EXHIBIT 10.24
OFFICE BUILDING LEASE
BETWEEN
ACD2,
a California corporation,
LANDLORD
AND
AMWEST INSURANCE GROUP, INC.
a Delaware corporation,
TENANT
CALABASAS COMMERCE CENTER, BUILDING 6
TABLE OF CONTENTS
Page
1. CERTAIN TERMS AND DEFINITIONS 1
2. PREMISES, COMMON AREAS & EXPANSION SPACE 5
2.1 Premises 5
2.2 Confirmation of RSF 5
2.3 Common Areas 6
2.4 Expansion Space 7
2.5 Quality of Construction - Standard for
Maintenance, Repairs and Operation 8
3. TERM AND OPTION TERM 9
3.1 Initial Term 9
3.2 Option to Extend Term 10
3.3 Cancellation Option 12
3.4 Possession 12
3.5 Early Entry into Premises 13
4. NONDISTURBANCE AGREEMENT 13
5. MONTHLY BASIC RENT 14
6. ADDITIONAL RENT 15
7. CONSTRUCTION OF THE TENANT IMPROVEMENTS
AND THE BASE BUILDING. 25
8. USE 25
9. PAYMENTS AND NOTICES 26
10. BROKERS AND REPRESENTATIVES 27
11. HOLDING OVER 27
12. TAXES ON TENANT'S PROPERTY 27
13. CONDITION OF PREMISES 28
14. ALTERATIONS 30
15. REPAIRS 32
16. LIENS 35
17. ENTRY BY LANDLORD 35
18. UTILITIES AND SERVICES 36
18.1 Services 36
19. BANKRUPTCY 37
20. INDEMNIFICATION AND EXCULPATION 37
21. DAMAGE TO TENANT'S PROPERTY 39
22. INSURANCE 39
23. DAMAGE OR DESTRUCTION 42
23.1 Definitions 42
23.2 Partial Damage - Insured Loss 42
23.3 Partial Damage - Uninsured Loss 43
23.4 Total Destruction 43
23.5 Damage Near End of Term 43
23.6 Notice of Repair Time 44
23.7 Abatement of Rent; Tenant's Remedies 44
23.8 Inconsistent Statutes 45
24. EMINENT DOMAIN 45
25. DEFAULTS AND REMEDIES 46
26. ASSIGNMENT AND SUBLETTING 48
27. SUBORDINATION 51
28. ESTOPPEL CERTIFICATE 51
29. SIGNS 52
30. RULES AND REGULATIONS 53
31. BANKRUPTCY 54
32. SECURITY 54
33. SURRENDER OF PREMISES 54
34. PERFORMANCE BY TENANT 54
35. MORTGAGE AND SENIOR LESSOR PROTECTION 55
36. DEFINITION OF LANDLORD 55
37. PARKING 55
38. OPTION TO XXXXXXXX 00
00. FORCE MAJEURE 57
40. LIMITATION ON LIABILITY 57
41. MODIFICATION FOR LENDER 57
42. ACCESS. 58
43. QUIET ENJOYMENT 58
44. CONFIDENTIALITY 58
45. CONSENT/DUTY TO ACT REASONABLY 58
46. CONFLICT OF LAWS 59
47. SUCCESSORS AND ASSIGNS 59
48. ATTORNEYS' FEES 59
49. WAIVER 59
50. SEVERABILITY 59
51. TERMS AND HEADINGS 60
52. TIME 60
53. PRIOR AGREEMENT; AMENDMENTS 60
54. TENANT AS CORPORATION 60
55. APPROVALS 60
56. NO PARTNERSHIP OR JOINT VENTURE 60
57. RULE AGAINST PERPETUITIES 60
58. RIGHT TO XXXXXXXXX 00
00. INTEREST RATE 61
60. REFERENCES 61
61. RECOVERY AGAINST LANDLORD 62
62. MEMORANDUM OF LEASE AND OPTION AGREEMENT 62
EXHIBIT A-I PRELIMINARY FLOOR PLAN 1
EXHIBIT A-II SITE PLAN 2
EXHIBIT A-III RENTABLE SQUARE FOOTAGE OF BUILDING FLOORS 3
EXHIBIT C FORM OF NOTICE OF LEASE TERM DATES,
PREMISES SQUARE FOOTAGE AND TENANT'S
PERCENTAGE 1
EXHIBIT D SERVICES 1
EXHIBIT E SAMPLE FORM OF TENANT ESTOPPEL
CERTIFICATE 1
EXHIBIT F RULES AND REGULATIONS 1
EXHIBIT G PARKING RULES AND REGULATIONS 1
EXHIBIT H SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT 1
EXHIBIT I OPTION AGREEMENT 1
EXHIBIT J MEMORANDUM OF LEASE AND OPTION AGREEMENT 1
THIS OFFICE BUILDING LEASE ("Lease") is made as of the 24th day of
January, 1996, by and between ACD2, a California corporation, and AMWEST
INSURANCE GROUP, INC., a Delaware corporation.
1. CERTAIN TERMS AND DEFINITIONS. For the purposes of this Lease,
the following terms shall have the following definitions and meanings:
(a) "LandLord": ACD2, a California corporation
(b) "Landlord's address":
ACD2
Department 713
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxxxx Xxxxx
With copies to:
Xxxxxxxxx Xxxxxxxxxx-Xxxxxxxx, Esq.,
Senior Counsel, Legal
Home Savings of America, FSB
0000 Xxxxxxxxxx Xxxx #0000
Xxxxxxxxx, Xxxxxxxxxx 00000
Copies of all notices pertaining to any Tenant Delay, Landlord
Delay or any Event of Default applicable to Lessee shall be
sent, in the same manner and at the same time, to:
Paul, Hastings, Xxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: M. Guy Maisnik, Esq.
(c) "Tenant": AMWEST INSURANCE GROUP, INC., a Delaware corporation
(d) "Tenant's Address before Commencement Date":
Amwest Insurance Group
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx
"Tenant's Address after Commencement Date":
All notices after the Commencement Date shall be sent to the
address of the Premises:
Attention: Chief Financial Officer
Copies of all notices pertaining to any Tenant Delay, Landlord
Delay or any Event of Default applicable to Lessee shall be
sent, in the same manner and at the same time, to:
Pillsbury Madison & Sutro
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxxxx X. Xxxxx, Esq.
(e) "Building": The three (3) story building to be constructed
by Landlord under the terms of the Work Agreement attached
hereto as Exhibit B (and referred to therein as the "Base
Building") and commonly known as Building 6. The parties
anticipate that the Building shall contain approximately
75,709 rentable square feet ("RSF"). The Building is part of a
larger business park known as Calablasas Commerce Center
("Project"), as shown on the Site Plan attached hereto as
Exhibit A-II, which Project has not as of the date of this
Lease been completed. Tenant acknowledges that because the
Project has not yet been completed, that the Site Plan is not
an accurate representation of the completed Project and that
Landlord shall have the right to modify the Project from time
to time without the consent of Tenant, provided that Landlord
does not reduce or alter Tenant's parking rights as set forth
herein. The RSF of the Building shall be computed from
dimensioned drawings of Landlord's architect or space
planner in accordance with the criteria established by the
Building Owners and Managers Association ("BOMA Guidelines")
as American National Standard Z65.1-1989. The parties shall
attach Exhibit A-III to this Lease when the RSF for each floor
in the Building have been determined. Exhibit A-III shall
state the RSF of each floor in the Building.
(f) "Premises":Approximately 63,091 RSF encompassing the entire
second and third floors and approximately fifty percent
(50%) of the ground floor of the Building, as depicted on
Exhibit A-1, which amount shall be expanded pursuant to
Subparagraph 2.4 below. The Premises as initially leased by
Tenant, exclusive of any Expansion Space, is sometimes
referred to as the "Initial Premises".
(g) "Term":Fifteen (15) Lease Years commencing on the Commencement
Date (as defined in Subparagraph 1(j) below), plus any
extensions pursuant to Subparagraph 3.2 below if exercised
by Tenant pursuant to the terms set forth in the Lease.
The first fifteen (15) Lease Years of the Term is sometimes
referred to as the "Initial Term." The phrase "Lease Year"
means each 365-day period during the Term commencing on the
Commencement Date and each anniversary thereof and terminating
on the date immediately prior to the next succeeding
anniversary of the Commencement Date and each anniversary
thereof.
(h) "Tenant Improvement Allowance": Twenty-five Dollars ($25.00)
per RSF of the Initial Premises.
(i) "Tenant Improvements":All improvements, fixtures and equipment
installed by Tenant in connection with the Premises for
Tenant's occupancy thereof pursuant to the Work Agreement.
(j) "Commencement Date": The earlier of (i) the date of Occupancy
for Business (defined in Subparagraph 1(y) below) by Tenant
or (ii) one hundred-twenty (120) days ("Construction Period")
following (x) Substantial Completion of the Building (defined
in Subparagraph 1(k) below) and (y) the Delivery Date
(defined in Subparagraph 1(l) below). The Target Commencement
Date is estimated by Landlord to be May 1, 1997; however such
estimate is for informational purposes only, and neither party
shall rely on such estimate. The Construction Period shall be
extended one (1) day for each day Tenant is delayed in
designing and constructing its Tenant Improvements and moving
into its Premises because of Landlord Delays or Force Majeure
Delays (as such terms are defined in Sections 2.2 and 4.4 of
the Work Agreement hereto); provided, however, that Tenant's
notice to be given as a prerequisite to the effectiveness of
any Landlord Delay or Force Majeure Delay shall specifically
state that Tenant is actually being delayed in constructing
its Tenant Improvements and/or moving into its Premises as a
result thereof.
(k) "Substantial Completion of the Building":
When each of the following conditions has been satisfied or
would have been satisfied but for Tenant Delays (as defined in
the Work Agreement):
(1) Landlord has substantially completed the Base
Building, consistent with the standards of a
first-class Comparable Building as defined in
Subparagraph 2.5 below (which the parties agree shall
be the case if constructed in accordance with the
Base Building Plans as defined in the Work
Agreement), including all of the following, with the
exception of normal punch-list items or other items
which remain uncompleted but which do not materially
interfere with Tenant's safe and convenient use,
access and occupancy of the Building and Parking Area
(as defined in Subparagraph 2.1 below):
(i) common areas in the Building to the extent
reasonably necessary for Tenant's
use and access to the Premises;
(ii) pedestrian and service entrances to the
Building to the extent reasonably necessary
for Tenant's access to the Building;
(iii) all systems and equipment to the extent
necessary for the proper operation of the
Building Systems and Building Structure (as
such terms are defined in Subparagraph 15(b)
herein) as required hereunder to be
furnished by Landlord to Tenant for the
Premises;
2) Tenant and its visitors shall have adequate and safe
access to the lobbies of the Building and to the
Premises through the lobbies of the Building to the
bank of elevators serving the Premises, and the
Building's life safety system to the extent
reasonably necessary for Tenant's use of the Building
and the Premises are operating in a normal manner;
(3) Landlord has completed the Base Building Improvements
to the extent that Tenant shall be able to obtain a
certificate of occupancy or a temporary certificate
of occupancy or the equivalent pursuant to which the
City of Calabasas permits occupancy of the Initial
Premises when Tenant has completed the Tenant
Improvements;
(4) Landlord has made the Premises available to Tenant
free and clear of any other occupancy or tenancy
(other than contractors and other workers to complete
punchlist items);
(5) all of the elevators intended to service the Premises
are available for Tenant's use; and
(6) Landlord has caused the Parking Area for the Building
to be available to Tenant to the extent reasonably
necessary for Tenant's initial space requirements and
are sufficient to accommodate the users of such
Parking Area.
(l) "Delivery Date": Five (5) business days after the date on
which Landlord has provided a factually correct notice to
Tenant ("Landlord's Delivery Notice") that Landlord has
substantially completed the Base Building to the extent
necessary for Tenant to begin constructing the Tenant
Improvements, with the exception of normal punchlist items or
other items which remain uncompleted but which do not
materially interfere with Tenant's safe and convenient access
and use of the Building and Parking Area for the purpose of
constructing the Tenant Improvements. Landlord's Delivery
Notice shall be deemed true and correct if Tenant does not
otherwise object thereto within ten (10) business days
following Tenant's receipt of Landlord's Delivery Notice.
(m) "Expiration Date": The last day of the Term, as identified on
the Commencement Notice.
(n) "Effective Date": This Lease shall become effective on the
date Landlord and Tenant mutually execute this Lease.
(o) "Annual Basic Rent" payable on a triple net basis for Lease
Years:
Initial Term
Lease Years 1-5 $13.68 per RSF.
Lease Years 6-10 $15.73 per RSF.
Lease Years 11-15 $18.09 per RSF.
Option Period
Lease Years 16-20 "Fair Market Rental Rate" (as defined in
Subparagraph 3.2(v)(i) below).
Lease Years 21-25 Fair Market Rental Rate.
(p) "Monthly Basic Rent": Annual Basic Rent divided by twelve(12).
(q) "Tenant's Percentage": A fraction whose numerator is the
number of RSF of the Premises and whose denominator is the
number of RSF within the Building.
(r) (i) "Security Deposit": None.
(ii) "Prepaid Rent": None
(s) (i) "Landlord's Broker":
Xxxxxxx & Xxxxxxxxx of California, Inc.
(c/o Xxx Xxxx and Xxxxxx Xxxx)
(ii) "Tenant's Representative":
Xxxxxx X. Xxxxxxx, Inc.
(c/o Xxxx Xxxxxx and Xxxx Xxxxxxxx)
(t) "Landlord's Construction Representative":
Xxxx Enterprises Commercial Group
(c/o Xxxxxxx Xxxxxx or Xxxxxxx Xxxxx)
(u) "Use of Premises": General office use and other related
legally permitted uses consistent and compatible with the uses
in the Building and Project (as defined herein) and other
first-class low rise office buildings in the Calabasas area.
(v) "Exhibits": A through K, inclusive, which Exhibits are
attached to this Lease and are incorporated herein by this
reference.
(w) "Guarantor": None.
(x) "Commencement Notice": A memorandum in the form of Exhibit "C"
specifying the Lease Term, Commencement Date, Expiration Date,
Tenant's Percentage, the total RSF of each floor of the
Premises, and the total RSF of the Building.
(y) "Occupancy for Business by Tenant": Occupancy of almost all of
the Premises by Tenant (i.e. 75% or more of the total RSF of
the Premises) for the purpose of Tenant's employees conducting
its business therein, excluding occupancy or use to construct
Tenant Improvements, to monitor construction of Tenant
Improvements, to construct, install or move in Tenant's
furniture, fixtures and equipment, or to install or retrieve
business records. Provided, however, if Tenant occupies a
portion of any floor of the Premises (but occupies less than a
almost all of the entire Premises) for the purpose of
conducting business therein, Tenant shall pay Rent to
Landlord, commencing as of the date Tenant so occupies such
portion of any floor and continuing until the Commencement
Date, at the rate of $0.0375 (Three and three quarter cents)
per RSF of floor space contained within (i) the entire floor
so occupied, if Tenant occupies more than fifty percent (50%)
of any floor, or (ii) fifty percent (50%) of the floor so
occupied, if Tenant occupies fifty percent (50%) or less or
such floor, per day ("Daily Basic Rent"). (For example, if
the second floor contains 25,000 RSF, and if Tenant, prior to
the Commencement Date, occupies for business 10,000 RSF on
such floor, then Tenant would be required to pay Daily Basic
Rent, in the time and manner provided herein, at the rate of
$0.0375 per RSF based on 12,500 RSF, until the Commencement
Date; in the alternative, if at any time prior to the
Commencement Date Tenant were to occupy for business more than
12,500 RSF of such floor, then Tenant would be required to pay
Daily Basic Rent at the rate of $.0375 per RSF based on 25,000
RSF, until the Commencement Date). The total Daily Basic Rent
owed by Tenant shall be paid to Landlord on the Commencement
Date, except that if the Commencement Date shall not have
occurred within thirty (30) days following the date on which
Tenant took occupancy of a portion of any floor, the Daily
Basic Rent shall be payable on the last day of each calendar
month prior to the Commencement Date, with the final payment
due to Landlord on the Commencement Date. Nothing under this
Subparagraph 1(y) shall be construed as granting Tenant a free
rent period.
(z) "Parking Ratio": 3.6 non-tandem parking spaces in the Parking
Area per 1,000 RSF of the Premise. All such non-tandem parking
spaces shall be designated as "reserved." Landlord shall use
good faith efforts to provide Tenant with at least ten (10)
covered parking spaces as set forth in Subparagraph 37(a).
2. PREMISES, COMMON AREAS & EXPANSION SPACE.
2.1 Premises. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord on the terms and provisions set forth in
this Lease the Premises designated in Subparagraph 1(f) above,
outlined on the Preliminary Floor Plan attached hereto and
marked Exhibit "A-I" (which shall be deemed adjusted to fit
the actual Premises once the Building is Substantially
Completed) located in the Building described in Subparagraph
1(e) which, together with its related parking facilities
("Parking Area"), is located on the parcel or parcels of real
property described in the legal description attached hereto as
Exhibit "A-IV" ("Land"), all as outlined on the Site Plan
attached hereto as Exhibit "A-II". The parties acknowledge
that because this Lease is being signed before the Building,
Project or Development (as such terms are defined herein) have
been completed, that the Site Plan is not a precisely accurate
representation of the Building, Project or Development
(defined below), and that neither Landlord shall be in
default, nor shall this Lease be voidable or terminable by
Tenant if the Building, Project or Development is not
precisely as shown on the Site Plan. The Premises shall be
improved by Tenant with Tenant Improvements to be constructed
by Tenant in accordance with the Work Agreement. The Premises
being agreed, for the purposes of this Lease, to have an area
approximately the number of RSF designated in Subparagraph
1(f) above (the exact number to be determined in accordance
with Subparagraph 2.2) and being situated on the floors
designated in Subparagraph 1(f) above. The Building, together
with the Land, the Common Areas (as defined in Subparagraph
2.3 below), and all other easements, rights-of-way, and
licenses are known as and shall be referred to herein as the
"Development." The Development constitutes a portion of the
Project, as defined above.
2.2 Confirmation of RSF.
(a) Prior to the Commencement Date, Landlord shall
deliver to Tenant a certificate from the space
planner or architect who measured the space in the
Base Building shell and core stating the RSF of the
Building and the Premises in accordance with BOMA
Guidelines and setting forth the calculations
thereof, including the aggregating of all Common
Areas. If Tenant agrees with the calculations set
forth in the architect's or space planner's
certificate, then Landlord and Tenant shall initial
the certificate and attach it to this Lease and the
calculations in the certificate shall be deemed to
replace the RSF figures in Subparagraphs 1(e) and
1(f). If Tenant disagrees with such calculations,
then Tenant shall, within sixty (60) days of
receiving the architect's or space planner's
certificate, give Landlord written notice of the
opinion of Tenant's architect or space planner as to
the RSF of the Building and the Premises in
accordance with BOMA Guidelines. As a condition to
the delivery of such notice, Tenant's space planner
or architect shall have been actively engaged in the
measurement of space in office buildings for a
continuous period of at least three (3)years ending
on the date of his or her appointment. If Tenant
does not deliver such written notice to Landlord
within the sixty(60) day period, then Tenant shall be
deemed to have agreed with the calculations set forth
in Landlord's architect's or space planner's
certificate.
(b) Where Tenant has so disagreed with Landlord's
architect's or space planner's calculations, and
Tenant and Landlord cannot, together with their
respective space planners or architects, agree within
fifteen (15) days from and after Landlord's receipt
of Tenant's architect's or space planner's opinion of
the RSF of the Building and the Premises ("Discussion
Period"), Tenant may request by written notice to
Landlord that such disagreement be resolved by
arbitration. If Tenant does not make such request
within five (5) business days from and after the end
of the Discussion Period, Tenant shall be deemed to
have accepted Landlord's RSF figures for the
Premises and the Building.
(c) If Tenant does so request to have the RSF figures
determined through binding arbitration, the matter
shall be submitted for decision to an independent
arbitrator. Not later than fifteen (15) days from and
after Landlord's receipt of Tenant's written request
for arbitration, Tenant's and Landlord's space
planners and/or architects shall select an arbitrator
who shall have the same qualifications required for
Tenant's architect or space planner, as provided
herein, but shall not have performed work for either
party or any of their respective principals. The
determination of the arbitrator shall be limited
solely to the issue of whether Landlord's or Tenant's
calculations of the RSF for the Premises and the
Building is closest to the actual RSF determined by
the arbitrator. The arbitrator shall within fifteen
(15) days of his or her appointment reach a decision
as to whether the parties shall use Landlord's or
Tenant's calculations of the RSF of the Building and
the Premises, and shall notify Landlord and Tenant
thereof. The decision of the arbitrator shall be
binding upon Landlord and Tenant. The cost of the
arbitrator shall be shared by Landlord and
Tenant equally.
(d) If the arbitrator has not determined the RSF of the
Building and the Premises prior to the Commencement
Date, Tenant shall pay Monthly Basic Rent and
Tenant's Percentage of Operating Expenses based upon
the RSF calculations set forth in Landlord's
architect's or space planner's certificate until such
time as the arbitrator determines the RSF of the
Building and the Premises. If the arbitrator selects
Tenant's calculations, the next Monthly Installments
of Rent shall be equitably adjusted.
2.3 Common Areas. Tenant shall have the non-exclusive right,
subject to the Rules and Regulations referred to in Section 30
below, any CC&Rs and/or any REA's (as such terms are defined
in Subparagraph 13(e) hereunder) to use in common with other
tenants in the Building and the Development, as the case may
be, the following areas ("Common Areas") appurtenant to the
Development:
(a) The Building's common entrances, lobbies, restrooms,
freight and passenger elevators, escalators,
stairways and accessways, loading docks, ramps,
drives and platforms and any passageways and
serviceways thereto, and the common pipes, conduits,
shafts, wires and appurtenant equipment serving the
Premises; and
(b) Loading and unloading areas, trash areas, parking
areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas and similar areas and
facilities appurtenant to the Building.
The parties acknowledge that certain of the foregoing
items listed in Subparagraph 2.3(i) shall be located
on full floors leased by Tenant, in which case, such
items shall be deemed a part of the RSF of the
Premises pursuant to BOMA Guidelines but shall
nevertheless be constructed by Landlord in accordance
with the Base Building Plans.
Landlord reserves the right from time to time as
Landlord reasonably deems necessary, consistent with
the quality of a first-class low rise office building
complex:
(1) To make changes to the Common Areas,
including, without limitation, changes in
the location, size, shape and number of
driveways, entrances, parking spaces,
parking areas, (including construction of a
parking structure), loading and unloading
areas, ingress, egress, direction of
traffic, landscaped areas and walkways, so
long as Tenant's reserved parking spaces and
other parking privileges are not materially
and adversely affected thereby, the number
of Tenant's parking spaces are not reduced
and access to the Premises and Tenant's
parking spaces are not materially and
adversely affected;
(2) To close temporarily any of the Common Areas
for maintenance purposes so long as
reasonable access to the Premises and the
Parking Area remains available;
(3) To use the Common Areas while engaged in
making additional improvements, repairs or
alterations to the Building or the
Development, or any portion thereof,
provided Tenant's use and occupancy of the
Premises are not materially and adversely
affected;
(4) To add additional improvements to the Common
Areas of the Development (other than to the
Building unless required by Applicable Law
or, without any obligation to do so, to make
the Building safer or more efficient); and
(5) To do and perform such other acts and make
such other changes in, to or with respect to
the Common Areas, the Building or the
Development as Landlord may, in the exercise
of sound business judgment, deem to be
appropriate, provided Tenant's use and
occupancy of the Premises and the Parking
Area are not materially and adversely
affected.
2.4 Expansion Space.
(a) As a material inducement for Landlord entering into this Lease,
Tenant agrees that it shall be obligated in accordance with the
terms of this paragraph to lease from Landlord, upon the same
terms and conditions as those contained in this Lease, except
with respect to the Tenant Improvement Allowance, which shall be
determined as set forth below, the remainder of the Building not
then leased by Tenant (the "Expansion Space"). Landlord shall
deliver the Expansion Space to Tenant at any time between the
sixty-first (61st) and seventieth (70th) months of the Term, with
all Base Building improvements completed to the extent necessary
for Tenant to begin constructing the Tenant Improvements, and
with such additional improvements or alterations as Landlord may
reasonably elect, provided that such improvements are in good
condition and are at all times consistent with a general office
use ("Required Condition"). The Expansion Space Delivery Date
shall be five (5) business days after Tenant has received a
factually correct notice from Landlord that the Expansion Space
is in the Required Condition and available for Tenant's immediate
and exclusive use. Tenant's Monthly Basic Rent, Tenant's
Percentage of Operating Expenses and any other monetary
obligations of Tenant which are based on the RSF of the Premises
shall be equitably adjusted, and Tenant shall pay such increased
rental amounts beginning on the earlier of (i) the date of
Occupancy for Business in the Expansion Space, or (ii) one
hundred twenty (120) days (also the "Construction Period")
following the Expansion Space Delivery Date of the Expansion
Premises (the "Expansion Space Commencement Date"). Tenant's
Monthly Basic Rent for the Expansion Premises shall be the same
as the Monthly Basic Rent Tenant is paying for the Initial
Premises as of the Expansion Space Commencement Date (i.e. $15.73
per RSF), and the term of the Expansion Space shall be
coterminous with the Lease Term. The Construction Period will be
extended one day for each day Tenant is delayed in designing,
constructing and moving into the Expansion Space because of Force
Majeure Delays or Landlord Delays as defined in Exhibit B.
(b) As of the Expansion Space Commencement Date, Tenant shall be
entitled to additional parking spaces at the ratio stated in
Subparagraph 1(z) above; however, Tenant shall not be entitled to
any additional covered parking spaces.
(c) In the event that Landlord delivers the Expansion Premises to
Tenant previously improved for another tenant's occupancy, then
Tenant shall be entitled to a Tenant Improvement Allowance of
$12.50 per RSF for the design, construction and fixturizing of
the Expansion Space. If, however, Landlord delivers the space to
Tenant not previously improved for another tenant's occupancy
(other than the Building Base shell and core work), then Tenant
shall be entitled to a Tenant Improvement Allowance of $25.00 per
RSF for the design, construction and fixturizing of the Expansion
Space. Landlord shall pay the Tenant Improvement Allowance to
Tenant at the time and in the manner specified in the Work
Agreement attached hereto, to the extent applicable to the
Expansion Space. The provisions of Sections 2, 3 and 4 of the
Work Agreement to the extent applicable and to the extent not
inconsistent with this Lease, shall apply to the design and
construction of the Tenant Improvements in the Expansion Space.
(d) Following the Expansion Space Commencement Date, all references
herein to the "Premises" (other than those specifically
addressing the original construction of the Initial Premises
and/or the Building) shall mean and include the Initial Premises
as expanded by the Expansion Space, unless specifically stated
otherwise herein.
2.5 Quality of Construction - Standard for Maintenance, Repairs
and Operation. Landlord hereby covenants that the Building
will be constructed and operated in a first-class manner
comparable to that of Comparable Buildings, free of all
asbestos containing materials ("ACM") and in full compliance
with all governmental regulations, ordinances, and laws
("Applicable Laws") to the extent such Applicable Laws are in
existence and enforced in the manner and degree at the time of
construction, including, but not limited to, laws pertaining
to disabled access and laws pertaining to hazardous
substances, in order to make the Premises, the Building and
the Project suitable for business offices. In its obligation
to comply with Applicable Laws, Landlord will be fully
responsible for making all alterations and repairs to the
Premises and the Building at its cost, which shall not be
included as Operating Expenses (as defined in Subparagraph
6(a)(1) of the Lease), (a) required in order to comply
with the Americans with Disabilities Act of 1990, 42 U.S.C.
12101 et seq., as amended (the "ADA") (for purposes of this
Lease, Landlord shall be deemed to have complied with ADA once
Landlord has substantially completed Landlord's Work based
upon plans for which a valid building permit was issued),
(b) required to remove any and all ACM discovered at any
time to have existed in the Premises as of the Commencement
Date, or (c) resulting from or necessitated by the
failure by Landlord and/or Landlord's contractor to comply
with the Applicable Laws, including from Landlord's and/or
Landlord's contractor's utilization of hazardous substances.
Landlord's obligation to perform such work in accordance with
Applicable Laws as provided above shall exist and continue
even though the time for performance under such Applicable
Laws was contingent on (1) the passage of time or (2) the
expenditure of money. Accordingly, with respect to any costs
that Tenant incurs in connection with the construction of the
initial Tenant Improvements, which Tenant would not have had
to incur if the Building and Premises, to the extent of
Landlord's Work as expressly set forth in the Base Building
Plans were constructed in full compliance with the laws
applicable to new construction as provided above, then
Landlord shall reimburse Tenant for such increased costs.
Otherwise, Landlord shall, subject to Tenant's repair
obligations set forth in the Lease, maintain and operate the
Building in a first class manner, keep the Building Structure
and the Building Systems in first class condition and repair,
maintain and provide services and security (without any
liability whatsoever because of a breakdown in security, or
the failure of security devices or personnel to adequately
perform) to the Building in a first-class manner comparable to
other first-class low rise tilt-up concrete office buildings
in the City of Calabasas ("Comparable Building") the cost of
which (except for capital improvements and repairs, as more
specifically set forth in Section 6 of the Lease) shall be
included in Operating Expenses, or paid for directly by Tenant
(for maintenance and repair of the Premises only to the extent
required by this Lease) if not normally included in Operating
Expenses. Notwithstanding the foregoing, Landlord and Tenant
agree that in no event shall Landlord's obligations be
increased, nor shall Landlord be required to incur any cost or
expense, beyond Landlord's obligations in the Base Building
Plans as a result of any improvements, alterations or repairs
made by or at the direction of Tenant.
3. TERM AND OPTION TERM.
3.1 Initial Term. The Term shall be for the period designated in
Subparagraph 1(g) above, commencing on the Commencement Date
and ending on the Expiration Date, unless the Term shall be
sooner terminated as provided herein. Landlord shall deliver
the Commencement Notice to Tenant within thirty (30) days
after the Commencement Date and Tenant shall make such
corrections, if any, as are appropriate, and sign and return
the notice to Landlord within ten (10) business days of the
Tenant's receipt thereof. In the event that Landlord shall
fail to so deliver said Commencement Notice to Tenant within
said thirty (30) day period, and following Tenant's ten (10)
day prior written request for the same, then Tenant shall have
the right to deliver the Commencement Notice to Landlord, and
Landlord shall make such corrections, if any, as are
appropriate, and sign and return the notice to Tenant within
ten (10) business days of the Landlord's receipt thereof.
3.2 Option to Extend Term.
(1) Landlord hereby grants to Tenant two (2) options (each an
"Option") to extend the Term for a period of five (5) years
each ("First Option Term" and "Second Option Term",
respectivley, and generally, "Option Term"), provided that
such extension (x) shall be for all or any contiguous portion
of the Premises that includes either the ground, second and/or
third floor then leased by Tenant, and (y) shall not be for
less than all the space then leased by Tenant on any given
floor, such that Tenant shall not be entitled herein to lease
only a portion of any given floor.
(2) Each Option must be exercised by written notice
received by Landlord ("Extension Notice") not less
than one hundred twenty (120) days prior to the
expiration of the Initial Term (or the First Option
Term, if the Second Option Term is being exercised).
(3) Provided Tenant has properly and timely exercised the
applicable Option, the Term shall be extended by the
applicable Option Term and all terms, covenants and
conditions of this Lease shall remain unmodified and
in full force and effect, except that the Annual
Basic Rent shall be modified as set forth in
Subparagraph 3.2(iv)below, and all economic "tenant
concessions" granted to Tenant hereunder, if any,
shall be
inapplicable except to the extent the same are
included as part of the Fair Market Rental Rate if
determination thereof is applicable. In connection
therewith, Tenant shall be entitled to an additional
tenant improvement allowance (to be used solely for
the purposes provided herein) at the commencement of
each Option Term equal in amount to that which other
tenants of comparable spaces in Comparable Buildings
are then receiving (taking into account the relevant
factors listed below in Subparagraph 3.2(5)(i));
accordingly, the amount of such tenant improvement
allowance shall be taken into account when
determining the Fair Market Rental Rate (defined in
Subparagraph 3.2(5)(i) below) applicable to the
subject Option Term. If Tenant shall exercise its
Option herein, the tenant improvement allowance shall
be disbursed to Tenant in the same manner and on the
same conditions as set forth in the Work Agreement,
to the extent applicable to the Option Term. The
tenant improvement allowance shall be used for the
cost of renovating or redesigning the existing Tenant
Improvements, or for the construction and design of
new tenant improvements to the Premises, including
without limitation, materials and labor, space
planning and design, consultants' fees, permits,
voice and data wiring, security, and signage, but not
including the purchase, design or construction of
Tenant's personal property.
(4) Subject to the limitations set forth in the
provisions of Subparagraph 3.2(5) below, the Annual
Basic Rent payable for the First and Second Option
Terms shall be equal to the then Fair Market Rental
Rate (as defined hereunder) for the Premises.
(5) Landlord shall provide notice of Landlord's
determination of the Fair Market Rental Rate (as
defined hereinbelow) of the Premises for the
applicable Option Term within thirty (30) days after
receipt of Tenant's Extension Notice. Tenant shall
have fifteen (15)days ("Tenant's Extension Review
Period") after receipt of Landlord's notice within
which to
accept Landlord's determination of the Fair Market
Rental Rate for the Premises or to object reasonably
thereto in writing. If Tenant so objects, Landlord
and Tenant shall attempt in good faith to agree upon
such Fair Market Rental Rate, using their best good
faith efforts. If Landlord and Tenant fail to reach
agreement within fifteen (15) days from and after
Tenant's Extension Review Period ("Outside Agreement
Extension Date"),
then each party's determination shall be submitted to
arbitration consistent with the procedures outlined
below. Failure of Tenant to so elect in writing
within such period shall be deemed its rejection of
the Fair Market Rental Rate for the Premises as
determined by Landlord.
The arbitration procedure for calculating the Fair
Market Rental Rate for any Option Term where the
parties are unable to agree upon the Annual Basic
Rent shall be as follows:
(i) Not later than fifteen (15) days from and after the Outside
Agreement Extension Date, Landlord and Tenant shall each appoint
one arbitrator who shall by profession be a real estate
appraiser, which appointee shall have been active over the five
(5) year period ending on the date of such appointment in the
appraisal of first-class, office buildings in the Calabasas area.
The determination of the third arbitrator described below shall
be limited solely to the issue of whether Landlord's or Tenant's
submitted Fair Market Rental Rate for the applicable Option Term
is the closest to the actual Fair Market Rental Rate for such
Option Term, as determined by the arbitrator, based upon what a
willing, comparable tenant would pay and a willing, comparable
landlord would accept at arm's length, for a new five (5) year
lease on non-renewal but not first generation space for delivery
on or about the expiration of the Initial Term or the First
Option Term, as applicable, for comparable space in other
comparable low rise office buildings in the Calabasas area
similarly improved, giving appropriate consideration to the
annual rental rates per rentable square foot, the type of
escalation clauses (including, without limitation, operating
expenses, real estate tax allowance and/or Consumer Price Index
rental adjustments), rent concessions, if any, brokerage
commissions, the length of the lease term, size and location of
the premises being leased (including the floor level), quality
and location of the project, tenant improvement allowances, if
any, lease takeover payments, the then existing tenant
improvements, the extent of services to be provided to the leased
premises, the date as of which the Fair Market Rental Rate is to
become effective and other generally applicable terms and
conditions of tenancy for comparable sized space ("Fair Market
Rental Rate").
(ii) 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. Upon appointment of
the third arbitrator, Landlord and Tenant shall each submit to
the other and to the third arbitrator sealed envelopes containing
their respective determinations of the Fair Market Rental Rate.
If Landlord's and Tenant's determination are within five percent
(5%) of each other, the third arbitrator shall average the
determination. If such determinations are not within five percent
(5%) of each other, the third arbitrator shall choose the
determination closer to his own determination.
(iii) The third arbitrator shall within thirty
(30) days of his appointment reach a
decision as to whether the parties shall use
Landlord's or Tenant's submitted Fair Market
Rental Rate, or, if Landlord's and Tenant's
determination are within five percent (5%)
of each other, the average of the two, and
shall notify Landlord and Tenant thereof.
(iv) The decision of the third arbitrator shall
be binding upon Landlord and Tenant.
(v) If either Landlord or Tenant fails to
appoint an arbitrator within fifteen (15)
days after the Outside Agreement Extension
Date, the arbitrator timely appointed by one
of them shall reach a decision, notify
Landlord and Tenant thereof, and such
arbitrator's decision shall be binding upon
Landlord and Tenant.
(vi) 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, but subject to the instructions
set forth herein.
(vii) The cost of arbitration shall be paid by
Landlord and Tenant equally.
(viii) If the Fair Market Rental Rate for the
applicable Option Term has not been
determined by the commencement of such
Option Term, then until the time the Fair
Market Rental Rate is determined in
accordance with Subparagraph 3.2(5), Tenant
shall pay as Annual Basic Rent the greater
of (a) the Annual Basic Rent on a RSF basis
as it is then obligated to pay immediately
prior to the commencement of such Option
Term as increased by the percentage increase
in the Consumer Price Index (All Urban
Consumers, Los Angeles-Anaheim-Riverside
Metropolitan Area, as published by the
United States Department of Labor, Bureau of
Labor Statistics; "CPI" herein), over that
period beginning on the date of the last
increase in the Annual Basic Rent and ending
on the date of the commencement of such
Option Term, but not to exceed Landlord's
determination of the Fair Market Rental
Rate, or (b) an amount equal to the sum of
Landlord's and Tenant's determination of the
Fair Market Rental Rate for the applicable
Option Term divided by two (2). If the
arbitration procedure results in a higher
Annual Basic Rent than that paid by Tenant
prior to date of the arbitrators'
determination, Tenant shall make up the
difference and pay such amount to Landlord
along with the next installment of Monthly
Basic Rent due. If the arbitration procedure
results in a lower Annual Basic Rent than
that paid by Tenant prior to the date of the
arbitrators' determination, Tenant shall
receive a credit against any next succeeding
installment(s) of Monthly Basic Rent to the
extent of such overpayment.
Notwithstanding the foregoing, an Option
shall not be deemed properly exercised, if,
as of the date of the Option Notice, or at
the end of the then current Option Term,
Landlord has given Tenant notice that Tenant
is in monetary default or other material
default under this Lease and any applicable
cure period has lapsed without Tenant's
curing such default, and the period within
which the Option may be exercised shall not
be extended by reason of Tenant's inability
to exercise such Option as a result thereof.
3.3 Cancellation Option. Notwithstanding the foregoing, Tenant
shall have the option to cancel this Lease upon 30 days'
notice to Landlord in the event that the Delivery Date has not
occurred by July 1, 1997, except to the extent due to Tenant
Delays. Landlord shall not be liable for any damages suffered
by Tenant as a result of Landlord's failure to timely deliver
the Base Building by the date hereinabove described, and
Tenant's remedies in connection therewith shall be limited to:
(i) canceling this Lease, or (ii) suing for specific
performance.
3.4 Possession. Tenant agrees that if the Delivery Date has not
occurred by July 1, 1997, or any Expansion Space has not been
delivered to Tenant by the date otherwise anticipated by the
parties, as applicable, this Lease shall not be void or
voidable, except as expressly set forth in Subparagraph 3.3
above, nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom.
3.5 Early Entry into Premises. Tenant, upon providing Landlord
with at least two (2) business days' prior notice, may enter
the Premises after the execution and delivery of this Lease by
Landlord and Tenant in order to commence design work in
connection with the construction of the Tenant Improvements;
provided, however, that (i) prior to Substantial Completion of
the Building (as such term is defined in Subparagraph 1(k)
above), Tenant's early entry shall not interfere with
Landlord's construction of the Base Building, and to the
extent Tenant's early entry does interfere with Landlord's
construction activities, such interference shall constitute a
Tenant Delay (as defined in Section 1.4 of the Work
Agreement), (ii) Landlord shall not be responsible for, and
Tenant is required to obtain insurance covering, any loss
caused by Tenant or those entering the Premises on behalf of
Tenant to design or construct the Tenant Improvements,
including theft, damage or destruction to any work or material
installed or stored by Tenant or any contractor or individual
involved in the construction of the Tenant Improvements, or
for any injury to Tenant or Tenant's employees, agents,
contractors, licensees, directors, officers, partners,
trustees, visitors or invitees (collectively, "Tenant's
Employees") or to any other person; and (iii) Landlord shall
have the right to post the appropriate notices of
non-responsibility and to require Tenant to provide Landlord
with evidence that Tenant has fulfilled its obligation to
provide insurance pursuant to Section 22 hereof.
4. NONDISTURBANCE AGREEMENT.
4.1 Landlord warrants that on the date of this Lease Landlord owns
the Development free and clear of the interest of any ground
lessor or mortgage holder, and as a result, Tenant shall not
need a non-disturbance agreement (as defined below) to protect
its leasehold interest against such interests. Tenant
acknowledges that Landlord has provided Tenant with a copy of
that certain Preliminary Title Report issued by Chicago Title
Company, dated January 10, 1996, with respect to the
Development, and that it has satisfied itself that, as of the
date of this Lease, no monetary liens exist thereon for which
Tenant would require a non-disturbance agreement from any
holder thereof.
4.2 As a condition to Tenant's obligation to subordinate its
interest under the Lease to the interest of any lien holder,
Landlord shall first provide Tenant with commercially
reasonable non-disturbance agreement(s) substantially in the
form of Exhibit "H" attached to the Lease in favor of Tenant
from any mortgage holder, ground lessor or other lien holder
(each, "Superior Mortgagee") of Landlord who later come(s)
into existence at any time prior to the expiration of the Term
of the Lease, as it may be extended. Said non-disturbance
agreements shall be in recordable form and may be recorded at
Tenant's election and expense.
4.3 Notwithstanding anything to the contrary set forth in this
Lease, in the event that Landlord fails to pay to Tenant the
Tenant Improvement Allowance (including allowances, if any,
for expansions, renewals, initial construction, remodeling or
refurbishing), the Superior Mortgagee or such other successor
to the interests of Landlord and/or the Superior Mortgagee
shall pay to Tenant, together with interest at the Interest
Rate (as defined in Section 59 below), such unpaid amounts and
shall recognize and honor any remaining credit of Base Rent
and/or Operating Expenses. With respect to all such payments,
interest thereon shall be computed from the date such amounts
should have been paid until the date such amounts are in fact
paid.
4.4 All commercially reasonable non-disturbance agreements shall
acknowledge that, and Landlord hereby independently agrees
that, to the extent Landlord has failed to fulfill its
obligations with respect to the payment of any Tenant
Improvement Allowance (including allowances for expansions,
renewals, initial construction, remodeling or refurbishing),
or the cost incurred by Tenant of constructing or completing
the Tenant Improvements which were required to be constructed
or completed by Landlord at Landlord's expense ("Key
Obligations"), Tenant may deduct the amount of the Key
Obligation which Landlord has not paid, together with interest
thereon at the Interest Rate, from the Rent (defined in
Subparagraph 5(a) below) next coming due and payable, from
time to time, under the Lease.
In addition to the foregoing, Landlord agrees that if Landlord
has failed to pay the Tenant Improvement Allowance in
accordance with Landlord's obligations, Tenant may deduct the
amount thereof which Landlord has not paid, together with
interest at the Interest Rate, from the Rent next coming due
and payable, from time to time, under the Lease.
5. MONTHLY BASIC RENT.
(a) Tenant agrees to pay Landlord as Annual Basic Rent for the
Premises the Annual Basic Rent designated in Subparagraph 1(n) in
equal monthly installments of Monthly Basic Rent (collectively,
"Monthly Installments") each in advance on the first day of each
calendar month during the Term. Rent for any partial calendar
month during the Term shall be prorated and payable in the
proportion that the number of days this Lease is in effect during
such calendar month bears to thirty (30). In addition to the
Annual Basic Rent, Tenant agrees to pay as additional rent the
amount of rental adjustments and other occupancy costs required
expressly by Section 6 below and generally by any other terms of
this Lease. The terms "rental" "rent" or "Rent" have identical
meanings and include all monetary obligations of Tenant under
this Lease, including additional rent unless the context clearly
or specifically implies that only Annual Basic Rent is
referenced. All Rent shall be paid to Landlord when due, without
prior demand or notice and without any abatement (except as
expressly provided herein), deduction or offset, in lawful money
of the United States of America, at the address of Landlord
designated in Subparagraph 1(b) hereof or to such other person or
at such other place as Landlord may from time to time designate.
(b) Tenant hereby acknowledges that late payment by Tenant to
Landlord of rent, including, without limitation, any Monthly
Installment and all other additional charges to be paid to
Landlord in accordance with this Lease, will cause Landlord to
incur costs not contemplated in the agreement of the monetary and
other terms of this Lease, the exact amount of which are
presently anticipated to be extremely difficult to ascertain.
Such costs may include, without limitation, processing and
accounting charges and late charges which may be imposed on
Landlord by the terms of any mortgage or deed of trust covering
the Land and other expenses of a similar or dissimilar nature.
Accordingly, on the first occasion within a Lease Year in which
Tenant fails to make any Rent payment when due, and Tenant
further fails to make payment of the same within ten (10) days
after Landlord's delivery of written notice to Tenant that the
same is past due, in addition to such Rent payment, Tenant shall
pay to Landlord a late charge equal to two percent (2%) of the
overdue Rent. After such first occasion, Tenant shall incur a
late charge equal to two percent (2%) of the overdue Rent on any
further rent payments not made within two (2) business days of
Tenant's receipt of a notice from Landlord that such Rental
payment is past due, without the necessity of any further notice.
The parties agree that this late charge represents a fair and
reasonable estimate of the costs that Landlord will incur by
reason of late payment to Tenant. In addition, and unless
expressly stated otherwise herein, any payment, including,
without limitation, any Monthly Installment or additional charges
called for under this Lease, is not paid when due hereunder, the
amount unpaid shall bear interest from the date due, until the
same have been fully paid, at the Interest Rate (as defined in
Subparagraph 59 below). The payment of said late charge or such
interest shall not constitute waiver of, nor excuse or cure, any
default under this Lease, nor prevent Landlord or Tenant from
exercising any other rights and remedies available to Landlord or
Tenant. Notwithstanding the foregoing, Landlord shall not assess
a late charge against Tenant for the first late payment hereunder
during each Lease Year unless such late payment is not paid in
full to Landlord within five (5) business days after notice of
such late payment by Landlord to Tenant.
6. ADDITIONAL RENT.
(a) For the purposes of this Subparagraph 6(a), the following
terms are defined as follows:
(1) Operating Expenses: Operating Expenses shall consist
of all costs, expenses and disbursements of
ownership, management, maintenance, operation,
administration and repair of the Building, Common
Areas, Development and Project and related off-site
areas ("Operating Expenses"), including the following
costs by way of illustration, but not
limitation: any and all assessments Landlord must pay
for the Building and other improvements pursuant to
any CC&Rs, REAs (as such terms are defined in
Subparagraph 13(e)), tenancy-in-common agreements or
similar restrictions and agreements affecting the
Development or the Project; real property taxes
(defined below) and assessments and any taxes or
assessments hereafter imposed in lieu thereof; rent
taxes, gross receipt taxes (whether assessed against
Landlord or assessed against Tenant and paid by
Landlord, or both; water, water management, and sewer
charges (including without limitation, maintenance
and repair of private sewer lines and sewer hook-ups
for the Building or the Premises); accounting, legal
and other consulting fees; the net cost and expense
of insurance for which Landlord is responsible
hereunder or which Landlord or any first mortgagee
with a lien affecting the Premises reasonably deems
necessary in connection with the operation of the
Building (including deductible amounts thereof,
exclusive of any portion of the deductible paid under
a policy of earthquake insurance); utilities
(including, without limitation any utilities serving
off-site Mitigation Area); window washing; security;
labor; utilities surcharges, or any other costs
levied, assessed or imposed by, or at the direction
of, or resulting from statutes or regulations or
interpretations thereof, promulgated by any federal,
state, regional, municipal or local government
authority in connection with the use or occupancy of
the Project or the Premises or the parking facilities
serving the Project or premises (collectively,
"Governmental Required Expenditures"); any financing
costs of same obtained by Landlord on financing
of any repairs, alterations, replacements and
improvements where Landlord is entitled to pass
through the cost thereof under this Lease; repairs,
alterations, replacements and improvements made for
safety of persons or property in or about the
Project or Common Areas (colectively, "Safety
Expenditures"); the costs of any other capital
expenditures to the extent of any reduction in
Operating Expenses ("Efficiency Expenditures"); costs
reasonably required to maintain the Development
and Project in first class condition and repair as
existing on the Commencement Date ("Maintenance
Expenditures"); costs incurred in the management of
the Building, if any (including supplies, wages and
salaries of employees to the extent used in the
management, operation and maintenance of the
Building, and payroll taxes and similar governmental
charges with respect thereto); any exaction,
assessment, fee, charge or other cost relating to any
and all governmentally mandated transportation system
management programs and other transportation and
traffic measures applying to the Development and
Project; Building management office rental, not to
exceed the fair market rental value of such office
and provided such office is not materially larger
than necessary and only for the portion devoted
exclusively to management of the Development and/or
Project; a management fee not to exceed that payable
to first class managers of Comparable Buildings who
are not owned, controlled or affiliated with the
Landlord; air conditioning; waste disposal; heating;
ventilating; elevator maintenance; supplies;
materials; equipment; tools; warranties; repair and
maintenance of the structural portions of the
Building, including the plumbing, heating,
ventilating, air conditioning and electrical systems
installed or furnished by Landlord; maintenance
costs, including utilities and payroll expenses,
rental of personal property used in maintenance, and
all other upkeep of all Parking Area and Common
Areas; costs and expenses of gardening and
landscaping; maintenance of signs (other than
Tenant's signs which shall be the sole responsibility
of Tenant); personal property taxes levied on or
attributable to personal property used in connection
with the Project; reasonable audit or verification
fees; costs and expenses of repairs, resurfacing,
repairing, maintenance, painting, lighting, cleaning,
refuse removal, security and similar items; and costs
and expenses incurred in connection with the leasing
and management of any parking facility used in
connection with the Project, including, but not
limited to, the cost for payroll for clerks,
attendants and other persons, including payroll taxes
and benefits, payroll processing, bookkeeping,
janitorial and cleaning services, striping and
painting of parking spaces, repair and maintenance of
parking equipment, and traffic signs.
The term "Operating Expenses" shall additionally
include all costs of operation, management,
maintenance and repair (collectively, "Maintenance")
of the Project Common Areas to the extent (i) such
Maintenance is performed with respect to the Project
as a whole (including the Development) and is not
separately allocable to any single building or parcel
in the Project (e.g. costs of security personnel
patrolling the entire Project), or (ii) such
Maintenance is performed pursuant to any recorded
declarations, CC&Rs, REAs or the like, affecting the
Project. "Operating Expenses" shall further include
the cost of landscaping, maintaining and repairing
that area designated on the attached Site Plan as the
"Mitigation Area." Notwithstanding anything herein to
the contrary, Tenant's Percentage of the additional
Operating Expenses described in this paragraph only
shall equal the proportion that the RSF of the
Premises bears to the total RSF of all buildings in
the Project.
Because Tenant agrees that Tenant shall be solely
responsible, at its sole cost, for providing its own
janitorial services and utilities for the Premises,
Operating Expenses shall not include any janitorial
expenses or utility use charges provided to any other
tenants.
If the Building and/or Project is not fully
constructed and completed and/or does not have at
least one hundred percent (100%) of the RSF of the
Building and/or Project occupied during any calendar
year period, then the variable portion of the
Operating Expenses for such period shall be deemed to
be equal to the total of (i) the Operating Expenses,
other than real property taxes, which would have been
incurred by Landlord if the Building and/or Project
had been fully constructed and completed and one
hundred percent (100%) of the RSF of the Building
and/or Project had been occupied for the entirety of
such calendar year and (ii) the actual real property
taxes as defined below. The annual amortization of
costs shall be determined by dividing the original
cost of such capital expenditure by the number of
years useful life of the capital item acquired, which
useful life shall be reasonably determined by
Landlord. Operating Expenses shall be computed
according to the cash or accrual basis of accounting,
as Landlord may elect in accordance with standard and
reasonable accounting principles employed by
Landlord. Landlord further agrees that since one of
the purposes of Operating Expenses and the gross up
provision is to allow Landlord to require Tenant to
pay for the costs attributable to its Premises,
Landlord agrees that (i) Landlord will not be
entitled to charge Tenant more than Tenant's
Percentage of one hundred percent (100%) of the
Operating Expenses actually paid by Landlord in
connection with the operation of the Building, and
(ii) Landlord shall make no profit from Landlord's
collections of Operating Expenses from Tenant.
Notwithstanding anything to the contrary in the
definition of Operating Expenses and real property
taxes, Operating Expenses and real property taxes
shall not include the following except to the extent
specifically permitted by a specific exception to the
following:
(i) any ground lease rental;
(ii) capital expenditures of Landlord in
initially constructing the Development;
(iii) all costs of a capital nature (including, without
limitation, capital repairs, replacements, improvements and
equipment), as determined in accordance with generally accepted
accounting principles ("GAAP"), consistently applied "Capital
Items"), if applicable, other than Governmental Required
Expenditures incurred by Landlord after the Commencement Date for
any capital improvements to the extent installed or paid for by
Landlord and required by any new (or change in) laws, rules or
regulations of any governmental or quasi-governmental authority
which are enacted after the Commencement Date (or enacted before
the Commencement Date, but enforced in a different manner after
the Commencement Date), Efficiency Expenditures (provided the
annual amortized costs of any Efficiency Expenditures do not
exceed the actual cost savings realized and such savings do not
redound primarily to the benefit of any particular tenant),
Maintenance Expenditures or Safety Expenditures. Any allowed
costs of a capital nature (including interest costs thereon)
included in Operating Expenses shall be amortized as provided
above;
(iv) costs incurred by Landlord for the repair of
damage to the Building to the extent that
Landlord is reimbursed by insurance
proceeds, governmental agencies or entities
or any tenant of the Development and costs
of all capital repairs, regardless of
whether such repairs are covered by
insurance;
(v) costs, including permit, license and
inspection costs, incurred with respect to
the installation of tenant or other occupant
improvements made for tenants in the
Development or incurred in renovating or
otherwise improving, decorating, painting or
redecorating vacant office and retail space
(i.e., other than Common Areas) for tenants
or other occupants of the Development;
(vi) depreciation, amortization and interest payments, except as
provided herein, and except on materials, tools, supplies and
vendor-type equipment purchased by Landlord to enable Landlord to
supply services Landlord might otherwise contract for with a
third party where such depreciation, amortization and interest
payments would otherwise have been included in the charge for
such third party's services, all as determined in accordance with
GAAP, consistently applied, if applicable and when depreciation
or amortization is permitted or required, the item shall be
amortized over its reasonably anticipated useful life;
(vii)
leasing commissions, attorneys' fees, marketing costs,
advertising expenses, payments, credits, free rent, lease
takeover obligations, other inducements and other costs and
expenses incurred in connection with the leasing of space, or
negotiations and preparation of letters, deal memos, letters of
intent, leases, subleases, and/or assignments, space planning
costs and other costs and expenses incurred in connection with
lease, sublease and/or assignment, negotiations and transactions
or disputes with present or prospective tenants or other
occupants of the Development concerning their particular leased
premises;
(viii) expenses in connection with services or
other benefits which are not offered to
Tenant or for which Tenant or any other
tenant is charged directly but are not
offered to another tenant or occupant of the
Building;
(ix) costs incurred by Landlord due to the
violation by Landlord or any tenant of the
terms and conditions of any lease of space
in the Development;
(x) costs paid to Landlord or to subsidiaries or
affiliates of Landlord for services in the
Building to the extent the same exceeds the
costs of such services rendered by
unaffiliated third parties on a competitive
basis;
(xi) except for Governmental Required
Expenditures Efficiency Expenditures, Safety
Expenditures and Maintenance Expenditures,
interest, principal, points and fees on
debts or amortization on any mortgage or
mortgages or any other debt instrument
(including refinancings) encumbering the
Development or the Land (except as permitted
in Subsection (iii) above);
(xii) Landlord's general corporate overhead and
general and administrative expenses or costs
for which Landlord has been compensated by a
management fee and any management fee in
excess of those management fees which are
normally and customarily charged by
comparable landlords of Comparable
Buildings;
(xiii) costs of, including compensation paid to clerks,
attendants or other persons, in excess of revenues from,
commercial concessions operated by Landlord serving the
Development where such concessions are operated for a profit or
in the Parking Area of the Building or wherever Tenant is granted
its parking privileges and/or all fees paid to any parking
facility operator (and/or of the Project) provided, however, that
if Landlord provides such parking to Tenant free of charge or at
a reduced rate, to the extent that Tenant's Proportionate Share
of such expenses exceeds an amount paid by Tenant for such
parking, those expenses may be included as part of Operating
Expenses;
(xiv) except for making repairs or keeping
permanent systems in operation while repairs
are being made, rentals and other related
expenses incurred in leasing air
conditioning systems, elevators or other
equipment ordinarily considered to be of a
capital nature, or not reasonably necessary
or appropriate to operate or maintain the
Building in a first class manner, other than
Governmental Required Expenditures, Safety
Expenditures, Efficiency Expenditures and
Maintenance Expenditures;
(xv) all items and services for which Tenant or
any other tenant in the Building reimburses
Landlord or which Landlord provides
selectively to one or more tenants (other
than Tenant) without reimbursement;
(xvi) advertising and promotional expenditures and
purchasing, constructing, repairing,
maintaining or removing costs of signs, or
any legal expenses incurred in connection
with securing any required governmental
approvals therefor in or on the Building,
identifying the owner of the Building;
(xvii) utility costs for which Tenant or any tenant
directly contracts with the local
public service company;
(xviii) interest or penalties incurred as a result
of Landlord's inability or unwillingness to
make payments and/or to file any tax or
informational returns when due;
(xix) costs for sculpture, paintings or other art
work;
(xx) costs for off-site personnel, including
accounting services, to the extent
such personnel do not perform services for
the Development;
(xxi) costs to acquire, finance, construct, equip
and complete the Development, the cost of
utilities consumed in connection with the
construction and completion of the
Development or any space therein, any costs
to complete "punchlist"
matters in the common areas, Premises or any
other portions of the Development, and costs
incurred in connection with replacing any
defective portion of such original
construction;
(xxii) costs (other than tax increases) in
connection with the purchase or sale of the
Development or Landlord or any portion of or
interest (direct or indirect) in either;
(xxiii) unreimbursed expenditures by Landlord for
(i) HVAC provided to other tenants to the
extent such tenants receive such HVAC at
costs below those charged to Tenant under
this Lease and (ii) the cost of providing
janitorial services to other tenants to the
extent such tenants receive janitorial
services in excess of that provided to
Tenant under this Lease, or the cost of any
non-common area janitorial expenses if
Tenant provides its own janitorial services;
(xxiv) costs arising from Landlord's charitable or
political contributions;
(xxv) costs to repair latent defects in the Base
Building or improvements or repairs
made by Landlord;
(xxvi) all assessments and premiums which are not specifically
charged to Tenant because of what Tenant has done, which can be
paid by Landlord in installments, shall be paid by Landlord in
the maximum number of installments permitted by law and not
included as Operating Expenses except in the year in which the
assessment or premium installment is actually paid; provided,
however, that it is the prevailing practice in Comparable
Buildings to pay such assessments or premiums on an earlier basis
and Landlord pays on such basis, such assessments or premiums
shall be included in Operating Expenses as paid by Landlord;
(xxvii) any compensation fee (as opposed to a reimbursement or
pass-through charge) payable to the parking operator of the
Parking Area;
(xxviii) cost, including penalties or damages
incurred due to such non-compliance, to
correct Landlord's failure to comply and
conform with the Americans With Disabilities
Act or any other Applicable Law on the date
the building permit was issued for the
construction of the Base Building, provided
such Applicable Law was routinely enforced
in the manner and degree being enforced on
the date the building permit therefor was
issued;
(xxix) except for making repairs or keeping
permanent Building Systems in operation
while repairs are being made, rentals and
other related expenses incurred in leasing,
air-conditioning systems, elevators or other
equipment ordinarily considered to be of a
capital nature except equipment not affixed
to the Building which is used in providing
janitorial or similar services;
(xxx) rentals for items (except when needed in
connection with normal repairs and
maintenance of permanent systems) which if
purchased, rather than rented, would
constitute a Capital Item which is
specifically excluded in Subsection (ii)
above (excluding, however, Capital Items
where the costs thereof is permitted to be
passed through as an Operating Expense under
this Lease as provided above or permitted
equipment not affixed to the Building which
is used in providing janitorial or similar
services);
(xxxi) Overhead and profit increments paid to
Landlord or to subsidiaries or affiliates of
Landlord for goods and/or services in or to
Building to the extent the same exceeds the
costs of such goods and/or services rendered
by substantially all unaffiliated third
parties on a competitive basis;
(xxxii) To the extent that Tenant will be paying
directly for electricity, gas, and other
utilities used within its Premises
(collectively, "Separately Metered
Utilities"), and so long as Tenant will be
providing janitorial services for its own
Premises, Landlord shall not include in
Operating Expenses the cost of such
utilities or janitorial services which are
provided to any other tenant in the
Building; or
(xxxiii) water services provided and costs incurred
in connection with the operation of the
retail and restaurant operations in the
Building, except to the extent the square
footage of such operations are included in
the RSF of the Building and to the extent
the services and tax costs do not exceed
that which would have been incurred had the
retail and/or restaurant space been used for
general office purposes.
(b) "Real property taxes" shall include any form of assessment,
license fee, license tax, business license fee, commercial
rental tax, levy, charge, penalty, tax or similar imposition,
imposed by any authority having the direct power to tax,
including without limitation any city, county, state or
federal government, or any school, agricultural, lighting,
drainage or other improvement or special assessment district
thereof, as against any legal or equitable interest of
Landlord in the Development, including, but not limited to,
the following:
(1) any tax on Landlord's "right" to rent or "right" to
other income from the Development or as against
Landlord's business of leasing the Development;
(2) any assessment, tax, fee, levy or charge in
substitution, partially or totally, of any
assessment, tax, fee, levy or charge previously
included within the definition of real estate tax,
including but not limited to, any assessments, taxes,
fees, levies and charges that may be imposed by any
governmental agencies for such services as fire
protection, street, sidewalk and road maintenance,
transportation management, utility or water
regulations, refuse removal and for other
governmental services formerly provided without
charge to property owners or occupants. It is the
intention of Tenant and Landlord that all such new
and increased assessments, taxes, fees, levies and
charges be included within the definition of "real
property taxes" for the purpose of this Lease;
(3) any assessment, tax, fee, levy or charge allocable to
or measured by the area of the Development or rent
payable hereunder, including, without limitation, any
gross income tax or excise tax levied by the state,
city or federal government, or any political
subdivision thereof, with respect to the receipt of
such rent, or upon or with respect to the possession,
leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof;
(4) any assessment, tax, fee, levy or charge upon this
transaction or any document to which Tenant is a
party creating or transferring an interest or an
estate in the Premises;
(5) any assessment, tax, fee, levy or charge by any
governmental agency related to any transportation
plan, fund or system instituted within the geographic
area of which the Development is a part; and
(6) reasonable legal fees and other professional fees,
costs and disbursements incurred in connection with
proceedings to contest, determine or reduce real
property taxes.
If the tax assessor does not specifically identify
tenant improvements in its assessment, Landlord shall
pay any real property taxes associated with the
tenant improvements of all tenants and include such
taxes in Operating Expenses. If the tax assessor does
specifically identify tenant improvements in its
assessment, any real property taxes associated with
tenant improvements based on tenant improvements
being valued at an amount not to exceed Twenty-five
Dollars ($25.00) per RSF shall be included in
Operating Expenses and Tenant shall be responsible
for all real property taxes associated with the
Tenant Improvements above such amount pursuant to
Subparagraph 12(b).
Notwithstanding any provision of this Subparagraph
6(b) expressed or implied to the contrary: (1) "real
property taxes" shall not include Landlord's federal
or state income, franchise, gift, capital stock,
transfer, inheritance or estate taxes; (2) Tenant's
Percentage of real property taxes included in
Operating Expenses shall be based on the actual real
property taxes payable for the Development, and
Tenant shall pay real property taxes as they are paid
by Landlord directly to the appropriate taxing
authority or into an impound account as required by
the holder of a beneficial interest of a deed of
trust or mortgage encumbering the Building, which
shall be on the later of (i) ten (10) days after
notice to Tenant stating the amount due and, if no
such impounds are required to be paid, a copy of the
tax xxxx or (ii) five (5) days before payment is due;
(3) real property taxes shall not be adjusted by
Landlord to represent a fully assessed building,
until so assessed by the appropriate taxing
authority; and (4) Tenant shall not be liable for any
share of late fees or penalties due to Landlord's
failure to pay real property taxes on time. In
addition, Landlord agrees that to the extent that the
real property tax component of the Operating Expenses
is increased due to the first sale of the Building
during the initial Term (i.e., prior to any Option
Term), Tenant's Operating Expenses shall not be
increased as a result thereof during the initial
Lease Term to the extent such increase exceeds the
increase that would have occurred had no such sale or
transfer taken place. Following such first sale, if
any event shall occur which causes a reassessment,
and thereby causes an increase in real property
taxes, the real property taxes payable by Tenant
shall be increased accordingly without regard to any
prior limitation on increases in real property taxes
agreed to above. The foregoing exclusions from real
property taxes are not intended to exclude any annual
increases in real property taxes. Notwithstanding the
foregoing, Tenant shall be liable for all taxes,
assessments or governmental charges attributable to a
Change of Ownership Assessment resulting from a sale,
transfer or other change in ownership, which sale,
transfer or change in ownership occurs subsequent to
the first sale of the Development.
Tenant may attempt to have the assessed valuation of
all or part of the Development or Tenant's personal
property reduced or may initiate proceedings to
contest the real property taxes or personal property
taxes. Upon Tenant's request, or if required by
applicable law, Landlord shall reasonably join in the
proceedings brought by Tenant. However, Tenant shall
pay all costs of the proceedings, including any
reasonable costs or fees reasonably incurred by
Landlord in connection therewith. Within thirty (30)
days after the final determination of any proceeding
or contest, Tenant shall pay the taxes due, together
with all costs, charges, interest and penalties
incidental to the proceedings. Notwithstanding the
foregoing and provided Tenant pays such taxes when
required by the taxing authority, Tenant shall pay
the taxes (and such other amounts, as applicable)
under protest, whether or not such payment under
protest is necessary to contest the amount of taxes
or to prevent the sale of the Development under a
"tax sale" or similar enforcement proceeding. If any
contest of taxes with respect to the Development
results in a reimbursement by one or more taxing
authorities of some or all of the tax payments
previously made by Tenant with respect to the
Development, Tenant shall be entitled to the full
amount of such reimbursement to the extent of any
payment by Tenant.
(c) (1) At least forty-five (45) days prior to the Commencement
Date, Landlord shall endeavor to deliver to Tenant an estimate
of Tenant's Percentage of Operating Expenses for the first
year of the Lease Term (i.e., the period commencing on the
Commencement Date and expiring on December 31 of said calandar
year) ("First Year Estimate",
and Tenant shall pay to Landlord concurrently with the first
payment of Monthly Basic Rent after the Commencement Date, and
then monthly thereafter together with each regular payment of
Monthly Basic Rent until the revised Estimate Statement takes
effect, the amount set forth in the First Year Estimate
Statement multiplied by a fraction, such fraction being the
number of calendar months remaining in such calendar year from
and after the Commencement Date divided by 12.
(2) By the end of each calendar year during the Term,
Landlord shall endeavor to deliver to Tenant a statement
("Estimate Statement") wherein Landlord shall estimate the
Operating Expenses (except for any portion attributable to real
property taxes) for the immediately following calendar year.
Not more often than once in any calendar year, if Landlord
determines that Tenant's Percentage of the Operating Expenses
for such calendar year exceeds (or is less than) that set
forth in the Estimate Statement, and such excess is
substantial, extraordinary and non-budgeted (or any expected
substantial expense does not occur) then Landlord shall
deliver to Tenant, as appropriate, a revised Estimate
Statement and Tenant shall pay to Landlord, or Landlord shall
credit Tenant's next monthly Rental payments coming due or pay
to Tenant, as appropriate, within fifteen (15) days of the
delivery of such revised Estimate Statement, the difference
between such revised Estimate Statement and the original
Estimate Statement for the portion of the current calendar
year which has then expired, and pursuant to Landlord's notice
to Tenant, Tenant shall either (a) pay during the balance of
such current calendar year a fraction of the balance of such
difference as would fully amortize such excess over the
remaining months of the then current calendar year or (b)
reduce its monthly payment during the balance of such current
calendar year by an amount to account for the revised Estimate
Statement's being less than the original Estimate Statement,
as appropriate.
(3) If Landlord has not given Tenant an Estimate Statement
before December 31 for the immediately following calendar
year, then during the immediately following calendar year,
until such Estimate Statement is given to Tenant, Tenant shall
continue to pay its Percentage Share of Operating Expenses at
the same rate as for the immediately preceding calendar year.
Once such Estimate Statement is rendered, it shall be
considered a revised Estimate Statement, as provided under
(ii) above, and Tenant shall pay Landlord Tenant's Percentage
of Operating Expenses for such calendar year accordingly.
(4) The Operating Expenses (excluding real property taxes)
estimated in the Estimate Statement shall be divided into
twelve (12) equal monthly installments, and Tenant shall pay
to Landlord, concurrently with the regular monthly Rent
payment next due following the receipt of such statement, an
amount equal to one (1) monthly installment multiplied by the
number of months from January in the calendar year in which
said statement is submitted to the month of such payment, both
months inclusive. Subsequent installments shall be paid
concurrently with the regular monthly Rent payments for the
balance of the calendar year and shall continue until the next
calendar year's Estimate Statement is rendered.
(5) By the first day of April of each succeeding calendar
year during the Term, Landlord shall endeavor to deliver to
Tenant a statement ("Actual Statement") wherein Landlord shall
state the actual Operating Expenses for the preceding calendar
year, certified
by Landlord. If the Actual Statement reveals a greater
increase in Tenant's Percentage of Operating Expenses than was
estimated by Landlord in the Estimated Statement (as revised)
delivered as provided herein, then within thirty (30) days
after receipt of the Actual Statement from Landlord, Tenant
shall pay a lump sum equal to said total increase. If the
Actual Statement reveals a lesser increase (or a decrease) in
Tenant's Percentage of Operating Expenses than was estimated
by Landlord in the Estimated Statement (as revised), then upon
receipt of Landlord's Actual Statement, any overpayment made
by Tenant on the monthly installment basis provided above
shall be credited toward the next monthly Rent falling due and
the monthly installment of Tenant's Percentage of Operating
Expenses to be paid pursuant to the then current Estimate
Statement shall be adjusted to reflect such lower expenses
from the most recent calendar year, or if this Lease has been
terminated, such excess shall be credited against any amount
which Tenant owes Landlord pursuant to this Lease and, to the
extent all amounts which Tenant owes Landlord pursuant to this
Lease have been paid, Landlord shall within ten (10) business
days of receipt by Tenant of the Actual Statement pay such
excess to Tenant. Any delay or failure by Landlord in
delivering any estimate or statement pursuant to this Section
6 shall not constitute a waiver of its right to require an
increase in rent nor shall it relieve Tenant of its
obligations pursuant to this Section 6, except that Tenant
shall not be obligated to make any payments based on such
estimate or statement until ten (10) days after receipt of
such estimate or statement.
(6) In the event Tenant shall dispute the amount set forth in
the Actual Statement described above in this Subparagraph 6(c)
and/or the amount due as Operating Expenses pursuant to Lease
Section 6, Tenant shall have the right not later than two (2)
years following receipt of such Actual Statement to cause
Landlord's books and records with respect to the preceding
calendar year (and previous years if necessary to review or
audit properly Landlord's books and records with respect to
such actual statement in question) to be reviewed and
photocopied by Tenant or its representatives or to be audited
by an accountant who shall be at least of a quality consistent
with accountants typically hired by nationally recognized
public accounting firms at Landlord's office. If after
reviewing and photocopying Landlord's books and records,
Tenant disagrees with the calculations set forth in the Actual
Statement and/or the amount due as Operating Expenses pursuant
to Lease Section 6, then Tenant shall, not later than two (2)
year from and after receiving the Actual Statement, give
Landlord written notice of Tenant's opinion of the Operating
Expenses for the Building for such calendar year. If Tenant
does not deliver such written notice to Landlord within the
two (2) year period, then Tenant shall be deemed to have
agreed with the calculations set forth in the Actual
Statement. If Landlord and Tenant disagree over the Actual
Statement, either party may submit the matter to arbitration
in accordance with the rules and regulations of the American
Arbitration Association. In no event, however, shall Tenant
have the right to withhold payment of all or any portion of
the amount stated as due in such Actual Statement. The amounts
payable under this Subparagraph 6(c) by Landlord to Tenant or
by Tenant to Landlord, as the case may be, shall be
appropriately adjusted on the basis of such audit. The cost of
such review or audit shall be borne by Tenant; provided,
however, that if upon resolution of the dispute it is
determined that Landlord's originally delivered Actual
Statement overstated Operating Expenses (excluding real
property taxes) for the Development by more than five percent
(5%), Landlord shall pay Tenant within thirty (30) days of
such determinations Tenant's actual and reasonable audit
expenses incurred in auditing such Actual Statement.
(7) Neither the accounting firm or Lessee's employees shall be
compensated on a contingent fee, commission or bonus basis,
but must only be compensated on a flat salary, fee or hourly
basis.
(8) Landlord shall maintain in a safe and orderly manner all
of its records pertaining to the additional rent payable
pursuant to this Section 6 for a period of three (3) years
after the completion of each calendar year. Landlord shall
maintain such records on a current basis and in sufficient
detail to permit adequate audit and review thereof and, at all
reasonable times, in reasonable coordination with Landlord's
schedule, during Landlord's regular business hours, copies of
such records, at Tenant's expense, shall be available to
Tenant or its representatives for such purposes at the office
of the Building.
(d) Even though the Term has expired and Tenant has vacated the
Premises, when the final determination is made of Tenant's
Percentage of Operating Expenses for the year in which this
Lease terminates, Tenant shall pay any increase due over the
estimated expenses paid within thirty (30) days after receipt
of such final determination and, conversely, any overpayment
made in the event said expenses decrease shall be rebated by
Landlord to Tenant within thirty (30) days after receipt of
such final determination.
(e) Each time Landlord provides Tenant with an actual and/or
estimated statement of Operating Expenses, such statement
shall be itemized on a line item by line item basis, showing
the applicable expense for the applicable year and the year
prior to the applicable year.
(f) In the event Tenant ceases, and has given Landlord written
notice that Tenant has ceased, to occupy one (1) or more
floors of the Premises (and provided Tenant is still leasing
and paying Monthly Basic Rent on the same), Tenant shall
receive a credit against Operating Expenses equal to the
actual reduction in the use of utilities (excluding Separately
Metered Utilities) and services in the Building resulting from
Tenant's vacancy of such portion of the Premises.
7. CONSTRUCTION OF THE TENANT IMPROVEMENTS AND THE BASE BUILDING.
Construction of the Tenant Improvements and the Building shall be done
in accordance with the terms of the Work Agreement attached hereto as
Exhibit "B."
8. USE.
(a) Tenant shall use the Premises for general office use and
other related legally permitted uses consistent with a
first-class office building in the Calabasas area, and shall not
use or permit the Premises to be used for any other purpose
without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed.
Nothing contained herein shall be deemed to give Tenant any
exclusive right to such use in the Building, nor grant any use or
access right therein to the general public or any person other
than those employed by or invitees of Tenant. Tenant shall not
use or occupy the Premises in violation of (i) any Applicable
Law, (ii) any recorded CC&R or REA affecting the Development, or
(iii) the certificate of occupancy issued for the Building, and
Tenant shall, upon receipt of written notice from Landlord or any
governmental authority having jurisdiction, immediately
discontinue any use of the Premises which is declared by any such
governmental authority to be a violation of Applicable Law or of
said CC&Rs, REAs or certificate of occupancy.
(b) Tenant shall comply at Tenant's cost and expense with any
direction of any governmental authority having jurisdiction which
shall, by reason of the nature of Tenant's use or occupancy of
the Premises or Tenant's Work, impose any duty upon Tenant or
Landlord with respect to the Premises or with respect to the use
or occupation thereof. Tenant shall comply with all rules,
orders, regulations and requirements of the Pacific Fire Rating
Bureau or its successor, or any other organization performing a
similar function. Provided, however, notwithstanding any
provision in this Lease to the contrary, Tenant shall not be
obligated to make any modifications to the Building Structure or
Building Systems except to the extent of a Tenant Related Cause.
A "Tenant Related Cause" means any alteration, improvement or
other work required by Applicable Law or standard building
practices to be made to the Building including, without
limitation, the ADA on account of Tenant's particular use, manner
of use, occupancy or manner of occupancy of the Premises,
Building and/or Parking Area in excess of that necessary to use
the Premises for general office uses typical of tenants of
Comparable Buildings (e.g., the Premises having private exclusive
washrooms or kitchens or any other similar Tenant-caused-reason
which triggers such compliance and/or upgrades and is not
necessary for general office use) or the particular type of
improvements, alterations or additions made by or at the
direction of Tenant, which would not be required to use the
Premises for general office use. In addition, Tenant acknowledges
that Tenant shall be responsible for complying with all
Applicable Laws within the Premises (exclusive of any Building
Structure or Building Systems (each defined below) unless
modifications are required to be made to the Building Structure
or Building Systems on account of a Tenant Related Cause). Tenant
shall promptly upon demand, reimburse Landlord for any additional
premium charged for such policy by reason of Tenant's failure to
comply with the provisions of this Section 8. Consistent
herewith, Tenant shall participate in and comply with all
governmentally mandated water management and rationing programs
or other environmental or safety programs applicable to the
Development from time to time. Furthermore, Tenant shall
participate in and comply with any and all governmentally
mandated transportation system management and transportation
demand management programs and other transportation and traffic
measures applicable to the Development from time to time.
(c) Tenant shall not do or permit anything to be done in or about
the Premises which will in any material way obstruct or
interfere with the rights of other tenants or occupants of the
Building or the Development, or injure or annoy them, or use
or allow the Premises to be used for any unlawful purpose, nor
shall Tenant cause, maintain or permit any nuisance in, on or
about the Premises. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises and shall keep the
Premises in first class repair, normal wear and tear excepted,
at Tenant's cost and expense.
(d) Landlord reserves the right to prescribe the weight and
position of all files, safes and heavy equipment which Tenant
desires to place in the Premises if required to properly
distribute the weight thereof. However, if Tenant designates the
location of the areas to be reinforced on a timely basis,
Landlord shall complete such reinforcement as part of the Base
Building improvements and only charge Tenant actual,
out-of-pocket costs for performing such work and ordering extra
materials. Tenant's business machines and mechanical equipment
which cause vibration or noise that may be transmitted to the
Building Structure or to any other space in the Building and
noticeable by a person outside the Premises shall be so
installed, maintained and used by Tenant as to eliminate such
vibration or noise. Except as provided in this Subparagraph 8(d),
Tenant shall be responsible at Tenant's cost and expense for all
structural engineering and other engineering and consultants
required to determine structural load, vibration and noise
related to Tenant's furnishing and equipment.
(e) During the entire Term of the Lease, the Premises shall not
be used as or for any retail uses, mission, restaurant, food
operations (except for an employee and guest cafeteria and
executive dining facility as specifically permitted under this
Lease), school, clubhouse, church, auction, "boiler-room",
tanning salon or any use which creates pedestrian or vehicular
traffic beyond that created by normal office use in a first class
office building. Notwithstanding the foregoing and subject to
Tenant's compliance with Applicable Laws (the cost of which shall
be borne entirely by Tenant), Tenant shall have the right, during
all times when Tenant is leasing the entire RSF of the Building,
to use the Premises, or any portion thereof, for a government
office and/or consulate.
9. PAYMENTS AND NOTICES.
All rents and other sums payable by Tenant to Landlord hereunder shall
be paid to Landlord at the address first set forth in Subparagraph 1(b)
above or at such other place as Landlord may hereunder designate in
writing. Any notice, consent, approval, election, demand or other
communication required or permitted to be given hereunder shall be in
writing and shall be delivered by hand, sent by reputable air courier,
sent by prepaid registered or certified United States mail with return
receipt requested, or sent by facsimile, and shall be deemed to have
been given upon the earliest of (i) receipt, (ii) one business day
after delivery in the United States to a reputable air courier for
overnight expedited delivery service for delivery within the Unites
States, (iii) three (3) business days after the date upon which it has
been deposited in the United States mail, registered or certified, with
postage prepaid and return receipt requested (provided that such return
receipt must indicate receipt at the address specified), or (iv) on the
next business day (in the place of its destination) after its
transmission by facsimile, subject to having in fact been received in
legible form, and addressed as appropriate to the addresses (or to such
other or further addresses or facsimile numbers as the parties may
designate by like notice similarly sent) stated in Section 1.
10. BROKERS AND REPRESENTATIVES.
Each party warrants and represents to the other party that neither it
nor any of its affiliates has had dealings with any real estate broker,
agent or finder in connection with the negotiation of this Lease,
except for the broker or representative named in Subparagraphs 1(s)(1)
and (2) whose commission or fee shall be payable by Landlord by
separate agreement, and that it knows of no other real estate broker,
agent, finder or representative who is or might be entitled to a
commission or fee in connection with this Lease. If a party to this
Lease, or its affiliate, has dealt with any other person or firm with
respect to leasing or renting space in the Building and that is
claiming a fee or commission, such party shall be solely responsible
for the payment of any fee or commission due said person or firm and
shall indemnify, defend and hold the other party free and harmless from
and against any liability in respect thereto, including reasonable
attorneys' fees and costs.
11. HOLDING OVER.
If Tenant holds over after the expiration or earlier termination of the
Term without the express written consent of Landlord, Tenant shall
become a month to month tenant, at a rental rate equal to one hundred
twenty-five percent (125%) of the rental rate then in effect as of the
Expiration Date, and otherwise subject to the terms, covenants and
conditions herein specified, so far as applicable. Acceptance by
Landlord of rent after such expiration or earlier termination shall not
result in a renewal of this Lease. The foregoing provisions of this
Section 11 are in addition to and do not affect Landlord's right of
reentry or any rights of Landlord hereunder or as otherwise provided by
law. If Tenant fails to surrender the Premises upon the expiration of
this Lease despite demand to do so by Landlord, Tenant shall indemnify
and hold Landlord harmless from all loss or liability, including
without limitation, any claim made by any succeeding tenant founded on
or resulting from such failure to surrender and any reasonable
attorneys' fees and costs.
12. TAXES ON TENANT'S PROPERTY.
Tenant shall be liable for and shall pay, before delinquency all taxes
levied against any personal property or trade fixtures placed by Tenant
in or about the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's
property or if the assessed value of the Premises is increased by the
inclusion therein of a value placed upon such personal property or
trade fixtures of Tenant and if Landlord, after written notice to
Tenant, pays the taxes based upon such increased assessment, which
Landlord shall have the right to do regardless of the validity thereof,
but only under proper protest if requested by Tenant, Tenant shall,
within ten (10) days after Landlord has delivered written notice to
Tenant, repay Landlord the taxes so levied against Landlord, or the
portion of such taxes resulting from such increase in the assessment.
13. CONDITION OF PREMISES.
(a) Landlord covenants to construct the Base Building and Tenant
covenants to construct the Tenant Improvements in a first-class
manner and in full compliance with all Applicable Laws applicable
to new construction, including ADA, pursuant to the Work
Agreement. In addition, neither Landlord nor Tenant, nor either
of their respective contractors shall use asbestos or unlawful
amounts of substances determined by Applicable Law as of the date
of this Lease to be hazardous substances (collectively,
"Hazardous Substances"). If Hazardous Substances are found in the
Development, Premises or Building, then to the extent required by
law, Landlord shall remove, or cause to be removed, any and all
Hazardous Substances from the Development, Premises and the
Building (except the existence of Hazardous Substances which is
caused by Tenant, in which case, Tenant shall immediately remove
such Hazardous Substances at Tenant's sole cost and expense). The
conduct of such removal shall be in accordance with all
Applicable Laws.
(b) Tenant and Landlord shall not transport, use, store,
maintain, generate, manufacture, handle, dispose, release or
discharge any "Hazardous Material" upon or about the Building,
nor permit their respective employees, agents, invitees or
contractors to engage in such activities upon or about the
Building. However, the foregoing provisions shall not prohibit
the transportation to and from, and the use, storage, maintenance
and handling within, the Premises of substances customarily used
in connection with normal office use provided: (i) such
substances shall be used and maintained only in such quantities
as are reasonably necessary for the permitted use of the Premises
set forth in this Lease strictly in accordance with Applicable
Laws and the manufacturers' instructions therefor; (ii) such
substances shall not be disposed of, released or discharged on
the Building or the Project, and shall be transported to and from
the Premises in compliance with all Applicable Laws, and as
Landlord shall reasonably require; (iii) if any Applicable Law or
Landlord's trash removal contractor requires that any such
substances be disposed of separately from ordinary trash, Tenant
shall make arrangements at Tenant's expense for such disposal
directly with a qualified and licensed disposal company at a
lawful disposal site (subject to scheduling and approval by
Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed), and shall ensure that disposal occurs
frequently enough to prevent unnecessary storage of such
substances in the Premises; and (iv) any remaining such
substances shall be completely, properly and lawfully removed
from the Building upon expiration or earlier termination of this
Lease.
(c) Landlord shall construct the Base Building to enable Tenant
to commence the lawful construction of its Tenant Improvements
and, when completed, to obtain a Certificate of Occupancy (or
temporary certificate of occupancy or other governmental approval
(in any such case, "Occupancy Permit") that shall permit Tenant
to use and occupy the Premises) for the Premises ("Delivery
Condition"). If, however, Tenant is able to obtain a building
permit for the commencement of construction of the Tenant
Improvements but is not able to obtain an Occupancy Permit until
Landlord has caused the Base Building to comply with Applicable
Laws for new construction, then Delivery Condition shall
nevertheless be deemed to have occurred; provided, however, that
the Commencement Date shall be delayed until Landlord has
complied with its obligations under this Section 13 and/or the
Work Agreement to the extent necessary to enable Tenant to obtain
an Occupancy Permit. Notwithstanding anything herein to the
contrary, Tenant covenants to perform all alterations,
improvements and other work resulting from a Tenant Upgrade
Cause, as hereinafter defined. A "Tenant Upgrade Cause" means any
alteration, improvement or other work required by Applicable Law
to be made to the Building including, without limitation, the ADA
on account of Tenant's particular use, manner of use, occupancy
or manner of occupancy of the Premises, Building and/or
Development in excess of that of any general office use or the
particular type of tenant improvements Tenant is requiring, and
would not necessarily be used by all office tenants. In addition,
Tenant acknowledges that Tenant shall be responsible for
complying with all Applicable Laws within the Premises (exclusive
of the Building Systems and Building Structure unless
modifications are required to be made to the Base Building on
account of a Tenant Upgrade Cause) once the Premises are
delivered in the Delivery Condition to Tenant on the Delivery
Date.
(d) Except as expressly stated in Subparagraph 2.5 and
Subparagraph 13(a) above, Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Development, Premises or the
Building, or with respect to the suitability of either for the
conduct of Tenant's business. The taking of possession of the
Premises by Tenant shall be presumptive evidence, as against
Tenant, that Tenant accepts the same in its then "as is"
condition subject to all defects existing on the Commencement
Date, except for (i) "punchlist" items, (ii) defects caused by
Landlord or Landlord's contractor of which Landlord receives
notice during the first ninety (90) calendar days from and after
the Commencement Date, (iii) latent defects (i.e., defects which
are not discoverable upon a reasonably diligent inspection of the
Premises within one (1) year from and after the Commencement
Date), and (iv) warranty items during warranty periods from
contractors with respect to the Premises. In no event shall
Landlord be liable to Tenant for any consequential damages
including lost profits. Tenant acknowledges and accepts that
various minor start-up inconveniences which shall not materially
impair Tenant's use and occupancy of the Premises may be
associated with the use of the Building's Common Areas, including
certain construction obstacles such as scaffolding, delays in use
of freight elevator service, certain elevators not being
available to Tenant, the passage of work crews using elevators,
uneven air conditioning services and other typical conditions
incident to recently constructed office buildings. Further,
Tenant acknowledges, in light of the practical impossibility of
ensuring that every floor slab has been installed with absolutely
no deflection, that all wood floor coverings, wood paneling and
similar interior Tenant Improvements may have to be designated to
accommodate the actual floor slab deflection (such deflection,
however, shall not be greater than what is customary in
Comparable Buildings).
(e) Tenant acknowledges that the Development is subject to all
reciprocal easements and/or operation and easement agreements
affecting the Development, as modified from time to time,
hereinafter collectively referred to as "REAs", and all
covenants, conditions and restrictions affecting the Development,
and as modified from time to time, hereinafter collectively
referred to as "CCRs." This Lease is and shall remain subject and
subordinate to the REAs and CCRs, as the same may hereafter be
supplemented, modified or amended, and Tenant agrees to execute
any commercially reasonable documents required to effectuate
and/or affirm such subordination; provided, however, that
Tenant's subordination shall be conditioned upon Tenant's prior
approval of all such supplements, modifications or amendments
which materially decrease Tenant's rights or materially increase
Tenant's obligations hereunder. The terms and provisions of the
CCRs and REAs are hereby incorporated into this Lease by this
reference, as applicable.
14. ALTERATIONS.
(a) Without Landlord's prior consent, but subject to the terms
and provisions herein, Tenant may make such interior,
non-structural alterations, additions and improvements to the
Premises as Tenant deems appropriate, provided such alterations
do not in any manner cause or create the potential for affecting
any Building Systems or for a Design Problem, as defined below,
and do not in any instance exceed Ten Thousand Dollars ($10,000).
Otherwise, Tenant shall not make or permit to be made any
alterations, additions or improvements in or to the Premises
after the Commencement Date without Landlord's prior written
consent, which consent shall not be unreasonably withheld,
conditioned or delayed.
(b) Unless Landlord's consent is not required or Landlord is not
requiring plans and specifications for any proposed work, Tenant
shall submit to Landlord plans and specifications for any
proposed alterations, additions or improvements, and may not make
such alterations, additions or improvements until Landlord has
approved of such plans and specifications. Tenant shall pay
Landlord's reasonably incurred Actual Costs to review Tenant's
plans and specifications, except as may otherwise be provided in
the Work Agreement. Landlord shall respond to any submittal of
plans and specifications within ten (10) business days by
approving them or disapproving them based upon Landlord's
reasonable determination that such alterations and/or
improvements would cause a Design Problem, as defined below.
Tenant shall construct such alterations, additions or
improvements in accordance with the plans and specifications
approved by Landlord, and shall not amend or modify such plans
and specifications without Landlord's prior approval, which
approval shall not be unreasonably withheld, conditioned or
delayed.
(c) Tenant shall have the right to make alterations and
improvements to the Premises, as long as (a) Tenant pays for the
entire cost of such alterations and improvements, (b) Tenant
agrees to remove said alterations and improvements upon the
expiration or termination of this Lease, unless (i) such
improvements and/or alterations are Standard Alterations
described in Section 14(f) below, or (ii) Landlord has otherwise
agreed in writing at the time the alterations and improvements
are approved by Landlord, and (c) such alterations and
improvements will not (i) adversely affect the Building Structure
or Building Systems, (ii) affect or change the exterior
appearance of the Building or the exterior appearance of the
Premises (provided, however, this restriction will not be
applicable once Tenant leases the entire Building), (iii)
unreasonably interferes with any other occupants' customary
business operations, (iv) violate any Applicable Law, (v) require
that Landlord make any alterations, improvements or repairs to
the Building except to the extent Tenant agrees to pay and
actually pays for such alterations, improvements or repairs or
(vi) increase Landlord's cost to operate the Building, unless
Tenant agrees to pay for such increased cost (individually and
collectively a "Design Problem"). In no event shall Tenant be
permitted to create a Design Problem.
(d) All work by Tenant or Tenant's contractors shall be done at
such times and in such manner as does not materially and
adversely affect other tenants. Tenant covenants and agrees that
all work done by Tenant shall be performed in full compliance
with all Applicable Laws and the rules, regulations and
requirements of the Pacific Fire Rating Bureau (or its
successor), and of any similar body. Tenant shall at all times
comply with all rules and regulations of Landlord, and Tenant
shall cause all work to be performed in a good and first class
workmanlike manner, using materials and equipment at least equal
in quality and class to the original installations of the
Building.
(e) Before commencing any work (except for de minimis work for
decoration purposes), whether or not Landlord's consent is
required, Tenant shall give Landlord at least twenty (20) days'
written notice of the proposed commencement of such work. Where
reasonably required by Landlord, Tenant or its contractor shall
obtain a policy of builder's all-risk insurance covering fire and
the broad form of extended coverage, and other risks as Landlord
may reasonably determine, in an amount equal to the replacement
value of that portion of the Premises undergoing work if other
insurance carried by Tenant does not provide adequate protection.
Any liability insurance of Tenant shall include coverage of acts
of Tenant's employees, contractors, agents and other invitees,
and shall conform to the general requirements of Subparagraph
22(b). Tenant shall not install and make part of the Premises any
materials, fixtures or articles which are subject to liens,
conditional sales contracts or chattel mortgages. Tenant further
covenants and agrees that any mechanic's lien filed against the
Premises or against the Building for work claimed to have been
done for, or materials claimed to have been furnished to Tenant,
will be discharged by Tenant, by bond or other means satisfactory
to Landlord, within ten (10) days after the filing thereof, at
the cost and expense of Tenant.
(f) All alterations, additions or improvements upon the Premises
made by either party, including, without limiting the generality
of the foregoing, all Tenant Improvements, all wall-covering,
built-in cabinet work, paneling and the like, shall, unless
Landlord elects or has agreed otherwise, become the property of
Landlord, and shall remain upon, and be surrendered with the
Premises, as a part thereof, at the end or earlier termination of
the Term. Tenant shall, upon the expiration or sooner termination
of the Term, surrender the Premises to Landlord in substantially
the same condition as when received, with Tenant Improvements and
other alterations approved by Landlord or those not requiring
Landlord's approval, normal wear and tear and damage by fire or
other casualty, or by Landlord excepted, except as otherwise
expressly stated herein. At the expiration of the Term, Tenant
shall deliver to Landlord an amount equal to the proceeds of any
insurance (including any self-insurance) which Tenant carries or
is required to carry hereunder and to which Tenant is entitled to
(or would have been entitled to if carried pursuant to the terms
of this Lease) on account of any damage to the Tenant
Improvements in the Premises. However, at the election of
Landlord (unless such election has been waived as hereinafter
provided or if not required pursuant to 14(c) above), exercisable
by written notice to Tenant, Tenant shall, at Tenant's sole cost
and expense, prior to the expiration of the Term, except as
otherwise provided in the Work Agreement and as provided in the
last sentence of this Subparagraph 14(f), remove from the
Premises Tenant's alterations, additions and improvements (other
than floor coverings, paint, ceilings, light fixtures and
controls, built-in cabinets and office demising walls, doors,
door fixtures and trim, HVAC distribution and fixtures related
thereto, to the extent the same are normal and customary for
general business office purposes), and repair all damage to the
Premises caused by such removal and return the Premises to
Landlord's standard build out condition. Prior to making any
alterations, additions or improvements to the Premises, Tenant
shall have the right to request in writing Landlord's consent to
Tenant's not removing any alterations, additions and improvements
that Tenant intends to make. If Landlord fails to respond to such
Tenant's request within fifteen (15) days after Landlord's
receipt of said notice, Landlord shall be deemed to have waived
its right to elect that such alterations, additions and
improvements be so removed, provided that in such Tenant's
request Tenant specifically states in such notice in bold face
print that Landlord shall be deemed to have waived Landlord's
right to require Tenant to remove such alterations, additions or
improvements if Landlord fails to respond to such request within
such fifteen (15) day period. Landlord's failure to require
Tenant to remove any particular alterations, additions or
improvements shall not be construed as a waiver of any prior
election of Landlord or release Tenant from its obligations to
remove any other alterations, additions or improvements.
Notwithstanding any of the foregoing, Landlord specifically
agrees that it shall not require that Tenant remove any
alterations, additions and improvements made subsequent to the
initial construction of the Tenant Improvements consisting of
normal Building standard type items which are customary for a
general office use (i.e., ceiling tiles, 2x4 fluorescent light
fixtures, partitions, door frames and hardware) (collectively,
"Standard Alterations").
(g) All articles of personal property, including all business and
trade fixtures, movable machinery and equipment, furniture and
movable partitions owned by Tenant or installed by or on behalf
of Tenant in the Premises shall be and remain the property of
Tenant and may be removed by Tenant at any time. All of Tenant's
personal property shall be completely removed by Tenant prior to
the expiration of the Term. Provided, however, that Tenant shall
repair all damage caused by such removal prior to the expiration
of the Term.
(h) Landlord reserves the right at any reasonable time and from
time to time and without the same constituting an actual or
constructive eviction, and without incurring any liability to
Tenant therefor or otherwise affecting Tenant's obligations under
this Lease, to make such changes, alterations, additions,
improvements, repairs or replacements in or to the Development or
the Building and the fixtures and equipment thereof, as well as
in or to the street entrances, halls, passages and stairways
thereof, provided access to the Parking Area, lobbies and
Premises is not materially adversely affected and the Building
Systems (including, without limitation, HVAC, elevators, life
safety and security) are not materially and adversely affected.
Nothing contained in this Section 14 shall be deemed to relieve
Tenant of any duty, obligation or liability with respect to
making any repair, replacement or improvement or complying with
any law, order or requirement of any government or other
authority (but Tenant shall not have to make any modification to
the Building Structure or Building Systems except to the extent
of a Tenant Related Cause, and nothing contained in this Section
14 shall be deemed or construed to impose upon Landlord any
obligation, responsibility or liability whatsoever for the care,
supervision or repair of the Building or any part other than as
otherwise provided in this Lease.
15. REPAIRS.
(a) Tenant shall keep, maintain and preserve the Premises other
than the Building Systems and Building Structure (except as
otherwise specifically provided herein) in a first class
condition and repair, normal wear and tear excepted, and shall,
when and if needed, at Tenant's sole cost and expense, make all
repairs to the Premises and every part thereof except as required
by Landlord as specifically provided herein. In that regard,
Tenant shall maintain and repair at its sole cost and expense,
and with maintenance contractors approved by Landlord, all
non-Base Building facilities within the Premises, including to
the extent same were not part of the Base Building lavatory,
shower, toilet, wash basin and kitchen facilities and HVAC
systems, including all plumbing connected to said facilities or
systems installed by or on behalf of Tenant, and all Tenant
Improvements. Landlord shall have no obligation to alter,
remodel, improve, repair, decorate or paint the Premises or any
part thereof, except as stated in Subparagraph 15(b) below.
(b) Except as otherwise provided in this Lease, Landlord shall
repair and maintain at all times during the Term of this Lease
(i) the structural portions of the Base Building, including the
foundation, floor/ceiling slabs, roof, curtain walls, exterior
glass and mullions, columns, beams, shafts (including elevator
shafts), common area stairwells, common area elevator cabs,
common area escalators, common area plazas, common area art work,
sculptures and washrooms, common area mechanical, electrical and
telephone closets and all other Common Areas (collectively,
"Building Structure"), and (ii) the mechanical, electrical, life
safety, plumbing, sprinkler systems (connected to the core) of
the Base Building (as opposed to any particular premises (e.g.,
executive washrooms) and HVAC systems (including primary and
secondary loops connected to the core) ("Building Systems") in
first class condition and repair and shall operate the Building
as a first class Comparable Building. Notwithstanding anything in
the Lease to the contrary, Tenant shall not be required to make
any repair to, modification of, or addition to the Building
Structure and/or the Building Systems except and to the extent of
a Tenant Related Cause. Tenant may request that repairs and
maintenance having a material effect on Tenant's use of the
Premises be performed during non-business hours, and Landlord
shall comply with such request to the extent compliance does not
increase Landlord's costs (unless Tenant agrees to pay for such
increased costs). All of Landlord's costs under this Subparagraph
(b) shall be passed through to Tenant as an Operating Expense,
unless expressly excluded in this Lease and subject to the
amortization requirements.
(c) In the event Tenant is prevented from using, and does not
use, the Premises or any portion thereof, for five (5)
consecutive business days or twelve (12) days in any twelve (12)
month period ("Eligibility Period") as a result of (a) any damage
or destruction to the Base Building, the Parking Area and/or the
Premises, (b) any repair, maintenance or alteration performed by
Landlord after the Commencement Date and required by this Lease
which substantially interferes with Tenant's use of the Premises,
the Parking Area and/or the Building, (c) any failure by Landlord
to provide Tenant with services that Landlord is expressly
required by this Lease to provide or access to the Premises, the
Parking Area and/or the Building, (d) because of an eminent
domain proceeding, or (e) because of the presence of Hazardous
Substances in, on or around the Building, the Premises and/or the
Project which could pose a health risk to occupants of the
Premises, then Tenant's Rent shall be abated or reduced, as the
case may be, after expiration of the Eligibility Period for such
time that Tenant continues to be so prevented from using, and
does not use, the Premises or a portion thereof, in the
proportion that the rentable area of the portion of the Premises
that Tenant is prevented from using, and does not use, bears to
the total rentable area of the Premises. However, in the event
that Tenant is prevented from conducting, and does not conduct,
its business in any portion of the Premises for a period of time
in excess of the Eligibility Period, and the remaining portion of
the Premises is not sufficient to allow Tenant to conduct in a
reasonable manner its business therein, and if Tenant does not
conduct its business from such remaining portion, then for such
time after expiration of the Eligibility Period during which
Tenant is so prevented from conducting in a reasonable manner its
business therein, the Rent for the entire Premises shall be
abated; provided, however, if Tenant reoccupies and conducts its
business from any portion of the Premises during such period, the
Rent allocable to such reoccupied portion, based on the
proportion that the rentable area of such reoccupied portion of
the Premises bears to the total rentable area of the Premises,
shall be payable by Tenant from the date such business operations
commence. If Tenant's right to abatement occurs because of an
eminent domain taking and/or because of damage or destruction to
the Premises or the Building or the Parking Area or Tenant's
property, if expressly permitted herein, Tenant's abatement
period shall continue until Tenant has been given sufficient time
as reasonably determined by Landlord's contractor and sufficient
access to the Premises, the Parking Area and/or the Building, to
rebuild such portion it is required to rebuild (including the
Tenant Improvements) and to install its property, furniture,
fixtures, and equipment to the extent the same shall have been
removed as a result of such damage or destruction, plus a move-in
period equal to one (1) weekend. To the extent Tenant is entitled
to abatement without regard to the Eligibility Period, because of
an event covered by Lease Sections 23 or 24, then the Eligibility
Period shall not be applicable.
(d) Unless expressly provided in this Lease, Landlord shall not
be liable for any failure to make any repairs or to perform any
maintenance. Except as expressly provided in this Lease, there
shall be no abatement of rent and no liability of Landlord by
reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises
or in or to fixtures, appurtenances and equipment therein. Tenant
waives the right to make repairs at Landlord's expense under any
law, statute or ordinance now or hereafter in effect.
Notwithstanding any provision set forth in the Lease to the
contrary, if Tenant provides written notice (or oral notice in
the event of an emergency such as damage or destruction to or of
the Building Structure and/or the Building Systems) to Landlord
of an event or circumstance which by the express terms of this
Lease requires the action of Landlord with respect to repair
and/or maintenance, and Landlord fails to provide such action
within a reasonable period of time, given the circumstances,
after the receipt of such notice, but in any event not later than
twenty-one (21) days after receipt of such notice, then Tenant
may proceed to take the required action upon delivery of an
additional ten (10) business days' notice to Landlord specifying
that Tenant is taking such required action (provided, however,
that neither of such notices shall be required in the event of an
emergency which threatens life or where there is imminent danger
of damage to property), and if such action was required under the
terms of the Lease to be taken by Landlord and was not taken by
Landlord within such ten (10) day period, and Landlord does not
give Tenant written notice disputing the same within such ten
(10) day period, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and
expenses payable to third parties in taking such action plus
interest thereon at the Interest Rate as defined below. If
Landlord shall fail to promptly reimburse Tenant as and when
expressly provided above, and Tenant obtains a final judgment
against Landlord as a result of Landlord's default in the payment
thereof, then the amount of the award (which shall include
interest at the Interest Rate from the time of each expenditure
by Tenant until the date Tenant receives such amount by payment
or offset and reasonable attorneys' fees and related costs) may
be deducted by Tenant from the Rents next due and owing under the
Lease. In the event Tenant takes such action, and such work will
affect the Building Structure and/or the Building Systems, Tenant
shall use only those contractors used by Landlord in the Building
for work on such Building Structure or Building Systems unless
such contractors are unwilling or unable to perform, or timely
and competitively perform, such work, in which event Tenant may
utilize the services of any other qualified contractor which
normally and regularly performs similar work in Comparable
Buildings exercising its due care in the same manner and
standards as required of Landlord under this Lease.
16. LIENS.
Tenant shall not permit any mechanics', materialmen's or other liens to
be filed against the Building nor against Tenant's leasehold interest
in the Premises. Landlord shall have the right at all reasonable times
to post and keep posted on the Premises any notices which it deems
necessary for protection from such liens. If any such liens are filed,
Tenant shall cause such liens to be released within the earlier of
fifteen (15) days or within the time period required by the holder of
any mortgage or deed of trust encumbering the Building after Tenant's
receipt of actual notice of such liens. If Tenant fails to cause such
liens to be released within said period of time, Landlord shall have
the right to obtain and post a bond in order to remove such liens of
record or to obtain a title insurance policy for one and one-half times
the amount of such lien, and Tenant shall on demand reimburse Landlord
as additional rent for Landlord's costs thereof including interest at
the Interest Rate.
17. ENTRY BY LANDLORD.
Landlord reserves and shall have the right to enter the Premises to
inspect the same upon one (1) business day's prior notice (except in
case of an emergency where notice is not reasonably practical), to
supply services to be provided by Landlord to Tenant hereunder at
reasonable times (which service may be provided after Building Business
Hours, as defined in Subparagraph 18.2 below), to show the Premises to
prospective purchasers or tenants upon one (1) business day's prior
notice (but only during the last 12 months of the Term as to
prospective tenants) and at reasonable times, to post notices of
non-responsibility, to alter, improve or repair the Premises or any
other portion of the Building, all without being deemed guilty of any
eviction of Tenant and without abatement of rent except as provided in
Section 15. If Tenant reasonably requests that Landlord enter at
another time, Landlord shall if feasible comply with such request.
Landlord may, in order to carry out such purposes, erect scaffolding
and other necessary structures where reasonably required by the
character of the work to be performed. Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with
Tenant's business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss in, upon and about the Premises due to an
entry allowed hereunder except to the extent of Landlord's indemnity
obligations in Section 20. Landlord shall at all times have and retain
a key with which to unlock all doors in the Premises, excluding
Tenant's vaults and safes and areas that Tenant has reasonably
designated. Landlord shall have no liability with respect to such areas
to which Tenant does not permit Landlord to access. In any event, any
such entry shall be accomplished as expeditiously as reasonably
possible and in a manner so as to cause as little interference to
Tenant as reasonably possible. Landlord shall have the right to use any
and all means which Landlord may deem proper to open said doors in an
emergency, without any liability whatsoever therefore to obtain entry
to the Premises. Any entry to the Premises obtained by Landlord by any
of said means shall not be construed or deemed to be a forcible or
unlawful entry into the Premises, or an eviction of Tenant from the
Premises or any portion thereof. It is understood and agreed that no
provision of this Lease shall be construed as obligating Landlord to
perform any repairs, alterations or decorations except as otherwise
expressly agreed herein by Landlord. Landlord shall attempt in the
exercise of its rights under this Section 17 to minimize any
disturbance to Tenant's use and possession of the Premises and to
provide as much notice to Tenant as may be reasonably possible prior to
any such exercise of Landlord's rights under this Section 17.
18. UTILITIES AND SERVICES.
18.1 Services. Landlord shall provide or cause to be provided the
services described in Exhibit "D" subject to the conditions
and in accordance with the terms set forth herein.
(a) Tenant agrees to keep and cause to be kept closed all doors
from the Premises leading to Common Areas, and Tenant agrees to
reasonably cooperate fully at all times with Landlord and to
abide by all reasonable regulations and requirements which
Landlord may prescribe for the proper functioning and protection
of the HVAC systems. Tenant shall not install or use in the
Premises, any equipment which would generate heat so as to
adversely and materially affect the normal operations of the HVAC
systems; provided, however, that subject to the provisions of
this Lease concerning the right of Tenant to make alterations,
repairs, additions, improvements and/or replacements, with
Landlord's consent (which consent shall not be unreasonably
withheld, conditioned or delayed) Tenant may install, at Tenant's
expense, supplemental HVAC equipment to allow for the use of heat
generating equipment that would otherwise adversely affect the
normal HVAC systems. Landlord, throughout the Term, shall have
free access to any and all mechanical installations of Landlord
or Tenant, including, without limitation, air conditioning, fan,
ventilating and machine rooms, telephone rooms, electrical
closets and any other areas in the Building containing mechanical
installations or utility lines or connections thereto. Tenant
agrees that there shall be no construction of partitions or other
obstructions which interfere with Landlord's free access thereto,
or interfere with the moving of Landlord's equipment to or from
the enclosures containing said installations. Tenant further
agrees that neither Tenant, nor its employees, agents, licensees
or invitees shall at any time enter the said enclosures or tamper
with, adjust, touch or otherwise in any manner affect Landlord's
mechanical installations.
(b) As part of the construction of the Tenant Improvements,
submeters or other equipment shall be installed to determine the
actual amount of electricity, and gas which Tenant shall utilize
from time to time in the Premises. Tenant shall pay directly to
the appropriate utility company, to the extent the same are
separately metered, all costs attributable to electricity, gas
and other utility usage in the Premises. Utilities by other
tenants in their premises shall not be passed through to Tenant
in whole or in part. At all times, Tenant's use of electrical
current shall not exceed that to which Tenant is entitled by
Applicable Law or the capacity of the feeders to the Building or
the risers or wiring installation.
(c) Tenant shall have the right to retain a consultant to conduct
a technical analysis of the telephone, electrical, and HVAC
requirements for the Initial Premises. Tenant has approved the
HVAC specifications for the Base Building and is satisfied that
HVAC system is capable of providing to the Premises, on a
connected load basis, sufficient amount of wattage and live load
power per for Tenant's comfortable use. Landlord shall work with
Tenant and its consultant, if any, to maximize the electricity
provided to satisfy Tenant's power and HVAC needs within the
Title 24 regulations for the Building.
18.2 HVAC and Utility Operation. To the extent provided for in the
Base Building Plans, Tenant shall have access within the
Premises to separate controls (including climate control and
on/off switches) in connection with the HVAC service to the
Premises. In the event Tenant requires utilities (other than
Separately Metered Utilities) and/or services in excess of the
amount that Landlord is required to provide, or at times other
than during the hours of 8:00 a.m. to 6:00 p.m., Monday
through Friday (except nationally recognized holidays), and
8:00 a.m to 2:00 p.m Saturdays (excluding nationally
recognized holidays) (collectively, "Business Hours"),
Landlord agrees to provide such extra utilities and services,
and Tenant agrees to reimburse to Landlord its actual costs of
providing such extra utilities and services, without a profit
to or administration, depreciation or overhead charge by
Landlord ("Actual Costs").
18.3 Tenant's Obligations. Tenant shall at all times maintain at
its own cost and expense all non-Base Building plumbing
facilities and equipment attached thereto within the Premises
in good order, condition and repair to the satisfaction of
Landlord. Tenant hereby indemnifies Landlord against any and
all claims, liabilities, losses, damages, costs and expenses
whatsoever (including, without limitation, reasonable
attorneys' fees, costs, disbursements and expenses but
specifically excluding consequential damages) whether suffered
by Landlord or other occupants or persons in the Building, the
Development or any of the areas used in connection with the
operation thereof arising out of Tenant's failure to satisfy
its obligations under this Subparagraph 18.3. Landlord shall
not be obligated to clean or provide supplies for any such
plumbing facilities or equipment attached thereto. Nothing
herein contained shall be construed to confer upon Tenant the
right to install any plumbing facilities without the prior
written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed
18.4 Interruption of Services. Landlord reserves the right to stop
service of the elevator, plumbing, heating, ventilating, air
conditioning and electric or other mechanical systems, or
cleaning services, when necessary, by reason of accident or
emergency or for inspection, repairs, alterations,
decorations, additions or improvements, which in the
reasonable judgment of Landlord are desirable or necessary to
be made, until same shall have been completed, and Landlord
shall have no responsibility or liability, and there shall be
no abatement of rent, except as expressly stated in this
Lease, for failure to supply any of such services in such
instance. In the event of any failure, stoppage or
interruption of said services, Landlord shall use its
commercially reasonable efforts to cause the resumption of
such service as soon as reasonably possible.
19. BANKRUPTCY. [Intentionally omitted.]
20. INDEMNIFICATION AND EXCULPATION.
(a) Subject to the provisions of Sections 23 and 24, and to the
extent not covered by insurance required to be carried by
Landlord, Tenant shall indemnify, protect, defend and hold
Landlord harmless from all loss, cost, liability, damage or
expense (including, but not limited to, penalties, fines,
reasonable attorneys' fees or costs (but not lost profits or
consequential damages)) (collectively, "Claims") to any
person, property or entity arising from Tenant's use of the
Premises or the conduct of its business therein or from any
activity, work or thing done or permitted to be done by
Tenant, or any of Tenant's agents, employees or contractors
in or about the Premises, the Building or Common Areas.
Tenant shall further indemnify, protect, defend and hold
Landlord harmless from all claims arising from any breach or
default in the performance of any obligation to be performed
by Tenant under the express terms of this Lease for which
Tenant has received the prior written notice of such default
by Tenant required under this Lease and has had a reasonable
period of time within which to cure such default pursuant to
the provisions hereof, or arising from the willful
misconduct or negligence of Tenant or of its agents,
contractors, invitees or employees and from and against all
costs, reasonable attorneys' fees, expenses and liabilities
(but not lost profits or consequential damages) incurred in
or about such claim or any action or proceeding brought
thereon. In case any action or proceeding shall be brought
against Landlord by reason of any such claim, Tenant, upon
notice from Landlord, shall defend the same at Tenant's
expense by counsel approved in writing by Landlord.
Notwithstanding any of the foregoing, however, in no event
whatsoever shall Tenant be liable for Landlord's lost
profits or Landlord's consequential damages beyond the rent
payable by Tenant under this Lease or rent payable by other
tenants in the Project.
(b) Subject to the provisions of Sections 23 and 24, and to the
extent not covered by insurance required to be carried by
Tenant, Landlord shall indemnify, protect, defend and hold
harmless Tenant, its Affiliates and their respective
officers, directors, partners, agents and employees from all
Claims to any person, property or entity arising from or in
connection with Landlord's activities in the Building
(except for damage to the Tenant Improvements and Tenant's
personal property, fixtures, furniture and equipment in the
Premises, to the extent Tenant is required to obtain the
requisite insurance coverage pursuant to the Lease) or the
Project and any default in the performance of any obligation
on Landlord's part to be performed under the express terms
of this Lease for which Landlord has received at least
thirty (30) days prior written notice of such default by
Landlord and has had a reasonable period of time within
which to cure such default pursuant to the provisions
hereof, or arising from the willful misconduct or negligence
of Landlord or its agents, employees, invitees or
contractors or arising from any noncompliance of the
Building and/or the Project with any laws relating to
disable access, or Claims arising from the presence in the
Premises, the Building and/or the Project of hazardous
substances, except to the extent such hazardous substances
were placed in or on the Premises, the Building and/or the
Project by Tenant (Landlord's indemnity hereunder will
survive the expiration of the Term of, or any termination of
the Lease) and from and against all costs, reasonable
attorneys' fees, expenses and liabilities incurred in or
about such claim or any action or proceeding brought
thereon. In case any action or proceeding shall be brought
against Tenant by reason of any such claim, Landlord upon
notice from Tenant shall defend the same at Landlord's
expense by counsel approved in writing by Tenant.
Notwithstanding any of the foregoing, however, in no event
whatsoever shall Landlord be liable for Tenant's lost
profits or Tenant's consequential damages.
(c) Notwithstanding any of the foregoing, because Tenant is
required to insure fully all of its own personal property
and Tenant Improvements, neither Landlord nor any agent,
employee or contractor of Landlord shall be liable to Tenant
for any loss, injury or damage to any personal property of
Tenant or of agent, employee, contractor or invitee of
Tenant. In addition, except to the extend required to be
covered by Landlord's insurance under this Lease, neither
Landlord nor any agent, employee or contractor of Landlord
shall be liable for any damage caused by other lessees or
persons in or about the Building. Similarly, Tenant shall
not be responsible for any damage to the Building, Building
Structure and/or Building Systems to the extent covered by
insurance that Landlord carries or is required to carry
under this Lease.
(d) The indemnities set forth in this Section 20 shall not apply
to the extent any liability or damage is covered by
insurance maintained by Tenant or Landlord. Tenant's
agreement to indemnify and hold Landlord harmless pursuant
to Subparagraph 20(a) and Landlord's agreement to indemnify
and hold Tenant harmless pursuant to Subparagraph 20(c) is
not intended to and shall not relieve any insurance carrier
of its obligations under policies required to be or actually
carried by Landlord or Tenant pursuant to this Lease to the
extent that such policies cover the results of such acts,
omissions or willful misconduct. Failure by Landlord or
Tenant to carry required insurance shall automatically be
deemed to be the covenant and agreement of Landlord or
Tenant, respectively, to self-insure such required coverage,
with full waiver of subrogation.
(e) Notwithstanding anything to the contrary in this Lease,
Tenant's and Landlord's obligations under this Section 20
shall survive the expiration or earlier termination of this
Lease.
21. DAMAGE TO TENANT'S PROPERTY.
Subject to the provisions of Section 20 above and the insurance
provisions of Section 22, Landlord or its agents shall not be liable
for (i) any damage to any property entrusted to employees of the
Building, (ii) loss or damage to any property by theft or otherwise,
(iii) any injury or damage to persons or property resulting from
insurrection, riots, military activity, fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak from any
part of the Building or from the pipes, appliances or plumbing work
therein or from the roof, street or subsurface or from any other place
or resulting from dampness or any other cause whatsoever, except as
otherwise provided in this Lease. Neither Landlord nor its agents shall
be liable for any interference with or diminution of light, air, view
or other incorporeal hereditaments, whatever the cause. The occurrence
of any such interference or diminution shall not entitle Tenant to any
reduction in any rents or charges due Landlord hereunder. Tenant shall
give prompt notice to Landlord in case of fire or accidents in the
Premises or in the Building or of defects therein.
22. INSURANCE.
(a) Tenant shall during the Term and during all other times Tenant
or its agents, employees or contractors are on the Premises,
including during the period of Tenant's construction of the
Tenant Improvements, at Tenant's sole cost and expense, keep
in full force and effect the following insurance:
(1) Standard form property insurance insuring against the
perils of fire, extended coverage, vandalism,
malicious mischief ("All-Risk"), sprinkler leakage,
flood and earthquake. This insurance policy shall be
upon the Tenant
Improvements, all property owned by Tenant or that
was installed at Tenant's expense, and which is
located in the Building including, without
limitation, furniture, fittings, installations,
fixtures, and any other personal property, in an
amount not less than one hundred percent (100%) of
the full replacement cost thereof. Neither Landlord
nor Landlord's mortgagee shall incur any liability
whatsoever if such insurance does not cover
sufficiently ninety percent (90%) of the full
replacement cost of such property. Such policy shall
name Landlord and any mortgagees of Landlord of which
Tenant has notice as insured parties loss payees, as
their respective interests may appear.
(2) Commercial General Liability Insurance insuring
Tenant against any liability arising out of the
lease, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance
shall be in the amount of Two Million Dollars
($2,000,000) Combined Single Limit for injury to, or
death of one or more persons in an occurrence, and
for damage to tangible property (including loss of
use) in an occurrence, with such liability amount to
be adjusted from year to year (but not more often
than once a year) to reflect increases in the CPI;
provided, however, in no event shall such increases
require Tenant to carry a greater amount of insurance
than is generally carried by Comparable Tenants of
Comparable Buildings. The policy shall insure the
hazards of the Premises and Tenant's operations
thereon, independent contractors and contractual
liability (covering the indemnity contained in
Section 20 above) and shall name Landlord and
Landlord's interested parties as an additional
insured.
(3) Worker's Compensation and Employer's Liability
insurance of not less than One Million
Dollars ($1,000,000).
(4) Such other insurance as is generally carried by
Comparable Tenants of Comparable Buildings.
(b) All policies required to be carried by Tenant or Landlord
hereunder shall: (1) be taken out with insurance companies
holding a General Policyholders Rating of "A-" and a
Financial Rating of "IX" or better, as set forth in the most
current issue of Best's Insurance Guide (or the equivalent
under any substitute guide produced by Best); (2) contain a
cross-liability provision; and (3) contain a provision that
the insurance provided hereunder shall be primary and
non-contributing with any other insurance. On or before the
Commencement Date, each party shall deliver to the other
party copies of policies or certificates evidencing the
existence of the amounts and forms of coverage. No such
policy shall be cancelable or reducible in coverage except
after thirty (30) days' prior written notice to the other
party. Except Tenant shall, within thirty (30) days prior to
the expiration of such policies, furnish the Landlord with
renewals or "binders" thereof. Nothing in this Lease shall
prevent Tenant from taking out the insurance required
hereunder under a blanket insurance policy or policies
covering other properties as well as the Premises provided
that the total amount and quality of insurance allocated to
the Premises are not less than that required hereunder and
the insurance benefits to the Building and Landlord are not
reduced thereby. Nothing contained in this Section 22 shall
be construed as a limitation of Tenant's liability
hereunder.
(c) During the Term, Landlord shall insure the Base Building
(including the Building Structure and Building Systems and
Common Areas of the Building) (excluding any property which
Tenant is obligated to insure under Subparagraphs 22(a) and
(b) above) and the Common Areas of the remainder of the
Project (to the extent exclusively controlled by Landlord)
against damage with All-Risk insurance in an amount not less
than one hundred percent (100%) of the full replacement
value of the Development and Project Common Areas (to the
extent exclusively controlled by Landlord) and related
offsite improvements, commercial general liability insurance
covering Landlord against claims for bodily injury or death
or property damage occurring in, upon or about the
Development with a combined single limit of not less than
$5,000,000 per occurrence, and employer's liability
insurance with coverage of not less than $1,000,000 and
workers' compensation insurance covering Landlord's
employees in an amount not less than that required by
applicable laws or regulations. In addition to the
foregoing, Landlord shall insure against all risks and all
other hazards as are customarily insured against, in
Landlord's reasonable judgment, by others similarly situated
and developing or operating like properties, including,
without limitation, insurance against business interruption
and rent loss, insurance against loss, damage or destruction
caused by machinery breakdown, by fire and the perils
specified in the standard extended coverage endorsement,
vandalism and malicious mischief, and by sprinkler, gas,
water, steam and sewage leakage, and for such amounts and
upon such terms and conditions as would a prudent owner of
property similar to the Development in Landlord's reasonable
judgment. Landlord shall reevaluate the levels of insurance
required hereunder no less frequently than once every two
(2) years. Landlord may, but shall not be obligated to,
obtain and carry any other form or forms of insurance as it
or Landlord's mortgagees may determine advisable. Tenant
acknowledges that it has no right to receive any proceeds
from any insurance policies carried by Landlord in
connection with any incident in the Common Areas for which
there is liability to third parties except to the extent
Tenant is not covered under insurance it is required to
obtain pursuant to Subparagraph 22(a)(ii), and provided
Landlord (and any mortgagee of Landlord) has received
insurance proceeds adequate to cover all of Landlord's
liabilities, costs and expenses in connection with said
incident. Landlord is not required to carry insurance of any
kind on Tenant's furniture or furnishings or on any
fixtures, equipment, improvements or appurtenances of Tenant
under this Lease, and Landlord shall not be obligated to
repair any damages thereto or replace the same except as
specifically provided for in this Lease.
(d) Tenant will not keep, use, sell or offer for sale in or upon
the Premises any article which may be prohibited by any
insurance policy periodically in force covering the
Building. If Tenant's occupancy or business in, or on, the
Premises, whether or not Landlord has consented to the same,
results in any increase in premiums above what would be
required by general and customary tenants for the insurance
periodically carried by Landlord with respect to the
Building, then Tenant shall pay any such increase in
premiums as additional rent within thirty (30) days after
being billed therefor by Landlord. Landlord shall use its
commercially reasonable efforts to obtain from Landlord's
insurer written notice that the increase in premiums is
attributable to Tenant or Tenant's use of the Premises.
Absent such written notice from Landlord's insurer, a
schedule issued by the organization computing the insurance
rates on the Building or the Tenant Improvements showing the
various components of such rate, shall be conclusive
evidence of the several items and charges which make up such
rate. Tenant shall promptly comply with all reasonable
requirements of the insurance authority or any present or
future insurer relating to the Premises provided Tenant has
received prior written notice of such requirements.
(e) If any of Landlord's insurance policies shall be canceled or
cancellation shall be threatened in writing or the coverage
thereunder reduced or threatened in writing to be reduced in
any way because of the use of the Premises or any part
thereof, other than the uses expressly permitted hereunder,
by Tenant or any assignee or subtenant of Tenant or by
anyone Tenant permits on the Premises and, if Tenant fails
to remedy the condition giving rise to such cancellation,
threatened cancellation, reduction of coverage or threatened
reduction of coverage, increase in premiums, or threatened
increase in premiums, within two (2) business days after
notice thereof, Landlord may, at its option, enter upon the
Premises and attempt to remedy such condition, and Tenant
shall promptly pay the cost thereof to Landlord as
additional rent. Landlord shall not be liable for any damage
or injury caused to any property of Tenant or of others
located on the Premises resulting from such entry except to
the extent caused by Landlord's active negligence or willful
misconduct. If Landlord is unable, or elects not to remedy
such condition, then Landlord shall have all of the remedies
provided for in this Lease in the event of a default by
Tenant.
(f) Landlord and Tenant hereby release and relieve the other and
waive their entire right of recovery against the other for
loss or damage arising out of or incident to the perils
insured against, or required to be insured against, under
this Section 22, which perils occur in, on or about the
Project, whether due to the negligence of Landlord or Tenant
or their respective agents, employees, contractors and/or
invitees. Landlord and Tenant shall, upon obtaining the
policies of insurance required hereunder, give notice to
their insurer that this mutual waiver of subrogation is
provided in this Lease and shall thereafter obtain and
provide evidence of the waiver by their respective insurance
carriers of any right of subrogation against the other. If
any such policy can be obtained with a waiver of subrogation
only upon payment of an additional premium, the party whose
duty it is to pay for such insurance shall pay such
additional premium.
(g) If the Lease is terminated because of damage to or
destruction of the Building pursuant to Section 23, and the
Premises have also been damaged, Tenant will pay to
Landlord, within thirty (30) days of its receipt of the
same, all of its insurance proceeds, if any, to the extent
relating to the Tenant Improvements and alterations paid for
by Landlord (but not to Tenant Improvements and alterations
paid for by Tenant, Tenant's removable trade fixtures,
equipment, furniture or other personal property of Tenant)
in the Premises.
23. DAMAGE OR DESTRUCTION.
23.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or
destruction to all or any portion of the Premises
which is not Premises Total Destruction. "Building
Partial Damage" shall mean damage or destruction to
the Building which is not Building Total Destruction.
(b) "Premises Total Destruction" shall mean damage or
destruction to all or any portion of the Premises or
Building to the extent that 50% or more of the
Premises are rendered unusable and untenantable for
twelve (12) months or more. "Building Total
Destruction" shall herein mean damage or destruction
to the Building to the extent that either (i) the
cost of repair is 25% or more of the then replacement
cost of the Building as a whole; or (ii) the Building
cannot be restored to substantially the same
condition as it was in prior to such damage or
destruction.
(c) "Insured Loss" shall herein mean damage or
destruction to the Development which was caused by an
event covered by insurance or required by this Lease
to be covered by insurance or for which the uninsured
cost to repair (including the deductible) is less
than $50,000.
(d) "Uninsured Loss" shall mean damage or destruction to
the Development which was caused by an event not
covered by or not required to be covered by insurance
and for which the uninsured cost to repair is equal
to or greater than $50,000. Such $50,000 amounts
above shall be increased or decreased annually from
and after the Commencement Date by a percentage
equivalent to the aggregate percentage change in the
CPI from and after such date, or if no such index
exists, by a mutually agreeable method of adjusting
such amount to reflect the equivalency of
Commencement Date dollars.
23.2 Partial Damage - Insured Loss. Subject to the provisions of
Subparagraphs 23.4 and 23.5, if at any time during the Term
there is damage which is an Insured Loss and which falls into
the classification of Premises Partial Damage or Building
Partial Damage, Landlord shall, at Landlord's expense,
diligently proceed to repair such damage, but not the Tenant
Improvements or Tenant's personal property. Tenant shall, at
Tenant's expense, diligently proceed to repair the Tenant
Improvements and Tenant's personal property and this Lease
shall continue in full force and effect; provided, that
Landlord shall pay to Tenant all insurance proceeds received
by Landlord, if any, relating to the Tenant Improvements.
Tenant's repair of the Tenant Improvements shall be treated as
a Tenant alteration for purposes of Landlord's approval of
such repair except to the extent there are no changes to the
Tenant Improvements.
23.3 Partial Damage - Uninsured Loss. Subject to the provisions of
Subparagraphs 23.4 and 23.5, if at any time during the Term
there is damage which is an Uninsured Loss and which falls
within the classification of Premises Partial Damage or
Building Partial Damage, Landlord may at Landlord's option
either (i) repair such damage (other than the Tenant
Improvements and Tenant's personal property) as soon as
reasonably possible at Landlord's expense, in which event this
Lease shall continue in full force and effect, or (ii) if
Landlord does not elect to repair such damage, give notice to
Tenant within fifty (50) days after the date of the occurrence
of such damage of Landlord's intention to terminate this
Lease, as of the date of the occurrence of such damage with
respect to any unoccupyable portions of the Premises and
effective four (4) months after receipt by Tenant of such
notice for the balance of the Premises. If Landlord elects to
give such notice of Landlord's intention to terminate this
Lease, Tenant shall have the right within thirty (30) days
after the receipt of such notice to give notice to Landlord of
Tenant's intention to reimburse Landlord for the repair of
such damage without contribution or reimbursement from
Landlord, in which event this Lease shall continue in full
force and effect, and Landlord shall proceed to make such
repairs as soon as reasonably possible following its receipt
of adequate funding or assurances to Landlord's reasonable
satisfaction of the same from Tenant. If Tenant does not give
such notice within such thirty (30) day period, this Lease
shall be canceled and terminated as of the date of the
occurrence of such damage with respect to the unoccupyable
portions of the Premises and effective four (4) months after
receipt by Tenant of such notice for the balance of the
Premises. If Landlord elects to repair such damage, Tenant
shall promptly repair and restore the Tenant Improvements.
23.4 Total Destruction. If at any time during the Term there is
damage, whether or not an Insured Loss (including destruction
required by any authorized public authority), which falls into
the classification of Building Total Destruction or Premises
Total Destruction, Landlord or Tenant shall have the right to
terminate this Lease by notice to the other within ninety (90)
days after the date of the occurrence of such damage as of the
date of the destruction, effective four (4) months after
receipt by Tenant of such notice for the balance of the
Premises. If neither Landlord nor Tenant exercises the right
to so terminate, Landlord shall, at Landlord's expense, repair
such damage, other than the Tenant Improvements and Tenant's
personal property, as soon as reasonably possible.
23.5 Damage Near End of Term.
(a) In addition to any other right of termination which either
party may have under this Section 23, but subject to
Subparagraph 23.5(b), if at any time during the last
twenty-four (24) months of the Term there is damage, whether
or not an Insured Loss, which affects any floor of the
Premises such that fifty percent (50%) or more of such floor
cannot be occupied for business purposes, and repair or
restoration of such damage would take, in Landlord's
reasonable judgment, more than the shorter of twelve (12)
months or one-half of the time left in the Term from the
date of the occurrence of the damage, Landlord or Tenant may
at its option terminate this Lease as to such floor or
floors as of the date of occurrence of such damage by giving
notice to the other party of its election to do so within
thirty (30) days after the date of occurrence of such
damage; provided further, if such damage makes thirty-five
percent (35%) or more of the Premises unusable and
untenantable and repairs or restoration of such damage would
take, in Landlord's reasonable judgment, more than the
shorter of six (6) months or one-half of the time left in
the Term from the date of the occurrence of the damage,
Landlord or Tenant may, at its option, terminate this Lease
as of the date of occurrence of such damage by giving notice
to the other party of its election to do so within thirty
(30) days after the date of occurrence of such damage.
(b) Notwithstanding Subparagraph 23.5(a), if Tenant has an
option to extend this Lease, and the time within which said
option may be exercised has not yet expired, Tenant may
exercise such option, if it is to be exercised at all, no
later than thirty (30) days after receipt of the notice
pursuant to Subparagraph 23.5(a). If Tenant duly exercises
such option during such 30-day period, Landlord shall, if
otherwise required under this Section 23, at Landlord's
expense, repair such damage affecting the portion of the
Premises damaged as soon as reasonably possible and this
Lease shall continue in full force and effect. If Tenant
fails to exercise such option during such 30-day period,
then such option shall automatically expire and this Lease
shall terminate on the expiration of such 30-day period
notwithstanding any term or provisions in the option to the
contrary. The percentages with respect to the Premises as
stated in this Section 23 are intended to exclude any
expansion space or other space which Tenant may have the
right to lease but which are not part of the Premises at the
time of the damage or destruction.
23.6 Notice of Repair Time. Within sixty (60) days after the date
of occurrence of any damage, Landlord shall notify Tenant,
upon Tenant's request for such notice, whether or not repair
of such damage will require more than twelve (12) months.
23.7 Abatement of Rent; Tenant's Remedies.
(a) Intentionally omitted.
(b) If there is damage described in Subparagraphs 23.2 or 23.3,
and Landlord repairs or restores the Premises, Building or
the Development (other than the Tenant Improvements and
Tenant's personal property), Landlord shall (i) diligently
prosecute insurance claims and diligently seek all necessary
governmental permits and authorizations necessary for such
repair or restoration; (ii) commence such repair or
restoration as soon as practicable; and (iii) diligently
proceed to complete such repair or restoration. Landlord
shall repair or restore in a workmanlike manner, using
materials and workmanship consistent with the original
construction of the Development.
(c) If Landlord shall be obligated or shall elect to repair or
restore the Premises under the provisions of this Section 23
and (i) shall not diligently prosecute insurance claims and
diligently seek all necessary governmental permits and
authorizations or (ii) shall not commence such repair or
restoration (commencement for purposes of the foregoing
meaning actually beginning new construction and not merely
the removal of damaged items or debris) within sixty (60)
days after insurance claims have been settled, insurance
proceeds have been received or set aside for such repair or
restoration and all necessary governmental permits and
authorizations have been obtained, or (iii) shall not
provide Tenant with notice within fifteen (15) days after
Tenant's written request therefor of Landlord's good faith
reasons for not proceeding with the prosecution of such
insurance claims or the commencement of such construction
(and including within said request a statement that Tenant
has the right to terminate this Lease if Tenant does not
receive a good faith response from Landlord within such
fifteen (15) day period), or (iv) the repair has not been
completed within twelve (12) months from the date of damage,
Tenant may at Tenant's option terminate this Lease by giving
Landlord notice of Tenant's election to do so at any time
prior to the commencement of such repair or restoration. In
such event, this Lease shall terminate as of the date of
such notice.
23.8 Inconsistent Statutes. The provisions of this Lease, including
this Section 23, constitute an express agreement between
Landlord and Tenant with respect to any and all damages to, or
destruction of, all or any part of the Premises, Building or
the Development and any statute or regulation of the State of
California, including without limitation Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any
rights or obligations concerning damage or destruction in any
absence of an express agreement between the parties, and any
similar statute or regulation now or hereafter in effect,
shall have no application to this Lease or to any damage to or
destruction of all or any part of the Premises, the Building
or the Development. In addition, Tenant hereby waives the
provisions of Sections 1941 and 1942 of the California Civil
Code, which Sections permit Tenant to make repairs at
Landlord's expense.
24. EMINENT DOMAIN.
(a) In case all of the Premises or such part thereof as shall
substantially interfere with Tenant's use and occupancy of
the Premises shall be taken for any public or quasi-public
purpose by any lawful power or authority by exercise of the
right of appropriation, condemnation or eminent domain
(generally referred to herein as a "taking"), or sold to
prevent such taking, either party shall have the right to
terminate this Lease effective as of the date possession is
required to be surrendered to said authority. Tenant shall
not assert any claim against Landlord for any compensation
because of such taking, and Landlord shall be entitled to
receive the entire amount of any award without deduction for
any estate or interest of Tenant except that Tenant's right
to receive compensation or damages from the condemning
authority for Tenant's personal property and fixtures and
reasonable moving expenses and the right to recover from the
condemning authority one hundred percent (100%) of the
"Bonus Value" of the leasehold estate which shall be equal
to the difference between the Rental Rate payable by Tenant
under the Lease and the rate established by the condemning
authority as an award for compensation purposes shall not be
affected in any manner hereby. In the event the amount of
property or the type of estate taken shall not substantially
interfere with the conduct of Tenant's business, Landlord
shall be entitled to the entire amount of the award without
deduction for any estate or interest of Tenant, Landlord
shall restore the Premises to substantially their same
condition prior to such partial taking, and a proportionate
rent abatement shall be made corresponding to the time
during which, and to the part of the Premises of which,
Tenant shall be so deprived on account of such taking and
restoration. Nothing contained in this Subparagraph shall be
deemed to give Landlord any interest in any award made to
Tenant for the taking of personal property and fixtures
belonging to Tenant.
(b) In the event of a taking of the Premises or any part thereof
for temporary use, (i) this Lease shall be and remain
unaffected thereby and rent shall not xxxxx, except as
expressly provided herein, and (ii) Tenant shall be entitled
to receive for itself such portion or portions of any award
made for such use with respect to the period of the taking
which is within the Term, provided that if such taking shall
remain in force at the expiration or earlier termination of
this Lease, Tenant shall then pay to Landlord a sum equal to
the reasonable cost of performing Tenant's obligations under
Section 15 above with respect to surrender of the Premises
and upon such payment shall be excused from such
obligations.
(c) Landlord may, with prior written notice to Tenant, agree to
sell and/or convey to any condemnor presenting a bona fide
threat of condemnation or eminent domain of the Premises, the
Building, the Development or any portion thereof sought by
condemnor, free from this Lease and the rights of Tenant
hereunder without first requiring that any action or
proceeding be instituted or, if instituted, pursued to a
judgment. Nothing herein is intended to affect Tenant's rights
of recovering from any condemnor the value of Tenant's
personal property and movable trade fixtures and the cost of
Tenant's moving expenses.
(d) In the event of a taking that does not result in a termination
of this Lease as to the entire Premises, the Annual Basic Rent
and Operating Expenses shall xxxxx in proportion to the
portion of the Premises taken or rendered untenantable by such
taking. Tenant and Landlord hereby waive and release their
rights under Section 1265.130 of the California Code of Civil
Procedure or any similar statute now or hereafter in effect.
25. DEFAULTS AND REMEDIES.
(a) The occurrence of any one or more of the following events
shall constitute a default hereunder by Tenant:
(1) The failure by Tenant to make any payment of rent or
additional rent or any other payment required to be
made by Tenant hereunder, within seven (7) calendar
days after written notice thereof from Landlord to
Tenant that such payment was not paid when due. Any
such notice shall be in addition to, and not in lieu
of, any notice required under California Code of
Civil Procedure Section 1161 et. seq. regarding
unlawful detainer actions.
(2) The failure by Tenant to observe or perform any
provision of this Lease to be observed or performed
by Tenant, other than as stated in Subparagraph
25(a)(1) or Subparagraph 26(a), where such failure
continues for twenty (20) days after written notice
thereof from Landlord to Tenant; provided, however,
if the nature of Tenant's failure is such that more
than twenty (20) days are reasonably required for its
cure, then Tenant shall not be deemed to be in
default if Tenant shall commence such cure within
twenty (20) days after notice of such failure is
given to Tenant, and Tenant thereafter diligently and
continuously prosecutes such cure to completion. Any
such notice shall be in addition to, and not in lieu
of, any notice required under California Code of
Civil Procedure Section 1161 et. seq. regarding
unlawful detainer actions.
(b) In the event of any such default by Tenant, in addition to any
other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder. In the event that
Landlord shall elect to so terminate this Lease then Landlord
may recover from Tenant:
(1) the worth at the time of award of any unpaid rent
which had been earned at the time of
such termination; plus
(2) 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 Tenant proves could
have been reasonably avoided; plus
(3) 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 Tenant proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's
failure to perform Tenant's obligations under this
Lease or which in the ordinary course of things would
be likely to result therefrom (including without
limitation reasonable attorneys' and accountants'
fees, costs of alterations of the Premises, interest
costs and brokers' fees incurred upon any reletting
of the Premises);
As used in Subparagraphs 25(b)(1) and (2) above, the
"worth at the time of award" is computed by allowing
interest at the maximum rate permitted by law. As
used in Subparagraph 25(b)(3) above, the "worth at
the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one
percent (1%).
(c) In the event of any such default by Tenant, Landlord shall
additionally have the right, with or without terminating this
Lease, to reenter the Premises and remove all persons and
property from the Premises; such property may be removed and
stored in a public warehouse or elsewhere at the cost of and
for the account of Tenant. No reentry or taking possession of
the Premises by Landlord pursuant to this Subparagraph 25(c)
shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant
or unless the termination thereof is decreed by a court of
competent jurisdiction.
If Landlord does not elect to terminate this Lease as provided
above, Landlord may from time to time, without terminating
this Lease, either recover all rent as it becomes due or relet
the Premises or any part thereof for the Term on terms and
conditions as Landlord in its good faith judgment may deem
advisable with the right to make alterations and repairs to
the Premises.
In the event that Landlord shall elect to so relet, then
rentals received by Landlord from such reletting shall be
applied: first, to the payment of any indebtedness other than
rent due hereunder from Tenant to Landlord; second, to the
payment of any cost of such reletting; third, to the payment
of the cost, including interest expense, of any alterations
and repairs to the Premises; fourth, to the payment of rent
due and unpaid hereunder and the residue, if any, shall be
held by Landlord and applied to payment of future rent as the
same may become due and payable hereunder. Should that portion
of such rentals received from such reletting during any month,
which is applied to the payment of rent hereunder, be less
than the rent payable during that month by Tenant hereunder,
then Tenant shall pay such deficiency to Landlord within
thirty (30) days after demand therefor by Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and
expenses incurred by Landlord in such reletting or in making
such alterations and repairs not covered by the rentals
received from such reletting.
(d) Tenant hereby expressly waives any and all rights to
possession of the Premises granted by or under any present or
future Applicable Law in the event of Tenant's being lawfully
physically evicted or dispossessed, or in the event Landlord's
lawfully obtaining actual possession of the Premises, by
reason of the violation by Tenant of any of the terms,
covenants, conditions, provisions or agreements of this Lease.
(e) All rights, options and remedies of Landlord contained in
this Lease shall be construed and held
to be cumulative, and no one of them shall be exclusive of
the other, and Landlord shall have the right to pursue any
one or all of such remedies or any other remedy or relief
which may be provided by law, whether or not stated in this
Lease. No waiver of any default of Tenant hereunder shall be
implied from any acceptance by Landlord of any rent or other
payments due hereunder or any omission by Landlord to take
any action on account of such default if such default
persists or is repeated, and no express waiver shall affect
defaults other than as specified in said waiver. The consent
or approval of Landlord to or of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to waive
or render unnecessary Landlord's consent or approval to or
of any subsequent similar acts by Tenant.
In the event of a breach or threatened breach by Tenant or
Landlord of any of the terms, covenants, conditions,
provisions or agreements of this Lease, Tenant or Landlord, as
the case may be, shall, in addition to all of their respective
rights and remedies, have the right of injunction, and where
it is determined by judicial authority that a breach of this
Lease has or was about to have occurred, the breaching party
shall pay the premium for any bond required in connection with
such injunction.
26. ASSIGNMENT AND SUBLETTING.
(a) Except as expressly stated below, Tenant shall not voluntarily
assign or encumber its interest in this Lease or in the
Premises or sublease all or any part of the Premises, or allow
any other person or entity to occupy or use all or any part of
the Premises. Any assignment, encumbrance or sublease which
does not comply with the terms and provisions of this Section
26 shall be voidable at Landlord's election, and, if Landlord
shall have notified Tenant of Landlord's disapproval of such
assignment, encumbrance or sublease, then such assignment,
encumbrance or sublease by Tenant shall constitute a default.
(1) Without Landlord's consent, Tenant may assign this
Lease in its entirety or sublet all or any portion of
the Premises to: (w) any entity resulting from a
merger or consolidation with Tenant or any
organization purchasing all or substantially all of
Tenant's assets; or (x) any entity succeeding to all
or substantially of the business or assets of Tenant;
or (y) any entity which acquires all or substantially
all of Tenant or (z) any Affiliate of Tenant, as
defined below (collectively, "Permitted Assignee");
provided, that in each of the foregoing instances,
such other entity shall assume in writing all of
Tenant's obligations hereunder; provided further,
that such assignment or subletting will not cause a
material denigration of Tenant's financial condition,
which in Landlord's reasonable opinion would affect
Tenant's ability to fulfill its respective
obligations as they become due. The term "Affiliate",
means any entity directly or indirectly, through one
or more intermediaries, controlling, " as used in
the immediately preceding sentence, means the right
to the exercise, directly or
indirectly, of more than fifty percent (50%) of the
voting rights attributable to the interest in the
controlled entity. No consent to an assignment,
encumbrance or sublease shall constitute a further
waiver of the provisions of this Section 26. In the
event of an assignment or subletting pursuant to this
Subparagraph 26(a)(i), Tenant shall retain 100% of
any and all Net Profits (as defined below).
(2) Subject to the terms and conditions stated herein,
Tenant may assign or sublease any portion of the
Premises to any entity which is not a Permitted
Assignee with Landlord's prior written approval,
which approval shall not be unreasonably withheld,
conditioned or delayed beyond the later of thirty
(30) days after Landlord's receipt of Tenant's
request or ten (10) days after Landlord's receipt of
all information reasonably requested by Landlord and
information provided herein required in connection
with such assignment or sublease. No consent to any
such assignment or sublease shall constitute a
further waiver of the provisions of this Section 26.
In such event, Tenant and Landlord shall evenly
divide any and all Net Profits applicable to the
Term.
"Net Profits" means the gross revenue, including
without limitation, any and all rent, fees, charges
and other consideration received by Tenant from any
assignee or sublessee with respect to the space
covered by the sublease or the assignment during the
sublease term or during the assignment ("Transferred
Space") (as opposed to the sale of its business but
based on the then Fair Market Rental Rate of the
Transferred Space) less: (a) the gross revenue paid
to Landlord by Tenant during the period of the
sublease term or during the assignment with respect
to the Transferred Space; (b) the gross revenue as to
the Transferred Space paid to Landlord by Tenant for
all days the Transferred Space was vacated from the
date that Tenant first vacated the Transferred Space
until the date the assignee or sublessee was to pay
Rent; (c) any improvement allowance or other economic
concession (planning allowance, moving expenses,
etc.), paid by Tenant to sublessee or assignee; (d)
brokers' commissions; (e) attorneys' fees; (f) lease
takeover payments; (g) costs of advertising the space
for sublease or assignment; and (h) unamortized cost
of initial and subsequent improvements to the
Premises by Tenant; provided, however, under no
circumstance shall Landlord be paid any Profits until
Tenant has recovered all the items set forth in
subparts (a) through (h) for such Transferred Space,
it being understood that if in any year the gross
revenues, less the deductions set forth in subparts
(a) through (i) ("Net Revenues"), are less than any
and all costs actually paid in assigning or
subletting the affected space (collectively,
"Transaction Costs"), the amount of the excess
Transaction Costs shall be carried over to the next
year and then deducted from Net Revenues with the
procedure repeated until a Profit is achieved.
(3) It is agreed that fifty percent (50%) of all Net
Profits are expressly reserved from the grant of
Tenant's leasehold estate hereunder except to the
extent otherwise expressly provided above. Landlord
shall have the right to fifty percent (50%) of Net
Profits regardless of whether (i) the instrument
effecting any assignment or sublease provides the
right to Landlord, or (ii) Landlord has approved such
an instrument which fails to provide such right to
Landlord.
(4) During the Term, Landlord shall not have the right to
recapture any portion of the Premises that Tenant
proposes to assign or sublease.
(b) In connection with any assignment or sublease where
Landlord's consent or approval is required, Tenant shall
notify Landlord in writing of Tenant's intent to assign,
encumber or sublease this Lease, the name of the proposed
assignee or sublessee, information concerning the financial
responsibility of the proposed assignee or sublessee and the
terms of the proposed assignment or subletting. Where
Landlord's approval of an assignment or sublease is
required, Landlord's disapproval shall be deemed reasonable
if it is based on Landlord's analysis of (1) the proposed
assignee's or sublessee's credit character and business or
professional standing or, (2) whether the assignee's or
sublessee's use and occupancy of the Premises will be
consistent with Subparagraph 1(u) and Section 8 above;
provided, however, that the basis for Landlord's disapproval
shall not be limited to those set forth in clauses (1) and
(2) above, but Landlord's approval shall not be unreasonably
withheld. Notwithstanding the foregoing, it shall be
unreasonable for Landlord to withhold its consent herein on
the basis that the proposed transferee is an existing or
prospective tenant of the Building or the Project.
Furthermore, Landlord shall not withhold its consent, if
such consent is otherwise required of Landlord, to any
assignment or sublease which Tenant has successfully
negotiated with any other tenant or occupant of the Building
or the Project, provided Tenant is the transferee.
(c) As a condition for granting its consent to any assignment,
encumbrance or sublease, Landlord may require that the
assignee or sublessee remit directly to Landlord on a
monthly basis, all monies due to Tenant by said assignee or
sublessee if Landlord has a reasonable and good faith reason
for the requirement of such condition based on circumstances
relating to Tenant or the transferee. A condition to
Landlord's consent to any assignment, transfer or
hypothecation of this Lease shall be the delivery to
Landlord of a true copy of the fully executed instrument of
assignment, transfer or hypothecation, and the delivery to
Landlord of an agreement executed by the assignee in form
and substance satisfactory to Landlord and expressly
enforceable by Landlord, whereby the assignee assumes and
agrees to be bound by all the applicable terms and
provisions of this Lease and to perform all of the
applicable obligations of Tenant hereunder. As a condition
to Landlord's consent to any sublease, such sublease shall
provide that it is subject and subordinate to this Lease and
to all mortgages; that Landlord shall have the right to
enforce the terms and provisions of this Lease directly
against such sublease to the extent applicable to the
sublease space; that Landlord may enforce the provisions of
the sublease, including collection of rent; that in the
event of termination of this Lease for any reason, including
without limitation a voluntary surrender by Tenant, or in
the event of any reentry or repossession of the Premises by
Landlord, Landlord may, at its option, either (i) terminate
the sublease, unless Landlord has entered into a
non-disturbance agreement with such sublessee, or (ii) take
over all of the right, title and interest of Tenant, as
sublessor, under such sublease, in which case such sublessee
shall attorn to Landlord and Landlord shall recognize such
sublease at the rate per RSF that is equal to the higher of
the rate per RSF in this Lease or the rate per RSF in the
Sublease, but that nevertheless Landlord shall not (1) be
liable for any previous act or omission of Tenant under such
sublease, (2) be subject to any defense or offset previously
accrued in favor of the sublessee against Tenant, or (3) be
bound by any previous modification of any sublease made
without Landlord's written consent, or by any previous
prepayment by sublessee of more than one month's rent. Such
sublessee shall execute a written agreement with Landlord
acknowledging such sublessee's agreement to the foregoing.
Landlord's rights to so enforce the terms of this Lease and
such sublease as against such sublessee shall not in any way
be construed as expanding or adding to any of the rights of
such sublessee under any such sublease, nor a waiver or
release of Tenant's obligations under the terms of this
Lease.
(d) Landlord's waiver or consent to any assignment or subletting
shall not relieve Tenant or any assignee or sublessee from any
obligation under this Lease whether or not accrued. No consent
to an assignment, encumbrance or sublease shall constitute a
further waiver of the provisions of this Section 26.
(e) Notwithstanding anything to the contrary in the Lease, Tenant
shall not be deemed to have waived any of its rights under
California Civil Code Section 1995.310, except to the extent
inconsistent with the terms and provisions of this Section 26.
(f) Tenant may allow any person or company which is a client or
customer of Tenant or which is providing service to Tenant
or one of Tenant's clients to occupy as a permittee certain
portions of the Premises without such occupancy being deemed
an assignment or subleasing (or otherwise constituting a
leasehold interests) as long as no new demising walls are
constructed to accomplish such occupancy, such relationship
was not created as a subterfuge to avoid the obligations set
forth in this Section 26, such person or company, together
with all other such persons or companies occupying the
Premises, do not occupy in the aggregate more than fifteen
percent (15%) of the total RSF of the Premises, and such
person or company is not making any payment of rent or other
fee (other than utility or other reimbursable charges such
as photocopy, telephone and food charges) for the use of
such space.
27. SUBORDINATION.
(a) Subject to Section 4, without the necessity of any additional
document being executed by Tenant for the purpose of effecting
a subordination, and at the election of Landlord or any
mortgagee with a lien on the Building or any ground lessor
with respect to the Building, this Lease shall be subject and
subordinate at all times to:
(1) all ground leases or underlying leases which may now
exist or hereafter be executed affecting the Building
or the land upon which the Building is situated or
both; and
(2) the lien of any mortgage or deed of trust which may
now exist or hereafter be executed in any amount for
which the Building, land, ground leases or underlying
leases, or Landlord's interest or estate in any of
said items is specified as security.
(b) Subject to Section 4, Landlord shall have the right to
subordinate or cause to be subordinated any such ground
leases or underlying leases or any such liens to this Lease.
In the event that any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust
is foreclosed or a conveyance in lieu of foreclosure is made
for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the
successor-in-interest to Landlord, and, in such event,
Tenant's right to possession of the Premises shall not be
disturbed except in accordance with the terms of this Lease.
Tenant covenants and agrees to execute and deliver, upon
demand by Landlord and consistent with the form attached
hereto as Exhibit "H" (and including therein such other
provisions reasonably required by the ground lessor or
holder of lien) evidencing the priority or subordination of
this Lease with respect to any such ground leases or
underlying leases or the lien of any such mortgage or deed
of trust. Should Tenant fail to sign and return any such
documents within ten (10) business days of request, Tenant
shall be deemed to have fully approved, executed and
delivered such documents, and such documents shall be
binding upon and enforceable against Tenant as if Tenant had
actually duly signed and delivered the same.
28. ESTOPPEL CERTIFICATE.
(a) Within ten (10) business days from and after any written
request which Landlord or Tenant may make from time to time,
the other party shall execute and deliver to the requesting
party a statement, in a form substantially similar to the
form of Exhibit "E" certifying: (i) the date of commencement
of this Lease; (ii) the fact that this Lease is unmodified
and in full force and effect (or, if there have been
modifications hereto, that this Lease is in full force and
effect, and stating the date and nature of such
modifications); (iii) the date to which the rental and other
sums payable under this Lease have been paid; (iv) that
there are no current defaults under this Lease by either
Landlord or Tenant except as specified in the replying
party's statement; and (v) such other commercially
reasonable matters requested by the requesting party.
Landlord and Tenant intend that any statement delivered
pursuant to this Section 28 may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser
of the Building or any interest therein or by any
prospective assignee or sublessee of the Premises.
(b) The non-requesting party's failure to deliver such statement
within such time shall be conclusive upon the non-requesting
party (i) that this Lease is in full force and effect, without
modification except as may be represented by the requesting
party, (ii) that there are no uncured defaults in the
requesting party's performance, and (iii) that not more than
one (1) month's rental has been paid in advance.
29. SIGNS.
29.1 Tenant, at Tenant's sole cost and expense, may initially
install the following signage:
(a) professionally designed identification signs on all
main entrances to the Premises, on each floor that is
open to the general public, and on corridor and/or
exterior doors which open into the Premises.
(b) on the Building directory information board;
(c) top of Building signage provided Tenant at all times
leases and occupies at least two (2) full floors of
the Building;
(d) a non-exclusive exterior monument sign indicating Tenant's
corporate name on the existing monument sign at the Mureau
Road entrance to the Project, as depicted on the Site Plan
as "Monument Sign "A""; Tenant shall be entitled to the top
tenant position thereon, and all other tenant identification
panels and lettering on said Monument Sign "A" shall be no
larger in size than the maximum size which Tenant is allowed
under the terms of this Lease (or under Applicable Law) for
such identification panels and lettering. To the extent
available, Tenant shall have the limited right to place
identification signage on the monument sign at the Las
Virgenes Road entrance to the Project, as depicted on the
Site Plan as "Monument Sign "B,"" once the same is
constructed; provided, however, Tenant's signage on Monument
Sign "B," if any, shall be subordinate to all other signs
thereon which identify the Project, building 7 and/or the
restaurant and retail tenants of the Project, and the size
and location of Tenant's signage on said Monument Sign "B"
shall be subject to Landlord's reasonable approval. Tenant's
signage rights herein shall be at all times subject to
compliance with Applicable Law.
(e) once and for so long as Tenant leases the entire
Building, any other sign or signs that Tenant elects
to install on the Building to the extent permitted by
Applicable Law.
Tenant's signage rights shall be subject to
restrictions imposed by Applicable Law, and shall
otherwise be reasonably satisfactory to Landlord.
29.2 Tenant, at Tenant's sole expense, shall maintain and keep in
good repair all of its signs and connections and shall pay for
all charges required to keep them in good repair and clean
condition. Upon termination of this Lease, Tenant shall
promptly remove all such signs (leaving monument intact) and
repair any damage caused by such removal, at its own expense.
Tenant shall be responsible for all costs associated with the
fabrication, installation, maintenance and repair of the
signage. If Tenant shall fail to keep its exterior signage in
good condition and repair, then Landlord shall have the right
to perform the same after providing Tenant with at least five
(5) business days' notice. If Tenant has not commenced
performance within such five (5) business day period and
thereafter diligently pursued the same to completion, then
Landlord may perform the same at Tenant's sole cost and
expense, which amount shall be payable as "rent" under this
Lease within thirty (30) days after written demand is made on
Tenant.
29.3 Landlord shall use its commercially reasonable efforts to
cooperate with Lessee in obtaining all necessary governmental
approvals and permits for the installation of Tenant's signage
on the Building Project. Tenant shall be responsible for all
materials, labor, installation, maintenance and utility costs
with respect to such signs. At the termination of this Lease,
unless Landlord otherwise requires, Tenant shall remove such
signs and repair any damage to the Building caused thereby at
Tenant's sole cost and expense.
29.4 Provided Tenant leases at least two (2) entire floors of the
Building, Tenant shall have the sole and exclusive sign rights
attributable to the Building and Landlord shall not permit any
other signs in or on the Building except directional signs and
signs required by law. If Tenant leases at least one (1)
entire floor of the Building, but less than two (2) entire
floors, Tenant shall have the non-exclusive right to place its
signs in and on the Building in proportion to the RSF then
leased by Tenant in the Building over the total RSF of the
Building. In the event that Tenant leases less than one (1)
entire floor of the Building, then Tenant shall immediately
remove, at Tenant's sole cost and expense, the exterior
building signs constructed pursuant hereto, promptly repair
any damage caused thereby, and Tenant shall no longer be
entitled to place identification signage on the Building
exterior, unless otherwise approved by Landlord in writing,
which approval may be withheld at Landlord's sole discretion.
29.5 No sign shall be placed on the Building (except for the
Building directory) which identifies any person, company or
entity which is a "competitor" of Tenant (as hereinafter
defined). Under no circumstances shall the Building be named
after or referred to utilizing the name of a competitor of
Tenant. Tenant may transfer such sign rights to any assignee
or sublessee. For purposes of the Lease, a "competitor" of
Tenant shall be a person or entity whose primary business is
sale of insurance.
30. RULES AND REGULATIONS.
(a) Tenant shall faithfully observe and comply with the "Rules
and Regulations," a copy of which is attached hereto and
marked Exhibit "F", and all reasonable and nondiscriminatory
modifications thereof and additions thereto from time to
time put into effect by Landlord provided Tenant has
received such modifications and additions in writing, to the
extent not inconsistent with the express terms of this
Lease. Landlord covenants that it will use its commercially
reasonable efforts to enforce the Rules and Regulations
against all tenants and in a uniform manner which shall
unreasonably interfere with the normal and customary use of
the Premises by Tenant for normal and customary business
office operations permitted under Subparagraph 1(u).
Landlord shall not be responsible to Tenant for the
violation or non-performance by any other tenant or occupant
of the Building of any of said Rules and Regulations, unless
such other tenant or party is the Landlord, and/or its
agents or its employees, and then only to the extent
expressly provided in this Lease.
(b) Landlord agrees that the Rules and Regulations of the
Building, attached to and made a part of this Lease, shall not
be changed or revised or enforced in any unreasonable way by
Landlord nor enforced or changed by Landlord in such a way as
to interfere with the uses expressly permitted under this
Lease.
31. BANKRUPTCY. In the event that the obligations of Landlord under this
Lease are not performed during the pendency of a bankruptcy or
insolvency proceeding involving Landlord as the debtor, or following
the rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code, then notwithstanding any provision of
this Lease to the contrary, Tenant shall have the right to set off
against Rents next due and owing under this Lease (a) any and all
damages caused by such non-performance of Landlord's obligations under
this Lease by Landlord, debtor-in-possession, or the bankruptcy
trustee, and (b) any and all damages caused by the non-performance of
Landlord's obligations under this Lease following any rejection of
this Lease in accordance with Section 365 of the United States
Bankruptcy Code.
32. SECURITY. Landlord shall provide at Tenant's sole cost, risk and
expense, building security, equipment, personnel, procedures and
systems as Tenant may require, except that the cost of drive-by
security and a key entrance system shall be maintained as an Operating
Expense under Section 6 above. In all events, unless expressly
provided herein, Landlord shall not be liable to Tenant, and Tenant
hereby waives any claim against Landlord, for any unauthorized or
criminal entry of third parties into the Premises or the Building,
including, without limitation, the parking areas of the Development,
and/or for any damage to persons, including, without limitation,
Tenant, its employees, agents, licensees and/or invitees or loss of
property in and about the Premises, the Building, the Development, the
parking area and the approaches, entrances, streets, sidewalks or
corridors thereto, by or from any unauthorized or criminal acts of
third parties, regardless of any action, inaction, failure, breakdown,
malfunction and/or insufficiency of the security measures, practices
or equipment provided by Landlord. Landlord acknowledges that Tenant
shall be permitted at its sole cost and expense to install its own
security system in the Premises subject to the approval of Landlord,
which approval shall not be unreasonably withheld, conditioned or
delayed. Tenant hereby agrees to indemnify and hold Landlord harmless
from and against any and all loss, costs and/or obligations relating
to Tenant's own security system, unless expressly provided herein.
33. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation thereof, shall not work a merger,
and shall, at the option of Landlord, terminate any or all existing
subleases or subtenancies, or may, at the option of Landlord operate
as an assignment to it of any or all subleases or subtenancies. Upon
the expiration or termination of this Lease, Tenant shall peaceably
surrender the Premises and all alterations and additions thereto,
broom clean the Premises, leave the Premises in good order, repair and
condition, reasonable wear and tear and damage from casualty excepted,
and comply with the provisions of Section 15 above. No act or thing
done by either party or such party's agents during the Term shall be
deemed a surrender of the Premises except by written agreement signed
by both parties. No employee of either party shall have any power to
accept or deliver the keys of the Premises prior to the expiration or
earlier termination of this Lease. Upon the expiration or earlier
termination of this Lease, Tenant shall have the right to remove its
personal property and fixtures provided Tenant repairs any damage to
the Premises or the Building as a result thereof.
34. PERFORMANCE BY TENANT. All covenants and agreements to be performed by
Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of
rent, unless expressly provided otherwise herein. If Tenant shall fail
to pay any sum of money owed to any party other than Landlord, for
which it is liable hereunder, or if Tenant shall fail to perform any
other act on its part to be performed hereunder, and such failure
shall continue for thirty (30) days (or shorter time if reasonably
required) after notice thereof by Landlord, Landlord may, without
waiving or releasing Tenant from obligations of Tenant, but shall not
be obligated to, make any such payment or perform any such other act
to be made or performed by Tenant. All sums so paid by Landlord and
all necessary incidental costs together with interest thereon at the
Interest Rate, from the date of such payment by Landlord, shall be
payable to Landlord as additional rent on demand. Tenant covenants to
pay any such sums, and Landlord shall have (in addition to any other
right or remedy of Landlord) all rights and remedies in the event of
the nonpayment thereof as in the case of default by Tenant in the
payment of rent.
35. MORTGAGE AND SENIOR LESSOR PROTECTION. No act or failure to act on the
part of Landlord which would entitle Tenant under the terms of this
Lease, or by law, to be relieved of Tenant's obligations hereunder or
to terminate this Lease, shall result in a release of such obligations
or a termination of this Lease, unless Tenant has satisfied the
provisions set forth on Exhibit "H" concerning the rights of the
beneficiary of any deed of trust or mortgage covering the Premises and
to the lessor under any master or ground lease covering the Building or
the Development or interest therein and whose identity and address
shall have been furnished to Tenant.
36. DEFINITION OF LANDLORD. The term "Landlord," as used in this Lease, so
far as covenants or obligations on the part of Landlord are concerned,
shall be limited to mean and include only the owner or owners, at the
time in question, of the fee title of the Premises or the lessees
under any ground lease, if any. In the event of any transfer,
assignment or other conveyance or transfers of any such title,
Landlord herein named (and in case of any subsequent transfers or
conveyances, the then grantor) shall be automatically freed and
relieved from and after the date of such transfer, assignment or
conveyance of all liability as respects the performance of any
covenants or obligations on the part of Landlord contained in this
Lease thereafter to be performed provided the transferee of such title
shall have assumed and agreed to observe and perform any and all
obligations of Landlord hereunder. Landlord may transfer its interest
in the Premises without the consent of Tenant and such transfer or
subsequent transfer shall not be deemed a violation on Landlord's part
of any of the terms and conditions of this Lease.
37. PARKING.
(a) Tenant shall have the exclusive right to the use of the parking
spaces within the Parking Area, as shown on the Parking Plan
attached hereto as Exhibit "A-IV." Tenant's use of the Parking
Area for parking purposes shall be at no additional charge to
Tenant (except for Operating Expenses relating thereto). All of
such parking spaces shall be designated as "reserved." Landlord
agrees to use its good faith efforts (without the requirement of
Landlord to expend money or commence legal or administrative
action, unless Tenant agrees to bear the cost thereof, and
further agrees to indemnify, protect, defend and hold Landlord
harmless from any liability, cost, expense or loss incurred in
connection therewith) to provide to Tenant up to ten (10) covered
parking spaces (such spaces to be included in the calculation of
the Parking Ratio set forth in Subparagraph 1(z)), provided that
(i) "covered parking" shall be construed to mean covered by a
non-structural awning, canopy, or otherwise, but not enclosed or
underground parking, and (ii) all costs and expenses of providing
such covered parking, including without limitation, design,
construction and permitting costs and expenses, and all insurance
costs related thereto, shall be borne entirely by Tenant. Upon
receipt of Landlord's invoice, or partial invoices, for the same,
Tenant shall either promptly reimburse Landlord for the cost
thereof or elect to reduce the Tenant Improvement Allowance by
such cost.
(b) At any time during the Term where Tenant does not have the
exclusive use of all parking spaces in the Development:
(i) Landlord may assign any unreserved and unassigned
parking spaces and/or make all or a portion of such
spaces reserved, if it determines in its sole
discretion that it is necessary for orderly and
efficient parking, provided it does not reduce
Tenant's overall parking below that of 3.6 spaces per
1,000 RSF of the Premises.
(ii) Tenant shall use its commercially reasonable efforts
to prohibit any vehicles that belong to or are
controlled by Tenant or Tenant's employees,
suppliers, shippers, customers or invitees to be
loaded, unloaded or parked in areas other than those
designated by Landlord for such activities.
(c) The use by Tenant, its employees and invitees, of the Parking
Area of the Development shall be on the terms and conditions set
forth in Exhibit "G" attached hereto, and shall be subject to
such other agreement between Landlord and Tenant as may
hereinafter be established. Landlord reserves the right to
modify, add to, or delete from time to time such Parking Rules
and Regulations as it deems reasonably necessary for the
operation of said parking provided Tenant has received such
modification, addition and deletions in writing; provided,
however, that Tenant shall always have the right to use the
Parking Area twenty-four (24) hours a day, seven (7) days a week,
every day of the year; provided, however, that Tenant
acknowledges that during construction of the Project or for
safety reasons, Landlord may require temporarily that Tenant not
use a certain portion of the parking area, provided Tenant's lack
of use shall not materially and adversely impact Tenant's overall
access and use of the Parking Area or access to the Premises.
Landlord covenants that it will use its commercially reasonable
efforts to enforce such Parking Rules and Regulations against all
users of the parking facilities and in a uniform manner. Landlord
may refuse to permit any person who frequently violates the
Parking Rules and Regulations to park in the Development Parking
Area, and frequent and notified violations shall be subject to
car removal.
(d) Tenant shall submit a written notice in a form reasonably
specified by Landlord, containing the names, office address
and office telephone numbers of those persons who are
authorized by Tenant to use the parking spaces (the
"Authorized Users") and shall use its commercially reasonable
efforts to identify each automobile by make, model and license
number. Such notice shall be served upon Landlord prior to the
beginning of the Term. Such notice, as amended from time to
time, is hereafter referred to as the "Parking Notice."
(e) Notwithstanding the foregoing, Tenant's parking rights shall
be subject to all federal, state and local laws and ordinances
pertaining to reserve parking, including, without limitation,
traffic management ordinances and regulations established by
regulatory agencies having jurisdiction over the Development,
and Tenant agrees to fully cooperate with Landlord in its
observance of such laws and ordinances.
(f) Landlord shall have the one-time right, at its election and
upon ten (10) days' prior notice to Tenant, to relocate up to
twenty (20) of Tenant's parking spaces within the Parking Area
from the area designated as location "1" on the Parking Plan
to the area designated as location "2" on said Parking Plan.
38. OPTION TO PURCHASE.
(a) In consideration for Tenant's execution hereof, Tenant shall
have the option to purchase ("Purchase Option") the
Development, including the Building, Parking Area, and any
improvements and appurtenances thereof, as more particularly
described in that certain Option Agreement attached hereto as
Exhibit I.
(b) Notwithstanding the foregoing, no exercise of any of Tenant's
rights under this Section 38 shall be valid unless and until
Tenant shall have cured, in the time and manner required under
this Lease, any valid notice of default given to Tenant under the
terms of this Lease, and which cure must be effected as a
condition to any purchase under the Purchase Option. Tenant
acknowledges and agrees that no exercise of Tenant's rights
pursuant to the Purchase Option shall affect or limit Landlord's
rights or remedies if Tenant is in default under this Lease.
Accordingly, any rent due but not yet paid on the date fee title
to the Development is conveyed to Tenant is expressly reserved
from such conveyance.
39. FORCE MAJEURE. "Force Majeure" shall mean any actual delay due to
strike, other labor trouble, governmental preemption of priorities or
other controls in connection with a national or other public
emergency, weather conditions, or shortages of fuel, supplies,
construction materials or labor resulting therefrom, or any other
cause, whether similar or dissimilar to the above, beyond a party's
reasonable control (but specifically excluding governmental delays
encountered by Tenant in connection with the issuance of all necessary
permits, certificates and approvals required as a condition to
Tenant's construction and/or completion of the Tenant Improvements, or
Tenant's occupancy of the Premises or any portion thereof). Except as
to Tenant's obligation to pay rent at the times and in the manner
stated in this Lease, neither party ("Nonperforming Party") shall
incur any liability whatsoever to the other party, and the
Nonperforming Party's obligations hereunder shall be extended on
account of Force Majeure. Except as to Tenant's obligations to pay
rent at the times and in the manner stated in this Lease, if this
Lease specifies a time period for performance of an obligation of the
Nonperforming Party, that time period for performance shall be
extended by the period of any delay in the Nonperforming Party's
performance caused by any of the events of Force Majeure described
above.
40. LIMITATION ON LIABILITY.
In consideration of the benefits accruing hereunder, Tenant and all
successors and assigns covenant and agree that, in the event of any
actual or alleged failure, breach or default hereunder by Landlord the
sole and exclusive remedy shall be against the Landlord's interest in
the Building. The obligations of Landlord under this Lease do not
constitute personal obligations of the individual directors, officers
or shareholders of Landlord, and Tenant shall not seek recourse against
the individual directors, officers or shareholders of Landlord or any
of their personal assets for satisfaction of any liability in respect
to this Lease. These covenants and agreements are enforceable both by
Landlord and also by any directors, officers or shareholders of
Landlord.
41. MODIFICATION FOR LENDER.
If, in connection with obtaining construction, interim or permanent
financing for the Building and/or the Development, any lender of
Landlord shall request reasonable modifications in this Lease as a
condition to such financing, Tenant will not unreasonably withhold,
delay or defer its consent thereto, provided that such modifications do
not increase Tenant's rent obligations hereunder or materially increase
Tenant's non-rent obligations hereunder or adversely affect Tenant's
right to quiet enjoyment of its leasehold created hereunder.
42. ACCESS.
Subject to emergency or other causes outside of the reasonable control
of Landlord, Tenant shall be granted access to the Building, the
Premises, and the Parking Area twenty-four (24) hours per day, seven
(7) days per week, every day of the year. Tenant acknowledges and
agrees that although Landlord provides security to the Building during
normal business hours, and that Landlord uses its good faith
commercially reasonable efforts to keep the Building and users thereof
reasonably safe, that, notwithstanding anything to the contrary in this
Lease, Landlord shall have no responsibility or liability to Tenant or
its employees, agents, consultants, guests or contractors for any
failure of or break down in security in the Building, or for any damage
or injury to person or property.
43. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that upon
Tenant's paying the rent required under this Lease and paying all other
charges and performing all of the covenants and provisions aforesaid on
Tenant's part to be observed and performed under this Lease, Tenant
shall and may lawfully, peaceably and quietly have, hold and enjoy the
Premises in accordance with this Lease without hindrance, disturbance
or ejection by Landlord or any other person claiming through Landlord.
44. CONFIDENTIALITY. Landlord and Tenant agree to keep the terms of this
Lease confidential except as reasonably necessary or appropriate in
connection with development, construction and operation of the
Development, and as each party may disclose to its professionals,
consultants and affiliates. Further, Landlord and Tenant expressly
agree that they and their respective agents and representatives are not
authorized to announce this Lease until Landlord and Tenant have
reviewed and approved any press releases or similar items to be
released by Landlord, its agents and representatives.
45. CONSENT/DUTY TO ACT REASONABLY. Whenever the consent of Landlord or
Tenant is required under the Lease, such consent shall not be
unreasonably withheld or delayed, unless another standard is
specifically stated otherwise herein. Notwithstanding anything in this
Lease to the contrary, Tenant acknowledges that Landlord may withhold
its consent and/or approval in its sole and absolute discretion with
respect to any proposed Tenant action which: (a) would have an adverse
effect on the structural integrity of the Building Structure (as
defined below); (b) is visible from the exterior of the Premises; (c)
would have an adverse effect on the Building Systems to xxxxx or
reduce noise or vibrations which could affect other tenants in the
Building; (d) in Landlord's reasonable judgment might materially and
adversely affect the other tenant's use of the Common Areas or other
tenants in the Building or the Project or increase Landlord's cost to
operate the Building or Development, unless Tenant agrees to pay for
such increased costs; (e) would result in a violation of Applicable
Law, any recorded CC&Rs and/or REAs, or any Rules and Regulations
promulgated by Landlord from time to time, subject to the restrictions
set forth herein whereupon in each such case Landlord's duty is to act
in good faith and in compliance with the Lease.
Except as otherwise provided, whenever the Lease grants Landlord or
Tenant the right to take action, exercise discretion, establish rules
and regulations, or make an allocation or other determination (other
than decisions to exercise expansion, contraction, cancellation,
termination or renewal options), Landlord and Tenant shall reasonably
act in good faith and take no action which might result in the
frustration of the other party's reasonable expectations concerning the
benefits to be enjoyed under the Lease.
46. CONFLICT OF LAWS. This Lease shall be governed by and construed
pursuant to the laws of the State of California.
47. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease,
all of the covenants, conditions and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, personal representatives, successors and
assigns.
48. ATTORNEYS' FEES. If either party becomes a party to any litigation
concerning this Lease, the Premises, or the Development, by reason of
any act or omission of the other party or its authorized
representatives, and not by reason of any act or omission of the party
that becomes a party to that litigation, or any act or omission of its
authorized representatives, the prevailing party shall be entitled to
have and recover from the losing party reasonable attorneys' fees and
court costs. If either party commences any action against the other
party arising out of or in connection with this Lease, or institutes
any proceeding in a bankruptcy or similar court which has jurisdiction
over the other party or any or all of its property or assets, or
appeals from any judgment in favor of the other party, the prevailing
party shall be entitled to have and recover from the losing party
reasonable attorneys' fees and court costs.
49. WAIVER. The failure of either party to seek redress of, or to insist
upon the strict performance of, any term, covenant, condition or
agreement in this Lease or in the Rules and Regulations shall not be
deemed to be a waiver by such party of such breach or violation or
prevent a subsequent act by the other party from having the same force
and effect of any original violation or be deemed a waiver of any
subsequent breach of the same or any other term, covenant, condition
or agreement herein contained, nor shall any custom or practice which
may grow up between the parties in the administration of the terms
hereof be deemed a waiver of or in any way affect the right of any
party to insist upon the performance by the other party in strict
accordance with terms of this Lease. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any term, covenant or condition of this
Lease, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach
at the time of acceptance of such rent. No acceptance by Landlord of a
lesser sum than the basic rental and additional rent or other sum then
due shall be deemed to be other than on account of the earliest
installment of such rent or other amount due, nor shall any
endorsement or statement on any check or any letter accompanying any
check be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover
the balance of such installment or other amount or pursue any other
remedy in this Lease provided.
50. SEVERABILITY. Any provision of this Lease which shall prove to be
invalid, void or illegal in no way affects, impairs or invalidates any
other provision hereof, and such other provisions shall remain in full
force and effect.
51. TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. Words used in one
gender include the other gender. The paragraph headings of this Lease
are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part hereof.
52. TIME. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor.
Unless expressly stated otherwise, all reference to days means
calendar days.
53. PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of the agreements
of the parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreement or understanding pertaining to
any such matter shall be effective for any purpose. No provision of
this Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective
successors-in-interest.
54. TENANT AS CORPORATION. If Tenant executes this Lease as a corporation,
then Tenant and the persons executing this Lease on behalf of Tenant
represent and warrant that the individuals executing this Lease on
Tenant's behalf are duly authorized to execute and deliver this Lease
on its behalf in accordance with a duly adopted resolution of the board
of directors of Tenant, a copy of which is to be delivered to Landlord
on execution hereof, and in accordance with the bylaws of Tenant, and
that this Lease is binding upon Tenant in accordance with its terms.
55. APPROVALS. The submission of this Lease to Tenant or its broker or
other agent does not constitute an offer to Tenant to Lease the
Premises. This instrument shall have no force and effect until this
Lease has been executed and delivered by Tenant to Landlord and
executed by Landlord.
56. NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Lease shall be deemed
to constitute Landlord and Tenant as partners or joint venturers. It
is the express intent of the parties hereto that their relationship
with regard to this Lease be and remain that of landlord and tenant.
57. RULE AGAINST PERPETUITIES. Anything in this Lease to the contrary
notwithstanding, all of the transactions and transfers contemplated by
this Lease, must be consummated, if at all, within the time permitted
by the rule against perpetuities, including codification thereof,
enforced in the State of California.
58. RIGHT TO TERMINATE.
58.1 Notwithstanding anything in either Lease Sections 23 or 24 to
the contrary, and except as expressly set forth in Subsection
(b) below, in the event that Tenant is notified or becomes
aware of the fact that:
(i) damage or destruction to the Premises, the Parking
Area and/or the Building or any part thereof so as to
interfere substantially with Tenant's use of the
Premises, the Parking Area and/or the Building;
(ii) a taking by eminent domain or exercise of other
governmental authority of the Premises, the Parking
Area and/or the Building or any part thereof so as to
interfere substantially with Tenant's use of the
Premises, the Parking Area and/or the Building;
(iii) the inability of Landlord to provide services to the
Premises, the Parking Area and/or the Building so as
to interfere substantially with Tenant's use of the
Premises, the Parking Area and/or the Building; or
(iv) any discovery of hazardous substances in, on or
around the Premises, the Building and/or the Project
not placed in, on or around the Premises, the
Building and/or the Project by Tenant, that may,
considering the nature and amount of the substances
involved, interfere with Tenant's use of the Premises
or which present a health risk to any occupants of
the Premises) (each of the items set forth in
provision (a)(i),(ii), (iii) and (iv) being referred
to herein as a "Trigger Event"), and as a result
thereof, Tenant cannot, within twelve (12) months
("Non-Use Period") of the occurrence of the Trigger
Event, be given reasonable use of, and access to, a
fully repaired and restored (subject to changes
required by Applicable Law) Premises,the Parking Area
and Building (except for minor "punch-list" items
(i.e., items which are not so substantial that they
prevent Tenant from having reasonable use and access
to the Premises, Parking Area or Building) which will
be repaired promptly thereafter), and the utilities
and services pertaining to the Premises, the Parking
Area and the Building, all suitable for the efficient
conduct of Tenant's business therefrom, and Tenant
does not use the Premises, Parking Area and Building
during such Non-Use Period, then Tenant may elect to
exercise an ongoing right to terminate the Lease upon
ten (10) days' written notice sent to Landlord at any
time following the expiration of the Non-Use Period.
58.2 In the event of any Trigger Event occurring during the last
year of the Lease Term (as may be extended by any option to
extend granted herein), should the Non-Use Period continue for
sixty (60) days, Tenant may elect to exercise an on-going
right to terminate the Lease upon ten (10) days' written
notice sent to Landlord at any time following the expiration
of the Non-Use Period.
59. INTEREST RATE. The "Interest Rate" is defined as the lesser of (a) (2%)
in excess of the prime reference rate of interest established for
commercial loans announced publicly by Bank of America at its San
Francisco Headquarters, adjusted monthly on the first (1st) business
day of each month to the then effective rate, such adjustment to be
effective for the following month (or, if such bank ceases to exist,
the rate publicly announced from time to time, by the largest (as
measured by deposits) chartered bank operating in California as its
Prime Rate, Reference Rate or other similar benchmark, plus two percent
(2%)); or (b) the maximum rate permitted by law.
60. REFERENCES. All personal pronouns used in this Lease, whether used in
the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and vice versa, and
references to "party" or "parties" shall refer solely to the parties
signatory hereto except where otherwise specifically provided. All
references in this Lease to Sections or Subparagraphs shall refer to
the corresponding Section or Subparagraph of this Lease unless
specific reference is made to another document or instrument. The use
herein of the words "including" or "include" when following any
general statement, term or matter shall not be construed to limit such
statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters,
whether or not nonlimiting language (such as "without imitation," or
"but not limited to," or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other
items or matters that would reasonably fall within the broadest
possible scope of such general statement, term or matter. The term
"and/or" when used herein shall be construed to include every possible
construction with "and" alone and every possible construction with
"or" alone. All references to "mortgage" and "mortgagee" shall include
deeds of trust and beneficiaries under deeds of trust, respectively.
All Exhibits referenced herein and attached to this Lease are hereby
incorporated in this Lease by this reference. If there is more than
one Tenant, the obligations under this Lease imposed on Tenant shall
be joint and several. The captions preceding the Sections and
Subparagraphs of this Lease have been inserted solely as a matter of
convenience and such captions in no way define or limit the scope or
intent of any provision of this Lease.
61. RECOVERY AGAINST LANDLORD. Tenant shall look solely to Landlord's
interest in the Building for the recovery of any judgment against
Landlord. Landlord, or if Landlord is a partnership, its partners
whether general or limited, or if Landlord is a corporation, its
directors, officers and shareholders, shall never be personally liable
for any such judgment. Any lien obtained to enforce any such judgment
and any levy of execution thereon shall be subject and subordinate to
all ground leases, or underlying leases, and the liens of all mortgages
or deeds of trust referred to herein.
62. MEMORANDUM OF LEASE AND OPTION AGREEMENT. Concurrently with the
execution of this Lease, Landlord shall execute and have its signature
notarized on, a "Memorandum of Lease and Option Agreement" in the form
of Exhibit "J" attached hereto and incorporated herein. Tenant shall
also execute and notarize the Memorandum of Lease and Option Agreement,
and shall cause the same to be recorded in the Official Records of Los
Angeles County.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first above written.
LANDLORD:ACD2, a California corporation
By:___________________________
Print name: _______________
Title: ____________________
TENANT: AMWEST INSURANCE GROUP, INC.,
a Delaware corporation
By:___________________________
Print name: _______________
Title: ____________________
By:___________________________
Print name: _______________
Title: ____________________
