EXHIBIT 10.22
STANDARD INDUSTRIAL/COMMERCIAL
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MULTI-TENANT LEASE-MODIFIED GROSS
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1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes
only, November 6, 1997, is made by and between AGBRI Xxxxx, LLC, a Delaware
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limited liability company ("Lessor") and New Century Financial Corporation, a
Delaware corporation ("Lessee"), (collectively the "Parties," or individually a
"Party").
1.2(a) Premises: That certain portion of the Building, comprising
approximately 66,310 square feet of rentable area, as defined in Paragraph 2,
including all improvements therein or to be provided by Lessor under the terms
of this Lease, commonly known by the street address of 17701 Xxxxx, located in
the City of Irvine, County of Orange, State of California, as outlined on
Exhibit A attached hereto ("Premises"). The Premises are comprised of two
portions. The first portion, referred to herein from time to time as the Initial
Premises, consists of 45,017 square feet of rentable area and shall be deemed to
be delivered to and accepted by Tenant as of the Commencement Date. The second
portion of the Premises consists of 21,293 square feet of rentable area, shall
be referred to herein from time to time as the "Expansion Premises," and shall
be automatically be considered to be a part of the Premises upon the date that
is the earlier to occur of (i) the date Lessee first occupies the Expansion
Premises, or (ii) the first day of the seventh (7th) calendar month after the
month in which the Commencement Date occurs (the "Expansion Commencement Date").
The location of the Expansion Premises is depicted on Exhibit A. The "Building"
is that certain building containing the Premises. In addition to Lessee's rights
to use and occupy the Premises as hereinafter specified, Lessee shall have non-
exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls
or utility raceways of the Building or to any other buildings in the Project.
The Premises, the Building, the Common Areas, the land upon which they are
located, along with all other buildings and improvements thereon, are herein
collectively referred to as the "Project." (Also see Paragraph 2.)
1.2(b) Parking: Lessee's prorata share of unreserved vehicle parking
spaces, on a non-exclusive basis, ("Unreserved Parking Spaces"). (Also see
Paragraph 2.6)
1.3 Term: Five years ("Original Term" commencing upon the earlier
to occur of the substantial completion of the Tenant Improvements for the
Initial Premises, as such terms are described in the Tenant Work Letter attached
hereto as Exhibit B, or January 1, 1998, (unless extended due to Unavoidable
Delays as provided in the Tenant Work Letter) (the "Commencement Date") and
ending December 31, 2002 ("Expiration Date"). (Also see Paragraph 3.)
1.4 Early Possession: Not Applicable ("Early Possession Date").
(Also see Paragraphs 3.2 and 3.3).
1.5 Base Rent: (i) $1.24 per square foot of Rentable Area, as
hereinafter defined, per month, or any pro rata portion thereof for months one
(1) through thirty (30) of the Lease Term, increasing to (ii) $1.32 per square
foot for months thirty-one (31) through sixty (60) of the Lease Term ("Base
Rent"), payable on the Commencement Date, and thereafter on the first day of
each month during the Lease Term. The Base Rent for the Expansion Premises shall
be due and payable on the Expansion Commencement Date and thereafter on the
first day of each month during the Lease Term.(Also see Paragraph 4.)
1.6(a) Base Rent Paid Upon Execution: $55,821.08 as Base Rent for the
first month of the Lease Term.
1.6(b) Lessee's Share of Common Area Operating Expenses: Seventy six
and sixty-six one hundredths percent (76.66%) ("Lessee's Share") as determined
by prorata rentable square footage of the Premises as compared to the total
rentable square footage of the Building.
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1.7 Security Deposit: Equal to 110% of the first months Base
Rent ("Security Deposit").
1.8 Permitted Use: General Office, storage, sales and
administrative use ("Permitted Use") (Also see Paragraph 6.)
1.9 Insuring Party. Lessor is the "Insuring Party." (Also see
Paragraph 8.)
1.10(a) Real Estate Brokers. The following real estate broker(s)
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
[XXX] CB Commercial represents Lessor exclusively ("Lessor's Broker")
[XXX] Xxx and Associates represents Lessee exclusively ("Lessee's Broker");
or
1.11 Guarantor. Not Applicable.
1.12 Addenda and Exhibits. Attached hereto are Exhibit A and B, and
the Extension Option Rider, all of which constitute a part of this Lease.
2. Premises, Parking and Common Areas.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. The term "Rentable
Area" or "square foot(age)", or any derivation thereof, as used in this Lease,
shall mean the number of square feet in the Premises, as determined by Lessor.
Unless otherwise provided herein, any statement of square footage set forth in
this Lease, or that may be used in calculating rental and/or Common Area
Operating Expenses or other sums to be paid by Lessee, is an approximation which
Lessor and Lessee agree is reasonable and the rental and Lessee's Share (as
defined herein) based thereon is not subject to revision whether or not the
actual square footage of the Building or the Premises, or any portion thereof,
is more or less.
2.2 Condition. On the Commencement Date, Lessor shall provide the
Initial Premises to Lessee with the tenant improvements to the Building and the
Initial Premises as the same are described in the Tenant Work Letter attached
hereto as Exhibit B (the "Lessee Improvements") being substantially completed.
Additionally, Lessor shall deliver the Initial Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Initial Premises, other
than those constructed by Lessee, shall be in good operating condition on the
Commencement Date and the skylights therein shall be in watertight condition and
repairs to concrete sub-floor shall be completed in a good and workmanlike
manner. If a non-compliance with said warranty exists as of the Commencement
Date, Lessor shall, except as otherwise provided in this Lease, promptly after
receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify same at Lessor's expense. If Lessee
does not give Lessor written notice of a non-compliance with this warranty
within thirty (30) days after the Commencement Date, correction of that non-
compliance shall be the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code.
Lessor warrants that, unless specified to the contrary herein or in the Tenant
Work Letter, it shall be Lessor's responsibility to insure that any improvements
(other than those constructed by Lessee or at Lessee's direction) on or in the
Premises and the Common Areas of the Building and which have been constructed or
installed by Lessor or at Lessor's instigation shall comply or shall be made to
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to
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any Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or
to be made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within six (6) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be reasonable
or appropriate to rectify the non-compliance. Lessor makes no warranty that the
Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable
Laws (as defined in Paragraph 2.4).
Lessee warrants that any improvements (other than those
constructed by Lessor or at Lessor's direction) on or in the Premises which are
constructed or installed by Lessee shall comply with all applicable covenants or
restrictions of record and applicable building codes, regulations and ordinances
in effect on the Commencement Date and throughout the Term of this Lease. Said
warranties shall specifically apply to any Alterations or Utility Installations
(defined in Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do
not comply with said warranties, Lessee shall, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessor or any
governmental authority, take such action, at Lessee's expense, as may be deemed
reasonable or appropriate by Lessor to rectify the non-compliance.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that
it has been advised by the Broker(s) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record (collectively,
"Applicable Laws") and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefore as the same relate to the occupancy of
the Premises by Lessee and/or the terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written representations
or warranties or is responsible for any additional investigation with respect to
said matters other than as set forth in this Lease. Accordingly, except as may
be otherwise specifically provided in this Lease, Lessee hereby accepts the
Premises and the Project in their condition existing as of the Lease
Commencement Date or the date that Lessee takes possession of the Premises,
whichever is earlier, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the use or
initial build out of the Premises, and any easements, covenants or restrictions
of record, and accepts this Lease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto.
2.5 Intentionally Omitted.
2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the
Common Areas designated from time to time by Lessor for parking. Lessee shall
not use more parking spaces than said number. Said parking spaces shall be used
for parking by vehicles no larger than full-size passenger automobiles or pick-
up trucks, herein called "Permitted Size Vehicles." Vehicles other than
Permitted Size Vehicles shall be parked and loaded or unloaded as directed by
Lessor in the Rules and Regulations (as defined in Paragraph 40) issued by
Lessor. (Also see Paragraph 2.9.)
(a) Lessee shall not permit or allow any vehicles that belong
to or are controlled by Lessee or Lessee's employees, suppliers, shippers,
customers, contractors or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities or depicted on the
Site Plan.
(b) If Lessee permits or allows any of the prohibited
activities described in this Paragraph 2.6, then Lessor shall have the right,
without notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
2.7 Common Areas--Definition. The term "Common Areas" is defined
as all areas and facilities outside the Premises and within the exterior
boundary line of the Project
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and interior utility raceways within the Premises that are provided and
designated by the Lessor from time to time for the general nonexclusive use of
Lessor, Lessee and other lessees of the Project and their respective employees,
suppliers, shippers, customers, contractors and invitees, including but not
limited to common entrances, lobbies, corridors, stairways and stairwells,
public restrooms, elevators, parking areas, loading and unloading areas, trash
areas, roadways, sidewalks, walkways, parkways, driveways and landscaped areas.
2.8 Common Areas--Lessee's Rights. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the nonexclusive right to
use, in common with others entitled to such use, the Common Areas as they exist
from time to time, subject to any rights, powers, and privileges reserved by
Lessor under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the right to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor or
Lessor's designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
2.9 Common Areas--Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable Rules and Regulations with respect thereto
in accordance with Paragraph 40. Lessee agrees to abide by and conform to all
such Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations by
other lessees of the Project.
2.10 Common Areas--Changes. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(a) To make reasonable changes to the Common Areas, including,
without limitation, changes in the location, size, shape and number of lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, ingress, egress, direction of traffic, decorative walls, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways,;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of (but
contiguous to) the Project to be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common
Areas so, long as the same are contiguous to the Project;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Project, or any portion thereof; and
(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Project as Lessor may,
in the exercise of sound business judgment, deem to be appropriate.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3. Options to extend the Original
Term of the Lease are described in the Extension Option Rider attached hereto.
For purposes of this Lease, the
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Term of this Lease shall refer to the Original Term, as it may be extended by
any properly exercised options granted hereunder.
3.2 Intentionally Omitted.
3.3 Delay in Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee.
4. Rent.
4.1 Base Rent, Utilities and Janitorial Services. Lessee shall pay
Base Rent and other rent or charges, as the same may be adjusted from time to
time, to Lessor in lawful money of the United States, without offset or
deduction, on or before the day on which it is due under the terms of this
Lease. For purposes of this Lease, Base Rent and all other sums or charges due
Lessor from Lessee hereunder may be collectively referred to from time to time
as "Rent." Base Rent and all other rent and charges for any period during the
term hereof which is for less than one full month shall be prorated based upon
the actual number of days of the month involved. Payment of Base Rent and other
charges shall be made to Lessor at its address stated herein or to such other
persons or act such other addresses as Lessor may from time to time designate in
writing to Lessee. Lessee shall also pay directly for all utilities and
janitorial services supplied to the Premises except for water, including but not
limited to electricity, telephone, security systems in the Premises, if any, gas
and cleaning of the Premises, together with any taxes thereon. If any such
utilities or services are not separately metered to the Premises or separately
billed to the Premises, Lessee shall pay to Lessor a reasonable approximation,
to be determined by Lessor, of all such charges jointly metered or billed with
other premises in the Building, in the manner and within the time periods set
forth in Paragraph 4.2.
4.2 Common Area Operating Expenses Increase. Lessee shall pay to
Lessor during the term hereof, in addition to the Base Rent, Lessee's Share (as
specified in Paragraph 1.6(b) of the amount by which all Operating Expenses, as
hereinafter defined, for each Comparison Year exceeds the amount of all
Operating Expenses for the Base Year, such excess being hereinafter referred to
as the "Operating Expense Increase", in accordance with the following
provisions:
(a) "Lessee's Share" is defined, for purposes of this Lease,
as the percentage set forth in paragraph 1.6(b) of the Basic Lease Provisions,
which percentage has been determined by dividing the approximate square footage
of rentable area of the Premises by the total approximate square footage of the
rentable area contained in the Project.
(b) "Base Year" is defined as the calendar year 1998.
(c) "Comparison Year" is defined as each calendar year during
the term of this Lease subsequent to the Base Year. Lessee's Share of the
Operating Expense Increase for the first and last Comparison Years of the Lease
Term shall be prorated according to that portion of such Comparison Year as to
which Lessee is responsible for a share of such increase.
(d) "Common Area Operating Expenses" or "Operating Expenses"
are defined, for purposes of this Lease, as all costs, expenses and amounts, of
every kind and nature incurred by Lessor relating to the management, ownership,
repair, restoration or operation of the Project, including, but not limited to,
the following:
(i) The operation, repair and maintenance of the
Project, in neat, clean, safe, good order and condition, including but not
limited to the following:
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(aa) The Common Areas, including their surfaces,
coverings, decorative items carpets, drapes and window coverings, and including
parking areas, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, driveways, landscaped areas, striping, bumpers, irrigation
systems, Common Area lighting facilities, fences and gates, elevators and roof.
(bb) Exterior signs and any tenant directories.
(cc) All heating, air conditioning, plumbing,
electrical systems, life safety equipment, telecommunication and other equipment
used in common by, or for the benefit of, lessees or occupants of the Project,
including elevators and escalators, tenant directories, fire detection systems
including sprinkler system maintenance and repair.
(ii) The cost of water, gas, electricity and telephone to
service the Common Areas and the Project.
(iii) Trash disposal, property management and security
services and the costs of any environmental inspections.
(iv) Reserves set aside for maintenance and repair of Common
Areas.
(v) Any increase above the Base Real Property Taxes (as
defined in Paragraph 10.2(b)) for the Building and the Common Areas.
(vi) Any "Insurance Cost Increase" (as defined in Paragraph
8.1).
(vii) The cost of the liability and property insurance
policies maintained by Lessor pursuant to the terms hereof with respect to the
Common Areas.
(viii) Any deductible portion of an insured loss concerning
the Building or the Common Areas.
(ix) Labor, salaries and applicable, reasonable fringe
benefits and costs, materials, supplies and tools, used in maintaining and/or
cleaning the Project and accounting and a management fee attributable to the
operation of the Project;
(x) Replacements of equipment or improvements to the extent
the same are either (a) reasonable or necessary, or (b) reasonably anticipated
to reduce the costs of operating the Project.
(xi) Replacing and/or adding improvements mandated by any
governmental agency and any repairs or removals necessitated thereby amortized
over its useful life according to Federal income tax regulations or guidelines
for depreciation thereof (including interest on the unamortized balance as is
then reasonable in the judgment of Lessor's accountants);
(xii) any equipment rental agreements or management
agreements (including the cost of any management fee) and costs of operation and
maintenance of a room for delivery and distribution of mail (if such a room is
provided) including the fair rental value of such mail room
(xiii) Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.
(e) Any Common Area Operating Expenses and Real Property Taxes
that are specifically attributable to the Building or to the operation, repair
and maintenance thereof, may be allocated entirely to the Building.
(f) The inclusion of the improvements, facilities and services set
forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon
Lessor to either have
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said improvements or facilities or to provide those services unless the Project
already has the same, Lessor already provides the services, or Lessor has agreed
elsewhere in this Lease to provide the same or some of them.
(g) If Lessor is not furnishing any particular work or service
(the cost of which, if performed by Lessor, would be included in Operating
Expenses) to a tenant who has undertaken to perform such work or service in lieu
of the performance thereof by Lessor, Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Lessor if it had at its own
expense furnished such work or service to such tenant. If the Building is not
fully occupied during all or a portion of any Expense Year, Lessor shall make an
appropriate adjustment to the variable components of Operating Expenses for such
year or applicable portion thereof, employing sound accounting and management
principles, to determine the amount of Operating Expenses that would have been
paid had the Building been ninety-five percent (95%) occupied and fully
assessed.
(h) Lessee's Share of Operating Expense Increase shall be payable
by Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time in advance of Lessee's Share
of the Operating Expense Increase for any Comparison Year, and the same shall be
payable monthly or quarterly, as Lessor shall designate, during each Comparison
Year of the Lease term, on the same day as the Base Rent is due hereunder. In
the event that Lessee pays Lessor's estimate of Lessee's Share of Operating
Expense Increase as aforesaid, Lessor shall deliver to Lessee within sixty (60)
days after the expiration of each Comparison Year a reasonably detailed
statement showing Lessee s Share of the actual Operating Expense Increase
incurred during such year. If Lessee's payments under this paragraph 4.2(h)
during said Comparison Year exceed Lessee's Share as indicated on said
statement, Lessee shall be entitled to credit the amount of such overpayment
against Lessee s Share of Operating Expense Increase next falling due. If
Lessee's payments under this paragraph during said Comparison Year were less
than Lessee's Share as indicated on said statement, Lessee shall pay to Lessor
the amount of the deficiency within ten (10) days after delivery by Lessor to
Lessee of said statement. Lessor and Lessee shall forthwith adjust between them
by cash payment any balance determined to exist with respect to that portion of
the last Comparison Year for which Lessee is responsible as to Operating Expense
Increases, notwithstanding that the Lease term may have terminated before the
end of such Comparison Year.
5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security for
Lessee's faithful performance of Lessee's obligations under this Lease. If
Lessee fails to pay Base Rent or other rent or charges due hereunder, or
otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor may
use, apply or retain all or any potion of said Security Deposit for the payment
of any amount due Lessor or to reimburse or compensate Lessor for any liability,
cost, expense, loss or damage (including attorneys' fees) which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefore deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Lessor shall not be required
to keep all or any part of the Security Deposit separate from its general
accounts. Lessor shall, at the expiration or earlier termination of the term
hereof and after Lessee has vacated the Premises, return to Lessee within thirty
(30) days (or, at Lessor's option, to the last assignee, if any, of Lessee's
interest herein), that portion of the Security Deposit not used or applied by
Lessor. Unless otherwise expressly agreed in writing by Lessor, no part of the
Security Deposit shall be considered to be held in trust, to bear interest or
other increment for its use, or to be prepayment for any monies to be paid by
Lessee under this Lease.
6. Use.
6.1 Permitted Use.
(a) Lessee shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that
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is unlawful, creates waste or a nuisance or that disturbs owners and/or
occupants of, or causes damage to the Premises or neighboring premises or
properties.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment, or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (use hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor and compliance in a timely
manner (at Lessee's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and
(iii) the presence in, on or about the Premises of a Hazardous Substance with
respect to which any Applicable Laws require that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may, without Lessor's prior consent, but upon notice to
Lessor and in compliance with all Applicable Requirements, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of the Permitted Use, so long as such use is not a Reportable Use and
does not, in Lessor's good faith and reasonable business judgment, expose the
Premises, the Project, or neighboring properties to any risk of contamination or
damage or have the potential to expose Lessor to any liability therefor. In
addition, Lessor may (but without any obligation to do so) condition its consent
to any Reportable Use of any Hazardous Substance by Lessee upon Lessee's giving
Lessor such additional assurances as Lessor, in its reasonable discretion, deems
necessary to protect itself, the public, the Premises the Project and the
environment against damage, contamination or injury and/or liability therefor,
including but not limited to the installation (and, at Lessor's option, removal
on or before Lease expiration or earlier termination) of reasonably necessary
protective modifications to the Premises (such as concrete encasements) and/or
the deposit of an additional Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable
cause to believe, that a Hazardous Substance has come to be located in, on,
under or about the Premises or the Building, other than as previously consented
to by Lessor, Lessee shall immediately give Lessor written notice thereof,
together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous Substance
including but not limited to all such documents as may be involved in any
Reportable Use involving the Premises. Lease shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including, without limitation, through the plumbing or sanitary sewer
system).
(c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control or with
Lessee's knowledge or consent. Lessee's obligations under this Paragraph 6.2(c)
shall include, but not be limited to, the effects of any contamination or injury
to person, property or the environment created or suffered by Lessee, and the
cost of investigation (including consultants' and attorneys' fees and testing),
removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the expiration or earlier
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termination of this Lease. Neither the expiration of this Lease due to the
passage of time, nor any termination, cancellation or release agreement entered
into by Lessor and Lessee, shall release Lessee from its obligations under this
Lease with respect to Hazardous Substances, unless specifically so agreed by
Lessor in writing at the time of such agreement. Lessor shall indemnify,
protect, defend and hold Lessee harmless from and against any and all damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, loss of
permits and attorneys' and consultants' fees necessitated by any Hazardous
Substance brought onto the Premises by or for Lessor. Lessor's obligations under
this Paragraph 6.2(c) shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessor, and the cost of investigation (including consultants' and
attorneys' fees and testing), removal, remediation, restoration and/or abatement
thereof, or of any contamination therein involved, and shall survive the
expiration or earlier termination of this Lease. Neither the expiration of this
Lease due to the passage of time, nor any termination, cancellation or release
agreement entered into by Lessor and Lessee, shall release Lessor from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessee in writing at the time of such agreement.
(d) Exculpation of Lessor. Other lessees of the Project may use, handling
or store certain Hazardous Substances in connection with such lessees' use of
their premises. The failure of another lessee to comply with applicable laws and
procedures could result in a release of Hazardous Substances and contamination
to the Project, or any part thereof or the soil and ground water thereunder. In
the event of such release, the lessee responsible for the release, and not
Lessor, shall be solely responsible for any claim, damage or expense incurred by
Lessee by reason of such contamination. Lessee waives any rights it may have to
later assert that the foregoing release does not cover unknown claims. Lessee
and anyone claiming by, through or under Lessee hereby fully and irrevocably
releases Lessor, its partners and their respective employees, officers,
directors, representatives, agents, successors and assigns from any and all
claims that it may now have or hereafter acquire against such persons and
entities for any cost, loss, liability, damage, expense, demand, action or cause
of action arising from or related to any construction defects, errors, omissions
or other conditions, including, but not limited to, environmental matters,
affecting the Property, or any portion thereof. This release includes claims of
which Lessee is presently unaware or which Lessee does not presently suspect to
exist in its favor which, if known by Lessee, would materially affect Lessee's
release of Lessor. Lessee specifically waives the provision of California Civil
Code (S) 1542, which provides as follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
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Lessor's Initials Lessee's Initials
6.3 Lessee's Compliance with Requirements. Lessee shall, at
Lessee's sole cost and expense, fully, diligently and in a timely manner, comply
with all "Applicable Requirements," which term is used in this Lease to mean all
laws, rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, now in effect or which may hereafter come into
effect whether or not they reflect a change in policy from that now existing,
during the term or any part of the term hereof and relating in any manner to
the Premises and Lessee's use thereof. Lessee shall conduct its business in a
lawful manner and shall not use or permit the use of the Premises or the Common
Areas in any manner that will tend to create waste or a nuisance or shall tend
to disturb other occupants of the Project.
6.4 Inspection; Compliance with Law. Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lenders") shall
have the right to enter the Premises at any time
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in the case of an emergency, and otherwise at reasonable times, for the purpose
of inspecting the condition of the Premises and for verifying compliance by
Lessee with this Lease and all Applicable Requirements (as defined in Paragraph
6.3), and Lessor shall be entitled to employ experts and/or consultants in
connection therewith to advise Lessor with respect to Lessee's activities,
including but not limited to Lessee's installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance on or from the Premises. The
costs and expenses of any such inspections shall be paid by the party requesting
same, unless a Default or Breach of this Lease by Lessee or a violation of
Applicable Requirements or a contamination, caused or materially contributed to
by Lessee, is found to exist or to be imminent, or unless the inspection is
requested or ordered by a governmental authority as the result of any such
existing or imminent violation or contamination. In such case, Lessee shall upon
request reimburse Lessor or Lessor's Lender, as the case may be, for the costs
and expenses of such inspections.
7. Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) Subject to the other terms and provisions hereof,
including the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance with
Covenants, Restrictions and Building Code), 7.2 (Lessor's Obligations), 9
(Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole
cost and expense and at all times, keep the Premises and every part thereof in
good order, condition and repair (whether or not such portion of the Premises
requiring repair, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, without limiting the generality of the foregoing,
all equipment or facilities specifically serving the Premises, such as plumbing,
heating, air conditioning, ventilating, electrical, lighting facilities,
boilers, fired or unfired pressure vessels, fire hose connections if within the
Premises, fixtures, interior walls, interior surfaces of exterior walls,
ceilings, floors, windows, doors, plate glass, and skylights, but excluding any
items which are the responsibility of Lessor pursuant to Paragraph 7.2 below.
Lessee, in keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices. Lessee's obligations shall
include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair.
(b) Intentionally Omitted.
(c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building
Code), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), and subject to
the reimbursement requirements of Paragraph 4.2, Lessor, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler and/or
standpipe and hose (if located in the Common Areas) or other automatic fire
extinguishing system including fire alarm and/or smoke detection systems and
equipment, fire hydrants, parking lots, walkways, parkways, driveways,
landscaping, fences, signs and utility systems serving the Common Areas and all
parts thereof, as well as providing the services for which there is a Common
Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated
to paint the exterior or interior surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace windows, doors or plate glass of the
Premises if broken by Lessee or its agents or invitees. There shall be no
abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements,
alterations or repairs made by Lessor to the Office Building Project or any part
thereof. Lessee expressly waives the benefit of any statute now or hereafter in
effect which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this
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Lease because of Lessor's failure to keep the Building, Project or Common Areas
in good order, condition and repair.
7.3 Utility Installations, Trade Fixtures, Alterations.
(a) Definitions; Consent Required. The term "Utility
Installations" is used in this Lease to refer to all air lines, power panels,
electrical distribution, security, fire protection systems, communications
systems, lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "Trade Fixtures"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "Alterations" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be
made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent.
(b) Consent. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation. Lessee shall pay to
Lessor all of Lessor's actual costs incurred in conjunction with the review of
Lessee's proposed Alterations or Utility Installations within fifteen (15) days
of Lessee's receipt of an invoice therefore.
(c) Lien Protection. Lessee shall pay when due all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense, defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor, in an
amount equal to one and one-half times the amount of such contested lien claim
or demand, indemnifying Lessor against liability for the same, as required by
law for the holding of the Premises free from the effect of such lien or claim.
In addition, Lessor may require Lessee to pay Lessor's attorneys' fees and costs
in participating in such action if Lessor shall decide it is to its best
interest to do so.
7.4 Ownership, Removal, Surrender, and Restoration.
(a) Ownership. Subject to Lessor's right to require their
removal and to cause Lessee to become the owner thereof as hereinafter provided
in this Paragraph 7.4, all Alterations and Utility Installations made to the
Premises by Lessee shall be the property of and owned by Lessee, but considered
a part of the Premises. Lessor may, at any time and at its option, elect in
writing to Lessee to be the owner of all or any specified part of the Lessee-
Owned Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof,
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all Lessee-Owned Alterations and Utility Installations shall, at the expiration
or earlier termination of this Lease, automatically and without further action
on the part of Lessor, become the property of Lessor and remain upon the
Premises and be surrendered with the Premises by Lessee unless otherwise
specified to Lessee by Lessor at the time such Attention or Utility.
Installation is approved by Lessor.
(b) Removal. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee-Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
that their installation may have been consented to by Lessor. Lessor may require
the removal at any time of all or any part of any Alterations or Utility
Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises
by the end of the last day of the Lease term or any earlier termination date,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease. Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice. Lessee's Trade Fixtures shall remain the property of Lessee and shall
be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.
8. Insurance; Indemnity.
8.1 Payment of Premium Increases.
(a) As used herein, the term "Insurance Cost Increase" is
defined as any increase in the actual cost of the insurance applicable to the
Project and required to be carried by Lessor, pursuant to Paragraphs 8.2(b),
8.3(a) and 8.3(b), ("Required Insurance"), over and above the Base Premium, as
hereinafter defined, calculated on an annual basis. "Insurance Cost Increase"
shall include, but not be limited to, requirements of the holder of a mortgage
or deed of trust covering the Premises, increased valuation of the Premises,
and/or a general premium rate increase. The term "Insurance Cost Increase" shall
not, however, include any premium increases resulting from the nature of the
occupancy of any other lessee of the Building. If the parties insert a dollar
amount in Paragraph 1.9, such amount shall be considered the "Base Premium." If
a dollar amount has not been inserted in Paragraph 1.9 and if the Building has
been previously occupied during the twelve (12) month period immediately
preceding the Commencement Date, the "Base Premium" shall be the annual premium
applicable to the Base Year.
(b) Lessee shall pay any Insurance Cost Increase to Lessor
pursuant to Paragraph 4.2. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $2,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke fumes from a hostile fire. The
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policy shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability assumed under
this Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance required by this
Lease or as carried by Lessee shall not, however, limit the liability of Lessee
nor relieve Lessee of any obligation hereunder. All insurance to be carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be named
as an additional insured therein.
8.3 Property Insurance-Building, Improvements and Rental Value.
(a) Building and Improvements. Lessor shall obtain and keep in
force during the term of this Lease a policy or policies in the name of Lessor,
with loss payable to Lessor and to any Lender(s), insuring against loss or
damage to the Premises. Such insurance shall be for full replacement cost, as
the same shall exist from time to time, or the amount required by any Lender(s),
but in no event more than the commercially reasonable and available insurable
value thereof if, by reason of the unique nature or age of the improvements
involved, such latter amount is less than full replacement cost. Lessee-Owned
Alterations and Utility Installations, Trade Fixtures and Lessee's personal
property shall be insured by Lessee pursuant to Paragraph 8.4. If the coverage
is available and commercially appropriate, Lessor's policy or policies shall
insure against all risks of direct physical loss or damage (including the perils
of flood and/or earthquake), including coverage for any additional costs
resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or replacement
of any undamaged sections of the Building required to be demolished or removed
by reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located.
(b) Rental Value. Lessor shall also obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and any Lender(s), insuring the loss of the full rental
and other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that in
the event the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the premises, to provide for one full year's loss
of rental revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of any co-insurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental income,
Real Property Taxes, insurance premium costs and other expenses, if any,
otherwise payable, for the next 12-month period. Common Area Operating Expenses
shall include any deductible amount in the event of such loss.
(c) Adjacent Premises. Lessee shall pay for any increase in
the premiums for the property insurance of the Building and for the Common Areas
or other buildings in the Project if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(d) Lessee's Improvements. Since Lessor is the Insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Trade
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Fixtures and Lessee-Owned Alterations and Utility Installations in, on, or about
the Premises similar in coverage to that carried by Lessor as the Insuring Party
under Paragraph 8.3(a). Such insurance shall be full replacement cost coverage
with a deductible not to exceed $1,000 per occurrence. The proceeds from any
such insurance shall be used by Lessee for the replacement of personal property
and the restoration of Trade Fixtures and Lessee-Owned Alterations and Utility
Installations. Upon request from Lessor, Lessee shall provide Lessor with
written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+, V, or such other rating as may be required by a Lender, as set
forth in the most current issue of "Best's Insurance Guide." Lessee shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages (whether in contract or in tort) against
the other, for loss or damage to their property arising out of or incident to
the perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessor's negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, employees, officers, independent
contractors, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the occupancy of the Premises by Lessee, the conduct of Lessee's business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not. Lessor
shall not be liable for any damages arising from any act or neglect of any other
lessee of Lessor nor from the failure by Lessor to enforce the provisions of any
other lease in the
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Project unless Lessor is negligent in such failure. Notwithstanding Lessor's
negligence or breach of this Lease, Lessor shall under no circumstances be
liable for injury to Lessee's business or for any loss of income or profit
therefrom.
8.9 No Representation or Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Lessee's property or obligations under
this Lease.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction
to the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is less than fifty percent (50%)
of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall mean damage or
destruction to the Premises, other than Lessee-Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is fifty percent
(50%) or more of the then Replacement Cost of the Premises (excluding Lessee-
Owned Alterations and Utility Installations and Trade Fixtures) immediately
prior to such damage or destruction. In addition, damage or destruction to the
Building, other than Lessee-Owned Alterations and Utility Installations and
Trade Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures
of any lessees of the Building) of the Building shall, at the option of Lessor,
be deemed to be Premises Total Destruction.
(c) "Insured Loss" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations and
Trade Fixtures which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a) irrespective of any deductible amounts
or coverage limits involved and where the proceeds of such insurance are
available to Lessor for repair of the Premises.
(d) "Replacement Cost" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurence to
their condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence
or discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Premises Partial Damage - Insured Loss. If Premises Partial
Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations
and Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or adequate
assurance thereof, within ten (10) days following receipt of written notice of
such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said ten (10) day period, Lessor shall complete them as
soon as reasonably possible and this Lease shall remain in full force and
effect. If Lessor does not receive such funds or assurance within said period,
Lessor may nevertheless elect by written notice to Lessee within ten (10) days
thereafter to make such restoration and repair as is commercially reasonable
with Lessor paying any shortage in proceeds, in which ease this Lease shall
remain in full force and effect. If Lessor does not receive such funds or
assurance within such ten (10) day period, and if Lessor does not so elect to
restore and repair, then this Lease shall terminate sixty (60) days following
the occurrence of the damage or
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destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or earthquake
shall be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding
that there may be some insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the repair of such damage totally at Lessee's expense and without
reimbursement from Lessor. Lessee shall provide Lessor with the required funds
or satisfactory assurance thereof within thirty (30) days following such
commitment from Lessee. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not give such
notice and provide the funds or assurance thereof within the times specified
above, this Lease shall terminate as of the date specified in Lessor's notice of
termination.
9.4 Total Destruction. Notwithstanding any other provision hereof,
if Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate upon the date of such
Premises Total Destruction, whether or not the damage or destruction is an
Insured Loss or was caused by a negligent or willful act of Lessee. In the
event, however, that the damage or destruction was caused by Lessee, Lessor
shall have the right to recover Lessor's damages from Lessee except as released
and waived in Paragraph 9.7.
9.5 Damage Near End of Term. If at any time during the last six
(6) months of the term of this Lease there is damage for which the cost to
repair exceeds one month's Base Rent, whether or not an Insured Loss, Lessor
may, at Lessor's option, terminate this Lease effective sixty (60) days
following the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within thirty (30) days after the date of
occurrence of such damage. Provided, however, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then Lessee
may preserve this Lease by (a) exercising such option, and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (i) the date which is ten (10)
days after Lessee's receipt of Lessor's written notice purporting to terminate
this Lease, or (ii) the day prior to the date upon which such option expires. If
Lessee duly exercises such option during such period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's expense repair such damage as soon as
reasonably possible and this Lease shall continue in full force and effect. If
Lessee fails to exercise such option and provide such funds or assurance during
such period, then this Lease shall terminate as of the date set forth in the
first sentence of this Paragraph 9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of (i) Premises Partial Damage or (ii)
Hazardous Substance Condition for which Lessee is not legally responsible, the
Base Rent, Common Area Operating Expenses and other charges, if any, payable by
Lessee hereunder for the period during which such damage or condition, its
repairs, remediation or restoration continues, shall be abated in proportion to
the degree to which, in Lessor's good faith reasonable business judgment,
Lessee's use of the Premises is impaired, but not in excess of proceeds from
insurance required to be carried under Paragraph 8.3(b). Except for abatement of
Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall
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be performed by Lessee, and Lessee shall have no claim against Lessor for any
damage suffered by reason of any such damage, destruction, repair remediation or
restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, the
repair or restoration of the Premises within ninety (90) days after either (i)
such obligation shall accrue, or (ii) receipt or all applicable insurance
proceeds, whichever time period is greater, then, Lessee may, at any time prior
to the commencement of such repair or restoration, give written notice to Lessor
and to any Lenders of which Lessee has actual notice of Lessee's election to
terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect. "Commence" as used in this Paragraph
9.6 shall mean either the authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever occurs
first.
9.7 Hazardous Substance Conditions. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefore (in which case
Lessee shall make the investigation and remediation thereof required by
Applicable Requirements and this Lease shall continue in full force and effect,
but subject to Lessor's rights under Paragraph 6.2(e) and Paragraph 13), Lessor
may at Lessor's option either (i) investigate and remediate such Hazardous
Substance Condition, if required, as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) if the estimated cost to investigate and remediate such condition exceeds
twelve (12) times the then monthly Base Rent or $100,000 whichever is greater,
give written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the date
of such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessee's commitment to pay for the excess costs of (a) investigation and
remediation of such Hazardous Substance Condition to the extent required by
Applicable Requirements, over (b) an amount equal to twelve (12) times the then
monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor
with the funds required of Lessee or satisfactory assurance thereof within
thirty (30) days following said commitment by Lessee. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
investigation and remediation as soon as reasonably possible after the required
funds are available. If Lessee does not give such notice and provide the
required funds or assurance thereof within the time period specified above, this
Lease shall terminate as of the date specified in Lessor's notice of
termination.
9.8 Termination - Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.
9.9 Waiver of Statutes. Lessor and Lessee agree that the terms of
this Lease shall govern the effect of any damage to or destruction of the
Premises and the Building with respect to the termination of this Lease and
hereby waive the provisions of any present or future statute to the extent it is
inconsistent herewith.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2(a), applicable to the Project, and except as otherwise
provided in Paragraph 10.3, any increases in such amount over the Base Real
Property Taxes shall be included in the calculation of Common Area Operating
Expenses in accordance with the provisions of Paragraph 4.2.
10.2 Real Property Tax Definitions.
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(a) As used herein, the term "Real Property Taxes" shall
include any form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (other than inheritance, personal income or estate taxes)
imposed upon the Project by any authority having the direct or indirect power to
tax, including any city, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage, or other improvement district
thereof, levied against any legal or equitable interest of Lessor in the Project
or any portion thereof, Lessor's right to rent or other income therefrom, and/or
Lessor's business of leasing the Premises. The term "Real Property Taxes" shall
also include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring, or changes in Applicable Law taking
effect, during the term of this Lease, including but not limited to a change in
the ownership of the Project or in the improvements thereon, the execution of
this Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties.
(b) As used herein, the term "Base Real Property Taxes" shall
be the amount of Real Property Taxes, which are assessed against the Premises,
Building or Common Areas in 1998. In calculating Real Property Taxes for any
calendar year, the Real Property Taxes for any real estate tax year shall be
included in the calculation of Real Property Taxes for such calendar year based
upon the number of days which such calendar year and tax year have in common.
10.3 Additional Improvements. Common Area Operating Expenses shall
not include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment of such other lessees.
Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises by
Lessee or at Lessee's request.
10.4 Joint Assessment. If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable proportion
of the Real Property Taxes for all of the land and improvements included with
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. Lessor' reasonable determination
thereof, in good faith, shall be conclusive.
10.5 Lessee's Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Project. When Possible,
Lessee shall cause its Lessee-Owned Alterations and Utility Installations, Trade
Fixtures, furnishings, equipment and all other personal property to be assessed
and billed separately from the real property of Lessor. If any of Lessee's said
property shall be assessed with Lessor's real property, Lessee shall pay Lessor
the taxes attributable to Lessee's property within ten (10) days after receipt
of a written statement setting forth the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. If
any such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Lessee shall pay to Lessor a reasonable
proportion to be determined by Lessor of all such charges jointly metered or
billed with other premises in the Building, in the manner and within the time
periods set forth in Paragraph 4.2(d). Lessee shall not make connection to the
utilities except by or through existing outlets, or suffer or permit any act
that causes extra burden upon the utilities or services, including but not
limited to security services, over standard office usage for the Project. Lessor
shall require Lessee to reimburse Lessor for any excess expenses or costs that
may arise out of a breach of this subparagraph by Lessee. Lessor may, in its
sole discretion, install at Lessee's expense supplemental equipment and/or
separate metering applicable to Lessee's excess usage or loading. There shall be
no abatement of rent and Lessor shall not be liable in any respect
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whatsoever for the inadequacy, stoppage, interruption or discontinuance of any
utility or service due to riot, strike, labor dispute, breakdown, accident,
repair or other cause beyond Lessor's reasonable control or in cooperation with
governmental request or directions.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Except as specifically, provided herein, Lessee shall not
voluntarily or by operation of law assign, transfer, mortgage or otherwise
transfer or encumber (collectively, "assign" or "assignment") or sublet all or
any part of Lessee's interest or obligations in or under this Lease or in the
Premises without Lessor's prior written consent given under the subject to the
terms of Paragraph 36, which Lessor shall not withhold unreasonably. The parties
agree, however, that in approving or disapproving of any proposed assignment or
subletting of the Premises or the Lease, Lessor shall be entitled to take into
consideration, by way of example and not limitation, any or all of the criteria
set forth below and that it shall not be unreasonable for Lessor to withhold its
consent if any of the following circumstances exist or may exist: (i) the
transferee's contemplated use of the Premises following the proposed assignment
or subletting is different from the permitted use specified herein; (ii) in
Lessor's reasonable business judgment, the transferee lacks sufficient business
reputation or experience to operate a successful business of the type and
quality permitted under the Lease; (iii) in Lessor's reasonable business
judgment, the present net worth of the transferee is less than the greater of
Lessee's net worth at the Effective Date or Lessee's net worth at the date of
Lessee's request for consent to the assignment or subletting; (iv) in Lessor's
reasonable business judgment, the Rent that Lessor reasonably anticipates
receiving from the transferee is less than that which Lessor has received from
Lessee; (v) the proposed assignment or subletting would breach any covenant of
Lessor in any other lease, financing agreement or other agreement relating to
the Project or otherwise; or (vi) the transferee requests an amendment to the
Lease other than the identity of Lessee. No assignment or subletting shall
release Lessee from its obligations and liabilities hereunder.
(b) A Change of Control of Lessee shall constitute an
assignment requiring Lessor's consent. Change of Control shall mean the transfer
by sale, assignment, death, incompetency, mortgage, deed of trust, trust,
operation of law, or otherwise, of any shares, voting rights or ownership
interest which will result in a change in the identity of the entity, entities,
person or persons exercising, or who may exercise, effective control of Lessee,
unless such change results from the trading of shares listed on a recognized
public stock exchange and such trading is not for the purpose of acquiring
effective control of Lessee. If Lessee is a private corporation whose stock
becomes publicly held, the transfers of such stock from private to public
ownership shall not be deemed a Change of Control. The transfer, on a cumulative
basis, of twenty-five percent (25%) or more of the voting control of Lessee
shall constitute a change in control for this purpose. Any provision of this
Paragraph 12.1 to the contrary notwithstanding, Lessor's approval shall deemed
given to an assignment or subletting to any person or entity who controls, is
controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee or to any person or legal
entity which acquires all the assets of Lessee as a going concern of the
business being conducted on the Premises (each of the foregoing is hereinafter
referred to as a "Lessee Affiliate"); provided that before such assignment shall
be effective, (a) said Lessee Affiliate shall assume, in full, the obligations
of Lessee under this Lease, (b) Lessor shall be given written notice of such
assignment and assumption, (c) the use of the Premises by the Lessee Affiliate
shall be as set forth in Section 1.8. and (d) the remaining portions of this
Lease, including but not limited to those pertaining to the assignment and/or
subletting of this Lease, and specifically including the terms and provisions of
Paragraph 12.2, shall continue to apply. For purposes of this paragraph, the
term "control" means possession, directly or indirectly, of more than fifty
percent (50%) of the ownership interests of such entity.
(c) The involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, refinancing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee's assets
occurs, which results or may, in Lessor's good faith reasonable business
judgment, result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount
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equal to or greater than twenty-five percent (25%) of such Net Worth of Lessee
as it was represented to Lessor at the time of full execution and delivery of
this Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, at whichever time said Net Worth of
Lessee was or is greater, shall be considered an assignment of this Lease by
Lessee to which Lessor may reasonably withhold its consent. "Net Worth of
Lessee" for purposes of this Lease shall be the net worth of Lessee (excluding
any Guarantors) established under generally accepted accounting principles
consistently applied.
(d) An assignment or subletting of Lessee's interest in this
Lease without Lessor's specific prior written consent shall, at Lessor's option,
be a Default curable after notice per Paragraph 13.1, or a non-curable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unconsented to assignment or subletting as a non-curable Breach, Lessor
shall have the right to exercise any of its rights at law, or equity or
otherwise including but not limited to either: (i) terminate this Lease, or (ii)
upon thirty (30) days' written notice ("Lessor's Notice"), increase the monthly
Base Rent for the Premises to the greater of the then fair market rental value
of the Premises, as reasonably determined by Lessor, or one hundred ten percent
(110%) of the Base Rent then in effect. Pending determination of the new fair
market rental value, if disputed by Lessee, Lessee shall pay the amount set
forth in Lessor's Notice, with any overpayment credited against the next
installment(s) of Base Rent coming due, and any underpayment for the period
retroactively to the effective date of the adjustment being due and payable
immediately upon the determination thereof. Further, in the event of such Breach
and rental adjustment, any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
rental bears to the Base Rent in effect immediately prior the adjustment
specified in Lessor's Notice.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by
Lessor shall be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of whether Lessor's consent is given or deemed
given, any assignment or subletting shall not (i) be effective without the
express written assumption by such assignee or sublessee of the obligations of
Lessee under this Lease, (ii) release Lessee of any obligations hereunder, nor
(iii) alter the primary liability of Lessee for the payment of Base Rent and
other sums due Lessor hereunder or for the performance of any other obligations
to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting by
Lessee or to any subsequent or successive assignment or subletting by the
assignee or sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications thereto without
notifying Lessee or anyone else liable under this Lease or the sublease and
without obtaining their consent, and such action shall not relieve such persons
from liability under this Lease or the sublease.
(d) In the event of any Default of Lessee's obligation under
this Lease, Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of the Lessee's obligations under this
Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.
(e) Should Lessee desire to enter into an assignment or
subletting transaction, Lessee shall give notice thereof to Lessor by
requesting in writing Lessor's consent to such assignment or subletting at
least thirty (30) days before the proposed effective date of any
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such assignment or subletting and shall provide Lessor with the following: (i)
the full particulars of the proposed assignment or subletting transaction,
including its nature, effective date, terms and conditions, and copies of any
documents pertaining to such proposed transaction; (ii) a description of the
identity, net worth and previous business experience of the transferee,
including, without limitation, copies of transferee's latest income, balance
sheet and change-of-financial-position statements (with accompanying notes and
disclosures of all material changes thereto) in audited form, if available, and
certified as accurate by the transferee; and (iii) any further information
relevant to the transaction which Lessor shall have requested within thirty (30)
days after receipt of Lessee's request for consent and all information specified
above in Subsections (i), (ii) and (iii).
Each assignment or subletting shall be evidenced by an
instrument made in such written form as is satisfactory to Lessor and executed
by Lessee and transferee. By such instrument, transferee shall assume all the
terms, covenants and conditions of this Lease which are obligations of Lessee.
Lessee shall remain fully liable to perform its duties under the Lease following
the assignment or subletting. Lessee shall, on demand of Lessor, reimburse
Lessor for Lessor's reasonable costs, including legal fees, incurred in
obtaining advice and preparing documentation for each assignment or subletting
to which Lessor has consented.
(f) Any assignment of, or sublessee under, this Lease shall,
by reason of accepting such assignment or entering into such sublease, be
deemed, for the benefit of Lessor, to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be
observed or performed by Lessee during the term of said assignment or sublease,
other than such obligations as are contrary to or inconsistent with provisions
of an assignment or sublease to which Lessor has specifically consented in
writing.
(g) Lessor, as a condition to giving its consent to any
assignment or subletting, may require that the amount and adjustment schedule of
the rent payable under this Lease be adjusted to what is then the market value
and/or adjustment schedule for property similar to the Premises as then
constituted, as determined by Lessor. In the event of such a rental adjustment
and whether or not the assignee or sublessee is a Lessee Affiliate as provided
above in subparagraph 12.1 (b), then Lessor and Lessee shall each be entitled to
fifty percent (50%) of any such increased rental amount less the amount of any
reasonable and necessary marketing costs or leasing commissions paid to
unaffiliated third parties.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease of all or
a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may
collect such rent and income and apply same toward Lessee's obligations under
this Lease; provided, however, that until a Breach (as defined in Paragraph
13.1) shall occur in the performance of Lessee's obligations under this Lease,
Lessee may, except as otherwise provided in this Lease, receive, collect and
enjoy the rents accruing under this sublease. Lessor shall not, by reason of the
foregoing provision or any other assignment of such sublease to Lessor, nor by
reason of the collection of the rents from a sublessee, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee under such Sublease. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice
from Lessor stating that a Breach exists in the Performance of Lessee's
obligations under this Lease, to pay to Lessor the rents and other charges due
and to become due under the sublease. Sublessee shall rely upon any such
statement and request from Lessor and shall pay such rents and other charges to
Lessor without any obligation or right to inquire as to whether such Breach
exists and notwithstanding any notice from or claim from Lessee to the contrary.
Lessee shall have no right or claim against such sublessee, or, until the Breach
has been cured, against Lessor, for any such rents and other charges so paid by
said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of
its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may
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require any sublessee to attorn to Lessor, in which event Lessor shall undertake
the obligations of the sublessor under such sublease from the time of the
exercise of said option to the expiration of such sublease; provided, however,
Lessor shall not be liable for any prepaid rents or security deposit paid by
such sublessee to such sublessor or for any other prior defaults or breaches of
such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor herein.
(d) No sublessee under a sublease approved by Lessor shall
further assign or sublet all or any part of the Premises without Lessor's prior
written consent.
(e) Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. Lessee's obligations to Lessor hereunder
shall include any and all costs or expenses incurred by Lessor in conjunction
with enforcing Lessor's rights and remedies hereunder, which shall include, but
shall not be limited to, any attorneys' fees or other legal expenses or costs
associated therewith Lessor and Lessee agree that if an attorney is consulted by
Lessor in connection with a Lessee Default or Breach (as hereinafter defined),
and that Lessor may include the cost of legal services in said notice as rent
due and payable to cure said default. A "Default" by Lessee is defined as a
failure by Lessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Lessee under this Lease. A "Breach"
by Lessee is defined as the occurrence of a Default, including but not limited
those listed below, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Rent, Lessee's Share of Common Area
Operating Expenses, or any other monetary payment required to be made by Lessee
hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of
three (3) days following written notice thereof by or on behalf of Lessor to
Lessee.
(c) Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination of
this Lease per Paragraph 30, (vi) the guaranty of the performance of Lessee's
obligations under this Lease if required under Paragraphs 1.11 and 37, (vii) the
execution of any document requested under Paragraph 42 (easements), or (viii)
any other documentation or information which Lessor may reasonably require of
Lessee under the terms of this Lease, where any such failure continues for a
period of ten (10) days following written notice by or on behalf of Lessor to
Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof
that are to be observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required for its
cure,
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then it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the
making by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section
101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement of
Lessee or of any Guarantor, given to Lessor by Lessee or any Guarantor, was
materially false.
(g) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such event,
to provide Lessor with written alternative assurances of security, which, when
coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the
time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by cashier's check. In the event of a Breach of this Lease by
Lessee (as defined in paragraph 13.1), with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the worth at the
time of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in
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provision (iii) of the immediately preceding sentence shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco or the Federal Reserve Bank District in which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Default or Breach of this Lease shall not waive
Lessor's right to recover damages under this Paragraph 13.2. If termination of
this Lease is obtained through the provisional remedy of unlawful detainer,
Lessor shall have the right to recover in such proceeding the unpaid rent and
damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit for such rent and/or damages. If a
notice and grace period required under Subparagraph 13.1 (b), (c) or (d) was not
previously given, a notice to pay rent or quit, or to perform or quit, as the
case may be, given to Lessee under any statute authorizing the forfeiture of
leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by Subparagraph 13.1(b), (c) or (d). In such
case, the applicable grace period under the unlawful detainer statute shall run
concurrently after the one such statutory notice, and the failure of Lessee to
cure the Default within the greater of the two (2) such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Breach and recover the rent as it becomes due, provided Lessee has the right to
sublet or assign, subject only to reasonable limitations. Lessor and Lessee
agree that the limitations on assignment and subletting in this Lease are
reasonable. Acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver to protect the Lessor's interest under this
Lease, shall not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 Inducement Recapture in Event of Breach. Any agreement by
Lessor for free or abated rent or Tenant Improvement Allowances or other charges
applicable to the Premises, or for the giving or paying by Lessor to or for
Lessee of any cash or other bonus, inducement or consideration for Lessee's
entering into this Lease, all of which concessions are hereinafter referred to
as "Inducement Provisions" shall be deemed conditioned upon Lessee's full and
faithful performance of all of the terms, covenants and conditions of this Lease
to be performed or observed by Lessee during the term hereof as the same may be
extended. Upon the occurrence of a Breach (as defined in Paragraph 13.1) of this
Lease by Lessee, any such Inducement Provision shall automatically be deemed
deleted from this Lease and of no further force or effect, and any rent, other
charge, bonus, inducement or consideration theretofore abated, given or paid by
Lessor under such an Inducement Provision shall be immediately due and payable
by Lessee to Lessor, and recoverable by Lessor, as additional rent due under
this Lease and prorated based upon the portion of the Lease Term expired at the
time of the Breach when compared to the portion of the Lease Terms (including
unexercised options) remaining. The acceptance by Lessor of rent or the cure of
the Breach which initiated the operation of this Paragraph 13.3 shall not be
deemed a waiver by Lessor of the provisions of this Paragraph 13.3 unless
specifically so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering the
Premises. Accordingly, if any installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) days after
such amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to
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six percent (6%) of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur
by reason of late payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's Default or Breach with respect
to such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding Paragraph 4.1 or any other
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are permanently
taken under the power of eminent domain or sold under the threat of the exercise
of said power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
portion of the Common Areas designated for Lessee's parking, is taken by
condemnation, Lessee may, at Lessee's option, to be exercised in writing within
ten (10) days after Lessor shall have given Lessee written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the Base
Rent shall be reduced in the same proportion as the rentable floor area of the
Premises taken bears to the total rentable floor area of the Premises. No
reduction of Base Rent shall occur if the condemnation does not apply to any
portion of the Premises. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution of value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any compensation, separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its net severance damages received, over and above Lessee's Share of
the legal and other expenses incurred by Lessor in the condemnation matter,
repair any damage to the Premises caused by such condemnation authority. Lessee
shall be responsible for the payment of any amount in excess of such net
severance damages required to complete such repair.
15. Brokers' Fees
15.1 Representations and Warranties. Lessee and Lessor each
represent and warrant to the other that it has had no dealings with any person,
firm, broker or finder other than as named in Paragraph 1.10(a) in connection
with the negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.
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16. Tenancy and Financial Statements.
16.1 Tenancy Statement. Each Party (as "Responding Party") shall
within ten (10) days after written notice from the other Party (the "Requesting
Party") execute, acknowledge and deliver to the Requesting Party a statement in
writing in a form similar to the then most current "Tenancy Statement" form
published by the American Industrial Real Estate Association, plus such
reasonable, factual additional information, confirmation and/or statements as
may be reasonably requested by the Requesting Party.
16.2 Financial Statement. If Lessor desires to finance, refinance,
or sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchaser designated by
Lessor such financial statements of Lessee and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. No Prior or other Agreements. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and no other
prior or contemporaneous agreement or understanding shall be effective.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and shall be and deemed duly served or given when
actually delivered, if personally delivered (including delivery by Federal
Express, Express Mail or other similar overnight or personal courier service
which confirms delivery in writing), or within three (3) business days after
deposit in the U.S. Mail, if sent by certified mail, postage prepaid, return
receipt requested and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. If notice is received on a Saturday or a Sunday
or a legal holiday, it shall be deemed received on the next business day. The
addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. A copy of all notices required or
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permitted to be given to Lessor hereunder shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designate by written notice to Lessee.
23.2 Intentionally Omitted.
24. Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent
or similar act by Lessee, or be construed as the basis of an estoppel to enforce
the provision or provisions of this Lease requiring such consent. Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Lessor shall not be a waiver of any Default or Breach by
Lessee of any provision hereof. Any payment given Lessor by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease, in a form acceptable to Lessor, for recording purposes. The Party
requesting recordation shall be responsible for payment of any fees or taxes
applicable thereto.
26. No Right to Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred twenty five
percent (125%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein shall
be construed as a consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall
automatically be subject and subordinate to any ground lease, mortgage, deed of
trust, or other hypothecation or security device and amendment thereto
(collectively, "Security Device"), now or hereafter placed by Lessor upon the
real property of which the Premises are a part, to any and all advances made on
the security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof. Lessee agrees that the Lenders holding any
such Security Device shall have no duty, liability or obligation to perform any
of the obligations of Lessor under this Lease, but that in the event of Lessor's
default with respect to any such obligation, Lessee will give any Lender whose
name and address have been furnished Lessee in writing for such purpose notice
of Lessor's default pursuant to Paragraph 13.5. If any, Lender shall elect to
have this Lease and/or any Option granted hereby superior to the lien of its
Security Device and shall give written notice thereof to Lessee, this Lease and
such Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
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30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not: (i)
be liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership, (ii) be subject to any offsets or
defenses which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into
for the first time (as opposed to amendments or modifications to existing
Security Devices) by Lessor after the execution of this Lease, Lessee's
subordination of this Lease shall be subject to receiving assurance (a "non-
disturbance agreement") from the Lender that Lessee's possession and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or nondisturbance agreement
as is provided to herein.
31. Attorneys' Fees. If any Party brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys' fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The attorneys' fee award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. Lessor shall
be entitled to attorneys' fees, costs and expenses incurred in preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's
agents shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary. Lessor may at any time place on or about the
Premises or Building any ordinary "For Sale" signs and Lessor may at any time
during the last one hundred eighty (180) days of the term hereof place on or
about the Premises any ordinary "For Lease" signs. All such activities of Lessor
shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the exterior of the
Premises or the Building without Lessor's prior written consent. Any such signs
shall comply with Applicable Requirements and the signage criteria established
for the Project by Lessor. Subject to Lessor's reasonable prior consent as to
design, size and location, Lessee shall be entitled, at its sole cost and
expense, install a sign for "New Century Financial Corporation" or similar on
the exterior of the Building on the MacArthur Boulevard side of the Building,
which sign shall be no lower than the sign for any other tenant on the same side
of the exterior of the Building. The installation of any sign on the Premises by
or for Lessee shall be subject to the provisions of all governmental regulations
and this Lease, including Paragraph 7 (Maintenance, Repairs, Utility
Installations, Trade Fixtures and Alterations). Lessor shall use its good faith
efforts in cooperating with
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Lessee to acquire all necessary governmental approvals for Lessee's signs that
are otherwise acceptable to Lessor. Lessor shall provide, at its sole cost and
expense, an interior Building directory sign identifying Lessee and a sign on
the exterior door of the Premises also identifying Lessee. Unless otherwise
expressly agreed herein, Lessor reserves all rights to the use of the roof of
the Building, and the right to install advertising signs on the Building,
including the roof, which do not unreasonably interfere with the conduct of
Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs.
35. Termination; Merger. Unless specifically stated otherwise in writing
by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Request for Lessor's consent to any matter hereunder, including
regarding a requested assignment or subletting of Lessee's leasehold or any
portion thereof, shall be responded to by Lessor within fifteen (15) business
days of receipt of all requisite documents and information pertaining to such
request. The failure of Lessor to respond to Lessee's request within such time
period shall be deemed to be Lessor's disapproval of such request. Lessor's
actual costs and expenses (including but not limited to architects', attorneys',
engineers' and other consultants' fees) incurred in the consideration of, or
response to, a request by Lessee for any Lessor consent pertaining to this Lease
or the Premises, including but not limited to consents to an assignment a
subletting or the presence or use of a Hazardous Substance, shall be paid by
Lessee to Lessor upon receipt of an invoice therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgement that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.
(b) All conditions to Lessors consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. Guarantor.
37.1 Form of Guaranty. If there are to be any Guarantors of this
Lease per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this Lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.
37.2 Additional Obligations of Guarantor. It shall constitute a
Default of the Lessee under this Lease if any such Guarantor fails or refuses,
upon reasonable request by Lessor to give: (a) evidence of the due execution of
the guaranty called for by this Lease, including the authority of the Guarantor
(and of the party signing on Guarantor's behalf) to obligate such Guarantor on
said guaranty, and resolution of its board of directors authorizing the making
of such guaranty, together with a certificate of incumbency showing the
signatures of the persons
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authorized to sign on its behalf, (b) current financial statements of Guarantor
as may from time to time be requested by Lessor, (c) a Tenancy Statement, or
(d) written confirmation that the guaranty is still in effect.
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises
and the performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, and except as
otherwise provided herein, Lessee shall have quiet possession of the Premises
for the entire term hereof subject to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Lease, the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.
39.2 Options Personal to Original Lessee. Each Option granted to
Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1
hereof, and cannot be voluntarily or involuntarily assigned or exercised by any
person or entity other than said original Lessee while the original Lessee is in
full and actual possession of the Premises and without the intention of
thereafter assigning or subletting. The Options, if any, herein granted to
Lessee are not assignable, either as a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from this Lease in
any manner, by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later option cannot be exercised unless
the prior Options to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i)
during the period commencing with the giving of any notice of Default under
Paragraph 13.1 and continuing until the noticed Default is cured, or (ii) during
the period of time any monetary obligation due Lessor from Lessee is unpaid
(without regard to whether notice thereof is given Lessee), or (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessor has
given to Lessee three (3) or more notices of separate Default under Paragraph
13.1 during the twelve (12) month period immediately preceding the exercise of
the Option, whether or not the Defaults are cured.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option
shall terminate and be of no further force of effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of
Lessee for a period of thirty (30) days after such obligation becomes due
(without any necessity of Lessor to give notice thereof to Lessee), or
(ii) Lessor gives to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during any twelve (12) month period, whether or not the Defaults
are cured, or (iii) if Lessee commits a Breach of this Lease.
40. Rules and Regulations. Lessee agrees that it will abide by, and keep
and observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and
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unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees.
41. Security Measures. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties and
shall install, at Lessee's sole cost and expense, any and all necessary security
devices. Nothing herein contained shall prevent Lessor, at Lessor's sole option,
from providing security protection for the Project or any part thereof, in which
event the cost thereof shall be included within the definition of Operating
Expenses
42. Reservations. Lessor reserves the right, from time to time, to grant,
without the consent or joinder Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility race-ways, dedications maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.
Lessor shall further have the following rights:
(a) To change the name, address or title of the Office
Building Project or building in which the Premises are located upon not less
than 90 days prior written notice;
(b) To, at Lessee's expense, provide and install Building
standard graphics on the door of the Premises and such portions of the Common
Areas as Lessor shall reasonably deem appropriate;
(c) To permit any lessee the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights expressly
given herein;
(d) To place such signs, notices or displays as Lessor
reasonably deems necessary or advisable upon the roof, exterior of the buildings
or the Office Building Project or on pole signs in the Common Areas;
In addition to the foregoing, Lessee shall not:
(a) Use a representation (photographic or otherwise) of the
Building or the Office Building Project or their name(s) in connection with
Lessee's business;
(b) Suffer or permit anyone, except in emergency, to go upon
the roof of the Building.
43. Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum of much thereof as it was not legally required to pay under the
provisions of this Lease.
44. Authority. If either Party thereto is a corporation, trust, or
general or limited partnership, each individual executing this Lease on behalf
of such entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on its behalf. If Lessee is a corporation, trust
or partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
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46. Offer. Preparation of this Lease by either Lessor or Lessee or
Lessor's agent or Lessee's agent and submission of same to Lessee or Lessor
shall not be deemed an offer to lease. This Lease is not intended to be binding
until executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
49. Lender Modification. Lessee agrees to make such reasonable
modifications to this Lease as may be reasonably required by an institutional
lender in connection with the obtaining of normal financing or refinancing of
the Building or the Project or any portion thereof.
50. Construction. Headings at the beginning of each paragraph and
subparagraph are solely for the convenience of the parties and are not a part of
the Lease. Whenever required by the context of this Lease, the singular shall
include the plural and the masculine shall include the feminine and vice versa.
This Lease shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same and, consequently,
any inconsistencies or ambiguities herein shall not be interpreted against
either party as the drafter of the Lease. Unless otherwise indicated, all
references to paragraphs and subparagraphs are to this Lease. All exhibits
referred to in this Lease are attached and incorporated by this reference.
51. Satellite Dish. Lessor acknowledges that Lessee intends to install a
satellite dish on the roof of the Building, in size and type and location
reasonably approved by Lessor in writing. Lessor agrees that Lessee, at its sole
cost and expense, and subject to all applicable governmental rules and
regulations, has the right to install the satellite dish on the roof of the
Building, so long as the same conforms to the design and specifications approved
by Lessor. Lessee agrees to install the satellite dish in accordance with sound
construction practices. Lessee further agrees to use any specified roofing
contractor specified by Lessor. Upon the expiration or earlier termination of
the Lease, Lessee shall, if so directed by Lessor, remove the Satellite Dish and
repair the roof of the Building so as not to impair the integrity of the roof or
any portion thereof, or otherwise affect the Building or any warranty benefiting
the Building.
52. Notice of Intent to Sell. If, during the Lease Term, Lessor intends
to sell the Building or the Project and such sale is not a part of a portfolio
sale or other sale including other property or properties, then Lessor shall
notify Lessee of its intent to so sell the Building or the Project.
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LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO, THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES,
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at:__________________________ Executed at:_________________________
on:___________________________________ on:__________________________________
By LESSOR: By LESSEE:
AGBRI Xxxxx, LLC, a Delaware limited New Century Financial Corporation, a
liability company Delaware corporation
By: AG Asset Manager
By: /s/ ??^^ By: /s/ XXXX X. XXXXXXX
----------------------------------- ----------------------------------
Name Printed: Name Printed: XXXX X. XXXXXXX
------------------------- ------------------------
Title: Title: PRESIDENT
-------------------------------- -------------------------------
By: By:
----------------------------------- ----------------------------------
Name Printed: Name Printed:
------------------------- ------------------------
Title: Title:
-------------------------------- -------------------------------
Address: Address:
------------------------------ -----------------------------
-------------------------------------- -------------------------------------
Telephone: ( ) Telephone: (000) 000-0000
----------------------- ---------------------
Facsimile: ( ) Facsimile: (000) 000-0000
----------------------- ---------------------
Initials:
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EXTENSION OPTION RIDER
This Extension Option Rider ("Rider") is made and entered into by and
between AGBRI Xxxxx, LLC, a Delaware limited liability company ("Lessor"), and
New Century Financial Corporation, a Delaware corporation ("Lessee"), and is
dated as of the Effective Date of the Lease ("Lease") by and between Lessor and
Lessee to which this Rider is attached. The agreements set forth in this Rider
shall have the same force and effect as if set forth in the Lease. To the extent
the terms of this Rider are inconsistent with the terms of the Lease, the terms
of this Rider shall control.
1. Option to Extend Lease Term. Lessor hereby grants to Lessee one
---------------------------
(1) option to extend the Lease Term for a period of sixty (60) months (the
"Option Term"). The option must be exercised, if at all, by written notice
("Option Notice") delivered by Lessee to Lessor not more than thirteen (13) and
not less than six (6) months prior to the end of the initial Lease Term.
Further, the option shall be deemed not to be properly exercised, if, as of the
date of the Option Notice or at the end of the initial Lease Term or extended
Lease Term (whichever is applicable), Lessee is in default under the Lease or if
Lessee has previously been in default under this Lease more than once. Provided
Lessee has properly and timely exercised the option, the Lease Term shall be
extended for the number of months specified above, and, except as provided
below, all terms, covenants and conditions of the Lease shall remain
unmodified and in full force and effect. The rights contained in this Extension
Option Rider shall be personal to Lessee and may only be exercised by Lessee
(and not any assignee, sublessee or other transferee of Lessee's interest in
this Lease) if Lessee occupies the entire Premises.
2. Adjustment to Base Rent. Base Rent shall be adjusted as of the
-----------------------
commencement of the Option Term to reflect 95% of the then-current prevailing
market rental rate, as reasonably determined by Lessor (the "Fair Market Rental
Value"). Fair Market Rental Value shall be established by comparison of similar
space, improved as the Premises have been improved, including all Lessee-Owned
Alterations and/or Utility Installations, within comparable office buildings in
Irvine, as determined herein. In addition to the foregoing, and for purposes of
calculating Fair Market Rental Value, rental inducements and concessions then
being offered to prospective tenants, and brokerages commissions payable by
landlords, shall be disregarded.
3. Exercise of Option. The option contained in this Extension Option
------------------
Rider shall be exercised by Lessee, if at all, and only in the following manner:
(i) Lessee shall deliver written notice to Lessor not more than thirteen (13)
months nor less than six (6) months prior to the expiration of the initial Lease
Term, stating that Lessee is interested in exercising its option; (ii) Lessor,
after receipt of Lessee's notice, shall deliver notice (the "Option Rent
Notice") to Lessee not less than four (4) months prior to the expiration of the
initial Lease Term, setting forth the Fair Market Rental Value. Lessee shall
have thirty (30) days after receipt of Lessor's notice of such estimated Fair
Market Rental Value within which to (a) rescind in writing its exercise of the
option to extend, or (b) to accept Lessor's estimated Fair Market Rental Value,
in which case Lessor's estimated Fair Market Rental Value shall be the Base
Rent for the extended term, or (c) to confirm in writing Lessee's election to
extend the term of this Lease, and to object in writing to Lessor's estimated
Fair Market Rental Value. Failure of Lessee to timely object to the estimated
Fair Market Rental Value submitted by Lessor shall conclusively be deemed to be
Lessee's acceptance of said estimated Fair Market Rental Value so submitted by
Lessor and the Lease Term shall be deemed to have been extended at the Base
Rent stated in Lessor's Option Notice. In the event Lessee objects to the
estimated Fair Market Rental Value submitted by Lessor, Lessor and Lessee shall
attempt in good faith to agree upon the Fair Market Rental Value of the
Premise. If Lessor and Lessee fail to reach agreement on such Fair Market Rental
Value within fifteen (15) days after Lessee has objected to or has been deemed
to have objected to Lessor's estimated Fair Market Rental Value (the "Outside
Agreement Date"), then Lessee shall submit to Lessor its estimated Fair Market
Rental Value and each party's estimated Fair Market Rental shall be submitted
to arbitration in accordance with Subparagraphs (a) through (g) below.
(a) Lessor and Lessee shall attempt to agree upon a single
arbitrator within fifteen (15) days after the Outside Agreement Date. If no
such agreement is reached, then within thirty (30) days after the Outside
Agreement Date Lessor and Lessee shall each appoint one arbitrator who shall
by profession be a real estate broker who has been unaffiliated with and
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transacted no business on behalf of Lessor or Lessee, as the case may be, over
the previous five (5) year period and who shall have been active over the five
(5) year period ending on the date of such appointment in the Irvine area, of
the type of the Premises.
(b) The two arbitrators so appointed shall within fifteen (15)
days of the date of the appointment of the last appointed arbitrator agree upon
and appoint a third arbitrator who shall be qualified under the same criteria
set forth hereinabove for qualification of the initial two arbitrators.
(c) The three arbitrators shall within thirty (30) days of the
appointment of the third arbitrator reach a decision as to whether the parties
shall use Lessor's or Lessee's estimated Fair Market Rental Value for the
Premises, and shall notify Lessor and Lessee thereof. Such decision shall be
based only upon whether each arbitrator believes that the Fair Market Rental
Value estimated by Lessor or by Lessee is closest to the Fair Market Rental
Value that such arbitrator believes would be payable as of the Expiration Date
for similar commercial office space, taking into account such variables as are
set forth above, and shall not be based upon a compromise or average of the
figures submitted by Lessor and Lessee, respectively.
(d) The decision of the majority of the three arbitrators shall be
binding upon Lessor and Lessee.
(e) If either Lessor or Lessee fails to appoint an arbitrator
within the time period specified in Subparagraph (a) hereinabove, the arbitrator
appointed by one of them shall reach a decision, notify Lessor and Lessee
thereof, and such arbitrator's decision shall be binding upon Lessor and Lessee.
(f) If the two arbitrators fail to agree upon and appoint a third
arbitrator, both arbitrators shall be dismissed and the matter to be decided
shall be forthwith submitted to arbitration under the provisions of the American
Arbitration Association, subject to the requirements of this Paragraph 3.
(g) The costs of arbitration shall be paid by Lessor and Lessee
equally.
If the process set forth in Subparagraphs (a) through (f) above has not resulted
in a selection of Lessor's or Lessee's estimated Fair Market Rental Value by the
commencement of the then applicable option period, Lessee shall continue to pay
the Rent then being paid by Lessee, with an appropriate adjustment for accrued
and unpaid rental if the arbitrators select Lessee's estimated Fair Market
Rental Value.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Extension
Option Rider as of the Effective Date.
LESSOR: LESSEE:
------- -------
AGBRI Xxxxx, LLC, a Delaware limited New Century Financial Corporation,
liability company a Delaware corporation
By AG Asset Manager
By: /s/ ^^ILLEGIBLE SIGNATURE^^ By: /s/ XXXX X. XXXXXXX
---------------------------------- -------------------------------
Name Printed: Name Printed:
------------------------ ---------------------
Title: Title:
------------------------------- ----------------------------
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EXHIBIT "A"
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DEPICTION OF THE PREMISES
[CHART OF FLOOR PLAN APPEARS HERE]
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EXHIBIT "B"
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NEW CENTURY FINANCIAL CORPORATION
TENANT WORK LETTER
------------------
This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the "Tenant Improvements" within the Premises, as such
term is defined below. Defined terms utilized herein and not otherwise defined
shall have the meaning given them in the Lease. This Tenant Work Letter is
organized chronologically and addresses the issues of the construction of the
Tenant Improvements within the Premises, in sequence, as such issues will arise
during the actual construction of such Tenant Improvements. All references in
this Tenant Work Letter to Articles or Sections of "this Lease" shall mean the
relevant portions of Articles 1 through 52 (together with all Exhibits and
---------------------
Riders) of this Lease to which this Tenant Work Letter is attached as Exhibit B
---------
and all references in this Tenant Work Letter to Sections of "this Tenant Work
Letter" shall mean the relevant portions of Sections 1 through 5 of this Tenant
--------------------
Work Letter.
SECTION 1
---------
DELIVERY OF THE PREMISES AND BASE BUILDING
------------------------------------------
Upon the execution and delivery of the Lease and evidence of insurance
thereunder, Lessor shall deliver the Premises and "Base Building," as that term
is defined below, to Lessee, and Lessee shall accept the Premises and Base
Building from Lessor in their presently existing "as-is" condition. The "Base
Building" shall consist of those portions of the Premises which were in
existence prior to the construction of the tenant improvements in the Premises
for the prior tenant of the Premises.
SECTION 2
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TENANT IMPROVEMENTS
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2.1 Tenant Improvement Allowance. Lessee shall be entitled to a one-time
----------------------------
improvement allowance (the "Tenant Improvement Allowance") in the amount of
$25.00 per rentable square foot of the Initial Premises and $22.50 per rentable
square foot of the Expansion Premises for the costs relating to the initial
design and construction of Lessee's improvements, which are permanently affixed
to the Premises (the "Tenant Improvements"). In no event shall Lessor be
obligated to make disbursements pursuant to this Tenant Work Letter in a total
amount which exceeds the Tenant Improvement Allowance. The Improvements to be
constructed in the Initial Premises and in the Expansion Premises shall be
constructed concurrently pursuant to this Work Letter and the Lease.
2.2 Disbursement of the Tenant Improvement Allowance.
------------------------------------------------
2.2.1 Tenant Improvement Allowance Items. Except as otherwise set
----------------------------------
forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Lessor only for the following items and costs (collectively the
"Tenant Improvement Allowance Items"):
2.2.1.1 Payment of the fees of the "Architect" and the
"Engineers," as those terms are defined in Section 3.1 of this Tenant Work
-----------
Letter, which fees shall, notwithstanding anything to the contrary contained in
this Tenant Work Letter, not exceed an aggregate amount equal to One Dollar and
Thirty Cents ($1.30) per square foot of the Premises, and payment of the fees
incurred by, and the cost of documents and materials supplied by, Lessor and
Lessor's consultants in connection with the preparation and review of the
"Construction Drawings," as that term is defined in Section 3.1 of this Tenant
-----------
Work Letter;
2.2.1.2 The payment of plan check, permit and license fees
relating to construction of the Tenant Improvements;
2.2.1.3 The cost of construction of the Tenant Improvements,
including, without limitation, testing and inspection costs, freight elevator
usage, hoisting and trash removal costs, and contractors' fees and general
conditions;
2.2.1.4 The cost of any changes in the Base Building when
such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied basis),
such cost to include all direct architectural and/or engineering fees and
expenses incurred in connection therewith;
2.2.1.5 The cost of any changes to the Construction Drawings
or Tenant Improvements required by any applicable governmental regulations or
building codes;
2.2.1.6 Sales and use taxes; and
2.2.1.7 All other costs actually incurred by Lessor in
connection with the construction of the Tenant Improvements.
2.2.2 Disbursement of Tenant Improvement Allowance. During the
--------------------------------------------
construction of the Tenant Improvements, Lessor shall make monthly disbursements
of the Tenant Improvement Allowance for Tenant Improvement Allowance Items for
the benefit of Lessee and shall authorize the release of monies for the benefit
of Lessee as follows:
2.2.2.1 Monthly Disbursements. On or before the 22nd day of
---------------------
each calendar month, as determined by Lessor, during the construction of the
Tenant Improvements (or such other date as Lessor may designate), Lessee shall
deliver to Lessor: (i) a request for payment of the "Contractor," as that term
is defined in Section 4.1 of this Tenant Work Letter, approved by Lessee, in a
-----------
form to be provided by Lessor, showing the schedule, by trade, of percentage of
completion of the Tenant Improvements in the Premises, detailing the portion of
the work completed and the portion not completed; (ii) invoices from all of
"Lessee's Agents," as that term is defined in Section 4.1.2 of this Tenant Work
-------------
Letter, for labor rendered and materials delivered to the Premises; (iii)
executed mechanic's lien releases from all of Lessee's Agents which shall
comply with the appropriate provisions, as reasonably determined by Lessor, of
California Civil Code Section 3262(d); and (iv) all other information reasonably
requested by Lessor. Lessee's request for payment shall be deemed Lessee's
acceptance and approval of the work furnished and/or the materials supplied as
set forth in Lessee's payment request. Thereafter, Lessor shall deliver a check
to Lessee made jointly payable to Contractor and Lessee in payment of the
lesser of: (A) the amounts so requested by Lessee, as set forth in this Section
-------
2.2.2.1, above, less a ten percent (10%) retention (the aggregate amount of such
-------
retentions to be known as the "Final Retention"), and (B) the balance of any
remaining available portion of the Tenant Improvement Allowance (not including
the Final Retention), provided that Lessor does not dispute any request for
payment based on non-compliance of any work with the "Approved Working
Drawings," as that term is defined in Section 3.4 below, or due to any
-----------
substandard work, or for any other reason. Lessor's payment of such amounts
shall not be deemed Lessor's approval or acceptance of the work furnished or
materials supplied as set forth in Lessee's payment request.
2.2.2.2 Final Retention. Subject to the provisions of this
---------------
Tenant Work Letter, a check for the Final Retention payable jointly to Lessee
and Contractor shall be delivered by Lessor to Lessee following the completion
of construction of the Premises, provided that (i) Lessee delivers to Lessor
properly executed mechanics lien releases in compliance with both California
Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or Section
3262(d)(4), (ii) Lessor has determined that no substandard work exists which
adversely affects the mechanical, electrical, plumbing, heating, ventilating and
air conditioning, life-safety or other systems of the Building, the curtain wall
of the Building, the structure or exterior appearance of the Building, or any
other Lessee's use of such other Lessee's leased premises in the Building and
(iii) Architect delivers to Lessor a certificate, in a form reasonably
acceptable to Lessor, certifying that the construction of the Tenant
Improvements in the Premises has been substantially completed.
2.2.2.3 Other Terms. Lessor shall only be obligated to make
-----------
disbursements from the Tenant Improvement Allowance to the extent costs are
incurred by Lessee for Tenant
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Improvement Allowance Items. All Tenant Improvement Allowance Items for which
the Tenant Improvement Allowance has been made available shall be deemed
Lessor's property under the terms of the Lease.
SECTION 3
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CONSTRUCTION DRAWINGS
---------------------
3.1 Selection of Architect/Construction Drawings. Lessee shall retain an
--------------------------------------------
architect/space planner designated by or approved by Lessor (the "Architect") to
prepare the "Construction Drawings," as that term is defined in this Section
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3.1. Lessee shall retain the engineering consultants designated by or approved
---
by Lessor (the "Engineers") to prepare all plans and engineering working
drawings relating to the structural, mechanical, electrical, plumbing, HVAC,
lifesafety, and sprinkler work in the Premises, which work is not part of the
Base Building. The plans and drawings to be prepared by Architect and the
Engineers hereunder shall be known collectively as the "Construction Drawings."
All Construction Drawings shall comply with the drawing format and
specifications determined by Lessor, and shall be subject to Lessor's approval.
Lessee and Architect shall verify, in the field, the dimensions and conditions
as shown on the relevant portions of the base building plans, and Lessee and
Architect shall be solely responsible for the same, and Lessor shall have no
responsibility in connection therewith. Lessor's review of the Construction
Drawings as set forth in this Section 3.1, shall be for its sole purpose and
-----------
shall not imply Lessor's review of the same, or obligate Lessor to review the
same, for quality, design, Code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Lessor or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Lessee by Lessor or Lessor's space
planner, architect, engineers, and consultants, Lessor shall have no liability
whatsoever in connection therewith and shall not be responsible for any
omissions or errors contained in the Construction Drawings, and Lessee's waiver
and indemnity set forth in Section 10.1 of this Lease shall specifically apply
------------
to the Construction Drawings.
3.2 Final Space Plan. Lessee shall supply Lessor with four (4) copies
----------------
signed by Lessee of its final space plan for the Premises before any
architectural working drawings or engineering drawings have been commenced. The
final space plan (the "Final Space Plan") shall include a layout and designation
of all offices, rooms and other partitioning, their intended use, and equipment
to be contained therein. Lessor may request clarification or more specific
drawings for special use items not included in the Final Space Plan. Lessor
shall advise Lessee within five (5) business days after Lessor's receipt of the
Final Space Plan for the Premises if the same is unsatisfactory or incomplete in
any respect. If Lessee is so advised, Lessee shall promptly cause the Final
Space Plan to be revised to correct any deficiencies or other matters Lessor may
reasonably require.
3.3 Final Working Drawings. After the Final Space Plan has been approved
----------------------
by Lessor, Lessee shall supply the Engineers with a complete listing of standard
and non-standard equipment and specifications for the Premises, to enable the
Engineers and the Architect to complete the "Final Working Drawings" (as that
term is defined below) in the manner as set forth below. Upon the approval of
the Final Space Plan by Lessor and Lessee, Lessee shall promptly cause the
Architect and the Engineers to complete the architectural and engineering
drawings for the Premises, and Architect shall compile a fully coordinated set
of architectural, structural, mechanical, electrical and plumbing working
drawings in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the "Final Working
Drawings") and shall submit the same to Lessor for Lessor's approval. Lessee
shall supply Lessor with four (4) copies signed by Lessee of such Final Working
Drawings. Lessor shall advise Lessee within five (5) business days after
Lessor's receipt of the Final Working Drawings for the Premises if the same is
unsatisfactory or incomplete in any respect. If Lessee is so advised, Lessee
shall immediately revise the Final Working Drawings in accordance with such
review and any disapproval of Lessor in connection therewith.
3.4 Approved Working Drawings. The Final Working Drawings shall be
-------------------------
approved by Lessor (the "Approved Working Drawings") prior to the commencement
of construction of the Tenant Improvements by Lessee. After approval by Lessor
of the Final Working Drawings,
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Lessee may submit the same to the City of San Diego for all applicable building
permits. Lessee hereby agrees that neither Lessor nor Lessor's consultants shall
be responsible for obtaining any building permit or certificate of occupancy for
the Premises and that obtaining the same shall be Lessee's responsibility;
provided, however, that Lessor shall cooperate with Lessee in executing permit
applications and performing other ministerial acts reasonably necessary to
enable Lessee to obtain any such permit or certificate of occupancy. No changes,
modifications or alterations in the Approved Working Drawings may be made
without the prior written consent of Lessor, which consent may not be
unreasonably withheld.
SECTION 4
---------
CONSTRUCTION OF THE TENANT IMPROVEMENTS
---------------------------------------
4.1 Lessee's Selection of Contractors.
---------------------------------
4.1.1 The Contractor. A general contractor shall be retained by
--------------
Lessee to construct the Tenant Improvements. Such general contractor
("Contractor") shall be selected by Lessee and approved by Lessor in writing.
4.1.2 Lessee's Agents. All subcontractors, laborers, materialmen,
---------------
and suppliers used by Lessee (such subcontractors, laborers, materialmen, and
suppliers, and the Contractor to be known collectively as "Lessee's Agents")
must be approved in writing by Lessor, which approval shall not be unreasonably
withheld or delayed. If Lessor does not approve any of Lessee's proposed
subcontractors, laborers, materialmen or suppliers, Lessee shall submit other
proposed subcontractors, laborers, materialmen or suppliers for Lessor's written
approval.
4.2 Construction of Tenant Improvements by Lessee's Agents.
------------------------------------------------------
4.2.1 Construction Contract; Cost Budget. Prior to Lessee's
----------------------------------
execution of the construction contract and general conditions with Contractor
(the "Contract"), Lessee shall submit the Contract to Lessor for its approval,
which approval shall not be unreasonably withheld or delayed. Prior to the
commencement of the construction of the Tenant Improvements, and after Lessee
has accepted all bids for the Tenant Improvements, Lessee shall provide Lessor
with a detailed breakdown, by trade, of the final costs to be incurred or which
have been incurred in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Lessee or the Contractor,
which costs form a basis for the amount of the Contract (the "Final Costs").
Prior to the commencement of construction of the Tenant Improvements, Lessee
shall supply Lessor with cash in an amount (the "Over-Allowance Amount") equal
to the difference between the amount of the Final Costs and the amount of the
Tenant Improvement Allowance (less any portion thereof already disbursed by
Lessor, or in the process of being disbursed by Lessor, on or before the
commencement of construction of the Tenant Improvements). The Over-Allowance
Amount shall be disbursed by Lessor prior to the disbursement of any of the then
remaining portion of the Tenant Improvement Allowance, and such disbursement
shall be pursuant to the same procedure as the Tenant Improvement Allowance. In
the event that, after the Final Costs have been delivered by Lessee to Lessor,
the costs relating to the design and construction of the Tenant Improvements
shall change, any additional costs necessary to such design and construction in
excess of the Final Costs, shall be paid by Lessee to Lessor immediately as an
addition to the Over-Allowance Amount or at Lessor's option, Lessee shall make
payments for such additional costs but of its own funds, but Lessee shall
continue to provide Lessor with the documents described in Sections 2.2.2.1 (i),
---------------------
(ii), (iii) and (iv) of this Tenant Work Letter, above, for Lessor's approval,
--------------------
prior to Lessee paying such costs.
4.2.2 Lessee's Agents:
---------------
4.2.2.1 Lessor's General Conditions for Lessee's Agents and
---------------------------------------------------
Tenant Improvement Work. Lessee's and Lessee's Agent's construction of the
-----------------------
Tenant Improvements shall comply with the following: (i) the Tenant Improvements
shall be constructed in strict accordance with the Approved Working Drawings;
(ii) Lessee's Agents shall submit schedules of
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all work relating to the Tenant's Improvements to Contractor and Contractor
shall, within five (5) business days of receipt thereof, inform Lessee's Agents
of any changes which are necessary thereto, and Lessee's Agents shall adhere to
such corrected schedule; and (iii) Lessee shall abide by all rules made by
Lessor with respect to the use of any freight, loading dock and service
elevators, parking areas and any staging areas, storage of materials,
coordination of work with the contractors of other tenants, and any other matter
in connection with this Tenant Work Letter, including, without limitation, the
construction of the Tenant Improvements.
4.2.2.2 Indemnity. Lessee's indemnity obligations under the Lease
---------
shall also apply with respect to any and all claims, costs, losses, damages,
injuries and liabilities related in any way to any act or omission of Lessee or
Lessee's Agents, or anyone directly or indirectly employed by any of them, or in
connection with Lessee's non-payment of any amount arising out of the Tenant
Improvements and/or Lessee's disapproval of all or any portion of any request
for payment. Such indemnities by Lessee, as set forth in this Lease, shall also
apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to Lessor's performance of any ministerial acts
reasonably necessary (i) to permit Lessee to complete the Tenant Improvements,
and (ii) to enable Lessee to obtain any building permit or certificate of
occupancy for the Premises.
4.2.2.3 Requirements of Lessee's Agents. Each of Lessee's
-------------------------------
Agents shall guarantee to Lessee and for the benefit of Lessor that the portion
of the Tenant Improvements for which it is responsible shall be free from any
defects in workmanship and materials for a period of not less than one (1) year
from the date of completion thereof. Each of Lessee's Agents shall be
responsible for the replacement or repair, without additional charge, of all
work done or furnished in accordance with its contract that shall become
defective within one (1) year after the later to occur of (i) completion of the
work performed by such contractor or subcontractors and (ii) the Lease
Commencement Date. The correction of such work shall include, without additional
charge, all additional expenses and damages incurred in connection with such
removal or replacement of all or any part of the Tenant Improvements, and/or the
Building and/or common areas that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
the Tenant Improvements shall be contained in the Contract or subcontract and
shall be written such that such guarantees or warranties shall inure to the
benefit of both Lessor and Lessee, as their respective interests may appear,
and can be directly enforced by either. Lessee covenants to give to Lessor any
assignment or other assurances which may be necessary to effect such right of
direct enforcement.
4.2.2.4 Insurance Requirements.
----------------------
4.2.2.4.1 General Coverages. All of Lessee's Agents shall
-----------------
carry worker's compensation insurance covering all of their respective
employees, and shall also carry public liability insurance, including property
damage, all with limits, in form and with companies as are required to be
carried by Lessee as set forth in this Lease.
4.2.2.4.2 Special Coverages. Lessee shall carry
-----------------
"Builder's All Risk" insurance in an amount approved by Lessor covering the
construction of the Tenant Improvements, and such other insurance as Lessor may
require, it being understood and agreed that the Tenant Improvements shall be
insured by Lessee pursuant to Lessee's insurance requirements under the Lease
immediately upon completion thereof. Such insurance shall be in amounts and
shall include such extended coverage endorsements as may be reasonably required
by Lessor including, but not limited to, the requirement that all of Lessee's
Agents shall carry excess liability and Products and Completed Operation
Coverage insurance, each in amounts not less than $500,000 per incident,
$1,000,000 in aggregate, and in form and with companies as are required to be
carried by Lessee as set forth in the Lease.
4.2.2.4.3 General Terms. Certificates for all insurance
-------------
carried pursuant to this Section 4.2.2.4 shall be delivered to Lessor before
---------------
the commencement of construction of the Tenant Improvements and before the
Contractor's equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give Lessor
thirty (30) days prior written notice of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance. In the event
that the Tenant
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Improvements are damaged by any cause during the course of the construction
thereof, Lessee shall immediately repair the same at Lessee's sole cost and
expense. Lessee's Agents shall maintain all of the foregoing insurance coverage
in force until the Tenant Improvements are fully completed and accepted by
Lessor, except for any Products and Completed Operation Coverage insurance
required by Lessor, which is to be maintained for ten (10) years following
completion of the work and acceptance by Lessor and Lessee. All policies carried
under this coverage in force until the Tenant Improvements are fully completed
and accepted by Lessor, except for any Products and Completed Operation Coverage
insurance required by Lessor, which is to be maintained for ten (10) years
following completion of the work and acceptance by Lessor and Lessee. All
policies carried under this Section 4.2.2.4 shall insure Lessor and Lessee, as
---------------
their interests may appear, as well as Contractor and Lessee's Agents. All
insurance, except Workers' Compensation, maintained by Lessee's Agents shall
preclude subrogation claims by the insurer against anyone insured thereunder.
Such insurance shall provide that it is primary insurance as respects the owner
and that any other insurance maintained by owner is excess and noncontributing
with the insurance required hereunder. The requirements for the foregoing
insurance shall not derogate from the provisions for indemnification of Lessor
by Lessee under Section 4.2.2.2 of this Tenant Work Letter. Lessor may, in its
---------------
discretion, require Lessee to obtain a lien and completion bond or some
alternate form of security satisfactory to Lessor in an amount sufficient to
ensure the lien-free completion of the Tenant Improvements and naming Lessor as
co-obligee.
4.2.3 Governmental Compliance. The Tenant Improvements shall comply
-----------------------
in all respects with the following: (i) all applicable governmental regulations,
including building codes, the Americans with Disabilities Act of 1990, and other
state, federal, city or quasi-governmental laws, codes, ordinances and
regulations, as each may apply according to the rulings of the controlling
public official, agent or other person; (ii) applicable standards of the
American Insurance Association (formerly, the National Board of Fire
Underwriters) and the National Electrical Code; and (iii) building material
manufacturer's specifications.
4.2.4 Inspection by Lessor. Lessor shall have the right to inspect
--------------------
the Tenant Improvements at all times, provided however, that Lessor's failure to
inspect the Tenant Improvements shall in no event constitute a waiver of any of
Lessor's rights hereunder nor shall Lessor's inspection of the Tenant
Improvements constitute Lessor's approval of the same. Should Lessor disapprove
any portion of the Tenant Improvements, Lessor shall notify Lessee in writing of
such disapproval and shall specify the items disapproved. Any defects or
deviations in, and/or disapproval by Lessor of, the Tenant Improvements shall be
rectified by Lessee at no expense to Lessor, provided however, that in the
event Lessor determines that a defect or deviation exists or disapproves of any
matter in connection with any portion of the Tenant Improvements and such
defect, deviation or matter might adversely affect the mechanical, electrical,
plumbing, heating, ventilating and air conditioning or life-safety systems of
the Building, the structure or exterior appearance of the Building or any other
tenant's use of such other tenant's leased premises, Lessor may, take such
action as Lessor deems necessary, at Lessee's expense and without incurring any
liability on Lessor's part, to correct any such defect, deviation and/or matter,
including, without limitation, causing the cessation of performance of the
construction of the Tenant Improvements until such time as the defect, deviation
and/or matter is corrected to Lessor's satisfaction.
4.2.5 Meetings. Commencing upon the execution of this Lease, Lessee
--------
shall hold weekly meetings at a reasonable time, with the Architect and the
Contractor regarding the progress of the preparation of Construction Drawings
and the construction of the Tenant Improvements, which meetings shall be held at
a location designated by Lessor, and Lessor and/or its agents shall receive
prior notice of, and shall have the right to attend, all such meetings, and,
upon Lessor's request, certain of Lessee's Agents shall attend such meetings. In
addition, minutes shall be taken at all such meetings, a copy of which minutes
shall be promptly delivered to Lessor. One such meeting each month shall include
the review of Contractor's current request for payment.
4.3 Notice of Completion: Copy of "As Built" Plans. Within ten (10) days
----------------------------------------------
after completion of construction of the Tenant Improvements, Lessee shall cause
a Notice of Completion to be recorded in the office of the Recorder of the
County of Orange in accordance
-6-
with Section 3093 of the Civil Code of the State of California or any successor
statute, and shall furnish a copy thereof to Lessor upon such recordation. If
Lessee fails to do so, Lessor may execute and file the same on behalf of Lessee
as Lessee's agent for such purpose, at Lessee's sole cost and expense. At the
conclusion of construction, (i) Lessee shall cause the Architect and Contractor
(A) to update the Approved Working Drawings as necessary to reflect all
changes made to the Approved Working Drawings during the course of construction,
(B) to certify to the best of their knowledge that the "record-set" of as-built
drawings are true and correct, which certification shall survive the expiration
or termination of this Lease, and (C) to deliver to Lessor two (2) sets of
copies of such as-built drawings within ninety (90) days following issuance of a
certificate of occupancy for the Premises, and (ii) Lessee shall deliver to
Lessor a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the
Premises.
4.4 Commencement Date and Substantial Completion.
--------------------------------------------
4.4.1 Substantial Completion: Punch-List. The Improvements shall be
----------------------------------
deemed to be "Substantially Completed," and "Substantial Completion" shall be
deemed to occur when Contractor certifies in writing to Lessor and Lessee that:
(a) Lessee has reasonable access to the Premises; (b) Contractor has
substantially performed all of the Improvements work to be performed under this
Work Letter, other than decoration and minor "punch list" items and adjustments
which do not materially interfere with Lessee's access to or use of the Premises
or Lessor or any other tenant's use of the Building, or in Lessor's reasonable
determination, do not adversely affect any system of the Building; and (c)
Contractor or Lessee has obtained a temporary certificate of occupancy or other
required approval from the local governmental authority permitting occupancy of
the Premises. Within three (3) business days after receipt of such certificate
from Lessee, Lessor shall conduct a walk-through inspection of the Premises with
Lessee to inspect the Premises and the Improvements. Within five (5) business
days following such inspection, Lessor shall develop and provide to Lessee a
written "punch list" specifying those improvements which require completion and
other reasonable corrective work, which punch list items Lessee or Contractor
shall thereafter diligently complete.
4.4.2 Commencement Date. The Term of the Lease shall commence as
-----------------
provided in Section 1.3 of the Lease. The Commencement Date shall only be
extended for Lessor's Delays and by Unavoidable Delays (as defined below). In no
event shall the Commencement Date be extended as a result of any Lessee Delays.
If, there are delays caused by Lessor or by Unavoidable Delays, the Commencement
Date shall be extended by the number of days of Lessor Delays and Unavoidable
Delays; provided, however, that if Substantial Completion of the Improvements is
delayed as a result of any Lessee Delays described below, then the Commencement
Date shall be accelerated by the number of days of such Lessee Delays.
4.4.3 Lessee Delays.
-------------
4.4.3.1 Lessee's Delays. For purposes of this Work Letter,
---------------
"Lessee Delays" shall mean any delay in substantial completion of the
Improvements resulting from any or all of the following:
4.4.3.1.1 Lessee's failure to timely perform any of
its obligations pursuant to this Work Letter;
4.4.3.1.2 Lessee's changes to Final Working Drawings
after Lessee's and Lessor's approval thereof;
4.4.3.1.3 Lessee's request for long lead-time
materials, finished or installations unless approved by Lessor in the Final
Working Drawings;
4.4.3.1.4 Any other delay, act or failure to act by
Lessee, Lessee's employees, agents, independent contractors, consultants and/or
any other person performing or required to perform services on behalf of Lessee,
including the Contractor;
4.4.3.2 Lessor Delays. For purposes of this Work Letter,
-------------
"Lessor Delays" shall mean any delay in substantial completion of the
Improvements resulting from any or all of the following:
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4.4.3.2.1 Lessor's failure to timely approve revisions to the
Final Working Drawings requested by Lessee; or
4.4.3.2.2 Lessor's failure to timely approve the Contract.
4.4.3.3 Unavoidable Delays. Performance by either party under this
------------------
Work Letter shall not be deemed to be in default where delays or defaults are
otherwise due to war, insurrection, strikes, lock-outs, riots, floods,
earthquakes, fires, casualties, acts of God, acts of public enemy, epidemics,
quarantine restrictions, freight embargoes, lack of general transportation,
governmental restrictions, moratoriums, acts or failure to act of any public,
private or governmental agency or entity or any other causes beyond the control
or without the fault of the party claiming an extension of time to perform as a
result thereof (excluding a party's financial inability to perform)
(individually, an "Unavoidable Delay").
SECTION 5
---------
MISCELLANEOUS
-------------
5.1 Lessee's Representative. Lessee has designated Xxxxxxx Xxxxx as its
----------------------- -------------
sole representative with respect to the matters set forth in this Tenant Work
Letter, who shall have full authority and responsibility to act on behalf of the
Lessee as required in this Tenant Work Letter.
5.2 Lessor's Representative. Lessor has designated Xxx Xxxxxxxxxxx, Matt
-----------------------
Root and Xxxxx Xxxxx as its sole representatives with respect to the matters set
forth in this Tenant Work Letter, who, until further notice to Lessee, shall
have full authority and responsibility to act on behalf of the Lessor as
required in this Tenant Work Letter.
5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise
----------------------------------------------
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. If any item requiring approval is timely disapproved by Lessor,
the procedure for preparation of the document and approval thereof shall be
repeated until the document is approved by Lessor.
5.4 Landlord's Fee. Landlord shall be paid a fee in connection with
--------------
Landlord's obligations set forth in this Tenant Work Letter with respect to
reviewing, approving and supervising the design and construction of the Tenant
Improvements for the Premises in the amount of 5% of the total cost to permit
and construct the Tenant Improvements (exclusive of the lesser of (i) the costs
paid by Lessee to third-party Architects or Engineers, or (ii) One Dollar and
Thirty Cents ($1.30) per square foot of the Premises) which amount shall be
deducted from the Tenant Improvement Allowance.
5.5 Lessee's Lease Default. Notwithstanding any provision to the
----------------------
contrary contained in this Lease, if an event of Lessee Default as described in
the Lease or this Tenant Work Letter has occurred at any time on or before the
Substantial Completion of the Premises, then (i) in addition to all other rights
and remedies granted to Lessor pursuant to this Lease, Lessor shall have the
right to withhold payment of all or any portion of the Tenant Improvement
Allowance and/or Lessor may cause Contractor to cease the construction of the
Premises (in which case, Lessee shall be responsible for any delay in the
substantial completion of the Premises caused by such work stoppage), and (ii)
all other obligations of Lessor under the terms of this Tenant Work Letter shall
be forgiven until such time as such Default is cured pursuant to the terms of
this Lease (in which case, Lessee shall be responsible for any delay in the
substantial completion of the Premises caused by such inaction by Lessor).
5.6 Fire Sprinkler System. Lessee acknowledges that Lessor is in the
---------------------
process of installing a Fire Sprinkler System in the Building. Lessee shall hold
Lessor harmless from any delay or interference in Lessee's work schedule as a
result of such work.
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