term shall continue from and after
the Commencement Date for the balance of the calendar month in which the
Commencement Date occurs (if the Commencement Date occurs on other than the
first day of any calendar month) and thereafter for the number of whole years
and months set forth in Article 1.2, unless sooner terminated pursuant to any
provision of this Lease. The date upon which the Lease Term actually expires
shall be the "Expiration Date."
2.3 Possession.
(a) If Landlord fails to deliver possession of the Premises to
Tenant on or before the Scheduled Commencement Date, Landlord shall not be
liable to Tenant for any loss or damage resulting therefrom and Tenant waives
the provisions of any law to the contrary. However, in such event, the Lease
Term shall commence on the earlier to occur of (i) seven (7) days following the
giving of notice by Landlord that the Premises shall be ready for occupancy;
provided, however, the Premises shall be substantially complete and ready for
occupancy on such Commencement Date or Landlord's notice shall be void, or (ii)
the date that Tenant first occupies the Premises, and Tenant shall not be liable
for Rent until such time. If the Lease Term commences on a date other than the
Scheduled Commencement Date pursuant to the provisions herein, the parties agree
to acknowledge the Commencement Date as previously provided; provided, however,
this Lease shall not be affected in any manner should either party fail or
refuse to execute such statement.
(b) If Landlord delivers possession of or access to the
Premises prior to the Scheduled Commencement Date, Tenant's occupancy or access
shall be subject to all of the terms and provisions of this Lease which could
reasonably and logically be construed as applying thereto, including, without
limitation, Tenant's obligation to pay Rent.
(c) Upon the expiration or other termination of the Lease
Term, Tenant shall quit and surrender the Premises to Landlord, broom clean and
in good order and condition, ordinary wear and tear excepted. Tenant shall
remove all of its personal property and shall promptly repair any damages to the
Premises caused by such removal. Tenant's obligation to perform this covenant
shall survive the expiration or other termination of the Lease Term.
(d) If Tenant holds possession of the Premises or any part
thereof after the expiration or termination of the Lease Term, by lapse of time
or otherwise, Tenant shall become a tenant at sufferance upon all of the terms
contained herein, except as to the term of this Lease, rent and other sums
payable by Tenant. During such holdover period, Tenant shall pay to Landlord
monthly a sum equivalent to one hundred and fifty percent (150%) of the Rent and
other sums payable by Tenant to Landlord with respect to the last month of the
term of this Lease (unless Landlord shall give written notice to Tenant of a
higher rent which shall apply), shall be payable in the amount and at the times
specified in this Lease.
2.4 Delays Caused By Tenant. Notwithstanding anything to the
contrary contained above, if Landlord's failure to deliver possession of the
Premises to Tenant upon the Scheduled Commencement Date is the result in whole
or in part of Tenant's action or failure to act, the Rent and all other sums and
charges payable hereunder shall commence on the date upon which Landlord would
have delivered possession of the Premises but for the occurrence of such events.
ARTICLE 3: RENT
3.1 Base Rent. Tenant shall pay to Landlord the Base Rent set forth
in Article 1.2, payable in advance, in monthly installments on the first day of
each calendar month during the Lease Term, except that Base Rent for the first
(1st) full month of the Lease Term shall be paid by Tenant to Landlord upon
execution of this Lease by Tenant. The Base Rent for any fractional part of a
month shall be prorated on the basis of a 30-day month. Base Rent shall be paid
without prior notice or demand, without deduction or offset, in lawful money of
the United States.
3.2 Cost of Living Increases.
Section intentionally omitted.
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3.3 Additional Rent.
(a) All charges and sums payable by Tenant in addition to Base
Rent shall be deemed Additional Rent (whether or not so designated herein).
Landlord shall have such rights and remedies for Tenant's failure to pay
Additional Rent when required by the Lease as are provided herein or at law or
in equity for the failure to pay Base Rent. As used herein the term "Rent" shall
mean both Base Rent and Additional Rent.
(b) Tenant shall pay to Landlord in advance, in twelve equal
monthly installments on the first day of each calendar month during the Lease
Term, Additional Rent equal to Tenant's Proportionate Share (as set forth in
Article 1.2 and as defined below) of the increase, if any, in Tax Costs and
Operating Costs, as defined herein, over the Tax Costs and Operating Costs
respectively, for the Base Year (as defined in Section 3.4(a) below). (Tenant's
Proportionate Share as set forth in Article 1.2 is calculated as a fraction, the
numerator of which is the number of rentable square feet comprising the Premises
and the denominator of which is the aggregate number of rentable square feet
comprising the Building, excluding the rentable square footage of any premises
subject to a triple net lease, and excluding any parking facilities. Landlord
and Tenant shall amend this Lease, as necessary, to reflect adjustments in
Tenant's Proportionate Share resulting from changes in the rentable square
footage of the Premises and/or the Building.
3.4 Determination and Payment of Additional Rent.
(a) Increase in Tax Costs. If, in any calendar year during the
Lease Term (the "Comparison Year") commencing with the calendar year 2006,
Landlord's Tax Costs shall be higher than the Tax Costs for the calendar year
2005 (the "Base Year"), Tenant shall pay to Landlord, as Additional Rent for the
Comparison Year, Tenant's Proportionate Share of such increase.
(b) Increase in Operating Costs. If Landlord's Operating Costs
for any Comparison Year shall be higher than the Operating Costs for the Base
Year, Tenant shall also pay to Landlord, as Additional Rent for the Comparison
Year, Tenant's Proportionate Share of such increase.
(c) On the first day of January of the first Comparison Year
and on the first day of every January thereafter during the Lease Term, Landlord
shall furnish to Tenant a written statement showing in reasonable detail
Landlord's actual Tax Costs and Operating Costs for the Base Year and Landlord's
estimated Direct Costs for the then current Comparison Year and the amount, if
any, of estimated Additional Rent payable by Tenant for such then current
Comparison Year (the "Estimated Statement"). Following receipt of the Estimated
Statement, Tenant's next monthly Additional Rent payment shall include the
projected amount set forth therein, multiplied by the number of rental payment
dates which elapsed during the then current Comparison Year. Thereafter, the
monthly Additional Rent payments becoming due hereunder shall be in the amount
set forth in the Estimated Statement from Landlord. Landlord's failure to
deliver the Estimated Statement in a timely manner shall neither constitute a
default by Landlord hereunder nor a waiver of Landlord's right to Additional
Rent. The Additional Rent due pursuant to this Section shall be in addition to
the Base Rent due under Section 3.1 or any other rental, sums or charges due
under any other provision of this Lease.
(d) Within six (6) months following the close of each calendar
year (or, at Landlord's election, within six (6) months following the expiration
or sooner termination of this Lease during such calendar year) or as soon
thereafter as possible, Landlord shall furnish to Tenant a written statement of
reconciliation (the "Revised Statement") setting forth (i) Landlord's actual Tax
Costs and Operating Costs for the Base Year and relevant Comparison Year, and
(ii) the amount of any adjusted sum to be paid by or credited to Tenant in order
to reconcile the sums paid by Tenant as estimated Additional Rent during such
Comparison Year with the actual Tax Costs and Operating Costs respectively paid
by Landlord for such Comparison Year. If the Revised Statement shows that
additional sums are due from Tenant, Tenant shall pay such sums to Landlord with
the next scheduled payment of Base Rent, but in no event later than thirty (30)
days from receipt of the Revised Statement. Alternatively, if a credit is due
Tenant, such credit shall be deducted from the next sums due from Tenant
hereunder as Additional Rent; however, in no event shall such credit be deducted
from the next sums due from Tenant as Base Rent unless this Lease has expired or
been terminated, in which event such sums shall be refunded to Tenant within
thirty (30) days of Tenant's receipt of the Revised Statement. In the event this
Lease has expired or otherwise has been terminated prior to the end of a
calendar year, Tenant's obligation to pay Additional Rent shall survive such
expiration or termination. The failure of the Landlord to give any statement
contemplated by this Article shall not prejudice Landlord's right to payment
when the statement is delivered.
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(e) Notwithstanding anything otherwise set forth herein, under
no circumstances shall Tenant's Base Rent be reduced below the amount set forth
in Article 1.2. Any reference to Landlord's "actual" Tax Costs or Operating
Costs in this Article 3 shall be deemed to include an allowance for any
adjustment to reflect the level of occupancy of the Building to the extent
provided for below, if at all.
(f) In the event that Tenant disputes the accuracy of the
Revised Statement, Tenant shall have the right, within sixty (60) days following
Tenant's receipt of the Revised Statement, after reasonable notice and at a
reasonable time, to inspect Landlord's accounting records at the location at
which they are maintained and stored by Landlord during a period of thirty (30)
days after delivery of a timely notice of inspection to Landlord. Tenant shall
have no further right after said sixty (60) day period inspect Landlord's
accounting records. If, following such inspection Tenant continues to dispute
the amount of the Additional Rent, Landlord shall cause an independent certified
public accountant to audit Landlord's records and to certify the amount of the
total Tax Costs and Operating Costs. Such certification shall be final and
conclusive. Tenant shall pay the cost of such audit unless the aggregate of the
Tax Costs and Operating Costs, as set forth in the Revised Statement, exceeds by
more than five percent (5%) the actual aggregate of the Tax Costs and Operating
Costs calculated by the certified public accountant. Tenant shall keep
confidential any information obtained by Tenant or Tenant's account or agent, as
well as the results of the audit and any change in Tenant's share of Tax Costs
or Operating Costs arising therefrom.
(g) "Direct Costs" shall include both Tax Costs and Operating
Costs. Landlord may divide the Estimated Statement and/or the Revised Statement
into separate statements for Tax Costs and Operating Costs. Additionally,
Landlord may estimate Tax Costs or Operating Costs, or both, on a fiscal year
instead of a calendar year basis and all notices referred to herein shall be
adjusted accordingly.
(h) "Tax Costs" shall mean the sum of the following: any and
all real estate taxes, or sums paid in lieu thereof by Landlord, other similar
charges on real property or improvements, assessments, water and sewer charges,
and all other charges assessed, levied, imposed or becoming a lien upon the
Premises, in whole or in part, the real property upon which the Building is
located, the Building or the appurtenances thereto and the facilities including,
without limitation, hallways, parking facilities, common areas and landscaped
areas. The Premises, the Building, parking facilities, the real property,
walkways, sidewalks, driveways, landscaping, the appurtenances thereto and the
facilities shall collectively be referred to as the "Project." Tax Costs shall
include, without limitation, any increase in real estate taxes resulting from
reassessment of the Project upon the sale thereof or of any interest therein, or
resulting from the sale of any capital stock of Landlord, or any charge imposed,
levied or assessed on the rents, issues, profits or income received or derived
from the Project by the United States, the state, county or city in which the
Building is located, or any other local governmental authority, agency or
political subdivision. If at any time any government authority shall impose (i)
a tax, assessment, levy, imposition or charge wholly or partially as a net
income, capital or franchise levy or otherwise on the rents, derived from the
Project and/or (ii) a tax, assessment, levy (including, but not limited to, any
municipal, state or federal levy), imposition or charge measured by or based in
whole or in part upon the Project and imposed upon Landlord and/or (iii) a
license fee measured by the Rent payable under this Lease, then all such taxes,
assessments, levies, impositions or charges shall be deemed to be included in
the Tax Costs. If the assessed valuation or Tax Costs of the Building for the
Base Year or any other calendar year during the Lease Term shall not be based
upon a completed building at least ninety-five percent (95%) occupied, then the
Tax Costs during such year or years shall be adjusted to reflect the taxes which
would have been payable for such year or years if the Building had been
completed and were ninety-five percent (95%) occupied. Tax Costs for each tax
year shall be appropriately prorated to determine the Tax Costs for the subject
calendar year.
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(i) "Operating Costs" shall mean the sum of the following: any
and all expenses, costs and disbursements paid or incurred by Landlord in
connection with the ownership, management, maintenance, operation, replacement,
repair of the Project including, but not limited to, salaries, wages, medical,
surgical and general welfare benefits, pension payments, payroll taxes, worker's
compensation, uniforms and dry cleaning thereof for employees engaged in the
management, operation, maintenance and/or repair of the Building and the Project
and all portions thereof; management fees for the management and operation of
the Building and the Project and all portions thereof, either as charged to
Landlord by independent management companies or an amount not exceeding the
amount typically charged by independent management companies if Landlord manages
the Building and the Project or portions thereof; the cost of all charges to
Landlord for electricity, air conditioning, steam, water and other utilities
furnished to the Building and the Project and all portions thereof, including
any taxes thereon; the cost of all charges for fire and extended coverage,
liability, earthquake, rent loss and all other insurance for the Building and
the Project; the cost of all building and cleaning supplies and materials; the
cost of all charges for security services, cleaning, maintenance and service
contracts and other services with independent contractors, and the cost of any
janitorial, utility or other services to be provided by Landlord; the cost of
maintenance and replacement of telephone, television and video type facilities;
the cost of removal of hazardous materials; the cost of installation and
maintenance of landscaping; the cost of garbage, trash and refuse removal; the
cost of rental of machinery and equipment required to maintain and operate the
Building and the Project; all reasonable attorney's fees and costs required to
maintain and operate the Building and the Project . If, during the Base Year or
any other calendar year, the Building is less than ninety-five percent (95%)
occupied at any time, the Operating Costs shall be adjusted to reflect the
Operating Costs of the Building and the Project as though the Building was
ninety-five percent (95%) occupied for the entire year.
(j) If, at any time, Landlord is required, by any present or
future ruling, statute, case decision, ordinance, regulation or law, including
without limitation the Americans with Disabilities Act of 1990 ("Building
Regulations"), to make any changes, alterations or improvements to the Project
or any portion thereof (including, without limitation, electrical, mechanical or
other systems or components) ("Required Alterations") (but excluding Required
Alterations attributable to Tenant's use and occupancy of the Premises, which
alterations shall be Tenant's sole responsibility) all costs relating to such
Required Alterations (including all planning, legal, architectural, engineering,
construction, financing and other costs) fairly characterized as "expenses"
under generally accepted accounting principles shall be fully included in
Landlord's Operating Costs in the year in which such charges accrue or in such
year as Landlord pays such charges, as Landlord shall elect. If any portion or
all of such costs relating to Required Alterations must be allocated to capital
improvements to be depreciated or amortized over two or more years, or if
Landlord incurs any costs (not reimbursed to Landlord from insurance proceeds)
for any other capital improvements or structural repairs to the Project, whether
or not such capital improvements or structural repairs relate to any Required
Alterations, Landlord shall be entitled each year to include that portion of
such capital costs in Landlord's Operating Costs as Landlord reasonably
determines to be a fair estimate of the depreciation or amortization which would
be chargeable for such capital improvements during such year, given a reasonable
estimate of useful life. Landlord may use the depreciation (or amortization)
method by which Landlord accounts for or reports said costs for tax or other
purposes or any other reasonable basis. The capital costs described in this
Section 3.4(j) shall include all costs relating to the financing of any such
Required Alterations or other capital improvement items. If Landlord internally
finances any such capital costs, interest shall be added to such costs at an
annual rate equal to the Prime Rate in effect at the start of the work plus two
(2) percentage points. "Prime Rate" as referred to in this Lease shall be the
rate of interest announced, from time-to-time, by Bank of America as its prime
(or reference) rate; provided, however, if Bank of America shall cease to
announce such a rate, then the Prime Rate shall be the average rate of interest
announced by the three (3) largest banks in the continental United States as
their prime rate.
3.5 Utilities.
(a) Tenant shall pay directly for all sewer, water, gas, heat,
light, power, air conditioning, telephone and other utilities and services
supplied to the Premises, which are separately metered, together with any taxes
thereon and any connection fees, and Tenant shall indemnify and hold Landlord
free and harmless (including reasonable attorney's fees and costs) against any
claim or liability for the charges therefore. In the event any such charges are
not separately metered to Tenant, such charges shall be included in the
Operating Costs. In the event any such charges are separately metered to Tenant
and not to the other tenants of the Building, an adjustment shall be made to
Tenant's Proportionate Share of the Operating Costs.
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(b) Tenant shall comply with all rules and regulations which
Landlord, any governmental agencies or authorities or any utility company may
establish for the use and protection of any such utility.
3.6 Late Charges. Tenant's failure to pay Rent promptly shall cause
Landlord to incur unanticipated costs in the nature of processing and accounting
charges and penalties on mortgage or trust deed payments. The exact amount of
such costs are impractical or extremely difficult to ascertain. Accordingly, if
Landlord does not receive any Rent payment within five (5) days of its due date
(the "Grace Period"), Tenant shall pay Landlord a late charge ("Late Charge")
equal to ten percent (10%) of the overdue amount accruing from the due date of
such Rent. Provided further, that should the Tenant fail to pay Rent within the
Grace Period and incur a Late Charge on more than two (2) occasions in any
twelve (12) month period, the Grace Period shall be deemed waived and the Late
Charge shall accrue thereafter from the due date of Rent. The parties agree that
such Late Charge represents a fair and reasonable estimate of the costs Landlord
will incur by reason of such late payment.
3.7 Interest on Past Due Obligations. Any amount owed by Tenant to
Landlord which is not paid when due shall bear interest at the Prime Rate in
effect at the time plus three (3) percentage points, but in no event to exceed
the maximum legal rate from the due date of such payment. Interest shall not be
payable on Late Charges. A payment of interest on such past due obligations
shall not excuse or cure any default by Tenant under this Lease.
3.8 Taxes to be paid by Tenant. All taxes and other impositions of
any kind or nature imposed by any governmental authority on the personal
property of Tenant and/or on the improvements to the Premises over and above the
standard building improvements customarily furnished by the Landlord to tenants
shall be the sole responsibility of the Tenant and shall be paid by Tenant in a
timely manner before delinquency. Tenant shall save and hold the Landlord free
and harmless from the payment of such taxes or impositions including any liens,
if any, arising therefrom.
ARTICLE 4: SECURITY DEPOSIT
4.1 Security Deposit. Upon execution of this Lease, Tenant shall
deposit with Landlord the Security Deposit as set forth in Article 1.2 which
shall be held by Landlord as security for the full and faithful performance by
Tenant of all the terms, covenants, and conditions of this Lease to be kept and
performed by Tenant during the Lease Term. If Tenant defaults with respect to
any provision of this Lease, including, but not limited to, the provisions
relating to the payment of Base Rent, Additional Rent or other charges, Tenant's
repair obligations or Tenant's obligations upon surrender of the Premises,
Landlord may use, apply or retain all or any part of the Security Deposit for
the payment of any Rent or other loss or damage which Landlord may suffer by
reason of Tenant's default. If any portion of the Security Deposit is so used or
applied, Tenant shall, within five (5) business days after written demand
therefore, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount; Tenant's failure to do so shall
constitute a default under this Lease. Landlord shall not be required to keep
the Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. If Tenant shall fully and
faithfully perform every provision of this Lease, the Security Deposit, or any
balance thereof remaining, shall be returned to Tenant within thirty (30) days
after the expiration or sooner termination of the Lease Term and the surrender
of possession of the Premises to Landlord in the condition required by this
Lease.
4.2 Security Deposit increases. Each time the Base Rent is
increased, Tenant shall deposit additional funds with Landlord sufficient to
increase the Security Deposit to an amount which bears the same relationship to
the adjusted Base Rent as the initial Security Deposit bore to the initial Base
Rent.
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ARTICLE 5: INDEMNITY; LEGAL COSTS
5.1 Indemnity. Tenant hereby waives any and all rights and claims
against Landlord (except for claims based upon either fraud or the gross
negligence or willful misconduct of the Landlord) now and in the future, and
Tenant shall indemnify and hold Landlord, Landlord's agents, and employees
harmless from any and all costs, claims or liabilities arising from: (a)
Tenant's use of the Premises; (b) the conduct of Tenant's business or any
conduct done or permitted by Tenant to be done in or about the Project including
but not limited to the costs and expenses of removal of hazardous materials; (c)
all liens and claims of lien arising by reason of any alteration or improvement
of the Premises by Tenant, or arising from any other cause; (d) any breach or
default in the performance of Tenant's obligations under this Lease; (e) any
misrepresentation or breach of warranty by Tenant under this Lease; and (f)
other acts or omissions of Tenant, or any of its agents, employees, invitees or
licensees. Tenant shall defend Landlord against any such cost, attorneys' fees,
claim or liability at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
legal fees or costs incurred by Landlord in connection with any such claim. As a
material part of the consideration to Landlord, Tenant hereby assumes all risk
of damage to property or injury to persons in or about the Premises arising from
any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, except for any claim arising out of Landlord's gross negligence or
willful misconduct.
5.2 Legal Proceedings. Tenant shall reimburse Landlord, upon demand,
for any reasonable costs or expenses incurred by Landlord in connection with any
breach or default of Tenant under this Lease, whether or not suit is commenced
or judgment entered. Such costs shall include legal fees and costs incurred for
the negotiation of a settlement, enforcement of rights or otherwise.
Furthermore, if any action for breach of or to enforce the provisions of this
Lease is commenced, the court in such action shall award to the party in whose
favor a judgment is entered, a reasonable sum as attorneys' fees and costs. Such
attorneys' fees and costs shall be paid by the losing party in such action.
Tenant also shall indemnify Landlord against and hold Landlord harmless from all
reasonable costs and expenses, demands and liability incurred by Landlord if
Landlord becomes or is made a party to any claim or action (a) instituted by
Tenant, or by license of or agreement with Tenant; (b) for foreclosure of any
lien for labor or material furnished to or for Tenant or such other person; (c)
otherwise arising out of or resulting from any act or transaction of Tenant or
such other person; or (d) necessary to protect Landlord's interest under this
Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the
United States Code, as amended.
5.3 Landlord's Consent. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Tenant's request for Landlord's
consent under Article 10 (Assignment and Subletting), or in connection with any
other act which Tenant proposes to do and which requires Landlord's consent.
ARTICLE 6: USE OF PROPERTY
6.1 Permitted Use. Tenant shall use the Premises for the Permitted
Use set forth in Article 1.2 and shall not use or permit the Premises to be used
for any other purpose.
6.2 Restrictions on Use. Tenant shall not do or permit anything to
be done which will in any way obstruct or interfere with the rights of other
Tenants or occupants 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 purpose, nor shall Tenant cause or maintain or permit any nuisance
in, on or about the Premises. Tenant shall not bring or keep anything in, on or
about the Premises which will increase the existing rate of or affect any fire
or other insurance upon the Building or any of its contents. Tenant shall not
use or allow any part of the Premises to be used for the storage, manufacturing,
or sale of food or beverages or for the manufacture or retail or auction of
merchandise or goods or property of any kind, or as a school or a classroom.
Tenant shall not commit or suffer the commission of any waste in, on or about
the Premises. Tenant shall not place any signs on the Premises or on the
Building without Landlord's prior written consent. Tenant shall not cause or
permit any hazardous or toxic waste, substance or material to be brought to the
Premises or used, handled, stored or disposed of on or about the Premises.
Tenant shall not conduct business or any other activity on or about the Premises
if of such a nature as to place an unreasonable and excessive burden upon the
public or common areas of the Building or that will violate the Rules and
Regulations attached as Exhibit C and made a part hereof.
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6.3 Compliance with Governmental and Insurance Regulations;
Assumption of Risk of Noncompliance. Tenant shall not use or occupy the Premises
in violation of the Certificate of Occupancy of the Building or the Premises or
of any law, ordinance or regulation or other directive of any governmental
authority having or exercising jurisdiction over the Building. If any
governmental license or permit shall be required for the proper and lawful
conduct of Tenant's business in the Premises, Tenant shall, at its sole cost and
expense, procure and at all times maintain such license or permit and shall at
all times comply with the terms and conditions thereof. Tenant hereby warrants
that, as of the execution of this Lease, Tenant has investigated whether its
proposed use of the Premises and its proposed manner of operation complies with
all applicable laws regulating the Premises.
6.4 Landlord's Access. Landlord may enter the Premises at all
reasonable times to show the Premises to potential buyers, investors or tenants
or other parties, or for any other reasonable purpose Landlord deems necessary.
Landlord shall give prior notice of such entry, except in the case of an
emergency or to provide routine services. Landlord may place customary "For
Sale" or "For Lease" signs on the Premises or the Building. Landlord shall at
all times have and retain a master key which will unlock all doors in, upon and
about the Premises (excluding vaults and safes). Landlord shall conduct its
entry in such a manner as to cause minimal interference with the conduct of
Tenant's business or operations in the Premises.
ARTICLE 7: MAINTENANCE, REPAIRS, AND ALTERATIONS
7.1 Tenant's Obligations.
(a) Tenant, at its sole cost and expense, shall keep the
Premises in good order, condition and repair including, without limitation (i)
decorations, fixtures, interior walls and interior surfaces of exterior walls,
(ii) ceilings, windows, doors, plate glass, skylights, entrances, plumbing,
heating, air-conditioning, and electrical facilities and equipment within the
Premises. Tenant shall paint the interior surfaces from time to time as may be
required to keep the Premises neat and attractive; Tenant shall keep the
Premises at all times in a neat, sanitary condition, free from waste or debris.
All damage or injury to the Premises or the Building caused by the acts or
negligence of Tenant, its agents or employees, shall be promptly repaired by
Tenant, at Tenant's sole cost and expense, to the reasonable satisfaction of
Landlord.
(b) All of Tenant's obligations to maintain and repair shall
be accomplished at Tenant's sole expense. If Tenant fails to maintain and repair
the Premises, then Landlord, on ten (10) days' prior notice (except in the case
of emergency whereupon no notice shall be required) may enter the Premises and
perform such repair and maintenance and Tenant shall reimburse Landlord for all
costs incurred immediately upon demand therefore as Additional Rent.
(c) Tenant hereby waives any and all rights under Sections
1941 through 1942, inclusive, of the California Civil Code and hereby waives, to
the extent permissible, any rights under other statutes or laws now or hereafter
in effect which are contrary to the obligations of Tenant under this Lease, or
which place obligations upon Landlord in addition to those provided in this
Lease.
7.2 Landlord's Obligations.
(a) Except for repairs required as the result of Acts of God
or other casualty (in which event Article 8 shall govern), Landlord shall repair
and maintain the structural portions of the Building, including the basic HVAC,
mechanical, electrical, and sanitary systems installed or furnished by Landlord,
unless such maintenance or repairs are caused in whole or in part by the act,
neglect, fault or omission of Tenant, its agents, servants, employees or
invitees, in which event Tenant shall pay to Landlord the cost of such
maintenance or repairs upon demand. Landlord shall not be liable for failure to
make any such repairs or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Landlord by Tenant. Provided however, in no
event or under any circumstances shall Landlord incur any liability to Tenant
for any loss or liability incurred by Tenant in the operation of Tenant's
business. Tenant waives the right to make repairs at Landlord's expense under
any law or regulation now or hereafter in effect. The failure of Landlord to
make any repair or perform any act of maintenance shall not create in Tenant any
right to abatement of Rent, be deemed a constructive eviction, or give Tenant
the right to terminate this Lease.
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(b) Landlord agrees to furnish to the Premises, during
Building Service Hours (as defined in Article 21 below) air conditioning and
heat, elevator service, electric current for normal lighting and office
machines, and water for lavatory and drinking purposes, all in such reasonable
quantities as in the sole judgment of Landlord is necessary for the comfortable
occupancy of the Premises. Landlord will furnish building standard office
cleaning services, Monday through Friday or Sunday through Thursday at
Landlord's discretion (legal holidays excepted), provided the Premises are kept
in good order by Tenant, and remove Tenant's ordinary office refuse and rubbish.
Landlord (or an independent contractor) shall supply the Premises during
Building Service Hours with reasonable amounts of energy and utilities for
Tenant's use for lighting purposes and for equipment normally employed for
general office purposes. In the event Landlord provides other additional
services directly to Tenant, including, but not limited to, security,
janitorial, excess refuse or rubbish removal, maintenance and repair service, or
utilities beyond normal operating hours, Tenant shall pay all charges therefore
within ten (10) days after receipt of a statement for the additional services.
If Tenant uses excess electricity in Landlord's sole judgment which would be
considered more than for general office use such as computers, separate air
conditioning units, copy machines, etc. Landlord, at Tenant's sole cost (which
shall be Landlord's actual cost for installation of an electrical meter), will
install an electric meter to measure the excess amount of electricity consumed;
and Tenant shall pay on demand to Landlord for the excess consumption at the
rate charged to Landlord. Landlord shall not be liable for any stoppage or
interruption of any such services caused by riot, strike, labor disputes,
breakdowns, accidents, necessary repairs or other cause. Landlord shall not be
liable in damages or otherwise for any failure or interruption of any of the
foregoing services, or of any utilities to the Premises, and no such failure or
interruption shall entitle Tenant to terminate this Lease or to an abatement of
rent or be deemed a construction eviction. Landlord shall not be liable to
Tenant under any circumstances for loss of property, or consequential damages,
however occurring (including, but not limited to, the active or passive
negligence of Landlord), through, in connection with, or incidental to the
failure to furnish any of the foregoing. Landlord shall not be liable in damages
or otherwise, shall not be in breach of this Lease, nor shall Tenant have any
right of offset, abatement or termination as the result of Landlord's compliance
with any governmental restrictions on the use of energy or water.
7.3 Alterations, Additions, and Improvements. Tenant shall not make
any alterations, additions, or improvements to the Premises without Landlord's
prior written consent, except for non-structural alterations which do not exceed
Five Thousand Dollars ($5,000) cumulatively over the Lease Term, which are not
visible from the outside of the Premises and which comply with all Rules and
Regulations, Building Regulations and Landlord's structural, engineering and
design requirements for the Building. Tenant shall deliver to Landlord at least
ten (10) days' prior written notice of the commencement of any work on the
Premises. Landlord may require Tenant to provide payment and performance bonds
in form and amount satisfactory to Landlord. Landlord may elect to record and
post notices of nonresponsibility on the Premises of the Building. Upon
Landlord's written request Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Section. All
alterations, additions and improvements shall be accomplished at Tenant's sole
cost and expense in a good and workmanlike manner, in conformity with all
applicable laws and regulations and by a contractor approved by Landlord. As
soon as reasonably practicable, Tenant shall provide Landlord with copies of all
construction contracts, and proof of payment for all labor and materials.
Promptly upon completion of any such work, Tenant shall provide Landlord with
"as built" plans. Tenant shall promptly pay when due all claims for labor and
materials furnished to the Premises. Tenant shall save and hold the Landlord
free and harmless (including reasonable attorney's fees and costs) from any and
all claims for labor and materials and shall cause any mechanic's lien to be
immediately removed from the Project and shall post with Landlord from a
licensed surety acceptable to Landlord such indemnifications and/or bonds
regarding any mechanic's lien as Landlord shall require.
7.4 Condition Upon Termination. Upon termination of this Lease,
Tenant shall surrender the Premises to Landlord, broom-clean and in the same
condition as received except for ordinary wear and tear which Tenant was not
otherwise obligated to remedy under any provisions of this Lease. In addition,
Landlord may require Tenant to remove any alterations, additions or improvements
(whether or not made with Landlord's consent) prior to the termination of the
Lease Term and may require Tenant to restore the Premises to its prior condition
at Tenant's expense. All alterations, additions and improvements which Landlord
has not required Tenant to remove shall be surrendered to Landlord upon the
termination of this Lease, and shall be Landlord's property, except that Tenant
may remove Tenant's machinery, trade fixtures or equipment which can be removed
without material damage to the Premises or the Building. Tenant shall repair, at
Tenant's sole expense, any damage to the Premises caused by the removal of any
machinery or equipment.
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ARTICLE 8: DAMAGE OR DESTRUCTION
8.1 Damage to Premises or Building. If the Premises or the Building
are damaged by an insured casualty, occurring more than twenty four (24) months
prior to the expiration of the term hereof, Landlord shall forthwith repair
same, or cause same to be repaired, to the extent that insurance proceeds are
made available to Landlord therefore and provided that such repairs can, in
Landlord's reasonable opinion, be made within sixty (60) days from the date of
such damage (without payment of overtime or other premiums) under the laws and
regulations of the federal, state and local governmental authorities having
jurisdiction thereof. If Landlord is not so required to repair such damage,
Landlord shall have the option within forty-five (45) days from the date of such
damage either to (i) notify Tenant of Landlord's election to repair such damage,
in which event Landlord shall thereafter repair same, or (ii) notify Tenant of
Landlord's election to immediately terminate this Lease, in which event this
Lease shall be so terminated. Notwithstanding any contrary provision herein, and
regardless of whether caused by casualty, (a) Landlord shall not be required to
repair any damage to property with respect to which Tenant is required to
maintain property insurance pursuant to Section 13.3 below, and (b) any damage
caused by the negligence or willful misconduct of Tenant or any of its agents,
contractors, employees, invitees or guests shall be promptly repaired by Tenant,
at its sole cost and expense, to the reasonable satisfaction of Landlord;
provided, however, that Landlord shall bear said cost and expense to the extent
it receives proceeds, covering such damage, from insurance obtained by Landlord
as part of Operating Costs. Tenant hereby waives the provisions of Section 1932,
subdivision 2, and Section 1933, subdivision 4, of the Civil Code of California,
and any similar law, statute or ordinance now or hereafter in effect.
8.2 Abatement of Rent. If Landlord repairs damage to the Premises
pursuant to the provisions of Section 8.1 above, Rent payable hereunder until
such repairs are completed shall be abated in the proportion that the rentable
area of the portion, if any, of the Premises rendered unusable by Tenant (and
therefore not used thereby) bears to the rentable area of the Premises;
provided, however, that there shall be such rent abatement only if (a) the
damage so repaired is not caused by the negligence or willful misconduct of
Tenant or any of its agents, contractors, employees, invitees or guests, and (b)
a material portion of the Premises is so rendered unusable for more than thirty
(30) consecutive days. Except for abatement of Rent, if any, Tenant shall have
no claim against Landlord for any damage suffered by reason of (i) any damage to
the Premises, the Project or any portion thereof, (ii) such repairs, or (iii)
any inconvenience, interruption or annoyance caused by such damage or repair,
except to the extent arising from the gross negligence or willful misconduct of
Landlord.
ARTICLE 9: CONDEMNATION
If all or any portion of the Premises is taken under the power of
eminent domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If the remaining portion of the Premises is not reasonably usable for the
conduct of Tenant's business, either Landlord or Tenant may terminate this
Lease, and if more than twenty percent (20%) of rentable area of the Building
excluding the Premises is taken, Landlord may terminate this Lease, in either
event as of the date the condemning authority takes title or possession, by
delivering written notice to the other within ten (10) days after receipt of
written notice of such taking (or in the absence of such notice, within ten (10)
days after the condemning authority takes possession). If neither Landlord nor
Tenant terminates this Lease, this Lease shall remain in effect as to the
portion of the Premises not taken, except that the Base Rent shall be reduced in
proportion to the reduction in the rentable floor area of the Premises. Any
Condemnation award or payment shall be distributed in the following order: (a)
first, to any mortgagee or beneficiary under a deed of trust encumbering the
Premises, the amount of its interest in the Premises; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Premises caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord's expense.
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ARTICLE 10: ASSIGNMENT AND SUBLETTING
10.1 Landlord's Consent Required. No portion of the Premises or of
Tenant's interest in this Lease may be acquired by any other person or entity,
whether by assignment, mortgage, sublease, transfer, operation of law, or act of
Tenant, without Landlord's prior written consent, except as provided in Section
10.2. Landlord shall grant or withhold its consent as provided in Section 10.5.
Any attempted transfer without consent shall be void and shall constitute a
noncurable breach of this Lease. If Tenant is a partnership, any cumulative
transfer of more than twenty percent (20%) of the partnership interests shall
require Landlord's consent. If Tenant is a corporation, any change in ownership
of a controlling interest of the voting stock of the corporation shall require
Landlord's consent.
10.2 Tenant Affiliate. Subject to the provisions of Article 10.9
below regarding Prohibited Transfers, Tenant may assign this Lease or sublease
the Premises, upon reasonable prior notice to Landlord but without Landlord's
consent, to any corporation which controls, is controlled by or is under common
control with Tenant, or to any corporation resulting from the merger of or
consolidation with Tenant ("Tenant's Affiliate"). In such case, any Tenant's
Affiliate shall assume in writing all of Tenant's obligations under this Lease.
10.3 No Release of Tenant. No transfer permitted by this Article 10
whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay Rent and to perform all other obligations of
Tenant under this Lease. Landlord's acceptance of Rent from any other person is
not a waiver of any provision of this Article 10. Consent to one transfer is not
a consent to any subsequent transfer. If Tenant's transferee defaults under this
Lease, Landlord may proceed directly against Tenant without pursuing remedies
against the transferee.
10.4. Procedures for Requesting Authorization. If Tenant desires at
any time to assign or otherwise transfer this Lease or to sublet the Premises or
any portion thereof, it must first notify Landlord of its desire to do so and
shall submit in writing to Landlord (i) the name of the proposed subtenant or
assignee; (ii) the nature of the proposed subtenant's or assignee's business to
be carried on in the Premises; (iii) the terms and provisions of the proposed
sublease or assignment; and (iv) such financial information as Landlord may
reasonably request concerning the proposed subtenant or assignee.
10.5 Landlord's Option. At any time within fifteen (15) business
days after Landlord's receipt of the information specified in Section 10.4
above, Landlord may by written notice to Tenant elect to (i) consent to the
subletting or assignment upon the terms and to the subtenant or assignee
proposed; (ii) refuse to give its consent; (iii) sublease the Premises or the
portion thereof so proposed to be subleased by Tenant or take an assignment of
Tenant's leasehold estate hereunder or such part thereof as shall be specified
in Tenant's notice upon the same terms (excluding terms relating to the use of
Tenant's name or the continuation of Tenant's business) as those offered to the
proposed subtenant or assignee, as the case may be; or (iv) terminate this Lease
as to the portion (including all) of the Premises so proposed to be subleased or
assigned with a proportionate abatement in the Rent payable hereunder. Tenant
agrees that Landlord may consent to a proposed subletting or assignment subject
to such reasonable conditions as Landlord, in its sole discretion, deems
appropriate including, but not limited to, the conditions specified in Sections
10.6(a), 10.6(b) and 10.6(c) below. Tenant further agrees that no assignment or
subletting consented to by Landlord shall impair or diminish any covenant,
condition or obligation imposed upon Tenant by this Lease or any right, remedy
or benefit afforded Landlord by this Lease. If Landlord consents to such
assignment or subletting, Tenant may, within ninety (90) days after the date of
Landlord's consent, enter into a valid assignment or sublease of the Premises or
portion thereof upon the terms and conditions described in the information
required to be furnished by Tenant to Landlord pursuant to Section 10.4 above,
or upon other terms not more favorable to Tenant; provided, however, that any
material change in such terms shall be subject to Landlord's consent as provided
in this Article 10. Failure of Landlord to exercise any option set forth in
clauses (i) through (iv) above within such fifteen (15) day period shall be
deemed the Landlord's refusal to consent to the proposed subletting or
assignment.
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10.6 Conditions to Consent.
(a) Standards of Reasonableness. It shall not be deemed
unreasonable for Landlord to withhold its consent to any assignment, subletting,
hypothecation or other transfer if the proposed assignee, sublessee or
transferee (i) is not satisfactory to Landlord as to credit, or (ii) intends to
occupy the Premises for purposes other than specified in this Lease or for
purposes which are inconsistent with Landlord's commitments to other tenants in
the Building.
(b) Further Transfers. In no event shall Landlord's consent to
any assignment, transfer or subletting relieve Tenant from the obligations to
obtain Landlord's express written consent to any further assignment, transfer,
subletting or sub-subletting or release Tenant from any liability or obligation
hereunder (whether or not then accrued), and Tenant shall continue to be fully,
jointly and severally liable hereunder notwithstanding Landlord's consent to
such assignment, transfer or subletting.
(c) Rent or Other Premiums. As a further condition to
Landlord's consent to any subletting, assignment or other transfer referred to
in Section 10.5 and 10.6(a) or any other part of Article 10, Landlord shall be
entitled to receive one-half (1/2) of any rent or other premium otherwise
payable to Tenant in consideration of the sublease, assignment or other transfer
(i.e., if the sublease, assignment or other transfer provides that the
sublessee, assignee or other transferee thereunder is to pay any amount in
excess of the rental and other charges due under this Lease, whether such
premium be in the form of an increased monthly or annual rental, a lump sum
payment in consideration of the sublease, assignment or transfer, or
consideration of any other form, one-half (1/2) of such premium over and above
the Rent and other sums due hereunder shall, at Landlord's election, inure to
Landlord's benefit), and any such sublease, assignment or transfer and
Landlord's consent shall be effected on forms supplied or approved by Landlord
and its attorneys. For the purposes of this Section 10.6(c), in calculating the
"one half (1/2) of any rent or other premium payable to Tenant," costs,
expenses, rental concessions, tenant improvements, and real estate commissions
incurred by Tenant in connection with any such subletting, assignment or other
transfer shall be considered and deducted as part of said calculation.
10.7 Assignment of Sublease Rents. Tenant immediately and
irrevocably assigns to Landlord, as security for Tenant's obligations under this
Lease, all rent from any subletting of all or a part of the Premises as
permitted by this Lease, and Landlord, as assignee and as attorney-in-fact for
Tenant, or a receiver for Tenant appointed on Landlord's application, may
collect such rent and apply it toward Tenant's obligations under this Lease;
except that until the occurrence of an act of default by Tenant, Tenant shall
have the right to collect such rent, subject to Section 10.6(c) above.
10.8 Processing Costs and Fees. Tenant agrees to reimburse Landlord
for Landlord's reasonable costs and attorneys' fees incurred in connection with
the processing and documentation of any such requested assignment, subletting,
transfer, change of ownership or hypothecation of this Lease or Tenant's
interest in and to the Premises.
10.9 Prohibited Transfers. Notwithstanding anything to the contrary
contained in this Article 10, Tenant shall not enter into any assignment,
sublease, license, concession or other agreement for use, occupancy or
utilization of space in the Premises which provides for rental or other payment
for such use, occupancy or utilization based in whole or in part on the net
income or profits derived by any person from the property leased, used, occupied
or utilized (other amount based on a fixed percentage or percentages of or
sales). Any such assignment, sublease, license, concession or other agreement
shall be absolutely void and ineffective as a conveyance of any right or
interest in the possession, use, occupancy or utilization of any part of the
Premises. Tenant further covenants and agrees that it shall include in each
assignment, sublease, license, concession or other agreement for use, occupancy
or utilization of space in the Premises, a provision that neither the sublessee
nor any other person having an interest in the possession, use, occupancy or
utilization of the Premises shall enter into any assignment, sublease, license,
concession or other agreement for use, occupancy or utilization of space in the
Premises which provides for rental or other payment for such use, occupancy or
utilization based in whole or in part on the net income or profits derived by
any person from the property leased, used, occupied or utilized (other than an
amount based on a fixed percentage or percentages of receipts or sales), and
that any such purported assignment, sublease, license, concession or other
agreement shall be absolutely void and ineffective as a conveyance of any right
or interest in the possession, use, occupancy or utilization of any part of the
Premises, and Tenant further agrees to use reasonable efforts to enforce such
provisions. A failure, refusal or neglect on Tenant's part to comply with the
provisions of this Section 10.9 shall constitute, at Landlord's option, an event
of default hereunder and at Landlord's election shall be void so as not to
confer any rights upon any third person.
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ARTICLE 11: DEFAULTS AND REMEDIES
11.1 Covenants and Conditions. Tenant's performance of each of
Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Premises is conditioned upon
such performance. Time is of the essence in the performance of all covenants and
conditions contained in this Lease.
11.2 Defaults. Tenant shall be in default under this Lease upon the
occurrence of, without limitation, any of the following:
(a) If Tenant fails to pay Rent or other charges required to
be paid by Tenant, when such failure continues for three (3) days following
notice to Tenant.
(b) If Tenant fails to perform any of Tenant's nonmonetary
obligations under this Lease for a period of twenty (20) days after written
notice from Landlord; provided that (except where Tenant is required to deliver
the Estoppel Certificates or Subordination Agreements and similar documents as
required by Article 12 below), if more than twenty (20) days are required to
complete such performance, Tenant shall not be in default if Tenant commences
such performance within the twenty (20) day period and thereafter diligently
pursues its completion. However, Landlord shall not be required to give such
notice if Tenant's failure to perform constitutes a noncurable breach of this
Lease. The notices required by this Section 11.2 are intended to satisfy any and
all notice requirements imposed by law on Landlord and is not in addition to any
such requirement.
(c) If Tenant abandons or vacates the Premises for a period in
excess of thirty (30) days.
(d) If any financial statement or any representation given to
Landlord by Tenant or any successor of Tenant or any guarantor of this Lease
proves to be false or misleading in any material respect.
(e) (i) If Tenant makes a general assignment or general
arrangement for the benefit of creditors; (ii) if a petition for adjudication of
bankruptcy or for reorganization or rearrangement is filed by or against Tenant
and is not dismissed within sixty (60) days; (iii) if a trustee or receiver is
appointed to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease and possession is not
restored to Tenant within sixty (60) days; or (iv) if substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease is
subjected to attachment, execution or other judicial seizure which is not
discharged within sixty (60) days. If a court of competent jurisdiction
determines that any of the acts described in this subsection (e) is not a
default under this Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession) and such trustee or Tenant transfers
Tenant's interest hereunder, then Landlord shall receive, as Additional Rent,
the difference between the rent (or any other consideration) paid in connection
with such assignment or sublease and the Rent payable by Tenant hereunder.
11.3 Remedies. Upon the occurrence of any default by Tenant,
Landlord shall have the following rights and remedies at any time thereafter,
with or without notice or demand and without limiting Landlord in the exercise
of any right or remedy which Landlord may have:
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(a) The right to declare this Lease ended and terminated, to
reenter the Premises, to remove and eject all persons therefrom, to take
possession thereof, and to enjoy the Premises together with all additions,
alterations and improvements thereto, and Tenant shall thereupon have no further
claim thereon or thereunder;
(b) The right, even though Landlord may have reentered the
Premises without having declared this Lease ended and terminated, to thereafter
elect to terminate this Lease and all of the rights of Tenant in and to the
Premises;
(c) The rights available to Landlord under Section 1951.4 of
the California Civil Code, which Section is incorporated herein by this
reference as though set forth in full;
(d) In the event Landlord elects its rights and remedies under
Section 1951.4, Landlord may relet the Premises, or any part thereof, for the
account of Tenant for the remainder of the Lease Term and any extension terms,
at such rental, and upon such other provisions as Landlord, in its sole
discretion, may deem advisable. Landlord shall have the right, in reletting the
Premises, to make reasonable alterations and repairs to the Premises, at
Tenant's expense. In the event of any such reletting, Tenant shall pay to
Landlord any unpaid Rent and all other amounts payable hereunder to the date of
such reletting, and shall also pay upon demand all of the costs and expenses of
reentry, alterations, repairs, and reletting, including, but not limited to,
attorneys' fees and leasing commissions. Thereafter, upon the first day of each
calendar month during the remainder of the Lease Term, Tenant shall pay to
Landlord an amount equal to the excess, if any, of the Base Rent and Additional
Rent over the amount received by Landlord. In the event Landlord, upon such
reletting, receives amounts in excess of the Rent hereunder, such excess shall
be held by Landlord and applied in payment of future Rent, as the same may
become due and payable hereunder, or applied to other obligations due to the
Landlord from Tenant;
(e) Should Landlord elect to terminate this Lease under the
provisions of Sections 11.3(a) or (b) hereof, Landlord shall have all of the
rights and remedies of a landlord provided in Section 1951.2 of the California
Civil Code, which Section is incorporated herein by this reference as though set
forth in full. In computing Landlord's damages pursuant to Sections 1951.2(1)
and (2) of the Civil Code, the "worth at the time of award" shall be computed by
allowing interest at the Prime Rate then in effect plus three (3) percentage
points. The amount of damages which Landlord may recover in the event of such
termination shall include the worth at the time of award of the amount by which
the unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of rental loss that Tenant proves could be reasonably
avoided, computed in accordance with Civil Code Section 1951.2(b), plus
reasonable attorneys' fees and leasing commissions;
(f) In the event of default, all of Tenant's fixtures,
furniture, equipment, improvements, additions, alterations and other personal
property shall remain on the Premises, and Landlord shall have the right to
remove and store such property at Tenant's sole cost and expense, or take
exclusive possession of same and to use same, rent or charge free, until all
defaults are cured, or at its option, to require Tenant to forthwith remove
same;
(g) Tenant hereby waives all claims and demands against
Landlord for damages or loss arising out of or in connection with any reentering
and taking possession of the Premises as provided in this Article;
(h) In the event of the exercise by Landlord of any one or
more of its rights and remedies under this Article, Tenant hereby expressly
waives any and all rights of redemption or relief from forfeiture under
California Code of Civil Procedure Section 1174 or 1179, or granted by or under
any present or future laws, and further releases Landlord, from any and all
claims, demands and liabilities by reason of such exercise by Landlord;
(i) The various rights, options, elections, powers and
remedies reserved to Landlord herein shall be cumulative and, except as
otherwise provided by statute, Landlord may pursue any or all such rights and
remedies, whether at the same time or otherwise, and no single right shall be
deemed to be exclusive of any of the others or of any right or priority allowed
by law or in equity. No delay or omission of Landlord to exercise any right or
remedy shall be construed as a waiver of any such right or remedy or waiver of
any default by Tenant. In addition to the foregoing, Landlord may exercise any
other remedy now or hereafter available to a landlord against a defaulting
tenant under the laws of the State of California; and
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(j) Landlord shall be under no obligation to observe or
perform any covenant of this Lease on its part to be observed or performed for
the benefit of Tenant, which accrues after the date of any default by Tenant.
11.4 Landlord's Cure of Tenant's Default. If at any time during the
Lease Term, Tenant fails, refuses or neglects to perform any of its obligations
under this Lease, Landlord shall have the right, but not the obligation, to
perform such obligation at the expense and for the account of Tenant. The amount
of any monies so expended or obligations so incurred by Landlord, together with
interest thereon at the maximum rate permitted by law, shall be repaid to
Landlord within five (5) days of Tenant's receipt of Landlord's statement.
ARTICLE 12: PROTECTION OF LENDERS
12.1 Subordination. This Lease shall be subordinate to any ground
lease, deed of trust or mortgage encumbering the Premises, any advances made on
the security thereof and any renewals, modifications, consolidations,
replacements or extensions thereof, whenever made or recorded; provided,
however, that Tenant's right to quiet possession of the Premises during the
Lease Term shall not be disturbed if Tenant pays the Rent and performs all of
Tenant's obligations under this Lease and is not otherwise in default.
Notwithstanding the foregoing, if any ground lessor, beneficiary or mortgagee
elects to have this Lease prior to the lien of its deed of trust or mortgage and
gives written notice thereof to Tenant, this Lease shall be deemed prior to such
deed of trust or mortgage whether this Lease is dated prior or subsequent to the
date of such deed of trust or mortgage or the date of recording thereof.
12.2 Attornment. If Landlord's interest in the Premises is acquired
by any ground lessor, beneficiary under a deed of trust, mortgagee, or purchaser
at a foreclosure sale, Tenant shall attorn to the transferee of or successor to
Landlord's interest in the Premises and recognize such transferee or successor
as Landlord under this Lease. Tenant waives the protection of any statute or
rule of law which gives or purports to give Tenant any right to terminate this
Lease or surrender possession of the Premises upon the transfer of Landlord's
interest.
12.3 Signing of Documents. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten (10)
days after written request, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
12.4 Estoppel Certificates.
(a) Upon Landlord's written request, Tenant shall execute,
acknowledge and deliver to Landlord a written statement certifying: (i) that
none of the terms or provisions of this Lease have been changed (or if they have
been changed, stating how they have been changed); (ii) that this Lease has not
been canceled or terminated; (iii) the last date of payment of the Base Rent and
other charges and the time period covered by such payment; and (iv) that
Landlord is not in default under this Lease (or, if Landlord is claimed to be in
default, stating why). Tenant shall deliver such statement to Landlord within
ten (10) days after Landlord's request therefore. Any such statement by Tenant
may be given by Landlord to any prospective purchaser or encumbrancer of the
Premises. Such purchaser or encumbrancer may rely conclusively upon such
statement as true and correct.
(b) If Tenant does not deliver such statement to Landlord
within such ten (10) day period, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the following facts: (i)
that the terms and provisions of this Lease have not been changed except as
otherwise represented by Landlord; (ii) that this Lease has not been cancelled
or terminated except as otherwise represented by Landlord; (iii) that not more
than one month's Base Rent or other charges have been paid in advance; and (iv)
that Landlord is not in default under the Lease. In such event, Tenant shall be
estopped from denying the truth of such facts.
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ARTICLE 13: INSURANCE; INDEMNITY; WAIVERS
13.1 Liability Insurance. Tenant at all times during the Lease Term,
at its sole cost and expense, shall maintain in effect workers' compensation
insurance, as well as a policy of commercial general liability insurance with a
combined single limit of Three Million Dollars ($3,000,000) per occurrence. Such
policy shall specifically include, without limitation, personal injury, broad
form property damage, and contractual liability coverage, the last of which
shall cover the insuring provisions of this Lease and the performance by Tenant
of the indemnity agreements herein. Such insurance shall provide coverage on an
occurrence basis. In no event shall the coverage limits under these policies
limit the liability of Tenant under this Lease.
13.2 Property Insurance: Landlord. Landlord, at all times during the
Lease Term, shall maintain a policy of property insurance covering the Premises
and Building, protecting against (a) any peril included within the
classification "Standard Fire and Extended Coverage", and (b) vandalism and
malicious mischief. Except as otherwise provided in this Lease, the proceeds of
these policies shall be used to repair the insured property. The cost of such
insurance shall be included in the Operating Costs. Notwithstanding any contrary
provision herein, Landlord shall not be required to carry insurance covering the
property described in Section 13.3 below or covering earthquake or flood but
should Landlord elect to carry such insurance or any other insurance, the costs
thereof shall be included in Operating Costs.
13.3 Property Insurance: Tenant.
(a) Tenant, at all times and at its sole cost and expense,
shall maintain in effect a policy or policies of property insurance against
fire, vandalism, malicious mischief and any peril included within the
classification "Standard Fire and Extended Coverage," covering (i) its trade
fixtures, equipment and other personal property and all alterations, additions
and improvements (excluding Landlord's Work [as defined in the Addendum to this
Lease]) made by or at the expense of Tenant at the Premises, in an amount not
less than the replacement cost thereof from time to time, and (ii) all plate
glass in the Premises.
(b) The proceeds of such insurance shall be used to repair or
replace the insured property, during the Lease Term.
13.4 Insurance Policies. Any insurance required hereunder to be
maintained by Tenant shall be written by companies which have a "General
Policyholder's Rating" "A-XIII" or better, as set forth in Best's Insurance
Guide and with such companies and in such form satisfactory to Landlord in its
reasonable discretion, and qualified to do business in California. Tenant shall
provide to Landlord copies of policies of all such insurance, or certificates of
insurance, showing Landlord and its lenders as additional insureds thereunder.
All public liability policies shall contain a provision that Landlord,
regardless of whether it is named as an insured, shall be entitled to recovery
under the policies for any loss to Landlord, or Landlord's servants, agents,
partners or employees by reason of the acts or omissions of Tenant, including
but not limited to negligence. All policies of insurance to be obtained by
Tenant must: (a) contain a provision that the company writing such policy will
give Landlord thirty (30) days' notice in writing in advance of any cancellation
or lapse of the coverage thereunder, or of any reduction in the amounts or types
of coverage of insurance; and (b) be primary with respect to, and
non-contributory with, any other insurance available to Landlord. Landlord shall
have the right to periodically review Tenant's insurance hereunder and require
Tenant to obtain and maintain in effect additional or modified insurance which
provides coverage comparable to that carried by tenants in other first-class
office buildings in comparable locations in the Los Angeles area.
13.5 Waiver of Subrogation. Subject to the consent and approval of
the company or companies issuing the insurance contemplated by this Lease, each
party hereto hereby waives any and all rights to recover against the other
party, or against the officers, directors, employees, shareholders or principals
thereof, for loss or damage arising from any peril to the extent insured against
under any property or workers' compensation insurance policy carried by such
waiving party. To the extent reasonably available, each such policy shall be
endorsed to reflect the foregoing.
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ARTICLE 14: MISCELLANEOUS PROVISIONS
14.1 Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the
current owner(s) of the fee title to the Building and all successors thereto, as
such successors become the fee owners of the Building. Each Landlord is
obligated to perform the obligations of Landlord under this Lease only during
the time such Landlord owns such interest or title. Any Landlord who transfers
its title or interest is relieved of all liability with respect to the
obligations of Landlord under this Lease to be performed on or after the date of
transfer. However, each Landlord shall deliver to its transferee all security
deposits and advanced Rent (if any) previously paid by Tenant if such funds have
not yet been applied under the terms of this Lease.
(b) Landlord's liability under this Lease shall be limited to
Landlord's interest in the Building, and Tenant shall look solely to Landlord's
interest in the Building for satisfaction of Tenant's remedies. No other
property or assets of Landlord or any partner, officer, director, trustee or
shareholder of Landlord shall be subject to levy, execution or other enforcement
procedures for the satisfaction of Tenant's remedies. Neither Landlord nor any
partner, officer, director, trustee or shareholder of Landlord shall be liable
to Tenant for any consequential or punitive damages based upon the failure of
Landlord to perform its obligations under this Lease.
(c) Tenant shall give written notice of any failure by
Landlord to perform any of its obligations under this Lease to Landlord and to
any mortgagee or beneficiary under any deed of trust encumbering the Premises
whose name and address have been furnished to Tenant in writing. Landlord shall
not be in default under this Lease unless Landlord (or such mortgagee or
beneficiary) fails to cure such nonperformance within thirty (30) days after
receipt of Tenant's notice. However, if such non-performance reasonably requires
more than thirty (30) days to cure, Landlord shall not be in default if such
cure is commenced within such thirty (30) day period and thereafter diligently
pursued to completion. In the event of any default, breach or violation of
Tenant's rights under this Lease by Landlord, Tenant's exclusive remedies shall
be an action for specific performance or an action for damages. Tenant hereby
waives the benefit of any laws or statutes granting Tenant the right to (i)
perform Landlord's obligation, (ii) a lien upon the property of Landlord and/or
upon Rent due Landlord, and (iii) the right to terminate this Lease or withhold
Rent on account of any Landlord default, including the failure of Landlord to
consent to an assignment or subletting where required to do so.
(d) Tenant agrees that neither the shareholders, nor the
officers, directors, employees or agents of McMorgan & Company LLC shall be
personally liable under this Lease.
14.2 Relocation Right. Landlord shall have the right to relocate the
Premises to another part of the Building in accordance with the following: (a)
the new premises shall be substantially the same in size, dimensions,
configuration, decor, and nature as the Premises, and shall be placed in that
condition by Landlord at Landlord's cost and expense; (b) the physical
relocation of the Premises shall be accomplished by Landlord at Landlord's cost;
(c) Landlord shall give Tenant at least sixty (60) days' notice of Landlord's
intention to relocate the Premises; (d) all actual costs incurred by Tenant as a
direct result of the relocation, including, costs incurred in changing addresses
on stationery, business cards, directories, advertising, and such other items
shall be paid by Landlord in a sum not to exceed One Thousand Dollars ($1,000);
(e) the substituted premises shall be substantially complete and ready for
Tenant's occupancy on the date that Tenant is required to abandon the Premises;
and (f) the parties shall immediately execute an amendment to this Lease stating
the relocation of the Premises and any other revised terms as agreed to between
the parties hereto; in all other respects this Lease shall remain in full force
and effect according to its terms.
14.3 Modification of the Building. Landlord shall have the right at
any time to change the configuration, arrangement, location of, or to regulate
or eliminate the use of any concourse, garage, parking facility, elevators,
stairs, toilets, entrances, landscaping and all common areas and portions of the
Project without incurring any liability to Tenant or entitling Tenant to any
abatement of rent and such action by Landlord shall not constitute an actual or
constructive eviction of Tenant.
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14.4 Parking in the Building. Tenant shall have the right, so long
as this Lease remains in full force and effect, to lease from Landlord the
number of parking spaces set forth in Article 1.2 for its employees' automobiles
in the parking facilities of the Building, as and where designated by Landlord.
Such parking shall be available upon terms and conditions to be established from
time to time by Landlord or Landlord's operator of such parking facilities;
Landlord does not warrant or represent that the parking will continue to be
available if Tenant does not lease such parking continuously from the
commencement of the Lease Term. Tenant may not sell, assign or transfer its
parking rights hereunder, except pursuant to an approved and permitted sublease
or assignment of this Lease.
14.5 Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part hereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
provisions of this Lease, which shall remain in full force and effect.
14.6 Interpretation. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Premises with Tenant's express or
implied permission.
14.7 Incorporation of Prior Agreement; Modifications. This Lease is
the only agreement between the parties pertaining to the lease of the Premises
and no other agreements are effective. All amendments to this Lease shall be in
writing and signed by all parties. Any other attempted amendment shall be void.
14.8 Notices. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified mail,
return receipt requested, postage prepaid or sent by nationally recognized
overnight courier. Notices to Tenant shall be delivered to the address specified
in Article 1.2, except that upon Tenant's taking possession of the Premises, the
Premises shall be Tenant's address for notice purposes. Notices to Landlord
shall be delivered to the address specified in Article 1.2. All notices shall be
deemed effective upon the earlier of the date of actual receipt or forty-eight
(48) hours after mailing, except that all notices of change of address shall be
deemed given as of the date of receipt thereof. Either party may change its
notice address upon written notice to the other party.
14.9 Waivers. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision of this Lease in the future. No statement on a payment
check from Tenant or in a letter accompanying a payment check shall be binding
on Landlord. Landlord may, with or without notice to Tenant, negotiate such
check without being bound to the conditions of such statement.
14.10 No Recordation. This Lease shall not be recorded. No
memorandum or short form hereof shall be recorded without Landlord's prior
written consent.
14.11 Binding Effect; Choice of Law. This Lease binds any party who
legally acquires any rights or interest in this Lease from Landlord or Tenant.
However, Landlord shall have no obligation to Tenant's successor unless the
rights or interests of Tenant's successor are acquired in accordance with the
terms of this Lease. The laws of the State of California shall govern this
Lease.
14.12 Corporate Authority; Partnership Authority. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he or she has full authority to do so and that this Lease binds
the corporation. Within thirty (30) days after this Lease is signed, Tenant
shall deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person signing this Lease for Tenant represents and warrants that he or she is a
general partner of the partnership, that he or she has full authority to sign
for the partnership and that this Lease binds the partnership and all general
partners of the partnership. Within thirty (30) days after this Lease is signed,
Tenant shall deliver to Landlord a copy of Tenant's recorded Statement of
Partnership or Certificate of Limited Partnership.
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14.13 Joint and Several Liability. All parties signing this Lease as
Tenant shall be jointly and severally liable for all obligations of Tenant.
14.14 Force Majeure. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
14.15 Rules and Regulations. Tenant shall comply with all reasonable
Rules and Regulations applicable to Tenants of the Building established by
Landlord for use of the Building including, but not limited to, the Rules and
Regulations attached hereto as Exhibit C, incorporated herein by this reference,
as amended from time to time. Landlord shall not be liable to Tenant for the
failure of any Tenant or occupant of the Building to observe the Rules and
Regulations and all amendments and additions thereto.
14.16 Plurals and Genders. The terms "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular, and the neuter shall
include the masculine and feminine genders.
14.17 "Persons" Defined. The words "person" or "persons" whenever
used shall include individuals, firms, associations and corporations.
14.18 Covenants and Agreements--Time of the Essence. All of the
provisions of this Lease are to be construed as covenants and agreements as
though the words importing such covenants and agreements were used in each
separate provision hereof. Each of Tenant's covenants and agreements herein
contained are conditions, the time of the performance of each is of the essence
of this Lease, and the strict performance of each shall be a condition precedent
to the right of Tenant to remain in possession of the Premises and to have this
Lease continue in effect.
14.19 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute and be construed as one and the same instrument.
14.20 Applicable Law and Venue. This Lease shall be governed by and
construed in accordance with the laws of the State of California. Any action to
declare or enforce any rights or obligations under this Lease may be commenced
by any party in the Superior Court of the County in which the Building is
located. Tenant hereby consents to the jurisdiction of such Court for such
purposes and agrees that any notice, complaint or other legal process delivered
to Tenant in accordance with the provisions of Section 15.8 of this Lease shall
constitute adequate notice and service of process for all purposes and shall
subject Tenant to the jurisdiction of such Court for purposes of adjudicating
any matter related to this Lease. The provisions of this Section shall also
apply to all guarantors of this Lease.
14.21 Incorporation of Exhibits. All Exhibits or Riders referenced
in this Lease (or which are executed concurrently herewith and attached hereto
and refer to this Lease) are incorporated herein by reference as though fully
set forth herein.
14.22 Building Name Change. Landlord reserves the right to change
the name of the Building from time to time during the term of this Lease.
14.23 Multiple Parties. If there is more than one person, firm,
corporation, partnership or other entity comprising Tenant, then (i) the term
Tenant, as used herein, shall include all of the undersigned, (ii) each and
every provision in this Lease shall be binding on each and every one of the
undersigned, (iii) each of the undersigned shall be jointly and severally liable
hereunder; (iv) Landlord shall have the right to join one or all of the
undersigned in any proceeding or to proceed against them in any order; and (v)
Landlord shall have the right to release any one or more of the undersigned
without in any way prejudicing its right to proceed against the others.
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14.24 No Violation of Other Agreements. Tenant warrants and
represents that neither its execution performance under this Lease shall cause
Tenant to be violation of any agreement, instrument, contract, law, rule or
regulation by which Tenant is bound and Tenant agrees to indemnify Landlord
against any loss, cost, damage or liability arising out of Tenant's breach
hereof.
14.25 Confidentiality. All of the terms and provisions of this Lease
and all documents and correspondence relating thereto shall be kept confidential
by the Tenant and the terms and provisions thereof shall not be disclosed
without the prior written consent of Landlord.
14.26 Modification of Lease. Should any current or prospective
mortgagee or ground lessor for the Building or Project require a modification or
modifications of this Lease, which modification or modifications will not cause
an increased cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, then and in
such event, Tenant agrees that this Lease may be so modified and agrees to
execute whatever documents are reasonably required therefore and to deliver the
same to Landlord within ten (10) days following a request therefore. Should
Landlord or any such prospective mortgagee or ground lessor require execution of
a short form of Lease for recording, containing, among other customary
provisions, the names of the parties, a description of the Premises and the
Lease Term, Tenant agrees to execute such short form of Lease and deliver the
same to Landlord within ten (10) days following the request therefore.
14.27 Transportation Management. Tenant shall fully comply with all
present or future programs intended to manage parking, transportation or traffic
in and around the Project or Building, and in connection therewith, Tenant shall
take responsible action for the transportation planning and management of all
employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities.
14.28 Quiet Enjoyment. Landlord covenants that if, and so long as,
Tenant pays all of the Base Rent and Additional Rent hereunder, and keeps and
performs each and every covenant, agreement, term, provision and condition on
the part of Tenant to be kept and performed, Tenant shall quietly enjoy the
Premises without hindrance or molestation by Landlord or by any other person
lawfully claiming the same, subject to the covenants, agreements, terms,
provisions and conditions of this Lease and to any mortgages or deeds of trust
and covenants, restrictions, easements and agreements of record to which this
Lease is subordinate.
14.29 Security. Tenant acknowledges that Landlord shall have no (a)
obligation to provide guard service or other security measures for the benefit
of the Premises, the Building or the Project, or (b) responsibility for the
protection of Tenant and its employees, agents, contractors, representatives,
licensees, guests, invitees and visitors, or the property thereof, from acts of
third parties, whether or not Landlord, at its option, elects to provide
security protection for the Project.
ARTICLE 15: BROKERS
15.1 Indemnity. Landlord and Tenant each warrant to the other that
neither has had any dealings with any real estate broker, agent, or finder in
connection with this Lease except the Brokers, if any, set forth in Article 1.2
hereof. Each party hereto agrees to defend, indemnify and hold the other
harmless from any claim for any compensation, commission, fee or other charge by
any other real estate broker or agent or finder claiming through the
indemnifying party.
15.2 Broker's Commission. Landlord shall pay a commission to
Landlord's Broker, as set forth in Article 1.2, and to no other broker, agent or
finder. Landlord shall have no obligation to pay Tenant's Broker, it being
understood that Tenant's Broker shall look solely to Landlord's Broker or to
Tenant for payment of its fee.
-21-
ARTICLE 16: ADDITIONAL PROVISIONS
Additional provisions may be set forth in an addendum or addenda
attached hereto. All such addenda and all exhibits referred to in this Lease or
which are executed concurrently herewith and attached hereto, are incorporated
by this reference as though fully set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as
of the date first hereinabove set forth.
"LANDLORD"
McMorgan Institutional Real Estate Fund I, LLC
By: McMorgan & Company LLC
Its: Manager
By:
-------------------------------------
Xxxxx Xxxxxx
Its: Vice President
"TENANT"
Auxilio, Inc., a Nevada Corporation
By:
-------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: President & COO
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. The Lease must
be executed by the president or vice-president and the secretary or assistant
secretary, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event, the bylaws or a certified copy of the
resolution, as the case may be, must be attached to this Lease.
-22-
ADDENDUM
to Office Lease dated August 5, 2004
between McMorgan Institutional Real Estate Fund I, LLC. ("Landlord)
and Auxilio, Inc., a Nevada Corporation ("Tenant")
ARTICLE 17: CONSTRUCTION REQUIREMENTS
Any work performed at the Building or on the Premises by Tenant or Tenant's
contractor in connection with improvements shall be subject to the following
additional requirements:
(a) Such work shall not proceed until Landlord has approved (which
approval shall not be unreasonably withheld or delayed) 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) Tenant understands that all contractors and subcontractors retained
at the Project by Landlord or Tenant to perform construction or
tenant improvement work shall be signatory to the appropriate
collective bargaining agreement(s) with the labor organizations
affiliated with the Building and Construction Trades Department of
the AFL-CIO, with the International Brotherhood of Teamsters, or
with the United Brotherhood of Carpenters and Joiners of America.
(d) Tenant agrees to indemnify, defend and hold Landlord harmless for
any work performed, including consequential damages, which is not
performed in accordance with applicable law or the provisions of
this lease.
ARTICLE 18: HAZARDOUS MATERIALS
The Tenant, at its sole cost and expense, shall comply with all laws,
ordinances, regulations, and standards regulating or controlling hazardous
wastes or hazardous substances, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. 9601, et seq., the Hazardous Material Transportation Act, 49 U.S.C. 1801,
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.;
the Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous Substance Account Act, Health and Safety
Code section 25300, et seq.; the Underground Storage of Hazardous Substance Act,
Health and Safety section 25280, et seq.; the Safe Drinking Water and Toxic
Enforcement Act of 1986 (Health and Safety Code section 25249.5, et seq.); and
the Hazardous Waste Control Law, Health and Safety Code section 25100, et seq.
(the "Environmental Laws"). The Tenant hereby indemnifies and at all times shall
indemnify and hold harmless the Landlord, the Landlord's trustees, directors,
officers, employees, investment manager(s), attorneys, agents and any successors
to the Landlord's interest in the chain of title to the Property, their
trustees, directors, officers, employees, and agents from and against any and
all claims, suits, demands, response costs, contribution costs, liabilities,
losses, or damages, directly or indirectly arising out of the existence, use,
generation, migration, storage, transportation, release, threatened release, or
disposal of Hazardous Materials (defined below) in, on, or under the Property or
in the groundwater under the Property and the migration or transportation of
hazardous materials to or from the Property or the groundwater underlying the
Property. This indemnity extends to the costs incurred by the Landlord or its
successors to reasonably repair, clean up, dispose of, or remove such Hazardous
Materials in order to comply with the Environmental Laws, provided the Landlord
gives the Tenant not less than thirty (30) days advance written notice of its
intention to incur such costs. The Tenant's obligations pursuant to the
foregoing indemnification and hold harmless agreement shall survive the
termination of this lease. The subtenants, contractors, agents, or invitees of
the Tenant shall not use, generate, manufacture, store, transport, release,
threaten release, or dispose of Hazardous Materials in, on, or about the
Property unless the Tenant shall have received the Landlord's prior written
consent therefore, which the Landlord may withhold or revoke at any time in its
reasonable discretion, and shall not cause or permit the release or disposal of
Hazardous Materials from the Property except in compliance with applicable
Environmental Laws. The Tenant shall not permit any person, including its
subtenants, contractors, agents, or invitees to use, generate, manufacture,
store, transport, release, threaten release, or dispose of Hazardous Materials
in, on, or about the Property or transport Hazardous Materials from the Property
unless the Tenant shall have received the Landlord's prior written consent
therefore, which the Landlord may withhold or revoke at any time in its
reasonable discretion and shall not cause or permit the release or disposal of
Hazardous Materials. The Tenant shall promptly deliver written notice to the
Landlord if it obtains knowledge sufficient to infer that Hazardous Materials
are located on the Property that are not in compliance with applicable
Environmental Laws or if any third party, including, without limitation, any
governmental agency, claims a significant disposal of Hazardous Materials
occurred on the Property or is being or has been released from the Property, or
any such party gives notice of its intention to declare the Property to be
Border Zone Property (as defined in section 25117.4 of the California Health and
Safety Code). Upon reasonable written request of the Landlord, the Tenant,
through its professional engineers and at its cost, shall thoroughly investigate
suspected Hazardous Materials contamination of the Property. The Tenant, using
duly licensed and insured contractors, shall promptly commence and diligently
complete the removal, repair, clean-up, and detoxification of any Hazardous
Materials from the Property as may be reasonably recommended, whether or not
formally ordered or required.
-23-
Notwithstanding anything to the contrary in this Lease, nothing herein shall
prevent the Tenant from using materials other than Hazardous Materials on the
Premises as would be used in the ordinary course of the Tenant's business as
contemplated by this Lease. The Tenant does not in the course of the Tenant's
current business use Hazardous Materials. If during the term of this Lease, the
Tenant contemplates utilizing such materials (or subleases/assigns this Lease to
a subtenant or assignee who utilizes Hazardous Materials), the Tenant shall
obtain prior written approval from the Landlord which approval shall not be
unreasonably withheld. The Landlord, at its option, and at the Tenant's expense,
may cause an engineer selected by the Landlord, to review (a) the Tenant's
operations including materials used, generated, stored, disposed, and
manufactured in the Tenant's business and (b) the Tenant's compliance with terms
of this paragraph. The Tenant shall provide the engineer with such information
reasonably requested by the engineer to complete the review. The first such
review may occur prior to or shortly following commencement of the term of this
Lease. Thereafter, such review shall not occur more frequently than once each
year unless cause exists for some other review schedule. One-half (1/2) of the
fees and costs of the engineer shall be paid promptly by the Tenant to the
Landlord upon receipt of written notice of such fees and costs.
"Hazardous Materials" means any hazardous waste or hazardous substance as
defined in any federal, state, county, municipal, or local statute, ordinance,
rule, or regulation applicable to the Property, including, without limitation,
the Environmental Laws. "Hazardous Materials" shall also include asbestos or
asbestos-containing materials, radon gas, petroleum or petroleum fractions, urea
formaldehyde foam insulation, transformers containing levels of polychlorinated
biphenyls greater than 50 parts per million, and chemicals known to cause cancer
or reproductive toxicity, whether or not defined as a hazardous waste or
hazardous substance in any such statute, ordinance, rule, or regulations.
ARTICLE 19: BUILDING SERVICES
19.1 Building Services. Landlord shall provide: (a) necessary
elevator facilities from 7:00 a.m. to 6:00 p.m. Monday through Friday and 9:00
a.m. to 1:00 p.m. on Saturday (legal holidays excepted) ("Building Service
Hours") and have one elevator subject to call at all other times; (b) heat to
the during Building Service Hours whenever such heat shall, in Landlord's
reasonable judgment, be required for the comfortable occupancy of the Premises;
(c) air conditioning to the Premises during Building Service Hours whenever such
air conditioning shall, in Landlord's reasonable judgment, be required for the
comfortable occupancy of the Premises; (d) building standard office cleaning
services, Monday through Friday or Sunday through Thursday at Landlord's
discretion (legal holidays excepted), provided the Premises are kept in good
order by Tenant, and remove Tenant's ordinary office refuse and rubbish; and (e)
water for ordinary lavatory purposes but if Tenant uses or consumes water for
any other purposes or in unusual quantities (of which fact Landlord shall be the
sole judge), Landlord may install a water meter at Tenant's expense which Tenant
shall thereafter maintain in good working order and repair, and Tenant shall be
liable for all repairs made to any water device in Tenant's premises up to the
point of connection from the Building's main water source and shall pay Landlord
upon demand for such repairs.
-24-
19.2 Other Services
(a) Landlord or an independent contractor shall supply the
Premises during reasonable hours with reasonable amounts of energy and utilities
for Tenant's use for lighting purposes and for equipment normally employed for
general office purposes. In the event Landlord provides other additional
services directly to Tenant, including, but not limited to, security,
janitorial, excess refuse or rubbish removal, maintenance and repair service, or
utilities beyond normal operating hours, Tenant shall pay all charges therefore
within ten (10) days after receipt of a statement for said additional services.
If Tenant uses excess electricity in Landlord's sole judgment which would be
considered more than for general office use such as computers, separate air
conditioning units, copy machines, etc. Landlord, at Tenant's sole cost, will
install an electric meter to measure the excess amount of electricity consumed;
and Tenant shall pay on demand to Landlord for the excess consumption at the
rate charged to Landlord.
(b) Tenant may from time to time request from Landlord
additional services to be performed which would not otherwise be the Landlord's
obligation to perform under this Lease. The Landlord, however, may at its option
perform such services at the sole cost of Tenant. Such services shall be
performed at the actual cost to Landlord plus an administration fee determined
by Landlord.
ARTICLE 20: OPTION TO RENEW
Tenant shall have one (1) personal and non-transferable Option to Extend the
Lease for a period of three (3) years, and said option shall be exercised by
notice delivered by Tenant to Landlord in writing not more than nine (9) months
nor less than six (6) months prior to the expiration of the current Lease term;
provided that, at the time of the exercise and as of the commencement of the
renewal term (i) no default has occurred and (ii) Tenant has not sublet or
assigned any portion of the Premises. The rental rate for said option period
shall be the higher of (i) the Base Rent in effect at the end of the initial
lease term or (ii) Landlord's Fair Market Rental Rate. Fair Market Rental Rate
shall mean the monthly amount per rentable square foot that a willing,
comparable, new and non-renewing, non-equity, non-expansion Tenant would pay for
comparable space and Landlord would accept, at arms length, giving appropriate
consideration to free rent, beneficial occupancy, length of lease term, size and
location of premises being leased, building standard work letter and/or tenant
improvement allowance, if any, and other generally applicable terms and
conditions of tenancy in the building, as evidenced where possible by recently
consummated lease transactions in the building.
ARTICLE 21: RIGHT TO TERMINATE
Provided no Default has occurred and Tenant has given at least nine (9) months,
but not more than twelve (12) months, prior written notice, Tenant shall have
the option to cancel its obligations under this Lease effective at the end of
the thirty-eighth (38th) month of the Lease by making a payment to Landlord upon
the exercise of the cancellation option equal to the sum of (a) Landlord's
unamortized deal costs (i.e. leasehold improvements, commissions, free rent,
etc.) associated with this Lease based upon an interest rate of eight percent
(8%) with such amortization commencing after the date any Conditional Rent has
ceased (with respect to the initial costs incurred by Landlord) plus (b) four
(4) months Base Rent at the rate in effect as of the date the lease would
terminate (collectively, the "Termination Fee"). At least ninety (90) days prior
to the Notice Deadline, Tenant shall send Landlord notice requesting the amount
of the Termination Fee, such that Tenant will know the correct Termination Fee
to be tendered to Landlord upon exercise of the cancellation option. If Tenant
does not request the amount of the Termination Fee as provided herein, Tenant's
failure to tender the correct Termination Fee at the time of exercise of the
cancellation option shall render the exercise of such option null and void.
ARTICLE 22: SIGNAGE
Subject to City and Landlord approvals, Tenant shall be granted the right to
install building "eyebrow" signage. In addition to the eyebrow sign, subject to
city and Landlord prior approvals, Tenant will be allowed to place company name
over side entrance to the suite. All costs associated with said signage will be
at Tenant's sole cost and expense.
-25-
ARTICLE 23: FIRST RIGHT OF OFFER
Landlord shall deliver to Tenant notice of any space on the ground floor, other
than the Premises, becoming available from time to time during the Lease Term
("Landlord's Notice"). Tenant shall have a right of first offer to lease such
space at Fair Market Rental (as hereinafter defined). For purposes hereof, "Fair
Market Rental" shall mean the rent payable by a willing Tenant to a willing
landlord, taking into account all relevant factors, for like and comparable
space, improved with tenant improvements of like and comparable quality to those
then existing in such space, in the Building and like and comparable office
buildings located in the immediate market area of the project or in like and
comparable areas; provided, however, that in determining "Fair Market Rental",
brokerage commissions payable by landlords shall be disregarded. Within two (2)
weeks of Landlord's receipt of Tenant's Notice (as hereinafter defined),
Landlord shall notify Tenant of Fair Market Rental as determined by Landlord.
Any dispute between the parties hereto with respect to the amount so determined
shall be resolved by arbitration in accordance with the then-existing rules of
the American Arbitration Association; provided, however, that there shall not be
deemed to be such a dispute unless Tenant notifies Landlord thereof within two
(2) weeks after Landlord so notifies Tenant of Fair Market Rental. The
arbitrator (s) shall be a member of the American Institute of Real Estate
Appraisers (or any successor association or body of comparable standing) and
shall have been engaged in the appraisal of commercial real estate situated in
the area of the Building for a period of not less than five (5) years
immediately preceding his appointment. Tenant shall pay as rent the amount
determined by Landlord as Fair Market rental until such time as determined by
arbitration, whereupon Tenant shall pay any additional amount due to Landlord
based upon such subsequent determination of Fair Market Rental. If rent so paid
by Tenant is higher than that ultimately determined by the arbitration process,
Landlord shall reimburse such difference to Tenant. The term of the lease for
such space shall be coterminous with the then remaining term of this Lease, and
the other lease terms and conditions for such space shall be identical to this
Lease with respect to the Premises. Space shall not be deemed available in the
Building if a then existing tenant occupying such space decides to renew or
extend the term of its lease with respect to such space pursuant to an options
to so renew or extend, or if a then existing tenant in the Building then has an
option to expand into such space as additional space. This right of first offer
may be validly exercised only by Tenant's notice in writing ("Tenant's Notice")
received by Landlord within one (1) week after delivery of Landlord's Notice to
Tenant, and only if (a) Tenant is not then or at any time thereafter until such
delivery of such space to Tenant is in default hereunder and (b) the original
Tenant hereunder intends to occupy such space upon delivery thereof and
furnishes evidence thereof reasonably satisfactory to Landlord, and Tenant does
not assign any interesting this Lease or sublease all or any portion of the
Premises, or enter into any agreement to do same, at any time prior to such
attempted exercise or thereafter until such delivery. In the event less than two
(2) years remain on the Primary Lease term, this right shall terminate.
"LANDLORD"
McMorgan Institutional Real Estate Fund I, LLC
By: McMorgan & Company LLC
Its: Manager
By:
-------------------------------------
Xxxxx Xxxxxx
Its: Vice President
-26-
"TENANT"
Auxilio, Inc., a Nevada Corporation
By:
-------------------------------------
Xxxxxxx Xxxxxxxxx
Its: President & COO
By:
-------------------------------------
If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. The Lease must
be executed by the president or vice-president and the secretary or assistant
secretary, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event, the bylaws or a certified copy of the
resolution, as the case may be, must be attached to this Lease.
-27-
Exhibit "A"
OUTLINE OF PREMISES
[FLOOR PLAN OMITTED]
-28-
Exhibit "B"
NOTICE OF LEASE COMMENCEMENT
Auxilio, Inc.
-------------------------
-------------------------
Attn: Xxxxxxx Xxxxxxxxx
Re: Commencement Date of Lease Dated November 1, 2004
for Auxilio, Inc., a Nevada Corporation
00000 Xxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx (the "Lease")
Dear Xx. Xxxxxxxxx:
In accordance with Section 2.1 of the Lease, we hereby advise you that the
Commencement Date of the Lease is November 1, 2004.
Kindly acknowledge your acceptance of the Commencement Date by signing a
copy of this letter in the space provided below and returning it to the
undersigned.
Very truly yours,
Acknowledged and Accepted this
___ day of ________, 20__
Auxilio, Inc.
By:
-----------------------------
Xxxxxxx Xxxxxxxxx
Its: President & COO
By:
-----------------------------
Title:
--------------------------
-1-
Exhibit "C"
RULES AND REGULATIONS
1. Tenant and Tenant's employees shall not loiter in the entrance or
corridors of the Building or in any way obstruct the sidewalks, entry passages,
halls, stairways and elevators in and around the Building, and shall use the
same only as passageways, and means of passage, to and from their respective
offices.
2. The sash doors, sashes, windows, glass doors, lights and
skylights that reflect or admit light into the halls or other places of the
Building shall not be covered or obstructed, and doors leading into the
corridors shall not be suffered to remain open. The water closets and urinals
shall not be used for any purposes other than those for which they were
constructed, and no rubbish, newspapers or other substances of any kind shall be
thrown into them. Tenant shall not xxxx, drive nails, screw or drill into,
paint, or in any way deface the walls, ceilings, partitions, floors, wood, stone
or iron work of the Building. The expense of any breakage, stoppage or damage
resulting from a violation of this rule shall be borne by Tenant.
3. No awning, shade, sign, advertisement or notice shall be
inscribed, painted or affixed on or to any part of the outside or inside of the
Building, except by the written consent of Landlord and unless it be of such
color, size and style and in such place upon or in the Building as may be
designated by Landlord. If Tenant desires window curtains in addition to those
already in the Premises and owned by Landlord, the same must be of such uniform
shape, color, material and make as may be prescribed by Landlord and must be put
up in the manner directed by Landlord, and paid for by Tenant. Tenant shall
cooperate with Landlord in order to preserve the efficiency of the heating and
air conditioning systems in the Building.
4. Electric wiring of every kind shall be introduced and connected
as directed by Landlord, and no boring or cutting for wires shall be allowed
except with the consent of Landlord. The location of telephone and telegraph
instruments shall be designated by Landlord.
5. Tenant shall not use any machinery in the Premises which may
cause any excessive noise, as determined by Landlord in its sole judgment,
reasonably exercised, or may cause any jar or tremor to the floors or walls, or
which by its weight may injure the floors of the Building.
6. Landlord may limit the weight, size and position of all safes
used in the Building and such safes shall in all cases stand on wood or metal of
such size as shall be designated by Landlord. All damage done to the Building by
putting in, taking out or maintaining a safe shall be repaired at the expense of
Tenant. Landlord may likewise limit the weight, size and position of any
equipment and machinery of every kind used in the Building. No machinery of any
kind, whether manually or electrically operated, including, without limitation,
IBM or other forms of electronic business machines, heating or air conditioning
machines, and air or water cooling machines (but excluding electrically operated
typewriters and adding or calculating machines) will be allowed in the Building
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed.
7. Tenant and Tenant's officers, agents and employees shall neither
make nor permit any sound to be made in the Premises or the Building which would
disrupt or interfere with the other tenants of the Building, nor make nor permit
any other improper noises in the Building, nor interfere in any other way with
other tenants or those having business in the Building, nor bring into nor keep
within the Building any animal, bird or bicycle. Tenant and Tenant's officers,
agents and employees shall not throw cigar or cigarette butts or other items of
any kind out the windows or doors or down the passageways or skylights of the
Building, or sit on or place anything upon the window xxxxx or outside ledges.
8. All freight must be moved into, within and out of the Building
under the supervision of Landlord, and according to such regulations as may be
posted in the Building, and shall be moved only between the hours of 9:00 a.m.
and 11:00 a.m., and 2:00 p.m. and 4:00 p.m. of days other than Saturdays,
Sundays and holidays (no moving being permitted on Saturdays, Sundays or
holidays without Landlord's permission), but Landlord shall not be responsible
for the loss of or damage to such freight from any cause.
-1-
9. All keys shall be obtained from Landlord and all keys shall be
returned to Landlord upon the termination of this Lease. Tenant shall not change
the locks or install other locks on the doors. Neither Tenant, his agents nor
employees shall have any duplicate key made.
10. Use of the Premises outside of Building Service Hours shall be
permissive and subject to such rules and requirements as Landlord may from time
to time prescribe.
11. The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of Tenant only, and
Landlord reserves the right to exclude all other names therefrom and to make a
reasonable charge for each and every name other than the name of Tenant which
Tenant may desire to be placed upon such bulletin board and to which Landlord
may consent.
12. No person shall be employed by Tenant to do janitorial work in
any part of the Building without the prior written consent of Landlord.
13. Landlord reserves the right to exclude or expel from the
Building any person who, in the judgment of Landlord, is intoxicated or under
the influence of liquor or drugs or who shall in any manner do any act in
violation of the rules and regulations of the Building.
14. Landlord reserves the right to close and keep locked all
entrance and exit doors of the Building and gates or doors closing the stairways
thereof during such hours as Landlord may deem to be advisable for the adequate
protection of the Building.
15. Tenant, Tenant's employees, agents or associates, or other
persons entering or leaving the Building when it is so locked may be required to
sign the Building register when so doing, and the watchman in charge may refuse
to admit Tenant or any of Tenant's employees, agents or associates or any other
person to the Building while it is so locked, without a pass previously arranged
or other satisfactory identification, showing such person's right to access to
the Building at such time. However, Landlord assumes no responsibility
whatsoever in connection therewith and shall not be liable for any damage
resulting from any error in regard to any such pass or identification or from
the admission of any unauthorized person to the Building.
16. Landlord reserves the right to require issuance of a permit or
pass authorizing removal by Tenant or its employees, agents or associates of any
furniture, parcel, crate, typewriter or other sizable or valuable item of
personal property from the Building.
17. Neither Tenant nor its servants, employees, agents, visitors or
licensees shall at any time bring or keep upon the Premises any flammable,
combustible or explosive fluid, chemical or substance, except for a reasonable
quantity of such material reasonably necessary for the conduct of Tenant's trade
or business.
18. Tenant agrees that at no time will it permit any equipment,
machinery or device of any kind to be extended out of any window of the Premises
or on any ledge outside of any such window, specifically including any air
conditioner or air conditioning equipment.
19. Landlord reserves the right at any time to change or rescind any
one or more of these rules or regulations or to make such other further
reasonable rules and regulations applicable to all tenants of the Building as in
Landlord's reasonable judgment may from time to time be necessary for the
management, safety, care and cleanliness of the Premises and the Building, and
for the preservation of good order therein as well as for the convenience of
other occupants and tenants therein. Landlord shall not be responsible to Tenant
herein or to any other person for the nonobservance or violation of the rules
and regulations by any other tenant or other person. Tenant shall be deemed to
have read these rules and regulations and to have agreed to abide by them as a
condition to Tenant's occupancy of the Premises.
-2-
20. Tenant at all times agrees to abide by any additional rules or
regulations which are ordered or requested by any governmental or military
authority.
21. Tenant and its employees, agents, subtenants, contractors and
invitees shall comply with all applicable "no-smoking" ordinances and,
irrespective of such ordinances, shall not smoke or permit smoking of
cigarettes, cigars or pipes in the Premises or the Building.
-3-
EXHIBIT D
LANDLORD WORK LETTER AGREEMENT
Auxilio, Inc., a Nevada Corporation, (hereinafter called Tenant) and McMorgan
Institutional Real Estate Fund I, LLC (hereinafter called Landlord) are
executing simultaneously with this Work Letter Agreement (Agreement), a written
Lease Agreement (the Lease) covering those certain premises more particularly
described in Exhibit A to the Lease (the Premises) in the Building addressed at
00000 Xxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx.
To induce Tenant to enter into the Lease (which is hereby incorporated by
reference to the extent that the provisions of this agreement may apply thereto)
and in consideration of the mutual covenants hereinafter contained, Landlord and
Tenant mutually agree as follows:
1. DEFINITIONS. Unless otherwise defined in this Agreement, the capitalized
terms used herein shall have the meaning assigned to them in the Lease.
2. REPRESENTATIVES. Landlord hereby appoints Xxxx Xxxxxxxx of CB Xxxxxxx Xxxxx,
as Landlord's representative to act for Landlord in all matters covered by this
Agreement. Tenant hereby appoints , as Tenant's representative to act for Tenant
in all matters covered by this Agreement. All inquiries, requests, instructions,
authorizations and other communications with respect to the matters covered by
this Agreement shall be related to Landlord's representative or Tenant's
representative, as the case may be. Tenant will not make any inquiries of or
request to, and will not give any instructions or authorizations to, any other
employee or agent of Landlord, including Landlord's architects, engineers, and
contractors or any of their agents or employees, with regard to matters covered
by this Agreement. Either Landlord or Tenant may change its representative at
any time by written notice to the other.
3. BUILDING PLANS AND SPECIFICATIONS. (Intentionally Deleted)
4. TENANT FINAL SPACE PLAN. Tenant shall deliver to Landlord, within ten (10)
business days following the full execution of the Lease, a preliminary space
layout and improvement plan, which shall include finish specifications, for the
Premises ("Tenant Space Plan"). Upon Landlord's receipt of Tenant Space Plan,
Landlord shall have five (5) business days to review and approve the Tenant
Space Plan. Landlord and Tenant shall utilize their good faith efforts to
resolve any disagreement concerning the Tenant Space Plan. Upon Landlord's and
Tenant's approval of the Tenant Space Plan, such document shall thereafter be
referred to as the "Tenant Final Space Plan", to be attached hereto as Exhibit
B-1.
5. TENANT WORKING DRAWINGS. Based upon the approved Tenant Final Space Plan,
Landlord will, through Landlord's space planner, cause working drawings for the
improvements to the Premises (the "Tenant Working Drawings") to be prepared and
delivered to Tenant. The Tenant Working Drawings will include all requirements
of any government authority, and all architectural, mechanical and electrical
engineering plans required for the issuance of permits and the completion of the
Tenant Improvements, which may include, but not be limited to, complete detailed
plans and specifications for Tenant's partition layout, reflected ceiling,
heating and air conditioning, electrical outlets and switches, telephone
outlets, plumbing, fire sprinklers and finish selections. It is further agreed
that all plans and specifications referred herein and above are subject to
Landlord's approval, which Landlord agrees shall not be unreasonably withheld or
delayed, which determination shall be made within five (5) business days
following Landlord's receipt of the Tenant Working Drawings. Landlord's
preparation or approval of the Tenant Working Drawings, the Tenant Space Plan
and any other plans or specifications shall not constitute any representations
as to the adequacy, efficiency, performance or desirability of any space plan or
improvements. Tenant shall furnish, within three (3) business days after
Landlord's request, all information necessary to enable Landlord to complete the
Tenant Working Drawings. Any interior design services, such as selection of
paint colors, wall coverings, fixtures, furnishings, carpeting or design of
millwork or other special items shall be provided by Tenant at its expense, but
shall be subject to the reasonable approval of Landlord. Upon completion of the
Tenant Working Drawings, Landlord shall deliver such documents to Tenant for
review and approval, which shall not be unreasonably withheld. Tenant shall
respond to Landlord with (i) any comments to such documents or (ii) its approval
of the documents within three (3) business days following Tenant's receipt
thereof.
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6. NO SUBSTITUTIONS OR CREDITS. (Intentionally Deleted)
7. COST OF CONSTRUCTION AND PLANS. In connection with the Tenant Improvements to
be constructed by Landlord, Landlord, subject to Landlord's approval of costs,
shall perform the improvements in accordance with Tenant's space plan Exhibit
B-1 attached, utilizing building standard materials, finishes and quantities,
which shall include the preparation of the Tenant Space Plan and Tenant Working
Drawings. Any additional costs to complete the Tenant Improvements (the
"Above-Allowance Work"), including, but not limited to, the cost of overhead,
supervision and profit, shall be paid to Landlord by Tenant in a lump sum. If
the total cost of completing the Tenant Improvements is less than the Allowance,
any savings shall inure to the benefit of Landlord.
8. FINAL TENANT COST PROPOSAL. Within ten (10) business days following Tenant's
approval of the Tenant Working Drawings, Landlord will provide Tenant a final
cost proposal for constructing the improvements to the Premises in accordance
with the Tenant Working Drawings (the "Final Tenant Cost Proposal"). The Final
Tenant Cost Proposal will be based on actual bids received by Landlord from its
contractors, who shall be signatory to the appropriate collective bargaining
agreement (s) with the labor organizations affiliated with the Building and
Construction Trades Department of the AFL-CIO, with the International
Brotherhood of Teamsters, or with the United Brotherhood of Carpenters and
Joiners of America, and shall also include Landlord's administration fee of 5%.
9. APPROVAL OF FINAL TENANT COST PROPOSAL. Tenant will deliver to Landlord
written approval of the Final Tenant Cost Proposal within five (5) business day
following Tenant's receipt. Landlord shall use reasonable care in preparing the
Final Tenant Cost Proposal; provided, however, that the Final Tenant Cost
Proposal shall not limit Tenant's obligation to pay the actual cost of any
Above-Allowance Work if such cost is solely attributable to: (i) any changes in
the Tenant Improvements; or (ii) any changes, modifications, or change orders
requested by Tenant; or (iii) any delay by Tenant enumerated in Paragraph 12
below that increases the cost of construction; or any changes required by a
governmental authority during construction of the Tenant Improvements.
10. EFFECT OF APPROVAL. Tenant's approval of Tenant Working Drawings (initial or
revised) will constitute Tenant's acknowledgment that such drawings correctly
depict the proper layout and design for any and all improvements to the Premises
desired by Tenant. All of the work called for by the Tenant Working Drawings
will be performed by one or more contractors engaged by Landlord, at Landlord's
cost and expense. Landlord will submit the Tenant Working Drawings to the
appropriate governmental authorities for necessary approvals and building
permits.
11. PAYMENT FOR ABOVE ALLOWANCE WORK. Within five (5) business days following
Tenant's approval of the Final Tenant Cost Proposal, Tenant shall deliver to
Landlord a lump sum payment for the Above-Allowance Work, prior to Landlord
commencing work on the Tenant Improvements. All amounts payable by Tenant under
this Work Letter shall constitute additional rent under the Lease, and Landlord
shall have the same remedies against Tenant for default in the payment thereof
as in the case of Tenant's failure to pay any other sum due under the Lease.
12. COMPLETION AND RENTAL COMMENCEMENT DATE. Each of the following shall be
deemed a Tenant delay to the extent that actual delays are caused thereby, for
the purposes of establishing the Commencement Date of the Lease:
(a) Tenant's failure to timely supply information necessary to complete
the Tenant Working Drawings (or revisions to such drawings); or
(b) Tenant's failure to timely pay for any Above-Allowance Work; or
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(c) material modifications, revisions and changes to the Tenant Space
Plan or Tenant Working Drawings requested by or on behalf of Tenant;
or
(d) changes in the work requested by or on behalf of Tenant or orders to
halt or delay the work given by or on behalf of Tenant; or
(e) any delay in the completion of the work caused by Tenant's
contractors or material suppliers; or
(f) any other delay of any kind or nature caused by Tenant or its
contractors, architects, space planners or other agents or
employees.
Landlord using its commercially reasonable efforts, agrees to provide Tenant
with written notice ("Delay Notice") of any delay described by this Section
within three (3) business days following the occurrence thereof. The failure by
Landlord to deliver the Delay Notice within ten (10) business days following
such delay shall be deemed Landlord's waiver of the effect of such delay,
provided however, Landlord may subsequently deliver a Delay Notice with regard
to such Tenant delay and any subsequent continuing delay shall be recognized as
a Tenant delay. Notwithstanding the preceding sentence, to the extent that such
delay relates to (i) any action required to be performed by Tenant pursuant to
the express provisions of this Lease within a specified time period, and/or (ii)
Landlord and Tenant have previously acknowledged, in writing, that Tenant's
actions and/or inaction are resulting in a delay. Landlord's failure to deliver
a Delay Notice shall not be deemed a waiver of such delay.
13. CHANGE ORDERS. Tenant may authorize changes in the work during construction
only by written instructions to Landlord's representative on a form approved by
Landlord. Also, such changes will be subject to Landlord's prior written
approval. Before commencing any change, Landlord will prepare and deliver to
Tenant, for Tenant's approval, the change order setting forth the cost of such
change, which will include associated architectural, engineering and
construction fees, if any, and the cost of such change for Landlord's
contractor's overhead and profit. If Tenant fails to approve such change order
within three (3) business days, Tenant will be deemed to have withdrawn the
proposed change and Landlord will not proceed to perform that change. If Tenant
timely approves such change order, Tenant shall immediately pay to Landlord any
amounts payable by Tenant in connection with the change orders provided for in
this Paragraph. Delays resulting from requested change orders by Tenant or
Tenant's failure to comply with the time parameters set forth in this Agreement
shall accordingly extend the Expected Completion Date.
14. ACCESS TO PREMISES PRIOR TO DELIVERY. Landlord shall allow Tenant and its
contractors to enter the Premises at reasonable times during the seven (7) day
period prior to the Commencement Date to permit Tenant to install its cabling
for telephone, computers, work stations and security system, if any; provided,
however, that prior to such entry into the Premises, Tenant shall provide
evidence reasonably satisfactory to Landlord that the insurance required to be
carried by Tenant, per the Lease, shall be in full force and effect at the time
of such entry. Tenant and its representatives shall not interfere with Landlord
or Landlord's contractor in completing the work required of Landlord under this
Agreement and Tenant and its representatives shall be subject to all directives
of Landlord and Landlord's contractors in connection with such entry as well as
the use of the Building's common areas, restrooms, elevators, truck loading
areas and other facilities. Prior to the commencement of any construction in the
Premises, Tenant shall provide Landlord's representative a proposed work
schedule for Tenant's contractors and other representation, which schedule shall
be subject to Landlord's reasonable approval. Landlord's contractor, subject to
such schedule, shall reasonably coordinate with Tenant with regard to Tenant's
construction schedule. Tenant agrees that Landlord shall not be liable in any
way for any injury, loss or damage which may occur to any of Tenant's property
placed upon or installed in the Premises prior to the Commencement Date, the
same being at Tenant's sole risk, and Tenant shall be liable for all injury,
loss or damage to persons or property arising as a result of such entry of the
Premises by Tenant or its representatives.
15. EXCESSIVE LOADS. Tenant agrees that should the nature of its layout or any
of its equipment, fixtures or furnishings to be placed in the Premises place a
burden in excess of the Building's designed load, Tenant agrees to pay Landlord
the cost of any modifications to the Building necessary to accommodate Tenant's
furniture, furnishings or layout, as well as any design. engineering or other
professional fees incurred by Landlord in connection with such modifications.
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16. ALTERATIONS. Any alterations or improvements described by Tenant after
Landlord's delivery of the Premises shall be subject to the provisions of the
Lease.
If the foregoing correctly sets forth our understanding, please sign this
Work Letter where indicated below.
LANDLORD: TENANT:
McMorgan Institutional Real Auxilio Inc., a Nevada Corporation
Estate Fund I, LLC
By:
--------------------------------------- --------------------------------
By: McMorgan & Company LLC Its:
--------------------------------
Its: Investment Manager Name:
--------------------------------
By: By:
--------------------------------
Its: Its:
--------------------------------
Name:
--------------------------------
Address: c/o CB Xxxxxxx Xxxxx Address:
0000 X. Xxxxxxx, Xxxxx 000 ----------------------------
Xxxxxxx, XX 00000
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EXHIBIT B-1
TENANT SPACE PLAN
[GRAPHIC OMITTED]
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