STANDARD FORM LEASE AGREEMENT
LANDLORD: TOPANGA & VICTORY PARTNERS L.P.
TENANT: BRILLIANT DIGITAL ENTERTAINMENT, A DELAWARE CORPORATION
DATED: MAY 16, 1997
TABLE OF CONTENTS
PAGE
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ARTICLE 1 - PREMISES 3
Section 1.1 Lease of Premises 3
Section 1.2 Rentable Area 3
ARTICLE 2 - TERM 3
Section 2.1 Effective Date. 3
Section 2.2 Term of Lease 3
Section 2.3 Commencement Date. 3
Section 2.4 Delivery of Premises. 3
Section 2.5 Definition of Tenant Improvements,
Ready For Occupancy and Tenant Delays. 3
Section 2.6 Notice of Commencement Date 4
Section 2.7 4
ARTICLE 3 - RENT 5
Section 3.1 Payment of Rental 5
Section 3.2 Governmental Assessments 5
Section 3.3 Special Charges for Special Services 5
Section 3.4 Definition of Rent 5
Section 3.5 Late Charge 5
Section 3.6 Disputes as to Payments of Rent 6
Section 3.7 Special Assessment 6
ARTICLE 4 - ADJUSTMENTS TO RENT 6
Section 4.1 Operating Expense Adjustments 6
Section 4.2 Procedure for Payment of Operating
Expense Adjustments 6
Section 4.3 Certain Defined Terms 7
Section 4.4 Review of Operating Expenses 10
ARTICLE 5 - SECURITY DEPOSIT 10
ARTICLE 6 - USE 11
Section 6.1 Permitted Use 11
Section 6.2 Restriction on Use 11
Section 6.3 Compliance by Other Tenants 11
ARTICLE 7 - ALTERATIONS AND ADDITIONS 11
Section 7.1 Tenant's Rights To Make Alterations 11
Section 7.2 Installation of Alterations 11
Section 7.3 Tenant Improvements; Alterations - Treatment
at End of Lease 12
ARTICLE 8 - TENANT'S REPAIRS 12
ARTICLE 9 - LIENS BY TENANT 13
ARTICLE 10 - LANDLORD'S REPAIRS 13
Section 10.1 Scope of Landlord's Repairs 13
Section 10.2 Landlord's Right of Entry to Make Repairs 14
ARTICLE 11 - BUILDING SERVICES 14
Section 11.1 Standard Building Services 14
Section 11.2 Additional Services 14
Section 11.3 Landlord's Right To Cease Providing
Services 14
PAGE I
ARTICLE 12 - ASSIGNMENT AND SUBLETTING 15
Section 12.1 Right to Assign and Sublease 15
Section 12.2 Procedure For Assignment and Sublease/
Landlord's Recapture Rights 15
Section 12.3 Conditions Regarding Consent to Sublease
and Assignment 15
Section 12.4 Affiliated Companies/Restructuring of
Business Organization 16
Section 12.5 Landlord's Right to Assign 16
ARTICLE 13 - INDEMNIFICATION; INSURANCE 16
Section 13.1 Indemnification 16
Section 13.2 Insurance 16
Section 13.3 Assumption of Risk 17
Section 13.4 Allocation of Insured Risks and
Subrogation 17
ARTICLE 14 - DAMAGE OR DESTRUCTION 18
Section 14.1 Loss Covered By Insurance 18
Section 14.2 Loss Not Covered By Insurance 19
Section 14.3 Destruction During Final Year 19
Section 14.4 Destruction of Tenant's Personal Property,
Tenant Improvements or Property of
Tenant's Employees 19
Section 14.5 Exclusive Remedy 20
ARTICLE 15 - EMINENT DOMAIN 20
Section 15.1 Permanent Taking - When Lease Can Be
Terminated 20
Section 15.2 Permanent Taking - When Lease Cannot Be
Terminated 20
Section 15.3 Temporary Taking 20
Section 15.4 Exclusive Remedy 20
Section 15.5 Release Upon Termination 20
ARTICLE 16 - DEFAULTS 20
Section 16.1 Default by Tenant 20
Section 16.2 Default by Landlord 21
ARTICLE 17 - LANDLORD'S REMEDIES AND RIGHTS 22
Section 17.1 Remedies Upon Breach of Lease 22
Section 17.2 Re-Entry 22
Section 17.3 Termination 22
Section 17.4 Landlord's Damages 22
Section 17.5 Fixtures and Personal Property 23
Section 17.6 Waiver of Redemption 23
Section 17.7 Right to Perform 23
ARTICLE 18 - ATTORNEYS' FEES 24
ARTICLE 19 - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE 24
Section 19.1 Obligations of Tenant 24
Section 19.2 Landlord's Right to Assign 24
Section 19.3 Attornment by Tenant 24
Section 19.4 Non-Disturbance 24
Section 19.5 Attorney-In-Fact 25
ARTICLE 20 - RULES AND REGULATIONS 25
ARTICLE 21 - HOLDING OVER 25
Section 21.1 Surrender of Possession 25
Section 21.2 Payment of Money After Termination 25
PAGE II
ARTICLE 22 - INSPECTIONS AND ACCESS 25
ARTICLE 23 - NAME OF BUILDING 26
ARTICLE 24 - SURRENDER OF LEASE 26
ARTICLE 25 - WAIVER 26
ARTICLE 26 - SALE BY LANDLORD 26
ARTICLE 27 - FORCE MAJEURE 26
ARTICLE 28 - ESTOPPEL CERTIFICATES 26
ARTICLE 29 - RIGHT TO PERFORMANCE 27
ARTICLE 30 - PARKING FACILITIES 27
ARTICLE 31 - SECURITY SERVICES 27
Section 31.1 Landlord's Obligation to Furnish Security
Services 27
Section 31.2 Tenant's Right to Install Security System 27
ARTICLE 32 - NOTICES 27
ARTICLE 33 - HAZARDOUS WASTE 27
ARTICLE 34 - MISCELLANEOUS 28
Section 34.1 Authorization to Sign Lease 28
Section 34.2 Entire Agreement 28
Section 34.3 Separability 28
Section 34.4 Covenants and Conditions 29
Section 34.5 Gender and Headings 29
Section 34.6 Exhibits 29
Section 34.7 Modification For Lender 29
Section 34.8 No Recordation 29
Section 34.9 Cumulative Remedies 29
Section 34.10 Confidentiality 29
Section 34.11 Waiver of Trial by Jury 29
Section 34.12 Delivery of Financial Statements 29
Section 34.13 Delivery Statement Regarding Lawsuits 29
Section 34.14 30
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION 30
EXHIBIT INDEX
Exhibit A -- PREMISES
Exhibit B -- FORM OF NOTICE OF COMMENCEMENT DATE
Exhibit C -- CONSTRUCTION AGREEMENT
Exhibit D -- RULES AND REGULATIONS
Exhibit E -- STANDARD BUILDING SERVICES
Exhibit F -- FORM OF ESTOPPEL CERTIFICATE
Exhibit G -- PARKING
Exhibit H -- GUARANTEE [Intentionally Omitted]
PAGE III
OFFICE LEASE SUMMARY
This Office Lease Summary summarizes certain terms of the Lease Agreement to
which it is attached. The summary contained herein is qualified by and subject
to the terms of the Lease Agreement.
(a) Landlord: Topanga & Victory Partners L.P.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
(b) Landlord's Agent: Toibb Enterprises
(c) Tenant: Brilliant Digital Entertainment, a
Delaware corporation
(d) Building: 0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
(e) Premises: That certain portion of the first (1st) floor of the
Building, as shown cross-hatched on Exhibit "A" attached
hereto and to be commonly known as Suite 120.
(f) Rentable Area of Project: 158,751 rentable square feet ("RSF")
(g) Rentable Area of Premises: 3,040 RSF (measured in accordance with B.O.M.A.
standards).
(h) Scheduled Commencement Date: See Section 2.3
(i) Expiration Date: The day which is immediately preceding the day which is
sixty-six (66) months after the Commencement Date (as such term is defined
in Section 2.3 herein) unless extended pursuant to Section 2.7
hereinbelow.
(j) Rental: Five Thousand Six Hundred Twenty-Four and xx/100 Dollars
($5,624.00) (based on a rental rate of $1.85 per RSF) per month for months
one (1) through thirty-three (33) of the term; and Five Thousand Nine
Hundred Twenty-Eight and xx/100 Dollars ($5,928.00) (based on a rental
rate of $1.95 per RSF) per month for months thirty-four (34) through
sixty-six (66) of the term.
(k) Base Year: Calendar year 1997
(l) Allowance: See Section 4.3
(m) Tenant's Pro Rata Share: 1.91%
(n) Security Deposit: $2,309.05
(o) Use: General office and other uses legally permitted in connection
therewith, related to the development of interactive computer software and
technology, which constitutes intellectual property of a proprietary
nature.
(p) Tenant's Address for Notices:
Brilliant Digital Entertainment
0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
PAGE 1
Copy to: Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
(q) Landlord's Address for Notices:
Toibb Enterprises, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxxx
Copy to: Hamburg, Hanover, Xxxxxxx & Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
(r) Brokers:
For Landlord: Told Partners
For Tenant: Told Partners
(s) Parking Privileges: Per Exhibit G
(t) Date of Lease: May 16, 1997 (for reference purposes only)
PAGE 2
LEASE AGREEMENT
This LEASE AGREEMENT ("Lease"), dated as of May 16, 1997, is made and
entered into by and between Topanga & Victory Partners L.P., a California
limited partnership ("Landlord") and Brilliant Digital Entertainment , a
California corporation ("Tenant"), who agree as follows:
ARTICLE 1 - PREMISES
SECTION 1.1 LEASE OF PREMISES. Landlord leases to Tenant, and Tenant
leases from Landlord, the premises ("Premises") consisting of the office space
cross-hatched on the attached Exhibit "A" and described as Suite Number 120
located in an office building ("Building"), the address of which is 0000
Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000, situated on a
parcel of real property ("Land") located in Woodland Hills, California,
(collectively, the Land and the Building are referred to herein as the
"Project").
SECTION 1.2 RENTABLE AREA. The rentable area of the Premises and of the
Building are stipulated in Sections (g) and (f), respectively, of the Office
Lease Summary.
ARTICLE 2 - TERM
SECTION 2.1 EFFECTIVE DATE. The Lease will become effective on the day
the Lease has been signed by the Landlord and Tenant ("Effective Date").
SECTION 2.2 TERM OF LEASE. The term of the Lease ("Term") shall be for
sixty-six (66) months beginning on the Commencement Date (as defined in Section
2.3) unless extended pursuant to Section 2.7 hereinbelow. If the Commencement
Date falls on a date other than the first day of a month, the Term shall be
extended by that partial month from the Commencement Date to the first day of
the following month.
SECTION 2.3 COMMENCEMENT DATE. The Term of this Lease shall commence on
the date the Premises are "Ready for Occupancy" as that term is defined in
Exhibit "C" attached hereto ("Commencement Date").
SECTION 2.4 DELIVERY OF PREMISES. The Premises will be delivered to
Tenant, Ready for Occupancy, subject to Tenant Delays, on the Commencement Date
in its "As Is" condition with the Tenant Improvements completed by Landlord as
described in Exhibit "C" attached hereto. Notwithstanding said Commencement
Date, if for any reason Landlord cannot deliver possession of the Premises to
Tenant on said date, Landlord shall not be subject to any liability therefore,
nor shall such failure affect the validity of this Lease or the obligations of
Tenant hereunder or extend the term hereof, but in such case Tenant shall not
be obligated to pay rent until possession of the Premises is tendered to Tenant
in a "Ready for Occupancy" condition; CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. If Tenant
occupies the Premises prior to said Commencement Date, such occupancy shall be
subject to all provisions hereof, such occupancy shall not advance the
termination date and Tenant shall pay rent for such period at the monthly rates
set forth below; provided, however, that the entry of Tenant, its agents,
representatives or contractors for the purposes of completing Tenant Installed
Improvements (as defined in Section C of Exhibit "C") shall not constitute
occupancy of the Premises.
SECTION 2.5 DEFINITION OF TENANT IMPROVEMENTS, READY FOR OCCUPANCY AND
TENANT DELAYS. The terms "Tenant Improvements" and "Ready for Occupancy" are
defined in the attached Exhibit "C." "Tenant Delays" consist of those delays
defined in Exhibit "C."
PAGE 3
SECTION 2.6 NOTICE OF COMMENCEMENT DATE. Landlord shall send Tenant
notice of the occurrence of the Commencement Date in the form of the attached
Exhibit "B," which notice Tenant shall acknowledge by executing a copy of the
notice and returning it to the Landlord. If Tenant fails to sign and return
the notice to Landlord within ten (10) days of receipt of the notice from
Landlord, the notice as sent by Landlord shall be deemed to have correctly set
forth the Commencement Date. Failure of Landlord to send such notice shall
have no effect on the Commencement Date.
SECTION 2.7 OPTION TO RENEW.
(a) Provided that no Event of Default under the Lease, (subject to notice
and cure periods provided in this Lease) exists at such time, Tenant is given
the option ("Renewal Option") to extend the Term of this Lease on all the
provisions contained in this Lease except as to Rental (as defined below).
Such Renewal Option shall be for one (1) additional five (5) year term (the
"Option Term") following the expiration of the Term hereinabove set forth in
Section 2.2 of this Lease. If Tenant elects to exercise such Renewal Option
such Renewal Option shall be exercised by Tenant giving written notice of
exercise of the Renewal Option (the "Option Notice") to Landlord at least six
(6) months but not more than one (1) year before the expiration of the Term.
If such Option Notice is not sent during such six (6) month period or an Event
of Default under this Lease (subject to notice and cure periods provided in
this Lease) exists at such time, at then such Renewal Option shall be null and
void and in no event shall Tenant have any right to extend the Term of this
Lease beyond the Term even if it validly exercises the Renewal Option set forth
herein.
(b) Tenant shall pay to Landlord, as Rental for the Premises during the
Option Term, the Renewal Rental Rate (as hereinafter defined). The Renewal
Rental Rate shall be
prevailing fair market rental rate as reasonably determined by Landlord. The
term "prevailing fair market rental rate" for the purposes of the Lease shall
mean what a willing, comparable, new, non-expansion, non-renewal, non-equity
tenant would pay, and a willing, comparable landlord of a comparable office
building in the vicinity of the Building would accept, at arm's length, giving
appropriate consideration to the rental rate per rentable square foot, the
ratio of rentable square feet to usable square feet, escalation (including type
and base year) and abatement provisions reflecting free rent, length of the
lease term, size and location of premises being leased, building standard work
letter and/or tenant improvement allowances, if any, and other generally
applicable conditions of tenancy for the space in question so that this Tenant
will obtain the same rent and other benefits that Landlord would otherwise give
to any comparable prospective tenant. If the parties hereto are unable to
agree upon this Renewal Rate prior to the expiration of the Term, then within
ten (10) days each party, at its sole cost, shall appoint a real estate
appraiser with at least five (5) years' full-time commercial appraisal
experience in the San Xxxxxxxx Valley to determine the Renewal Rental Rate for
the Option Term based upon fair market rental rate specified above. If either
party does not appoint an appraiser within such ten (10) day period, then the
single appraiser appointed shall set the Renewal Rental Rate. If the two (2)
appraisers are unable to agree on the Renewal Rental Rate but their respective
appraisals of the fair market rental rate are within ten percent (10%) of each
other, then the Renewal Rental rate shall be determined by adding the two (2)
appraisals of fair market rental together and dividing the total by two (2);
the resulting quotient shall be the Renewal Rental Rate. If the two (2)
appraisals of fair market rental are not within ten percent (10%) of each
other, then the two (2) appraisers shall select a third appraiser who meets the
qualifications stated in this Section 2.7. Landlord and Tenant shall each bear
fifty percent (50%) of the cost of the third appraiser. Within thirty (30)
days after the selection of the third appraiser, the majority of appraisers
shall set the Renewal Rental Rate for the Option Term. If a majority of the
appraisers are unable to set the Renewal Rental Rate within the thirty (30) day
period, the three (3) appraisals of fair market rental shall be added together
and their total divided by three (3) and the resultant quotient shall be the
Renewal Rental Rate. Except for the adjustment to Rental as provided above,
all Rental payable during the Option Term shall be payable in the same manner
as Rental is paid during the Initial Term in accordance with the provisions of
Section 3.1.
PAGE 4
(c) Landlord and Tenant shall execute and deliver appropriate
documentation to evidence any renewal of this Lease and the terms and
conditions of this Lease during the Option Term.
(d) The option granted in this Article 2 shall be available only to the
original Tenant or a permitted Assignee (as defined in Section 12.4) under this
Lease and shall not be available to any subsequent assignee, sublessee or other
transferee of the original Tenant. Time is of the essence of all of the
provisions of this Article 3 relating to Tenant's exercise of the option to
extend the Term. Tenant's failure to comply with any of the time or other
requirements set forth in this Article 2 shall cause the option to
automatically cease and terminate and, in such event, the Lease shall terminate
upon the expiration of the Term.
ARTICLE 3 - RENT
SECTION 3.1 PAYMENT OF RENTAL. Tenant agrees to pay Landlord as rent for
the Premises the sum of: (i) Five Thousand Six Hundred Twenty-Four and xx/100
Dollars ($5,624.00) per month for months one (1) through thirty-three (33) of
the term; and (ii) Five Thousand Nine Hundred Twenty-Eight and xx/100 Dollars
($5,928.00)) per month for months thirty-four (34) through sixty-six (66) of
the Term (the "Rental"). The Rental for the first month of the Term shall be
due and payable on the Commencement Date, and for the remaining months of the
Term, Rental shall be due, in advance, on or before the first day of each
calendar month during the Term. In addition to the payment of Rental, Tenant
shall also pay all Operating Expense Adjustments computed pursuant to Section
4.1 of the Lease and such other payment as are described in this Lease.
SECTION 3.2 GOVERNMENTAL ASSESSMENTS. In addition to the Rental, Tenant
shall pay, prior to delinquency, (a) all personal property taxes, charges,
rates, duties and license fees assessed against or levied upon Tenant's
occupancy of the Premises, or upon any Tenant Improvements, trade fixtures,
furnishings, equipment or other personal property owned or leased by Tenant and
contained in the Premises (collectively "Personal Property"), and (b) Tenant's
Pro Rata Share (as defined in Section 4.3) of any governmental fees or charges,
general and special, ordinary and extraordinary of any kind whatsoever (other
than Taxes, as defined in Section 4.3(n), which shall be handled in accordance
with the provisions of Article 4) (collectively "Assessments"). Tenant shall
cause such Assessments upon Personal Property to be billed separately from the
property of Landlord. Tenant hereby indemnifies and holds Landlord harmless
from and against the payment of all such Assessments.
SECTION 3.3 SPECIAL CHARGES FOR SPECIAL SERVICES. Tenant agrees to pay
to Landlord, within ten (10) days following written demand, all charges for any
services, utilities, goods or materials furnished by Landlord at Tenant's
written request which are not required to be furnished by Landlord under the
Lease without separate charge or reimbursement.
SECTION 3.4 DEFINITION OF RENT. Any and all payments of Rental and any
and all taxes, fees, charges, costs, expenses, insurance obligations, late
charges, Assessments, Operating Expense Adjustments, and all other payments,
disbursements or reimbursements (collectively "Rent") which are attributable
to, payable by or the responsibility of Tenant under the Lease, constitute
"rent" within the meaning of California Civil Code Section 1951(a). Any Rent
payable to Landlord by Tenant for any fractional month shall be prorated based
on a three hundred sixty (360) day year. All payments owed by Tenant under the
Lease shall be paid, without deduction, set off or counterclaim, to Landlord in
lawful money of the United States of America at the location specified by
Landlord pursuant to Article 32 of the Lease.
SECTION 3.5 LATE CHARGE. Tenant acknowledges that the late payment of
Rent will cause Landlord to incur damages, including administrative costs, loss
of use of the overdue funds and other costs, the exact amount of which would be
impractical and extremely difficult to ascertain. Landlord and Tenant agree
that if Landlord does not receive a payment of Rent on or before the tenth
(10th) day following the date that such payment is due, Tenant shall pay to
Landlord a late charge equal to five percent (5%) of the overdue amount ("Late
Charge"). Acceptance of the
PAGE 5
Late Charge by Landlord shall not cure or waive Tenant's default, nor prevent
Landlord from exercising, before or after such acceptance, any of the rights
and remedies for a default provided by this Lease or at law. Payment of the
Late Charge is not an alternative means of performance of Tenant's obligation
to pay Rent at the times specified in this Lease.
SECTION 3.6 DISPUTES AS TO PAYMENTS OF RENT. Tenant agrees to pay the
Rent required under this Lease within the time limits set forth in this Lease.
If Tenant receives from Landlord an invoice or statement, which invoice is sent
by Landlord in good faith, and Tenant in good faith disputes whether all or any
part of such Rent is due and owing, Tenant shall nevertheless pay to Landlord
the amount of the Rent indicated on the invoice or statement until Tenant
receives a final judgment from a court of competent jurisdiction (or when
arbitration is permitted or required, receives a final award from an
arbitrator) relieving or mitigating Tenant's obligation to pay such Rent. In
such instance where Tenant disputes its obligations to pay all or part of the
Rent indicated on such invoice or statement, Tenant shall, concurrently with
the payment of such Rent, provide Landlord with a letter or notice entitled
"Payment Under Protest," specifying in detail why Tenant is not required to pay
all or part of such Rent. Tenant will be deemed to have waived its right to
contest any past payment of Rent unless it has filed a lawsuit against Landlord
(or when arbitration is permitted or required, filed for arbitration and has
served Landlord with notice of such filing), and has served a summons on
Landlord, within one (1) year of such payment.
SECTION 3.7 SPECIAL ASSESSMENT. Tenant shall pay Tenant's Pro Rata Share
of any special assessment levied upon the Land by any governmental entity
having authority to impose such assessment (Special Assessment"). Tenant shall
pay Tenant's Pro Rata Share of the Special Assessment in accordance with the
provisions of Article 4. If the xxxx for the Special Assessment specifies that
it applies to a given period of time, Tenant's obligations under this Section
3.7 shall be amortized to the extent that Term does not include all of such
period.
ARTICLE 4 - ADJUSTMENTS TO RENT
SECTION 4.1 OPERATING EXPENSE ADJUSTMENTS. Tenant shall pay, commencing
twelve (12) months following the Commencement Date, in addition to the Rental
computed and due pursuant to Section 3.1, as an additional sum as an operating
expense adjustment ("Operating Expense Adjustment") an amount equal to Tenant's
Pro Rata Share of any excess of Operating Expenses (as defined in Section 4.3)
over the Allowance (as defined in Section 4.3).
SECTION 4.2 PROCEDURE FOR PAYMENT OF OPERATING EXPENSE ADJUSTMENTS.
Tenant shall pay for Tenant's Pro Rata Share of any excess of Operating
Expenses over the Allowance, as follows:
(a) Commencing on the expiration of the Base Year, Landlord may, from
time to time by ten (10) days notice to Tenant, reasonably estimate in advance
the amounts Tenant shall owe on a monthly basis for excesses of Operating
Expenses over the Allowance for any full or partial calendar year of the Term.
In such event, Tenant shall pay such estimated amounts, on a monthly basis, on
or before the first day of each calendar month, together with Tenant's payment
of Rental. Such estimate may be reasonably adjusted from time to time by
Landlord by written notice to Tenant.
(b) Within one hundred twenty (120) days after the end of each calendar
year, or as soon thereafter as practicable, Landlord shall provide a statement
(the "Statement") to Tenant showing: (i) the amount of actual Operating
Expenses for such calendar year, (ii) any amount paid by Tenant towards
excesses of Operating Expenses over the Allowance during such calendar year on
an estimated basis and (iii) any revised estimate of Tenant's obligations for
excesses of Operating Expenses over the Allowance for the current calendar
year.
(c) If the Statement shows that Tenant's estimated payments were less
than Tenant's actual obligations for excesses of Operating Expenses over the
Allowance for such year, Tenant shall pay the difference. If the Statement
shows an increase in Tenant's estimated payments for
PAGE 6
the current calendar year, Tenant shall pay the difference between the new and
former estimates, for the period from January 1 of the current calendar year
through the month in which the Statement is sent. Tenant shall make such
payments within thirty (30) days after Landlord sends the Statement. If the
Statement shows that Tenant's estimated payments exceeded Tenant's actual
obligations for excesses of Operating Expenses over the Allowance, Tenant
shall receive a credit of such difference against payments of Rent next due.
If the Term shall have expired and no further Rent shall be due, Tenant shall
receive a refund of such difference within thirty (30) days after Landlord
sends the Statement.
(d) So long as Tenant's obligations hereunder are not materially
adversely affected, Landlord reserves the right to reasonably change, from time
to time, the manner or timing of the foregoing payments. No delay by Landlord
in providing the Statement (or separate Statements) shall be deemed a default
by Landlord or a waiver of Landlord's right to require payment of Tenant's
obligations for actual or estimated excesses of Operating Expenses over the
Allowance.
(e) If the Term commences other than on January 1, or ends other than on
December 31, Tenant's obligations to pay estimated and actual amounts towards
excesses of Operating Expenses over the Allowance for such first or final
calendar years shall be prorated, based on a 360 day year, to reflect the
portion of such years included in the Term.
SECTION 4.3 CERTAIN DEFINED TERMS. "Tenant's Pro Rata Share" means the
ratio, from time to time, of the rentable square feet of the Premises to the
rentable square feet in the Project. Tenant's Pro Rata Share as of the
Commencement Date is stipulated to be the percentage set forth in Section (m)
of the Office Lease Summary. The "Allowance" will be the total dollar amount
of Operating Expenses incurred during the Base Year, adjusted (except for Taxes
which are not adjusted) to reflect what the Operating Expenses would have been
had the Building been ninety-five percent (95%) occupied for the Base Year.
"Operating Expenses" are defined to be the sum of all costs, expenses, and
disbursements, of every kind and nature whatsoever, incurred by Landlord in
connection with the ownership, management, maintenance, operation,
administration and repair of all or any portion of the Project, and the roads,
walks, plazas, landscaped areas, common areas, improvements and facilities
thereon, including Parking Facilities (collectively, "Property") including, but
not limited to the following:
(a) All costs for materials, utilities (excluding electricity for
Tenant's normal business use and excluding the cost of up to fifty-five (55)
hours per week of HVAC usage), goods and services (but excluding all costs for
materials, utilities, goods and services furnished by Landlord which are not
required to be furnished by Landlord, and which have been directly paid for by
Tenant or other tenants to Landlord);
(b) All wages and benefits and costs of employees or independent
contractors or employees of independent contractors engaged in the operation,
maintenance and security of the Property;
(c) All expenses for janitorial, maintenance, security and safety
services;
(d) All repairs to, replacement of, and physical maintenance of the
Property, including the cost of all supplies, uniforms, equipment, tools and
materials;
(e) Any license, permit and inspection fees required in connection with
the operation of the Property;
(f) Any auditor's or accounting fees provided for the operation and
maintenance of the Property;
(g) Any legal fees, costs and disbursements as would normally be incurred
in connection with the operation, maintenance and repair of the Property
(except for such fees, costs and disbursements incurred in connection with any
legal proceeding against any tenant in the Building other than Tenant);
PAGE 7
(h) All reasonable fees for management services provided by a management
company and/or by Landlord and/or an agent of the Landlord;
(i) The annual amortization of costs, including actual but not imputed
financing costs, if any, incurred by Landlord after the Effective Date for any
capital improvements 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 (collectively "Laws");
(j) The annual amortization of costs, including financing costs, if any,
of any equipment, device or capital improvement purchased or incurred as a
labor-saving measure or to affect other economies in the operation or
maintenance of the Property (provided the annual amortized cost does not exceed
the actual cost savings realized and such savings do not redound primarily to
the benefit of any particular tenant);
(k) The annual amortization of costs, if any, incurred after completion
of the Property, for the replacement of (i) exterior perimeter window draperies
or blinds provided by Landlord and (ii) carpeting and wall coverings in the
common areas of the Building;
(l) All insurance premiums and other charges incurred by Landlord with
respect to the insuring of the Property including, without limitation, the
following to the extent carried by the Landlord: (i) fire and extended
coverage insurance, windstorm, hail and explosion; (ii) riot attending a
strike, civil commotion, aircraft, vehicle and smoke insurance; (iii) public
liability, bodily injury and property damage insurance; (iv) elevator
insurance; (v) workers' compensation insurance for the employees specified in
Section 4.3(b) above; (vi) boiler and machinery insurance, sprinkler leakage,
water damage, property, burglary, fidelity and pilferage insurance on equipment
and materials; (vii) loss of rent, rent abatement, rent continuation, business
interruption insurance, and similar types of insurance; (viii) earthquake
insurance; and (ix) such other insurance as is customarily carried by operators
of other comparable first-class office buildings in Southern California;
(m) Such other usual costs and expenses which are paid by other landlords
for the purpose of providing for the on-site operation, servicing, maintenance
and repair of first-class office buildings in Southern California; and
(n) All actual taxes, assessments, levies, charges, water and sewer
charges, rapid transit and other similar or comparable governmental charges
(collectively "Taxes") levied or assessed on, imposed upon or attributable to
the calendar year in question (i) to the Property, (ii) any increases in
property taxes directly attributable to a hypothecation or transfer of the
ownership of the Building during the Term, and/or (iii) to the operation of the
Property, including but not limited to Taxes against the Property, personal
property taxes or assessments levied or assessed against the Property, plus any
tax measured by gross rentals received from the Property, together with any
costs incurred by Landlord, including attorneys' fees, in contesting any such
Taxes but excluding any net income, franchise, capital stock, estate or
inheritance taxes imposed by the State of California or the United States or by
their respective agencies, branches or departments. If at any time during the
Term there shall be levied, assessed or imposed on Landlord or the Property by
any governmental entity, any general or special, ad valorem or specific excised
capital levy or other taxes on the payments received by Landlord under this
Lease or other leases affecting the Property and/or any license fee, excise or
franchise taxes measured by or based, in whole or in part, upon such payments,
and/or transfer, transaction, or taxes based directly or indirectly upon the
transaction represented by this Lease or other leases affecting the Property,
and/or any occupancy, use, per capita or other taxes, based directly or
indirectly upon the use or occupancy of the Premises or the Property, then all
such taxes shall be deemed to be included within the definition of the term
Taxes. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
PAGE 8
The annual amortization of costs shall be determined by dividing the
original cost of such capital expenditure by the number of years of 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.
Notwithstanding anything to the contrary contained in this Section 4.3,
Operating Expenses shall not include:
a. Legal fees incurred in negotiating and enforcing tenant leases.
b. Real estate brokers' leasing commissions
c. Initial improvements or alterations to tenant spaces.
d. The cost of providing any service directly to and paid directly
by any tenant.
e. Costs of any items for which Landlord receives reimbursement
from insurance proceeds or a third party. Insurance proceeds shall be deducted
from or offset against Operating Expenses in the year in which they are
received, except that any deductible amount permitted under this Lease under
any insurance policy shall be included within Operating Expenses.
f. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
g. Interest, principal, depreciation, costs of any investigations
or reports, points, fees, and other lender costs and on any mortgage or
mortgages, ground lease payments, or other debt instrument encumbering the
Building and/or the Project.
h. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
i. Any bad debt loss, rent loss, or reserves for bad debt or rent
loss.
j. Landlord's costs of electricity and other utilities, items,
benefits, and services that are sold or provided to other tenants or occupants
but that are not offered or provide to Tenant.
k. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
PAGE 9
l. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
m. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
SECTION 4.4 REVIEW OF OPERATING EXPENSES. Tenant shall have a
period of six (6) months following receipt of each Statement, within which to
inspect, at Landlord's office during normal business hours, Landlord's books
and records concerning Operating Expenses for the preceding calendar year
period in question. Such inspection may only be done by a certified public
accountant. If Tenant shall not have availed itself of such inspection, Tenant
shall be deemed to have accepted as final and determinative the amounts shown
on the Statement. If Tenant shall have availed itself of its right to inspect
the books and records, and then disputes the accuracy of the information set
forth in Landlord's books and records with respect to the Statement, Tenant
shall nevertheless continue to pay the amounts as required by the provisions of
this Article 4; provided however, that no later than six (6) months after
receipt of the Statement, Tenant must (or its right to contest such charges
shall be deemed waived) institute arbitration proceedings against Landlord in
an arbitration proceeding governed by the rules of the American Arbitration
Association to collect and recover any overpayments made by Tenant resulting
from errors in the books and records of Landlord; and provided further, that
Tenant shall, within ten (10) days of filing of the complaint, serve Landlord
with a copy of the complaint filed in any such proceeding. Tenant shall be
precluded from contesting Operating Expenses and Landlord's computations of the
amounts payable by Landlord or Tenant pursuant to this Article 4, unless an
arbitration complaint is filed and served within such six (6) month period.
Should the arbitrator find errors in excess of CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION of the
Statement, then Landlord shall be responsible for all reasonable fees incurred
by Tenant with respect to the arbitration proceeding. Should the arbitrator
find errors of less than CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION but more than CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION of the Statement, then Tenant and Landlord shall each be responsible
for one-half (1/2) of all fees incurred with respect to the arbitration
proceeding. Should the arbitrator find errors of CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION or
less of the Statement, then Tenant shall be responsible for all the reasonable
fees incurred by Landlord with respect to the arbitration proceeding.
If Tenant institutes such arbitration procedures, then the arbitrator
shall have the power to, and shall inquire into and determine, not only whether
or not Tenant was overcharged for any excesses of Operating Expenses over the
Allowance, but whether or not Tenant was undercharged for such excesses of
Operating Expenses. At the conclusion of the arbitration, the arbitrator shall
issue a ruling as to what the excesses of Operating Expenses should have been
had Landlord strictly complied with the provisions of this Lease. If Landlord
overcharged Tenant for excesses of Operating Expenses, the amount of the
overcharge shall be returned to Tenant within thirty (30) days following the
conclusion of the arbitration. If the arbitrator determines that Tenant was
undercharged for excesses of Operating Expenses, Tenant shall pay the amount of
such undercharge to Landlord within thirty (30) days following the issuance of
the arbitration ruling.
ARTICLE 5 - SECURITY DEPOSIT
Prior to the execution of the Lease, Tenant has deposited with Landlord
the sum of Two Thousand Three Hundred Nine and 05/100 Dollars ($2,309.050)
("Deposit"), which shall be held by Landlord as security for the full and
faithful performance of Tenant's covenants and obligations under this Lease.
The Deposit is not an advance Rental deposit, an advance payment of any other
kind, or a measure of Landlord's damages in case of Tenant's default. If
Tenant fails to comply with the full and timely performance of any or all of
Tenant's covenants and
PAGE 10
obligations set forth in this Lease, then Landlord may, from time to time,
without waiving any other remedy available to Landlord, use the Deposit,
or any portion of it, to the extent necessary to cure or remedy such
failure or to compensate Landlord for all damages sustained by Landlord
resulting from Tenant's failure to comply fully and timely with its obligations
pursuant to this Lease. Tenant shall immediately pay to Landlord on demand the
amount so applied in order to restore the Deposit to its original amount, and
Tenant's failure to immediately do so shall constitute a default under the
Lease. If Tenant is in compliance with the covenants and obligations set forth
in this Lease at the time of both the expiration or termination of the Lease
and Tenant's vacating of the Premises, Landlord shall return the Deposit to
Tenant promptly thereafter. Landlord's obligations with respect to the Deposit
are those of a debtor and not a trustee. Landlord shall not be required to
maintain the Deposit separate and apart from Landlord's general or other funds,
and Landlord may commingle the Deposit with any of Landlord's general or other
funds. Tenant shall not at any time be entitled to interest on the Deposit.
ARTICLE 6 - USE
SECTION 6.1 PERMITTED USE. The Premises shall be used only for the
purpose(s) described in Section (o) of the Office Lease Summary.
SECTION 6.2 RESTRICTION ON USE. Tenant shall not do or permit to be done
in or about the Property nor bring, keep or permit to be brought or kept
therein, anything which is prohibited by the attached Exhibit "D" or by any
standard form fire insurance policy or which will in any way increase the
existing rate of, or affect, any fire or other insurance upon the Building or
its contents, or which will cause a weight load or stress on the floor or any
other portion of the Premises in excess of the weight load or stress which the
floor or other portion of the Premises is designed to bear. Tenant, at Tenant's
sole cost, shall comply with all Laws affecting the Premises, and with the
requirements of any Board of Fire Underwriters or other similar body now or
hereafter instituted, and shall also comply with any order, directive or
certificate of occupancy issued pursuant to any Laws, which affect the
condition, use or occupancy of the Premises, including, but not limited to, any
requirements of structural changes related to or affected by Tenant's acts,
occupancy or use of the Premises. Tenant shall not conduct retail operations
from the Premises or use the Premises for any other office purpose which is
different from the office operations permitted by Landlord of its other tenants
in the Project.
SECTION 6.3 COMPLIANCE BY OTHER TENANTS. Landlord shall not be liable to
Tenant for any other occupant's or tenant's failure to conduct itself in
accordance with the provisions of this Article 6, and Tenant shall not be
released or excused from the performance of any of its obligations under the
Lease in the event of any such failure; provided, however that Landlord shall,
at all times, use its reasonable efforts to enforce the provisions of its
leases with other tenants.
ARTICLE 7 - ALTERATIONS AND ADDITIONS
SECTION 7.1 TENANT'S RIGHTS TO MAKE ALTERATIONS. Following the date on
which Tenant first occupies the Premises, Tenant, at its sole cost and expense,
shall have the right upon receipt of Landlord's consent, to make alterations,
additions, or improvements to the Premises if such alterations, additions or
improvements are made in accordance with this Article 7, are normal for general
office use, and the conduct of Tenant's business, do not adversely affect the
utility or value of the Premises or the Building for future tenants, do not
alter the exterior appearance of the Building, are not of a structural nature,
do not require excessive removal expenses and are not otherwise prohibited
under the Lease (collectively called "Alterations"). Any Alterations installed
by Tenant in the Premises after commencement of this Lease shall be in
compliance with all laws and regulations, including without limitation, the
rules of the Americans with Disabilities Act and shall be at Tenant's sole cost
and expense.
SECTION 7.2 INSTALLATION OF ALTERATIONS. Any Alterations installed by
Tenant during the Term shall be done in strict compliance with all of the
following:
PAGE 11
(a) No such work shall proceed without Landlord's prior approval of
(i) Tenant's contractor(s); (ii) certificates of insurance from a company or
companies approved by Landlord, furnished to Landlord by Tenant's contractor,
for combined single limit bodily injury and property damage insurance covering
comprehensive general liability and automobile liability, in an amount not less
than One Million Dollars ($1,000,000) per occurrence and endorsed to show
Landlord as an additional named insured, and for workers' compensation as
required by law, endorsed to show a waiver of subrogation by the insurer to any
claims Tenant's contractor may have against Landlord (provided, however,
nothing in this Section 7.2(a) shall release Tenant of its other insurance
obligations hereunder); and (iii) detailed plans and specifications for such
work;
(b) All such work shall be done in a first-class workmanlike manner and
in conformity with a valid building permit and/or all other permits or licenses
when and where required, copies of which shall be furnished to Landlord before
the work is commenced, and any work not acceptable to any governmental
authority or agency having or exercising jurisdiction over such work, or not
reasonably satisfactory to Landlord, shall be promptly replaced and corrected
at Tenant's expense. Landlord's approval or consent to any such work shall not
impose any liability upon Landlord. No work shall proceed until and unless
Landlord has received at least ten (10) days' notice that such work is to
commence;
(c) Tenant shall immediately reimburse Landlord for any reasonable
expense incurred by Landlord in reviewing and approving the plans and
specifications for such work or by reason of any faulty work done by Tenant or
Tenant's contractors, or by reason of delays caused by such work, or by reason
of inadequate cleanup;
(d) Tenant or its contractors will in no event be allowed to make
plumbing, mechanical, or electrical improvements to the Premises which
adversely affect the Building or any structural modification to the Building
without first obtaining Landlord's consent, which Landlord can withhold in its
sole and absolute discretion; and
(e) All work by Tenant shall be scheduled through Landlord and shall be
diligently and continuously pursued from the date of its commencement through
its completion.
SECTION 7.3 TENANT IMPROVEMENTS; ALTERATIONS - TREATMENT AT END OF LEASE.
All interior improvements in the Premises ("Tenant Improvements") and
Alterations (as such term is defined in Section 7.1 herein) made by or for
Tenant, whether temporary or permanent in character, made either by Landlord or
Tenant, shall be Landlord's property, and shall be surrendered to Landlord in
good condition upon expiration of the Term or termination of the Lease without
compensation to Tenant; provided however, that at the election of Landlord,
exercisable by notice to Tenant at the time of their installation, Tenant
shall, at Tenant's sole expense, prior to the expiration of the Term, remove
from the Premises all Alterations (or that portion of the Alterations required
to be removed by Landlord) and repair all damage to the Premises caused by such
removal. All moveable furniture, trade fixtures, and equipment not attached to
the Building or the Premises, 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, and provided
further, that any furniture, fixtures or equipment not so removed shall, at the
option of Landlord, automatically become the property of Landlord. Thereafter,
Landlord may retain or dispose of in any manner said furniture, fixtures and/or
equipment not so removed, without liability to Tenant.
ARTICLE 8 - TENANT'S REPAIRS
Tenant shall, at Tenant's sole cost and expense, keep the Premises in good
condition and repair at all times during the Term. All damage, injury or
breakage to any part or portion of the Premises or the Property caused by the
willful or negligent act or omission of Tenant or Tenant's agents, contractors,
licensees, directors, officers, partners, trustees, visitors or invitees
(collectively, "Tenant's Employees") shall be promptly repaired by Tenant, at
Tenant's sole cost
PAGE 12
and expense, to the reasonable satisfaction of Landlord; provided, however,
that Tenant shall be entitled to receive reimbursement for such expense
to the extent that the cost of any such repair is covered by insurance
obtained by Landlord as part of Operating Expenses and is related to
damage to the Property rather than expenses. Upon 48 hours prior written notice
from Landlord to Tenant, Landlord may make any repairs which are not made by
Tenant within a reasonable amount of time (except in the case of emergency when
such repairs can be made immediately), and charge Tenant for the cost of such
repairs. Tenant shall be solely responsible for the design and function of all
Tenant Improvements and Alterations. Tenant waives all rights to make repairs
to the Premises or to the Property at the expense of Landlord, or to deduct the
cost of such repairs from any payment owed to Landlord under the Lease.
ARTICLE 9 - LIENS BY TENANT
Tenant shall at all times keep the Premises, the Building and the Property
free from any liens arising out of any work performed or allegedly performed,
materials furnished or allegedly furnished or obligations incurred by or for
Tenant; provided that, if Tenant desires to contest a lien, Tenant shall,
within sixty (60) days after the receipt of notice of the filing of such a
lien, cause such lien to be released of record by payment, bond, order of a
court of competent jurisdiction, or otherwise. Tenant shall hold Landlord
harmless from any reasonable costs or expenses, or liability resulting from
such claims, including, without limitation, reasonable attorney's fees. Tenant
agrees to indemnify and hold Landlord harmless from and against any and all
claims for mechanics', materialmen's or other liens in connection with any
Alterations, repairs, or any work performed, materials furnished or obligations
incurred by or for Tenant. Landlord reserves the right to enter the Premises
for the purpose of posting such notices of non-responsibility as may be
permitted by law, or desired by Landlord.
Notwithstanding the foregoing, Tenant shall have the right at any time to
grant a security interest in any goods and property of every type and
description owned by Tenant, and installed or kept on the Premises to the
extent not installed by Landlord as part of the Landlord Tenant Improvement
(defined below). Landlord hereby consents to any such security interest and
disclaims any interest of any kind in any goods and property installed or kept
on the Premises to the extent not installed by Landlord as part of the Landlord
Tenant Improvement, Landlord agrees that it will within ten (10) days after
any written request by Tenant confirm the foregoing consent and disclaimer in
writing, in a form reasonably acceptable to Landlord.
ARTICLE 10 - LANDLORD'S REPAIRS
SECTION 10.1 SCOPE OF LANDLORD'S REPAIRS. Landlord shall be responsible,
at its sole cost and expense, subject to Tenant's obligation to reimburse, as
specifically provided in the Lease, for maintaining, repairing and replacing
the structural elements and the public and common areas of the Building as the
same may exist from time to time, including, without limitation, foundation,
roof, all plumbing, sprinkler and sewage facilities, heating and air
conditioning, electrical and other systems and equipment commercially
understood to be part of a Building's "base building system".
Landlord shall promptly commence and diligently pursue the completion of
any repairs or replacements required hereunder, CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION after
receipt of written notice from Tenant that such repairs or replacements are
necessary. If Landlord fails to promptly commence and diligently pursue the
completion of any repairs or replacements necessary to protect the Premises or
keep the Premises in a neat, clean, safe and orderly condition, Tenant may,
after ten (10) business days following the delivery of written notice to
Landlord, commence such repairs or replacements, and demand payment therefor by
delivering a notice to Landlord, which notice shall contain a description of
the work performed and a copy of all invoices and bills related thereto.
Landlord shall reimburse Tenant for reasonable costs and expenses of any such
necessary repairs or replacements within ten (10) business days after written
demand therefor. In the event Landlords obligations to maintain or repair
relate to the heating, air conditioning, ventilation, elevator, plumbing,
electrical systems,
PAGE 13
telephone systems and/or utilities services of the Premises, the Building
or the Property, Tenant shall further be entitled to such additional
remedies as provided in Section 11.3 below.
SECTION 10.2 LANDLORD'S RIGHT OF ENTRY TO MAKE REPAIRS. Landlord and
Landlord's Employees (as defined in Section 13.1 of the Lease) shall have the
right to enter the Premises at all reasonable times for the purpose of making
any alterations, additions, improvements or repairs to the Premises or the
Property as Landlord may deem necessary or desirable, without liability to
Tenant; provided, however, that Landlord shall at all times take such actions
in such a manner as to minimize to the extent reasonably possible any
interference with Tenant's conduct of its business. Landlord shall give at
least forty-eight (48) hours notice to Tenant of Landlord's intent to enter the
Premises and effect repairs, except, however in an emergency situation, in
which case no prior notice shall be required.
ARTICLE 11 - BUILDING SERVICES
SECTION 11.1 STANDARD BUILDING SERVICES. Subject to the performance in
all material respects by Tenant of all of Tenant's obligations under the
Lease, Landlord shall furnish the Premises with the standard building services
and utilities as set forth in the attached Exhibit "E."
SECTION 11.2 ADDITIONAL SERVICES. Tenant agrees to immediately pay on
demand all reasonable charges imposed by the Landlord from time to time for all
building services and utilities supplied to or used by Tenant in excess of or
in addition to those standard building services and utilities which Landlord
agrees to provide to Tenant in accordance with Exhibit "E" (said excess and
additional building services and utilities are referred to as "Additional
Services"). Landlord may at any time cause a switch and/or metering system to
be installed at Tenant's expense (which expense Tenant shall pay within ten
(10) working days of receipt of an invoice from Landlord covering the
installment cost of such switch or metering system) to measure the amount of
building services, utilities and/or Additional Services consumed by Tenant or
used in the Premises.
SECTION 11.3 LANDLORD'S RIGHT TO CEASE PROVIDING SERVICES. Landlord
reserves the right in its reasonable discretion to reduce, interrupt or cease
service of the heating, air conditioning, ventilation, elevator, plumbing,
electrical systems, telephone systems and/or utilities services of the
Premises, the Building or the Property, for any or all of the following reasons
or causes:
(a) any accident, emergency, governmental regulation, or Act of God,
including, but not limited to, any cause set forth in Article 27 of the Lease;
or
(b) the making of any repairs, additions, alterations or improvements to
the Premises or the Property until said repairs, additions, alterations or
improvements shall have been completed, provided that Landlord shall promptly
commence and diligently pursue to completion such actions.
No such interruption, reduction or cessation of any such building services
or utilities shall constitute an eviction or disturbance of Tenant's use or
possession of the Premises or Property, or an ejection or eviction of Tenant
from the Premises, or a breach by Landlord of any of its obligations, or render
Landlord liable for any damages, including but not limited to any damages,
compensation or claims arising from any interruption or cessation of Tenant's
business, or entitle Tenant to be relieved from any of its obligations under
the Lease, or result in any abatement of Rent. In the event of any such
interruption, reduction or cessation, Landlord shall promptly commence and use
reasonable diligence to restore such service where it is within Landlord's
reasonable control to do so. It is understood and agreed that Landlord and
Tenant have entered into this Lease on the express understanding and agreement
that Landlord shall not have any liability to Tenant whatsoever as a result of
Landlord's inability to furnish any of the utilities or services required to be
furnished by Landlord hereunder, whether resulting from breakdown, removal from
service for maintenance, repairs, or any of the items set forth in Article 27;
provided, however, that if such failure or inability is the direct result of
Landlord's negligence or
PAGE 14
willful misconduct or if Landlord is not proceeding diligently to correct
such failure or inability, and due to Landlord's negligence, willful
misconduct, or failure to proceed diligently to correct such failure or
inability, any portion of the Premises is rendered unusable or inaccessible
by Tenant for a continuous period of CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, Tenant
shall be entitled to an abatement of the rent (based on a square footage
analysis) with respect to such portion of the Premises for the period beginning
on the CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION that such portion of the Premises is
unusable or inaccessible and continuing until the use or access of such portion
of the Premises is restored to Tenant.
ARTICLE 12 - ASSIGNMENT AND SUBLETTING
SECTION 12.1 RIGHT TO ASSIGN AND SUBLEASE. This Article 12 is an
economic provision, like Rent, and Landlord's right to share in profits, is
granted by Tenant to Landlord in consideration of certain other economic
concessions granted by Landlord to Tenant. Tenant may voluntarily assign 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, upon first obtaining Landlord's prior consent, which consent
shall not be unreasonably withheld, conditioned or delayed, but only if such
assignment or sublease does not conflict with or result in a breach of Section
6.1 and if such proposed assignee or sublessee of Tenant's proposed assignment
or sublease is not:
(a) a governmental entity;
(b) a person with whom Landlord has negotiated with for space in the
Building during the twelve (12) month period ending with the date Landlord
receives notice of such assignment, encumbrance or subletting; or
(c) a present Tenant in the Building.
Any assignment, encumbrance or sublease without Landlord's prior consent
shall be voidable, at Landlord's election, and shall constitute a default. No
consent to an assignment, encumbrance, or sublease shall constitute a further
waiver of the provisions of this Article 12.
SECTION 12.2 PROCEDURE FOR ASSIGNMENT AND SUBLEASE/ LANDLORD'S RECAPTURE
RIGHTS. Tenant shall advise Landlord by notice of (a) Tenant's intent to
assign, encumber, or sublease this Lease, (b) the name of the proposed assignee
or sublessee, and evidence reasonably satisfactory to Landlord that such
proposed assignee or sublessee is comparable in reputation, stature and
financial condition to the other tenants then leasing comparable space in the
Building, and (c) the terms of the proposed assignment or subletting. Landlord
shall, within ten (10) days of the later of receipt of such notice and receipt
of any additional information requested by Landlord concerning the proposed
assignee's or sublessee's financial responsibility, elect one of the following:
(i) Consent to such proposed assignment, encumbrance or sublease; or
(ii) Refuse such consent, which refusal shall be on reasonable grounds.
SECTION 12.3 CONDITIONS REGARDING CONSENT TO SUBLEASE AND ASSIGNMENT. As
a condition for obtaining Landlord's consent to any assignment, encumbrance or
sublease, if Landlord so requests, Tenant shall require that the assignee or
sublessee remit directly to Landlord on a monthly basis, all Rent due to Tenant
by said assignee or sublessee. In the event that Landlord shall consent to an
assignment or sublease under the provisions of this Article 12, Tenant shall
pay Landlord's reasonable processing costs and attorneys' fees incurred in
giving such consent CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. Notwithstanding any permitted
assignment or subletting, Tenant shall at all times remain directly, primarily
and fully responsible
PAGE 15
and liable for all payments owed by Tenant under the Lease and for compliance
with all obligations under the terms, provisions and covenants of the Lease.
If for any proposed assignment or sublease, Tenant receives Rent or other
consideration, either initially or over the term of the assignment or sublease,
in excess of the Rent required by this Lease, or, in the case of the sublease
of a portion of the Premises, in excess of such Rent fairly allocable to such
portion, after appropriate adjustments to assure that all other payments
called for hereunder are taken into account, Tenant shall pay to Landlord as
additional Rent, fifty percent (50%) of the excess of each such payment of
Rent or other consideration received by Tenant within five (5) days of its
receipt or, in the event the sublessee or assignee makes payment directly
to the Landlord, Landlord shall retain fifty percent (50%) of such
excess.
SECTION 12.4 AFFILIATED COMPANIES/RESTRUCTURING OF BUSINESS ORGANIZATION.
Occupancy of all or part of the Premises by a subsidiary or affiliated
companies of Tenant ( a "Permitted Assignee") shall not be deemed an assignment
or subletting provided that such subsidiary or affiliated companies were not
formed as a subterfuge to avoid the obligation of this Article 12 and Tenant
owns more than a fifty-percent (50%) interest if such entity is controlled by
Tenant. If Tenant is a corporation, unincorporated association, trust or
general or limited partnership, then the sale, assignment, transfer or
hypothecation of any shares, partnership interest, or other ownership interest
of such entity which from time to time in the aggregate exceeds fifty-percent
(50%) of the total outstanding shares, partnership interests or ownership
interests of such entity or which effects a change in the management or control
of Tenant, or the dissolution, merger, consolidation, or other reorganization
of such entity, or the sale, assignment, transfer or hypothecation of more than
forty-percent (40%) of the value of the assets of such entity, shall be deemed
an assignment subject to the provisions of this Article 12.
SECTION 12.5 LANDLORD'S RIGHT TO ASSIGN. Landlord shall have the right
to sell, encumber, convey, transfer, and/or assign any of its rights and
obligations under the Lease.
ARTICLE 13 - INDEMNIFICATION; INSURANCE
SECTION 13.1 INDEMNIFICATION. Tenant shall at its expense defend,
indemnify, and hold Landlord and Landlord's agents, contractors, licensees,
employees, directors, officers, partners, trustees and invitees (collectively
"Landlord's Employees") harmless from and against any and all claims, arising
out of or in connection with Tenant's use of the Premises or the Property, the
conduct of Tenant's business, any activity, work or things done, permitted or
allowed by Tenant in or about the Premises or the Property, Tenant's or
Tenant's Employees' nonobservance or nonperformance of any statute, law,
ordinance, rule or regulation, or any negligence or willful act or failure to
act of Tenant or Tenant's Employees.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
SECTION 13.2 INSURANCE. Tenant shall have the following insurance
obligations:
(a) LIABILITY INSURANCE. Tenant shall obtain and keep in full force a
policy of comprehensive general liability and property damage insurance
(including automobile, personal injury, broad form contractual liability and
broad form property damage) under which Tenant is named as the insured and
Landlord, Landlord's agent and any lessors and mortgagees (whose names shall
have been furnished to Tenant) are named as additional insureds and under which
the insurer agrees to indemnify and hold the Landlord, its managing agent and
all applicable lessors and mortgagees harmless from and against all cost,
expense and/or liability resulting from bodily injury or property damage
arising out of or relating to Tenant's business operations, conduct, assumed
liabilities, or use or occupancy of the Premises. The minimum limits of
liability shall be a combined single limit with respect to each occurrence of
not less than One Million Dollars ($1,000,000). The policy shall contain a
cross liability endorsement and shall be primary coverage for Tenant and
Landlord for any liability arising out of Tenant's and Tenant's Employees' use,
occupancy or maintenance of the Premises and all areas appurtenant thereto.
PAGE 16
Such insurance shall provide that it is primary insurance and not "excess over"
or contributory with any other valid, existing and applicable insurance in
force for or on behalf of Landlord.
(b) TENANT'S PROPERTY INSURANCE. Tenant at its cost shall maintain on
all of its Personal Property and Alterations in, on, or about the Premises, a
policy of standard fire and extended coverage insurance, with theft, vandalism
and malicious mischief endorsements, to the extent of at least full replacement
value without any deduction for depreciation. The proceeds from any such
policy shall be used by Tenant for the replacement of such personal property or
the restoration of such Alterations. The "full replacement value" of the
improvements to be insured under this Article 13 shall be determined by the
company issuing the insurance policy at the time the policy is initially
obtained.
(c) WORKER'S COMPENSATION. Tenant shall maintain Worker's Compensation
and Employer's Liability insurance as required by law.
(d) BUSINESS INTERRUPTION. Tenant shall maintain loss of income and
business interruption insurance in such amounts as will reimburse Tenant for
direct or indirect loss of earnings attributable to all perils commonly insured
(except earthquakes and floods) against by prudent tenants or attributable to
prevention of access to the Premises or to the Building as a result of such
perils but in no event in an amount less than the Rent hereunder for six (6)
months.
(e) INSURANCE CRITERIA. All the insurance required under this Lease
shall:
(i) Be issued by insurance companies authorized to do business in
the State of California, with a financial rating of at least an A:IX
status as rated in the most recent edition of Best's Insurance Reports;
(ii) Contain an endorsement requiring thirty (30) days' written
notice from the insurance company to both parties and to Landlord's lender
before cancellation or change in the coverage, scope, or amount of any
policy; and
(iii) With respect to property loss or damage by fire or other
casualty, a waiver of subrogation must be obtained, as required by
Section 13.4.
(f) EVIDENCE OF COVERAGE. A duplicate original policy, or a certificate
of the policy with the actual policy attached, together with evidence of
payment of premiums, shall be deposited with Landlord on the Commencement Date,
and on renewal of the policy not less than twenty (20) days before expiration
of the term of the policy.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
SECTION 13.3 ASSUMPTION OF RISK. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to Tenant's
Personal Property or injury to persons, in, upon or about the Premises and/or
the Property from any cause (except for damage or injury caused by the
negligence of Landlord or Landlord's Employees, subcontractors,
representatives, agents or invitees) and Tenant hereby waives all such claims
against Landlord. Landlord and Landlord's Employees shall not be liable for
any damage to any of Tenant's Personal Property entrusted to Landlord or
Landlord's Employees, nor for loss or damage to any of Tenant's Personal
Property by theft or otherwise, except for loss or damage by or caused by the
willful act or negligence of Landlord or Landlord's Employees. Tenant shall
give prompt notice to Landlord in case of fire or accidents in the Premises or
in the Building.
SECTION 13.4 ALLOCATION OF INSURED RISKS AND SUBROGATION. Landlord and
Tenant release each other from any claims and demands of whatever nature for
damage, loss or injury to the Premises and/or the Building, or to the other's
property in, on or about the Premises and the Building, that are caused by or
result from risks or perils insured against under any insurance policies
required by the Lease to be carried by Landlord and/or Tenant and in force at
the time of
PAGE 17
any such damage, loss or injury. Landlord and Tenant shall cause each
insurance policy obtained by them or either of them to provide that the
insurance company waives all right of recovery by way of subrogation against
either Landlord or Tenant in connection with any damage covered by any policy.
Neither Landlord nor Tenant shall be liable to the other for any damage caused
by fire or any of the risks insured against under any insurance policy required
by the Lease. If an insurance policy cannot be obtained with a waiver of
subrogation, or is obtainable only by the payment of an additional premium
charge above that charged by insurance companies issuing policies without
waiver of subrogation, the party undertaking to obtain the insurance shall
notify the other party of this fact. The other party shall have a period of ten
(10) days after receiving the notice either to place the insurance with a
company that is reasonably satisfactory to the other party and that will carry
the insurance with a waiver of subrogation, or to agree to pay the additional
premium if such a policy is obtainable at additional cost. If the insurance
cannot be obtained or the party in whose favor a waiver of subrogation is
desired refuses to pay the additional premium charged, the other party is
relieved of the obligation to obtain a waiver of subrogation with respect to
the particular insurance involved.
ARTICLE 14 - DAMAGE OR DESTRUCTION
SECTION 14.1 LOSS COVERED BY INSURANCE. If, at any time prior to the
expiration or termination of this Lease, the Premises or the Building or the
Property is wholly or partially damaged or destroyed by a casualty, the loss to
Landlord from which is fully covered (except for the normal deductible) or
would have been fully covered by insurance required to be maintained under this
Lease by Landlord or for Landlord's benefit, which casualty renders the
Premises totally or partially inaccessible or unusable by Tenant in the
ordinary conduct of Tenant's business, then within thirty (30) days of notice
to Landlord of such damage or destruction, Landlord shall provide Tenant with
notice of its determination of whether the damage or destruction can be
repaired within three (3) months following the date of notice to Landlord of
such damage or destruction without the payment of overtime or other premium.
(a) REPAIRS WHICH CAN BE COMPLETED WITHIN CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISION. If
all such repairs to the Building or Premises can, in Landlord's reasonable
judgment, be completed within CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION following the date of
notice to Landlord of such damage or destruction without the payment of
overtime or other premium, Landlord shall, at Landlord's expense, promptly
commence and diligently pursue to repair the same and this Lease shall remain
in full force and effect and a proportionate reduction of Rental shall be
allowed Tenant for such portion of the Premises as shall be rendered
inaccessible or unusable to Tenant, and which is not used by Tenant, during the
period of time that such portion is unusable or inaccessible and not used by
Tenant. If such repairs are not completed within the period stated in this
Section 14.1 (a), Tenant may, within thirty (30) days following the end of such
period (but prior to the completion of such repairs), terminate this Lease
subject to the conditions set forth in Section 14.1 (b) hereinbelow.
(b) REPAIRS WHICH CANNOT BE COMPLETED WITHIN CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. If
all such repairs to the Building and Premises cannot, in Landlord's reasonable
judgment, be completed within CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION following the date of
notice to Landlord of such damage or destruction without the payment of
overtime or other premiums, then CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION Landlord may, by written
notice to Tenant no later than ninety (90) days after the occurrence of such
damage or destruction elect to terminate this Lease as of the date of the
occurrence of such damage or destruction CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
PAGE 18
A. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISISON.
B. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISISON.
C. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
D. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISION.
E. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISION.
SECTION 14.2 LOSS NOT COVERED BY INSURANCE. If, at any time prior to the
expiration or termination of this Lease, the Premises or the Building or the
Property is totally or partially damaged or destroyed from a casualty, the loss
(except for the deductible) to Landlord from which is not fully covered by
insurance required under this Lease to be maintained by Landlord or for
Landlord's benefit, which damage renders the Premises inaccessible or unusable
to Tenant in the ordinary course of its business, Landlord may, at its option,
upon written notice to Tenant within thirty (30) days after notice to Landlord
of the occurrence of such damage or destruction, elect to repair or restore
such damage or destruction, or Landlord may elect to terminate this Lease.
Landlord shall also provide Tenant with notice of its determination within
thirty (30) days after notice to Landlord of the occurrence of such damage or
destruction of whether, in Landlord's reasonable judgment, the damage or
destruction can be repaired within CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION of such damage or
destruction without the payment of overtime or other premium. If such damage
or destruction can be repaired within CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION of such damage
without the payment of overtime or other premium, and if Landlord elects to
repair or restore such damage or destruction, this Lease shall continue in full
force and effect but the Rental shall be proportionately reduced as provided in
Section 14.1(a). If Landlord does not elect by notice to Tenant to repair such
damage this Lease shall terminate. If the damage is not or cannot, in
Landlord's reasonable judgment, be completed within CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
following the date of notice to Landlord of such damage or destruction, Tenant
may terminate this Lease provided Tenant satisfies all of the conditions set
forth in Sections 14.1 (a) and/or 14.1 (b) hereinabove.
SECTION 14.3 DESTRUCTION DURING FINAL YEAR. Notwithstanding anything to
the contrary contained in Sections 14.1 or 14.2, if the Premises or the
Building or the Property are wholly or partially damaged or destroyed within
the final twelve (12) months of the Term of this Lease, and no renewal rights
have been exercised prior to such damage or destruction, and if as a result of
such damage or destruction Tenant is denied access or use of the Premises for
the conduct of its business operations for a period of seven (7) consecutive
business days, Landlord or Tenant may, at its option, by giving the other
notice no later than sixty (60) days after the occurrence of such damage or
destruction, elect to terminate the Lease.
SECTION 14.4 DESTRUCTION OF TENANT'S PERSONAL PROPERTY, TENANT
IMPROVEMENTS OR PROPERTY OF TENANT'S EMPLOYEES. In the event of any damage to
or destruction of the Premises or the Building or the Property, under no
circumstances shall Landlord be required to repair any injury, or damage to, or
make any repairs to or replacements of, Tenant's Personal Property. However,
as part of Operating Expenses, Landlord shall cause to be insured the Tenant
Improvements and Alterations which do not consist of Tenant's Personal Property
and shall cause such Tenant Improvements and Alterations to be repaired and
restored at Landlord's sole expense except that Tenant shall pay for such
portion which is covered by the deductible. Landlord shall
PAGE 19
have no responsibility for any contents placed or kept in or on the Premises
or the Building or the Property by Tenant or Tenant's Employees.
SECTION 14.5 EXCLUSIVE REMEDY. This Article 14 shall be Tenant's sole
and exclusive remedy in the event of damage or destruction to the Premises or
the Building or the Property, and Tenant, as a material inducement to
Landlord's entering into this Lease, irrevocably waives and releases Tenant's
rights under California Civil Code Sections 1932(2) and 1933(4). No damages,
compensation or claim shall be payable by Landlord for any inconvenience, any
interruption or cessation of Tenant's business, or any annoyance, arising from
any damage to or destruction of all or any portion of the Premises or the
Building or the Property.
ARTICLE 15 - EMINENT DOMAIN
SECTION 15.1 PERMANENT TAKING - WHEN LEASE CAN BE TERMINATED. If the
whole of the Premises, or so much of the Premises as to render the balance
unusable by Tenant, shall be taken under the power of eminent domain, the Lease
shall automatically terminate as of the date of final judgment in such
condemnation, or as of the date possession is taken by the condemning
authority, whichever is earlier. A sale by Landlord under threat of
condemnation shall constitute a "taking" for the purpose of this Article 15.
No award for any partial or entire taking shall be apportioned and Tenant
assigns to Landlord any award which may be made in such taking or condemnation,
together with all rights of Tenant to such award, including, without
limitation, any award or compensation for the value of all or any part of the
leasehold estate; provided that nothing contained in this Article 15 shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for (a) the taking of Tenant's personal
property, or (b) interruption of or damage to Tenant's business or (c) moving
expenses or (d) Tenant's unamortized cost of the Tenant Improvements to the
extent paid for by Tenant.
SECTION 15.2 PERMANENT TAKING - WHEN LEASE CANNOT BE TERMINATED. In the
event of a partial taking which does not result in a termination of the Lease
under Section 15.1, Rental shall be proportionately reduced based on the
portion of the Premises rendered unusable, and Landlord shall restore the
Premises or the Building to the extent of available condemnation proceeds;
provided, however, that if the remaining usable portion of the Premises is, in
Tenant's reasonable opinion, insufficient for the conduct of Tenant's business,
Tenant may terminate the Lease as of the date of final judgment in such
condemnation, or as of the date possession is taken by the condemning
authority, whichever is earlier.
SECTION 15.3 TEMPORARY TAKING. No temporary taking of the Premises or
any part of the Premises and/or of Tenant's rights to the Premises under this
Lease shall terminate this Lease; however, Rental shall be proportionately
reduced based on the portion of the Premises rendered unusable. Any award made
to Tenant by reason of such temporary taking shall belong entirely to Tenant.
SECTION 15.4 EXCLUSIVE REMEDY. This Article 15 shall be Tenant's sole
and exclusive remedy in the event of a taking or condemnation. Tenant hereby
waives the benefit of California Code of Civil Procedure Section 1265.130.
SECTION 15.5 RELEASE UPON TERMINATION. Upon termination of the Lease
pursuant to this Article 15, Tenant and Landlord hereby agree to release each
other from any and all obligations and liabilities with respect to the Lease
except such obligations and liabilities which arise or accrue prior to such
termination.
ARTICLE 16 - DEFAULTS
SECTION 16.1 DEFAULT BY TENANT. Each of the following shall be an "Event
of Default" by Tenant and a material breach of the Lease:
PAGE 20
(a) The failure by Tenant to make any payment of Rental or any other
payment required to be made by Tenant hereunder, as and when due, where such
failure shall continue for a period of CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION days after written
notice thereof from Landlord to Tenant.
(b) The failure of Tenant to observe or perform in all material respects
any of the covenants, conditions or provisions of this Lease to be observed or
performed by Tenant, other than described in sub-paragraph (a) above, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant; provided, however, that if the nature
of the Tenant's default is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion;
(c) The vacating or abandonment of the Premises by Tenant;
(d) The making by Tenant of any general assignment for the benefit of
creditors;
(e) The filing by or against Tenant of a petition to have Tenant adjudged
a bankrupt or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within ninety (90) days);
(f) The appointment of a trustee or receiver to take possession of all or
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within
ninety (90) days; or
(g) The attachment, execution or other judicial seizure of all or
substantially all of Tenant's assets located at the Premises, or of Tenant's
interest in this Lease, where such seizure is not discharged within ninety (90)
days.
SECTION 16.2 DEFAULT BY LANDLORD. Except as otherwise expressly provided
in this Lease, Landlord shall not be in default in the performance of any
obligation required to be performed under this Lease unless Landlord has failed
to perform such obligation within CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION after the receipt of
notice from Tenant specifying in detail Landlord's failure to perform;
provided, however, that if the nature of Landlord's obligation is such that
more than CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION are required for its performance, the
Landlord shall not be deemed in default if it shall commence such performance
within CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION and thereafter diligently pursues the same
to completion. Tenant shall have no rights as a result of any default by
Landlord until Tenant gives CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION notice to the then
current lender(s) who have a recorded interest pertaining to the Building,
specifying the nature of the default. Such person shall then have the right to
cure such default, and Landlord shall not be deemed in default if such person
cures such default within CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION after receipt of notice of the
default, or within such longer period of time as may reasonably be necessary to
cure the default. If Landlord or such person does not cure the default, Tenant
may exercise such rights or remedies or shall be provided or permitted by law
to recover any damages proximately caused by such default. Notwithstanding
anything to the contrary in the Lease, Tenant's remedy for any breach of the
Lease by Landlord shall be limited to an action for damages. Tenant agrees
that, in the event that it becomes entitled to receive damages from Landlord,
Tenant shall not be allowed to recover from Landlord consequential damages or
damages in excess of the out-of-pocket expenditures incurred by Tenant as a
result of a default by Landlord. In any event, Landlord's liability to Tenant
for damages resulting from Landlord's breach of any provision or provisions of
the Lease shall not
PAGE 21
exceed the value of Landlord's equity interest in the Building. Except as
expressly provided otherwise in this Lease, Tenant hereby waives and
relinquishes any right which Tenant may have to terminate this Lease
or withhold any payment owed by Tenant under the Lease, on account of any
damage, condemnation, destruction or state of disrepair of the Premises
(including, without limiting the generality of the foregoing, those rights
under California Civil Code Sections 1932, 1933(4), 1941, 1941.1 and 1942).
ARTICLE 17 - LANDLORD'S REMEDIES AND RIGHTS
SECTION 17.1 REMEDIES UPON BREACH OF LEASE. On the occurrence of any
breach of this Lease by Tenant, Landlord may, at any time thereafter, with or
without notice or demand and without limiting Landlord in the exercise of any
right or remedy which Landlord may have:
(a) Terminate Tenant's right to possession of the Premises and re-
enter the Premises by any lawful means, in which case this Lease shall
terminate. In such case Tenant shall immediately surrender possession of the
Premises to Landlord; or
(b) Maintain Tenant's right to possession of the Premises, in which
case this Lease shall continue in effect whether or not Tenant has abandoned
the Premises. In such event Landlord shall be entitled to enforce all
Landlord's rights and remedies under this Lease, including the right to recover
the Rental and additional charges as they become due and Landlord shall have
the right to occupy or re-let the whole or any part of the Premises for the
account of Tenant; or
(c) Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state of California; or
(d) Landlord's exercise of any right or remedy, whether set forth
herein or provided by law, shall not prevent it from exercising any other right
or remedy set forth herein or provided by law, and Landlord shall be entitled,
to the maximum extent permitted by law, to avail itself of all remedies
provided for herein or under applicable law.
SECTION 17.2 RE-ENTRY. If Landlord re-enters the Premises under the
provisions of Article 17.1(b), Landlord shall not be deemed to have terminated
this Lease, or the liability of Tenant to pay any Rental or other charges that
are due or thereafter accruing, or Tenant's liability for damages under any of
the provisions hereof. In the event of any entry or taking possession of the
Premises as aforesaid, Landlord shall have in addition to its rights under
Article 17.5, the right, but not the obligation, to remove from the Premises
any personal property located therein and to place it in storage at a public
warehouse at the expense and risk of Tenant.
SECTION 17.3 TERMINATION. Notwithstanding any other term or provision
hereof to the contrary, this Lease shall terminate on the occurrence of any act
which affirms Landlord's intention to terminate this Lease as provided in this
Article 17, including the filing of an unlawful detainer action against Tenant.
On such termination, Landlord's damages for default shall include all
reasonable costs and fees, including reasonable attorneys' fees, incurred by
Landlord in connection with the filing, commencement, pursuing or defending of
any action in any bankruptcy court or other court with respect to the Lease,
the obtaining of relief from any stay in bankruptcy restraining any action to
evict Tenant, or the pursuing of any action with respect to Landlord's right to
possession of the Property. All such damages suffered (apart from Rental and
other additional charges payable hereunder) shall constitute pecuniary damages
which must be reimbursed to Landlord prior to assumption of the Lease by Tenant
or any successor to Tenant in any bankruptcy or other proceeding.
SECTION 17.4 LANDLORD'S DAMAGES. If Landlord elects to terminate this
Lease and Tenant's right to possession of the Premises in accordance with the
provisions of this Lease, Landlord may recover from Tenant as damages, all of
the following:
PAGE 22
(a) The worth at the time of award of any unpaid Rental and other
charges which has been earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the unpaid
Rental and other charges which would have been earned after termination until
the time of award exceeds the amount of such rental loss Tenant proves Landlord
could have reasonably avoided; plus
(c) The worth at the time of award of the amount by which the unpaid
Rental and other charges which Tenant would have paid for the balance of the
Term after the time of award exceeds the amount of such rental loss that Tenant
proves Landlord could have reasonably avoided; plus
(d) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom including without limitation, any reasonable costs or expenses
incurred by Landlord in (i) maintaining or preserving the Premises after such
default, (ii) recovering possession of the Premises, including reasonable
attorneys' fees therefor, (iii) expenses of reletting the Premises to a new
tenant, including necessary renovations or alterations of the Premises,
reasonably attorneys' fees incurred, and leasing commissions incurred
(provided, however, that such expenses shall be amortized over the lease term
of the new tenant and Tenant shall only compensate Landlord for the amortized
expenses allocable to the balance of the Term); plus
(e) At Landlord's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by the laws of the
State of California.
As used in subparagraphs (a) and (b) above, the "worth at the time of
award" is computed by allowing interest on unpaid amounts at the rate of ten
percent (10%) per annum. As used in subparagraph (c) above, the "worth at the
time of award" is computed by discounting such amount at the discount rate of
the Federal Reserve Bank located nearest to the Building in effect at the time
of award, plus one percent (1%). For purposes of this Article 17, all
additional charges other than Rental, shall, for purposes of calculating any
amount due under the provisions of subparagraph (c) above, be computed on the
basis of the average monthly amount of additional rent payable by Tenant during
the immediately preceding thirty-six (36) month period, except that if it
becomes necessary to compute such charges before such thirty-six (36) months of
the term hereof has expired, then such additional charges shall be computed on
the basis of the average monthly amount of additional charges payable during
such shorter period.
SECTION 17.5 FIXTURES AND PERSONAL PROPERTY. Subject to rights of
parties granted security interests in accordance with Section 9 of this Lease,
in the event of Tenant's default, all of Tenant's merchandise, furniture,
fixtures, equipment and other personal property shall remain on the Premises,
and during the period of default Landlord shall have the right, with a proper
court order, to take the exclusive possession of such items and to use them
free of charge until all defaults are cured, or, at Landlord's option, to
require Tenant to forthwith remove such items.
SECTION 17.6 WAIVER OF REDEMPTION. [Intentionally omitted].
SECTION 17.7 RIGHT TO PERFORM. If Tenant fails to perform any covenant
or condition to be performed by Tenant, Landlord may perform such covenant or
condition at its option, after notice to Tenant. All reasonable costs incurred
by Landlord in so performing shall immediately be reimbursed to Landlord by
Tenant, together with interest at the Interest Rate. Any performance by
Landlord of Tenant's obligations shall not waive or cure such default.
Landlord may perform Tenant's defaulted obligations at Tenant's sole cost and
expense without notice in the case of any emergency. All costs and expenses
incurred by Landlord, including reasonable attorneys' fees (whether or not
legal proceedings are instituted), in collecting Rent or enforcing the
obligations of Tenant under the Lease shall be paid by Tenant to Landlord upon
demand.
PAGE 23
ARTICLE 18 - ATTORNEYS' FEES
If either Landlord or Tenant commences or engages in, or threatens to commence
or engage in, any action or litigation or arbitration against the other party
arising out of or in connection with the Lease, the Premises or the Building or
the Property, including but not limited to, any action for recovery of any
payment owed by either party under the Lease, or to recover possession of the
Premises, or for damages for breach of the Lease, the prevailing party shall be
entitled to have and recover from the losing party reasonable attorneys' fees
and other reasonable costs incurred in connection with the action and in
preparation for said action.
ARTICLE 19 - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
SECTION 19.1 OBLIGATIONS OF TENANT. The Lease and the rights granted to
Tenant by the Lease are and shall be subject and subordinate at all times to
(a) all ground or underlying leases affecting all or any part of the Property
now or later existing and all amendments, renewals, modifications, supplements
and extensions of the leases, and (b) all deeds of trust or mortgages now or
later affecting or encumbering all or any part of the Property and/or any
ground or underlying leasehold estate; provided however, that if Landlord
elects at any time to have Tenant's interest in the Lease be or become
superior, senior or prior to any such instrument, then upon receipt by Tenant
of written notice of such election, Tenant shall immediately execute all
necessary subordination instruments or other documents confirming the
subordination of such mortgage, deed of trust, ground or underlying lease to
the Lease. In the event that Landlord shall require Tenant to execute
subordination instruments or other documents confirming the subordination of
the Lease to such mortgage or deed of trust more than twice during the Term,
Landlord shall pay Tenant's reasonable processing costs and attorneys' fees
incurred in giving such subordination CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
SECTION 19.2 LANDLORD'S RIGHT TO ASSIGN. Landlord's interest in the
Lease may be assigned to any mortgagee or trust deed beneficiary as additional
security. Nothing in this Lease shall empower Tenant to do any act without
Landlord's prior consent which can, shall or may encumber the title of the
owner of all or any part of the Property.
SECTION 19.3 ATTORNMENT BY TENANT. In the event of the cancellation or
termination of any or all ground or underlying leases affecting all or any part
of the Project in accordance with its terms or by the surrender thereof,
whether voluntary, involuntary or by operation of law, or by summary
proceedings, or in the event of any foreclosure of any or all mortgages or
deeds of trust encumbering all or any part of the Project by trustee's sale,
voluntary agreement, deed in lieu of foreclosure, or by the commencement of any
judicial action seeking foreclosure, Tenant, at the request of the then
Landlord under the Lease, shall attorn to and recognize (a) the ground or
underlying lessor, under the ground or underlying lease being terminated or
canceled, and (b) the beneficiary or purchaser at the foreclosure sale, as
Tenant's landlord under the Lease, and Tenant agrees to execute and deliver at
any time upon request of such ground or underlying lessor, beneficiary,
purchaser, or their successors, any instrument to further evidence such
attornment. Tenant hereby waives its right, if any, to elect to terminate the
Lease or to surrender possession of the Premises in the event of any such
ground or underlying lease cancellation or termination or mortgage or deed of
trust foreclosure.
SECTION 19.4 NON-DISTURBANCE. Notwithstanding any of the provisions of
this Article 19 to the contrary, Tenant shall be allowed to occupy the Premises
subject to the conditions of this Lease, and this Lease shall remain in effect
until an Event of Default occurs (subject to notice and cure rights) or until
Tenant's rights because of an Eminent Domain proceeding pursuant to Article 15
or because of the occurrence of damage and destruction pursuant to Article 14.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
PAGE 24
SECTION 19.5 ATTORNEY-IN-FACT. [Intentionally omitted].
ARTICLE 20 - RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the Building rules and
regulations ("Rules"), a copy of which is attached to this Lease as Exhibit
"D," and all reasonable modifications and additions to the Rules from time to
time put into effect by Landlord, provided, however, that no modifications or
additions to the Rules shall interfere with Tenant's permitted use of the
Premises as set forth in Section 6.1. Landlord shall not be responsible to
Tenant for the nonperformance of any of the Rules by any other occupant or
tenant of the Property, but Landlord shall make commercially reasonably efforts
to enforce the Rules with regard to other occupants or tenants of the Project.
ARTICLE 21 - HOLDING OVER
SECTION 21.1 SURRENDER OF POSSESSION. Tenant shall surrender possession
of the Premises immediately upon the expiration of the Term or termination of
the Lease. If Tenant shall continue to occupy or possess the Premises after
such expiration or termination without the consent of the Landlord, then unless
Landlord and Tenant have otherwise agreed in writing, Tenant shall be a tenant
from month-to-month. All the terms, provisions and conditions of the Lease
shall apply to this month-to-month tenancy except those terms, provisions and
conditions pertaining to the Term, and except that the Rental shall be
immediately adjusted upward upon the expiration or termination of the Lease to
equal CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION of the Rental for the Premises in effect under this
Lease during the month which includes the day immediately prior to the date of
the expiration or termination of the Lease. This month-to-month tenancy may be
terminated by Landlord or Tenant upon thirty (30) days' prior notice to the
non-terminating party. In the event that Tenant fails to surrender the
Premises upon such termination or expiration, then Tenant shall indemnify and
hold Landlord harmless against all loss or liability resulting from or arising
out of Tenant's failure to surrender the Premises, including, but not limited
to, any amounts required to be paid to any tenant or prospective tenant who was
to have occupied the Premises after said termination or expiration and any
related reasonable attorneys' fees and brokerage commissions.
SECTION 21.2 PAYMENT OF MONEY AFTER TERMINATION. No payment of money by
Tenant to Landlord after the termination of the Lease by Landlord, or after the
giving of any notice of termination to Tenant by Landlord which Landlord is
entitled to give Tenant under the Lease, shall reinstate, continue or extend
the Term of the Lease or shall affect any such notice given to Tenant prior to
the payment of such money, it being agreed that after the service of such
notice or the commencement of any suit by Landlord to obtain possession of the
Premises, Landlord may receive and collect when due any and all payments owed
by Tenant under the Lease, and otherwise exercise its rights and remedies. The
making of any such payments by Tenant shall not waive such notice, or in any
manner affect any pending suit or judgment obtained.
ARTICLE 22 - INSPECTIONS AND ACCESS
Upon forty-eight (48) hours prior written notice to Tenant, Landlord may
enter the Premises during reasonable business hours for any reasonable purpose.
If Tenant shall not be personally present to open and permit an entry into the
Premises at any time previously agreed to by Tenant and when due to an
emergency such entry by Landlord is necessary or permitted under the Lease,
Landlord may enter by means of a master key without liability to Tenant except
for any failure to exercise due care for Tenant's Personal Property, and
without affecting the Lease.
PAGE 25
ARTICLE 23 - NAME OF BUILDING
Tenant shall not use any name, insignia, or logotype of the Building for
any purpose. Tenant may not use any picture of the Building or the Project or
the Property in its advertising, stationery or any other manner upon first
obtaining Landlord's prior consent, which consent shall not be unreasonably
withheld. Landlord expressly reserves the right, in Landlord's sole and
absolute discretion, at any time to change the name, insignia or logotype of
the Building or the Property without in any manner being liable to Tenant.
ARTICLE 24 - SURRENDER OF LEASE
The voluntary or other surrender of the Lease by Tenant, or a mutual
cancellation of the Lease, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing subleases or subtenancies, or may, at
the option of Landlord, operate as an assignment to it of Tenant's interest in
any or all such subleases or subtenancies.
ARTICLE 25 - WAIVER
The waiver by Landlord or Tenant of any term, covenant, agreement or
condition contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or of any other term, covenant, agreement,
condition or provision of this Lease, nor shall any custom or practice which
may develop between the parties in the administration of the Lease be construed
to waive or lessen the right of Landlord or Tenant to insist upon the
performance by the other in strict accordance with all of the terms, covenants,
agreements, conditions, and provisions of the Lease. The subsequent acceptance
by Landlord of any payment owed by Tenant to Landlord under the Lease, or the
payment of Rent by Tenant, shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant, agreement, condition or provision of
the Lease, other than the failure of Tenant to make the specific payment so
accepted by Landlord, regardless of Landlord's or Tenant's knowledge of such
preceding breach at the time of the making or acceptance of such payment.
ARTICLE 26 - SALE BY LANDLORD
In the event Landlord shall sell, assign, convey or transfer all or a part
of its interest in the Property or any part of the Property, Tenant agrees to
attorn to such transferee, assignee or new owner, and upon consummation of such
sale, conveyance or transfer, Landlord shall automatically be freed and
relieved from all liability and obligations accruing or to be performed from
and after the date of such sale, transfer, or conveyance. In the event of such
sale, assignment, transfer or conveyance, Landlord shall transfer to such
transferee, assignee or new owner of the Property the balance of the Deposit,
if any, remaining after lawful deductions and in accordance with California
Civil Code Section 1950.7, after notice to Tenant, and Landlord shall thereupon
be relieved of all liability with respect to the Deposit.
ARTICLE 27 - FORCE MAJEURE
Landlord shall not be chargeable with, liable for, or responsible to
Tenant for anything or in any amount for any failure to perform or delay caused
by: fire; earthquake; explosion; flood; hurricane; the elements; acts of God
or the public enemy; actions, restrictions, limitations or interference of
governmental authorities or agents; war; invasion; insurrection; rebellion;
riots; strikes or lockouts; inability to obtain necessary materials, goods,
equipment, services, utilities or labor; or any other cause whether similar or
dissimilar to the foregoing which is beyond the reasonable control of Landlord;
and any such failure or delay due to said causes or any of them shall not be
deemed a breach of or default in the performance of the Lease by Landlord.
ARTICLE 28 - ESTOPPEL CERTIFICATES
Tenant shall, at any time and from time to time upon request of Landlord,
within ten (10) days following notice of such request from Landlord, execute,
acknowledge and deliver to
PAGE 26
Landlord in recordable form, a certificate ("Estoppel Certificate") in writing
in the form of the attached Exhibit "F" or in such other form as Landlord or
any of its lenders, prospective purchasers, lien holders or assignees may deem
appropriate. Failure by Tenant to deliver the Estoppel Certificate within this
ten (10) day period shall be deemed to conclusively establish that this Lease
is in full force and effect and has not been modified except as may be
represented by Landlord. Tenant's failure to deliver the Estoppel Certificate
within this ten (10) day period shall, at the option of Landlord, constitute a
default.
ARTICLE 29 - RIGHT TO PERFORMANCE [Intentionally omitted].
ARTICLE 30 - PARKING FACILITIES
Landlord shall maintain and operate, or cause to be maintained and
operated, automobile parking facilities ("Parking Facilities") in, adjacent to
or within a reasonable distance from the Building. Tenant's privileges during
such time with respect to the Parking Facilities shall be in accordance with
the provisions of the attached Exhibit "G."
ARTICLE 31 - SECURITY SERVICES
SECTION 31.1 LANDLORD'S OBLIGATION TO FURNISH SECURITY SERVICES.
Landlord shall furnish security services for the Premises and/or the Building
and/or the Property as it deems appropriate in its sole and absolute
discretion. In the event Landlord does furnish or contract to furnish any such
services, Tenant shall nevertheless have sole responsibility for the protection
of itself, Tenant's Employees and all property of Tenant and Tenant's Employees
located in, on or about the Premises or the Building or the Property, and the
provisions of Section 13.3 shall nevertheless continue in full force and
effect.
SECTION 31.2 TENANT'S RIGHT TO INSTALL SECURITY SYSTEM. If Tenant wishes
to establish or install any automated and/or non-automated security system in,
on or about the Premises, Tenant shall first notify Landlord of Tenant's plan
for any such system, and Landlord shall have the right to review and approve or
disapprove said plan in Landlord's sole and absolute discretion. If Landlord
approves any such plan and Tenant establishes or installs any automated and/or
non-automated security system in, on or about the Premises, and should such
system adversely affect the Premises or the Property or the desirability of the
Premises or Property as office space, or as an office building, or have an
adverse effect on other tenants respectively, Landlord shall subsequently have
the right to review Tenant's security system from time to time and request
Tenant to make such changes in personnel and/or equipment. Tenant shall make
said requested changes immediately thereafter.
ARTICLE 32 - NOTICES
All notices, requests, consents, approvals, payments in connection with
the Lease, or communications that either party desires or is required or
permitted to give or make to the other party under the Lease shall only be
deemed to have been given, made and delivered, when made or given in writing
and personally served, or deposited in the United States mail, certified or
registered mail, postage prepaid, or deposited with and sent by overnight
courier and addressed to the parties as provided for in Sections (p) and (q) of
the Office Lease Summary or to such other address or addresses as either
Landlord or Tenant may from time to time designate to the other by written
notice in accordance herewith.
ARTICLE 33 - HAZARDOUS WASTE
Tenant shall not cause or permit any Hazardous Material (as defined below)
to be brought, kept or used in or about the Project by Tenant or Tenant's
Employees except for those office products normally used in conjunction with
the permitted use of the Premises. Tenant indemnifies Landlord from and against
any breach by Tenant of the obligations stated in the preceding sentence, and
agrees to defend and hold Landlord harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities, or losses
(including, without
PAGE 27
limitation, diminution in value of the Project, damages for the loss or
restriction or use of rentable or usable space or of any amenity of
the Project, and sums paid in settlement of claims and attorneys' fees) which
arise during or after the term of this Lease as a result of such breach. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal, or restoration work required by any federal, state,
or local governmental agency or political subdivision because of Hazardous
Material present in the soil or ground water on or under the Project. Without
limiting the foregoing, if the presence of any Hazardous Material on the
Project caused or permitted by Tenant results in any contamination of the
Project, Tenant shall promptly take all actions at its sole expense as are
necessary to return the Project to the condition existing prior to the
introduction of any such Hazardous Material.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
Landlord and Tenant acknowledge that Landlord may become legally liable
for the costs of complying with all laws relating to Hazardous Material which
are not the responsibility of Landlord or the responsibility of Tenant,
including the following: (i) Hazardous Material present in the soil or ground
water on the Project of which Landlord has no knowledge as of the Commencement
Date of this Lease; (ii) a change in Laws which relate to Hazardous Material
which make that Hazardous Material which is present on the Property as of the
Commencement Date of this Lease, whether known or unknown to Landlord, a
violation of such new Laws; (iii) Hazardous Material that migrates, flows,
percolates, diffuses, or in any way moves on, to, or under the Project after
the effective date of this Lease; or Hazardous Material present on or under the
Project as a result of any discharge, dumping or spilling (whether accidental
or otherwise) on the Project by other lessees of the Project or their agents,
employees, contractors, or invitees, or by others. Accordingly, Landlord and
Tenant agree that the cost of complying with Laws relating to Hazardous
Material on the Project for which Landlord is legally liable and which are paid
or incurred by Landlord shall be an Operating Expense CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, and
Tenant shall pay Tenant's Pro Rata Share thereof, unless the cost of such
compliance, as between Landlord and Tenant, is made the responsibility of
Tenant as set forth above. To the extent any such Operating Expense relating
to Hazardous Material is subsequently recovered or reimbursed through
insurance, or recovery from responsible third parties, or other action, Tenant
shall be entitled to a proportionate reimbursement to the extent it has paid
its share of such Operating Expense to which such recovery or reimbursement
relates.
As used herein, the term "Hazardous Material" means any hazardous or toxic
substance, material, or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States
Government.
ARTICLE 34 - MISCELLANEOUS
SECTION 34.1 AUTHORIZATION TO SIGN LEASE. If Tenant is a corporation,
each individual executing the Lease on behalf of Tenant represents and warrants
that he/she is duly authorized to execute and deliver the Lease on behalf of
Tenant.
SECTION 34.2 ENTIRE AGREEMENT. The Lease contains the entire agreement
between the parties respecting the Premises and all other matters covered or
mentioned in the Lease. The Lease may not be altered, changed or amended
except by an instrument in writing signed by both parties hereto.
SECTION 34.3 SEPARABILITY. The illegality, invalidity or
unenforceability of any term, condition, or provision of the Lease shall in no
way impair or invalidate any other term, provision or condition of the Lease,
and all such other terms, provisions and conditions shall remain in full force
and effect.
PAGE 28
SECTION 34.4 COVENANTS AND CONDITIONS. All provisions, whether covenants
or conditions, on the part of Tenant or Landlord shall be deemed to be both
covenants and conditions.
SECTION 34.5 GENDER AND HEADINGS. The words "Landlord" and "Tenant" as
used herein shall include the plural as well as the singular and, when
appropriate, shall refer to action taken by or on behalf of the Landlord or
Tenant by their respective employees, agents, or authorized representatives.
If there be more than one individual comprising Tenant, the obligations
hereunder imposed upon such individuals shall be joint and several. The
paragraph headings of the Lease are not a part of the Lease and shall have no
effect upon the construction or interpretation of any part hereof. Subject to
the provisions of Articles 12 and 26, and except as otherwise provided to the
contrary in this Lease, the terms, conditions and agreements of this Lease
shall apply to and bind the heirs, successors, legal representatives and
permitted assigns of the parties hereto. The Lease shall be governed by and
construed pursuant to the laws of the State of California.
SECTION 34.6 EXHIBITS. Exhibits "A," "B," "C," "D," "E," "F," "G," and
"H" attached to the Lease, are hereby incorporated by this reference and made a
part of the Lease.
SECTION 34.7 MODIFICATION FOR LENDER. Upon Landlord's request, Tenant
agrees to modify this Lease to meet the requirements of any or all lenders or
ground lessors selected by Landlord who request such modification as a
condition precedent to providing any loan or financing or to entering into any
ground lease affecting or encumbering the Property or any part thereof,
provided that such modification does not (a) increase Rental, or (b) alter the
Term, or (c) materially adversely affect Tenant's rights under this Lease.
SECTION 34.8 NO RECORDATION. Landlord and Tenant agree that in no event
and under no circumstances shall the Lease be recorded by Tenant.
SECTION 34.9 CUMULATIVE REMEDIES. No right, remedy or election provided,
allowed or given by any provision of the Lease shall be deemed exclusive unless
so indicated, but shall, whenever possible, be cumulative with all other rights
or remedies in law or equity.
SECTION 34.10 CONFIDENTIALITY. This Lease document and the terms of this
Lease, and the covenants, obligations, and conditions contained in this Lease
shall remain strictly confidential. Tenant agrees to keep such terms,
covenants, obligations and conditions strictly confidential and not to disclose
such matters to any other landlord, tenant, prospective tenant, or broker.
Provided, however, Tenant may provide a copy of this Lease to a non-party
solely in conjunction with Tenant's reasonable and good faith effort to secure
an assignee or sublessee for the Premises and provided further that tenant may
make all disclosures required by federal and/or state law or a court of
competent jurisdiction.
SECTION 34.11 WAIVER OF TRIAL BY JURY. The respective parties hereto
shall and they hereby do waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other on any
matter whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
or any claim of injury or damage, or the enforcement of any remedy under any
statute, emergency or otherwise.
SECTION 34.12 DELIVERY OF FINANCIAL STATEMENTS. Tenant shall, prior to
the Effective Date and upon request of Landlord, deliver to Landlord or to any
party designated by Landlord annual financial statements of Tenant prepared in
accordance with generally accepted accounting practices, for Tenant's most
recent fiscal year. Such financial statements shall be certified by an
independent certified public accountant, or certified as accurate and complete
by its Chief Financial Officer.
SECTION 34.13 DELIVERY STATEMENT REGARDING LAWSUITS. Tenant shall, prior
to the Effective Date, deliver to Landlord or to any party designated by
Landlord, a statement
PAGE 29
describing, in detail, any litigation or arbitration in which Tenant or any
officer, director, shareholder or partner of Tenant was a party. Tenant
represents and warrants to Landlord that Tenant has never been evicted or
ceased occupancy from any premises for non-payment of rent. This
representation is a material inducement and consideration in the letting of
the Premises to Tenant.
SECTION 34.14 CONSENT. Whenever Landlord's or Tenant's consent, approval,
acceptance or satisfaction is required under any provision of this Lease, such
consent, approval, acceptance or satisfaction shall not be unreasonably
withheld, conditioned or delayed by either party, unless such provision
expressly so provides otherwise.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
IN WITNESS WHEREOF, the parties have executed the Lease as of the date
first set forth above, acknowledged that each Party has carefully read each and
every provision of the Lease, that each party has freely entered into the Lease
of its own free will and volition, and that the terms, conditions and
provisions of the Lease are commercially reasonable as of the day and year
first above written.
"Tenant"
Brilliant Digital Entertainment
a Delaware corporation
By: /s/ Xxxxxxx Xxxx
Its: Chief Financial Officer
Date Executed: 6/9/97
Place Executed: Los Angeles
"Landlord"
Topanga & Victory Partners L.P.,
a California limited partnership
By: Toibb II, a California corporation, its general
partner
By: /s/ Xxx Xxxxxx
Its: Xxx Xxxxxx-Vice President
Date Executed: 6/9/97
Place Executed: Los Angeles
PAGE 30
EXHIBIT "A"
FLOOR PLAN
[THE PREMISES]
PAGE 31
EXHIBIT "B"
NOTICE OF LEASE TERM DATES
To:
Date:
Re: Lease dated May 15, 1997 between Topanga & Victory Partners, a California
limited partnership, Landlord, and Brilliant Digital Entertainment, a
Delaware corporation, Tenant, concerning Suite 120, located at 0000
Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000.
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm as
follows:
That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the subject Lease, and that
there is no deficiency in construction.
That the Tenant has possession of the subject Premises and acknowledges
that under the provisions of the subject Lease, the Term of said Lease
commenced as of __________________ for a term of _________ years, ending
on __________________.
That in accordance with the subject Lease, rental commenced to accrue on
__________________.
If the Commencement Date of the subject Lease is other than the first day
of the month, the first billing will contain a pro rata adjustment. Each
billing thereafter shall be for the full amount of the monthly installment
as provided for in said Lease.
Rent is due and payable in advance on the first day of each and every
month during the term of said Lease. Your rent checks should be made
payable to Topanga & Victory Partners, L.P. at 0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000.
Topanga & Victory Partners, L.P., a California
limited partnership
By: Toibb II, a California corporation, its
general partner
By: _________________________
Its: _________________________
Date:_________________________
(Landlord)
AGREED AND ACCEPTED:
Brilliant Digital Entertainment, a Delaware
corporation
By: __________________________
Its: __________________________
Date:_________________________
(Tenant)
PAGE 32
EXHIBIT "C"
NON-BUILDING STANDARD -
BUILD TO SUIT - TENANT ALLOWANCE
CONSTRUCTION AGREEMENT
This Construction Agreement ("Agreement") is being entered into as of
June 9, 1997, between Topanga & Victory Partners, L.P., a California
limited partnership ("Landlord") and Brilliant Digital Entertainment, a
Delaware corporation ("Tenant"), in connection with the execution of the Lease
between Landlord and Tenant dated May 16, 1997("Lease"), who hereby agree as
follows:
1. GENERAL:
-------
(a) The purpose of this Agreement is to set forth how the interior
improvements in the Premises ("Tenant Improvements," as made fully defined
below) are to be constructed, who will do the construction of the Tenant
Improvements, who will pay for the construction of the Tenant Improvements, and
the time schedule for completion of the construction of the Tenant
Improvements.
(b) Except as defined in this Agreement to the contrary, all terms
utilized in this Agreement shall have the same meaning as the defined terms in
the Lease.
(c) The provisions of the Lease, except where clearly inconsistent or
inapplicable to this Agreement, are incorporated into this Agreement.
(d) Except for the Tenant Improvements to be constructed pursuant to this
Agreement, Tenant accepts the Premises in its "As Is" condition and
acknowledges that it has had an opportunity to inspect the Premises prior to
signing the Lease.
2. COMMENCEMENT DATE: The Commencement Date shall be determined in
accordance with Article 2 of the Lease.
3. SELECTION OF DESIGNER/ARCHITECT: A space plan which shall reflect a
build-out in accordance with the provisions of the Landlord's Standard Work
Letter attached hereto as Exhibit "1", shall be prepared by CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION ("Designer") who is familiar with the Building and with all
applicable laws, statutes, codes, rules or regulations, including regulations
and procedures promulgated by Landlord (collectively "laws") applicable to
tenant construction in the Building. Notwithstanding the provisions in the
space plan, the interior ceiling height shall be fifteen (15) feet.
4. DELIVERY OF PREMISES TO LESSEE AND CONDITION OF PREMISES UPON
EXECUTION OF THE LEASE: Landlord shall deliver the possession of the Premises
to the Tenant on execution of the Lease by Landlord in its "As Is" condition.
Tenant acknowledges that it has been given an opportunity to inspect the
Building and the Premises and finds it in satisfactory condition.
5. PREPARATION OF PLANS AND CONSTRUCTION SCHEDULE AND PROCEDURES:
Landlord shall provide instructions and Building background drawings to the
Designer to complete the plans and specifications, and Landlord shall arrange
for the construction of the Tenant Improvements in accordance with the
following schedule:
(a) Landlord shall submit to Tenant a space plan prepared by the
Designer.
(b) Tenant shall approve such space plan within three (3) business days
of receipt or designate by notice to Landlord the specific changes
required to be made to the space plan, which Landlord shall make as soon
as reasonably possible. This procedure shall be repeated until the space
plan is finally approved by Tenant.
PAGE 33
(c) Landlord shall obtain and submit to Tenant after Tenant has approved
the space plan, engineering drawings showing complete plans for telephone
outlets, electrical, plumbing work, heating, ventilating and air
conditioning.
(d) Tenant shall approve such engineering drawings within three (3)
business days of receipt or designate by notice to Landlord the specific
changes required to be made to the engineering drawings, which Landlord
shall make as soon as reasonably possible. This procedure shall be
repeated until the engineering drawings are finally approved by Tenant.
(e) After Tenant has approved the engineering drawings, Landlord shall
submit to Tenant final plans ("Plans") which shall be deemed as, and shall
consist of, complete architectural plans (inclusive of the space plan and
engineering drawings) and specifications necessary to allow the Contractor
to build the Tenant Improvements in accordance with the Plans. The term
"Tenant Improvements" shall mean all improvements shown on the Plans as
finally approved by Tenant.
(f) Tenant shall approve such Plans within three (3) business days of
receipt or designate by notice to Landlord the specific changes required
to be made to such Plans, which Landlord shall make as soon as reasonably
possible. This procedure shall be repeated until the Plans are finally
approved by Tenant.
(g) The Plans shall be submitted to a general contractor selected by
Landlord. Landlord shall instruct the contractor selected ("Contractor")
to build the Tenant Improvements as soon as reasonably possible at
Landlord's sole and entire cost except as provided in Section 6, below.
(h) Tenant agrees and understands that Landlord shall not be the
guarantor of, nor responsible for, the correctness or accuracy of any such
Plans or compliance of such Plans with applicable laws.
6. CONSTRUCTION: Landlord, as soon as this Agreement is executed, shall
make arrangements to construct, on a prompt and timely basis, consistent with
industry custom and practice, the tenant improvements to be constructed by
Landlord ("Landlord Tenant Improvements") indicated on the Plans, the elements
of which are set forth in line item format on Schedule 1 to this Xxxxxxx "X"
("Xxxxxxxx 0"). The construction of the Landlord Tenant Improvements set forth
in Schedule 1 (each, a "Line Item Expense") shall be the responsibility of
Landlord and shall be at Landlord's sole cost and expense, CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION, unless caused by Tenant Plan Changes (defined below). The
aggregate amount of the ultimate cost of each line item expense comprising the
Landlord Tenant Improvement, as provided for in this paragraph, shall be deemed
the Maximum Landlord Cost.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
PAGE 34
Tenant may request changes to the Plans ("Tenant Plan Changes"), which
shall be subject to Landlords consent, provided that in no event will such
changes adversely affect the Building's structure, systems, equipment, security
system or appearance; and, provided further that only to the extent that any
Tenant Plan Changes, in the aggregate, cause Landlord Tenant Improvements to
exceed the Maximum Landlord Cost (the "Differential"), Tenant shall pay
Landlord the amount of the Differential plus an amount equal to ten percent
(10%) of the Differential to compensate Landlord for its time and efforts in
connection with such changes. If Tenant Plan Changes delay Landlord's
completion of the Landlord Tenant Improvements, then such delay shall
constitute Tenant Delays. Whenever possible and practical, Landlord will
utilize, for the construction of the Landlord Tenant Improvements, the items
and materials designated in the Plans. However whenever Landlord determines in
its judgment that it is not practical or efficient to use such materials,
Landlord shall have the right, upon receipt of Tenant's consent, to substitute
comparable items and materials. If Tenant refuses to grant such consent, and
Landlord is delayed in causing the Landlord Tenant Improvements to be
substantially complete because of Tenant's failure to permit the substitution
of comparable items and materials, such delay shall constitute Tenant Delays.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
Tenant shall be solely responsible for bearing the costs associated with
the installation of wood caps in the bullpen area of the Premises, as well as
any costs over and above the Maximum Landlord Cost and any additional tenant
improvements which Tenant may elect to make (collectively, "Tenant Installed
Improvements"). Landlord shall provide Tenant with reasonable access to
complete the Tenant Installed Improvements in conjunction with Landlord's
performance of the Landlord Tenant Improvements so as to enable the Tenant
Installed Improvements to be completed on or before the Commencement Date.
7. READY FOR OCCUPANCY: The term "Ready For Occupancy" means that (i)
Landlord has completed the Tenant Improvements and other work that it is
obligated to perform pursuant to this Agreement, and that this work shall be
deemed complete, notwithstanding the fact that minor details of construction,
mechanical adjustments or decorations which do not materially interfere with
Tenant's use of the Premises remain to be performed (items normally referred to
as "Punch-List" items) and (ii) Tenant has been provided with reasonable time
and access to the Premises to complete Tenant Installed Improvements but in no
event less than ten (10) business days. The Premises shall be deemed Ready For
Occupancy even though certain portions of the Building, which do not interfere
with Tenant's efficient conduct of its business, have not been fully completed,
and even though Tenant's furniture, telephones, telexes, telecopiers, photocopy
machines, computers and other business machines or equipment have not been
installed, the purchase and installation of which shall be Tenant's sole
responsibility. Landlord shall cause the Punch-List items to be corrected as
soon as reasonably possible and practical.
Executed in Los Angeles, California, on the 9th day of June, 1997.
Landlord: Tenant:
Topanga & Victory Partners Brilliant Digital Entertainment, a
L.P., a California limited California corporation
partnership
By: /s/ Xxxxxxx Xxxx
By: Xxxxx XX, a California Its: Chief Financial Officer
corporation, its general partner
By: /s/ Xxx Xxxxxx
Its: Xxx Xxxxxx-Vice President
PAGE 35
EXHIBIT "D"
RULES AND REGULATIONS
1. The sidewalks, entrances, exits, passages, parking areas, courts,
elevators, vestibules, stairways, corridors, terraces, lobbies or halls shall
not be obstructed or used for any purpose other than ingress and egress. The
halls, passages, entrances, exits, elevators and stairways are not for the use
of the general public, and Landlord shall retain the right to control and
prevent access thereto of all persons whose presence, in the judgment of
Landlord, is deemed to be prejudicial to the safety, character, reputation and
interests of the Building and its tenants. No Tenant or Tenant's employee
shall go on the roof of the Building.
2. No curtains, blinds, shades or screens shall be attached to or hung
in, or used in connection with, any window of the Premises other than
Landlord's standard window covering without Landlord's prior consent which
consent may be withheld in its sole and subjective discretion. All electric
ceiling fixtures hung in offices or spaces along the perimeter of the Building
must be fluorescent, and of a quality, type, design and bulb color approved by
Landlord in its sole and subjective discretion. Neither the interior nor
exterior of any windows shall be coated or otherwise sun screened without
consent of Landlord which consent may be withheld in its sole and subjective
discretion.
3. No signs, picture, placard, advertisement, notice, lettering,
direction or handbill shall be exhibited, distributed, painted, installed,
displayed, inscribed, placed or affirmed by any Tenant on any part of the
exterior of Premises or the interior of the Premises which is visible from the
exterior of the Premises, the Building or the Property without the prior
consent of Landlord which consent may be withheld in its sole and subjective
discretion. In the event of the violation of the foregoing by any Tenant,
Landlord may remove same without any liability, and may charge the expense
incurred in such removal to the Tenant violating this rule. Interior signs on
doors shall be inscribed, painted or affixed for each Tenant by the Landlord at
Tenant's expense, and shall be of a size, color and style acceptable to the
Landlord. Nothing may be placed on the exterior of corridor walls or corridor
doors other than Landlord's building standard sign on the corridor door,
applied and installed by Landlord provided, however, that tenant shall be
entitled to display eyebrow signage on the exterior of the building, the
details of such signage to be agreed between landlord and tenant.
4. The Building directory will be provided exclusively for the display
of the name and location of tenants of the Building and Landlord reserves the
right to exclude any other names therefrom. Landlord shall provide Tenant with
standard building signage on or next to Tenant's main entrance door to the
Premises. The Tenant's name and any name(s) of Tenant's principal employees
which Tenant shall desire to have placed on the Building directory shall be
paid for by the Tenant.
5. Tenant shall not drill into, or in any way deface any part of the
Premises. No boring, cutting or stringing of wires or laying of linoleum or
other similar floor coverings shall be permitted, except with the prior consent
of the Landlord which consent may be withheld in its sole and subjective
discretion.
6. No vehicles, or animals of any kind shall be brought into or kept in
or about the Premises or the Building, and no cooking shall be done or
permitted by Tenant on the Premises, except that the preparation of coffee,
tea, hot chocolate and similar items and items prepared in a microwave oven for
Tenant and Tenant's employees shall be permitted; provided, however, that the
power required shall not exceed that amount which can be provided by a 30-amp
circuit. No Tenant shall cause or permit any unusual or objectionable odors to
be produced or to permeate the Premises or the Building.
7. The Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the use of the
Premises for medical
PAGE 36
office purposes. No Tenant shall occupy or permit any portion of the
Premises to be occupied as an office for a public stenographer or typist
or for the manufacture or sale of liquor or, narcotics, or tobacco in
any form, or as a xxxxxx or manicure shop, or as an employment bureau, or as a
travel agency, without the consent of Landlord which consent may be withheld in
its sole and subjective discretion. No Tenant shall sell or permit the sale of
newspapers, magazines, periodicals, theater tickets or any other goods or
merchandise in or on the Premises. No Tenant shall engage or pay any employees
on the Premises except those actually working for such Tenant on the Premises
nor shall any Tenant advertise for laborers giving an address at the Premises.
The Premises shall not be used for lodging or sleeping or for any immoral or
illegal purposes.
8. No Tenant shall make, or permit to be made, any unseemly noises which
disturb other occupants of the Building, whether by the use of any musical
instrument, radio, television, phonograph, screening room, or in any other way.
No Tenant shall use, keep or permit to be used any foul or noxious gas or
substance in, on or about the Premises.
9. No Tenant nor any of Tenant's employees shall at any time bring or
keep within the Premises or the Building any flammable, combustible or
explosive fluid, chemical substance, or material. Electric space heaters shall
not be used at any time by Tenant.
10. No new or additional locks or bolts of any kind shall be placed upon
any of the doors by Tenant, nor shall any changes be made in existing locks or
the mechanism thereof without the prior consent of Landlord which consent may
be withheld in its sole and subjective discretion. If Landlord consents to
such a lock change, Tenant must furnish Landlord with a key. Tenant must, upon
the termination of its tenancy, give, return, and restore to Landlord all keys
of stores, offices, vaults, and toilet rooms, either furnished to, or otherwise
procured by Tenant, and in the event at any time of any loss of keys so
furnished, Tenant shall pay to Landlord the cost of replacing the same or of
changing the lock or locks opened by such lost key if Landlord shall deem it
necessary to make such changes.
11. Furniture, freight, packages, equipment, safes, bulky matter or
supplies of any description shall be moved in or out of the Building only after
the Building Manager has been furnished with prior notice and given his/her
approval and only during such hours and in such manner as may be prescribed by
the Landlord from time to time. The scheduling and manner of all Tenant move-
ins and move-outs shall be subject to the sole discretion and approval of
Landlord, and said move-ins and move-outs shall only take place after 6:00 P.M.
on weekdays, on weekends, or at such other times as Landlord may designate.
Landlord shall have the right to approve or disapprove the movers or moving
company employed by Tenant, and Tenant shall cause said movers to use only the
loading facilities and elevators designated by Landlord. In the event Tenant's
movers damage the elevator or any other part of the Property, Tenant shall
immediately pay to Landlord the amount required to repair said damage. The
moving of safes or other fixtures or bulky or heavy matter of any kind must be
done under the Building Manager's supervision, and the person employed by any
Tenant for such work must be acceptable to Landlord, but such persons shall not
be deemed to be agents or servants of the Building Manager or Landlord, and
Tenant shall be responsible for all acts of such persons. The Landlord
reserves the right to inspect all safes, freight or other bulky or heavy
articles to be brought into the Building and to exclude from the Building all
safes, freight or other bulky or heavy articles which violate any of these
Rules or the Lease of which these Rules are a part. The Landlord reserves the
right to determine the location and position of all safes, freight, furniture
or bulky or heavy matter brought onto the Premises, which must be placed upon
supports approved by Landlord to distribute the weight.
12. No furniture shall be placed in front of the Building, or in any
lobby or corridor or balcony, without the prior written consent of Landlord.
Landlord shall have the right to remove all non-permitted furniture, without
notice to Tenant, and at the expense of Tenant.
13. No Tenant shall purchase water, ice, towel, janitorial or
maintenance, or other like services, from any person or persons not approved in
writing by the Landlord. No Tenant shall
PAGE 37
obtain or purchase food or beverages on the Property from any vendor or
supplier except at hours and under regulations fixed by Landlord.
14. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as an office building and, upon written notice
from Landlord, Tenant shall immediately refrain from or discontinue such
advertising.
15. Landlord reserves the right to exclude from the Building between the
hours of 6:00 p.m. and 7:00 a.m., Monday through Friday, and at all hours on
Saturday, Sunday, state and federal holidays, all persons who are not
authorized by Tenant. Such authorization shall be in accordance with
procedures established by Landlord in its sole and subjective discretion. Each
Tenant shall be responsible for all persons for whom it causes to be present in
the Building and shall be liable to Landlord for all acts of such persons. In
the case of invasion, riot, act of God, or other circumstance rendering such
action advisable in Landlord's opinion, Landlord reserves the right to prevent
access of all persons, including Tenant, to the Building during the continuance
of the same by such actions as Landlord may deem appropriate, including the
closing and locking of doors.
16. Any persons employed by Tenant to do any work in or about the
Premises shall, while in the Building and outside of the Premises, be subject
to and under the control and direction of the superintendent of the Building
(but shall not be deemed to be an agent or servant of said superintendent or of
the Landlord), and Tenant shall be responsible for all acts of such persons.
17. All doors opening onto public corridors shall be kept closed, except
when in use for ingress and egress. All doors leading to equipment and utility
rooms shall be kept closed.
18. Canvassing and, soliciting and peddling in the Building, except as
expressly permitted herein, are prohibited and each Tenant shall cooperate to
prevent the same.
19. All office equipment of any electrical nature shall be placed by
Tenant in the Premises in settings and locations approved by Landlord, to
absorb or prevent any vibration, noise and annoyance.
20. No air conditioning unit or other similar apparatus shall be
installed or used by Tenant without the consent of Landlord which consent may
be withheld in its sole and subjective discretion.
21. Tenant shall faithfully observe and comply with the terms of any and
all covenants, conditions and restrictions recorded against the Property.
22. Restrooms and other water fixtures shall not be used for any purpose
other than that which the same are intended, and any damage resulting to the
same from misuse on the part of Tenant or Tenant's employees shall be paid for
by Tenant. Each Tenant shall be responsible for causing all water faucets,
water apparatus and utilities to be shut off before Tenant or Tenant's
employees leave the Premises each day and Tenant shall be liable for any waste
or damage sustained by other tenants or occupants of the Building or Landlord
as a result of Tenant's failure to perform said duty.
23. The Building and the Premises may be equipped with an electronic
access control device and Tenant shall give Landlord the sum of Ten Dollars
($10.00) for each identification key or card issued to Tenant as a deposit
against the return of the identification key or card to Landlord. There shall
be a replacement charge to Tenant, or person designated by Tenant, of Twenty-
Five Dollars ($25.00) for loss of each identification key or card. The amount
of the deposit and/or the replacement charge for each identification key or
card shall be subject, from time to time, to an adjustment by Landlord at its
discretion.
PAGE 38
24. For all purposes of this Exhibit "D," the term "Tenant" shall be
defined to include and encompass Tenant's employees and Tenant's contractors.
PAGE 39
EXHIBIT "E"
STANDARDS FOR UTILITIES AND SERVICES
The furnishing of building services and utilities to Tenant shall be
accomplished in accordance with and subject to the terms and conditions set
forth in this Exhibit "E" and elsewhere in the Lease. Landlord reserves the
right to adopt from time to time such reasonable modifications and additions
hereto as Landlord may deem appropriate.
1. Subject to the full performance by Tenant of all of Tenant's
obligations under the Lease, Landlord shall, on Monday through Friday, from
8:00 A.M. to 6:00 P.M., and on Saturday, from 9:00 a.m. to 1:00 p.m., excepting
state and federal holidays ("Normal Hours"), provide the standard building
services and utilities set forth in this Paragraph 1. Landlord shall:
(a) Provide automatic elevator facilities on Monday through Friday, 7:00
a.m. to 6:00 p.m. only, and have one automatic elevator available at all other
times.
(b) Provide to the Premises, during Normal Hours, heating, ventilation,
and air conditioning ("HVAC") when, in the judgment of Landlord, it may be
required for the comfortable occupancy of the Premises for the general office
purposes permitted hereunder (subject, however, to any governmental act,
proclamation or regulation). Landlord shall not be responsible for any room
temperatures if Tenant's lighting and receptacle loads exceed those listed in
Paragraph 1(c) of this Exhibit, or if the Premises are used for other than the
general office purposes permitted hereunder. Tenant shall have the option, at
its sole cost (which cost shall be equal to Landlord's actual cost of providing
HVAC or other utilities) to obtain HVAC or other utilities for times after
Normal Hours.
(c) Provide to the Premises on a 24 hour per day, 7 days a week basis,
electric current for routine lighting and the operation of the general office
machines and equipment such as typewriters, dictating equipment, desk model
adding machines, photocopy machines and "small" computers incidental to
necessary for the conduct of Tenant's business in the Premises as permitted
hereunder of normal general office business, which use 110/220-volt electric
power, not to exceed the reasonable capacity of Building standard office
lighting and receptacles, and not in excess of limits imposed by any
governmental authority. Tenant agrees, should its electrical installation or
electrical consumption be in excess of the aforesaid use or extend beyond
Normal Hours, to reimburse Landlord for the excess utilities as provided in
Article 11 of the Lease.
(d) Provide at all times reasonably necessary amounts of water for
restrooms furnished by Landlord.
(e) Provide janitorial services to the Premises each evening, Sunday
through Thursday (except state and federal holidays), provided the Premises are
used exclusively in accordance with Article 6 of the Lease, and are kept
reasonably in order by Tenant. Tenant shall pay to Landlord the cost of
removal of any of Tenant's refuse and rubbish, to the extent that the same
exceeds the refuse and rubbish usually attendant upon the use of the Premises
for general office purposes. Landlord shall not be responsible or liable for
any act or omission or commission on the part of the persons employed to
perform said janitorial services, and said janitorial services shall be
performed at Landlord's direction without interference by Tenant or Tenant's
employees.
(f) Provide 24 hours per day, 7 days per week access to the Building by
means of a card key entry system.
2. Landlord shall have the exclusive right to make any replacement of
electric light bulbs, tubes and ballasts in the Premises throughout the Term.
The Landlord may, at Landlord's
PAGE 40
sole discretion, adopt a system of relamping and reballasting periodically
on a group basis in accordance with good practice.
3. No electrical equipment, air conditioning or heating units, or
plumbing additions shall be installed, nor shall any changes to the Building's
HVAC, electrical or plumbing systems be made which could possibly adversely
affect the Building or such systems without prior consent of Landlord, which
consent shall be subject to Landlord's sole and subjective discretion.
Landlord reserves the right to designate and/or approve the contractor to be
used by Tenant. Any permitted installations shall be made under Landlord's
supervision. Tenant shall pay any additional cost on account of any increased
support to the floor load or additional equipment required for such
installations, and such installations shall otherwise be made in accordance
with Section 7.2 of the Lease.
4. Landlord shall not provide in the Premises, reception outlets or
television or radio antennas for television or radio broadcast or reception,
and Tenant shall not install any such equipment without the prior consent of
Landlord which can be withheld in Landlord's sole and subjective discretion.
5. Tenant shall not, without the prior consent of Landlord, use any
apparatus, machine or device in the Premises, which will in any way increase
the amount of electricity or water usually furnished or supplied for use of the
Premises permitted hereunder as general office space, nor connect with electric
current, except through existing outlets in the Premises, any apparatus or
device for the purpose of using electric current in excess of that usually
furnished or supplied for use of the Premises permitted hereunder as medical
office space.
6. Tenant shall separately arrange with the applicable local public
authorities, utility companies and telephone companies, as the case may be, for
the furnishing of, and payment of, all telephone services as may be required by
Tenant in the use of the Premises; provided, however, that Tenant shall neither
bear the cost of nor be responsible for installation of the telephone wiring
stubbed to the telephone room. Tenant shall directly pay for such telephone
services, including the establishment and connection thereof, at the rates
charged for such services by said authority, telephone company or utility, and
the failure of Tenant to obtain or to continue to receive such services for any
reason whatsoever shall not relieve Tenant of any of its obligations under the
Lease nor constitute a breach of the Lease by Landlord.
7. Tenant agrees to cooperate fully at all times with Landlord to
assure, and to abide by all regulations and requirements which Landlord may
prescribe for the proper functioning and protection of the Building's HVAC,
electrical, security (if any), and plumbing systems. Tenant shall comply with
all laws, statutes, ordinances and governmental rules and regulations now in
force or which may later be enacted or promulgated in connection with building
services furnished to the Premises, including, without limitation, any
governmental rule or regulation relating to the heating and cooling of the
Building.
8. Landlord shall provide, when reasonably necessary, and to Landlord's
reasonable satisfaction, appropriate vermin and pest control services to and
for the Building.
PAGE 41
EXHIBIT "F"
ESTOPPEL CERTIFICATE
DATE: ______
Gentlemen:
The undersigned hereby certifies as follows:
1. Brilliant Digital Entertainment, a Delaware corporation, as "Tenant,"
and Topanga & Victory Partners L.P., a California limited partnership, as
"Landlord," entered into a written lease dated May 16, 1997, ("Lease"), in
which Landlord leased to Tenant and Tenant leased from Landlord, certain
"Premises" described in said Lease and located in the City of Woodland Hills,
County of Xxx Xxxxxxx, Xxxxxxxxxx 00000.
2. The Lease is in full force and effect and has not been amended,
modified, supplemented or assigned by Tenant except by written agreement(s)
dated, ________, 199_. The Lease represents the entire agreement between
Landlord and Tenant.
3. Tenant has accepted the Premises and presently occupies them, and is
paying rent on a current basis. Tenant has no setoffs, claims, or defenses to
the enforcement of the Lease.
4. As of the date of this Estoppel Certificate ("Certificate"), Tenant
is not in default in the performance of any of its obligations under the Lease,
and has not committed any breach of the Lease, and no notice of default has
been given to Tenant.
5. As of the date of this Certificate, Landlord is not in default in the
performance of any of its obligations under the Lease, and has not committed
any breach of the Lease, and no notice of default has been given to Landlord.
6. Rental (as defined in the Lease) in the amount of $_____was payable
from _____, 199_ No Rental has been paid by Tenant in advance under the Lease
except for a payment that becomes due on ____ 199_. The amount of the
Operating Expense Adjustment (as defined in the Lease) currently payable by
Tenant is $ ________ per month and Tenant has paid such amounts up to and
including __. A security deposit in the amount of $ ____ was deposited with
Landlord on ______ 199_
7. Tenant has no claim against Landlord for any other security deposit,
prepaid fee or charge or prepaid rent except as provided in Paragraph 6 of this
Certificate.
8. Tenant is executing and delivering this Certificate with the
understanding that either a potential buyer is contemplating acquiring all or a
part of the Property or a potential lender or ground lessor is contemplating
providing financing or a ground lease which affects the Building and/or the
Property and that said buyer, lender or ground lessor will be entering into
said transaction in material reliance on this Certificate.
Executed and effective on ________,199_
"Tenant": Brilliant Digital Entertainment,
a California corporation
By:_________________________
Its: _______________________
PAGE 42
EXHIBIT "G"
PARKING FACILITIES
So long as the Lease dated May 16, 1997, between Topanga & Victory
Partners L.P., a California limited partnership ("Landlord") and Brilliant
Digital Entertainment, a Delaware corporation ("Tenant") pertaining to Premises
located at 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, remains in
effect and Tenant is not in default thereunder, Tenant and Tenant's designated
employees shall be entitled during the Term to (A) monthly parking licenses,
privileges or leases for up to twelve (12) automobiles in the aggregate, and
(B) park said automobiles, on an as-available basis, in the parking facilities
adjacent to the Building ("Parking Facilities"); Tenant shall pay for the
parking spaces at the monthly rate of Twenty-Eight Dollars ($28) per unreserved
rooftop space, Forty-Five Dollars ($45) per unreserved covered space, and
Sixty-Six Dollars ($66) for covered reserved space per month. Landlord may in
its sole discretion adjust or modify said rates or charges from time to time
during the Term, CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. In each case, Tenant (or its designated
employee) shall enter into parking licenses or lease agreements or other
arrangements then in use by Landlord (or Landlord's operator) with respect to
such monthly parking. Tenant and Tenant's designated employees shall be
entitled during the Term to additional monthly parking licenses, privileges or
leases on an as-available basis only.
A condition of any parking shall be compliance by all parkers with parking
rules and regulations and all modifications and additions thereto from time to
time established by Landlord (or Landlord's operator), in their sole
discretion, including any sticker or other identification system established by
Landlord (or Landlord's operator). Landlord (and Landlord's operator) shall
not be responsible to Tenant for the nonperformance of any of said rules and
regulations by any other xxxxxx. The rules and regulations for the Parking
Facilities are as follows:
RULES AND REGULATIONS
1. Parking hours are currently established from 7:00 a.m. to 7:00 p.m.
Monday through Friday, state and federal holidays excepted, which Landlord can
adjust and change in the exercise of its reasonable discretion; provided,
however, Tenant shall have 24-hour access to the Parking facilities by way of a
key card entry system.
2. Automobiles must be parked entirely within the stall lines on the
pavement.
3. All directional signs and arrows must be observed.
4. The speed limit shall be 5 miles per hour.
5. Parking is prohibited in areas not striped for parking, unless
specifically provided for by Landlord (or its operator).
6. Parking stickers or any other device or form of identification
supplied by Landlord (or its operator) shall remain the property of Landlord
(or its operator). Such parking identification device must be displayed as
requested and may not be mutilated in any manner. The serial number of the
parking identification device may not be obliterated. Devices are not
transferable or assignable and any device in the possession of an unauthorized
holder will be void. There will be a deposit of $10.00 required for each
parking card and a replacement charge to Tenant or person designated by Tenant,
of $10.00 for loss or damage of any parking card, which amounts can be adjusted
from time to time by Landlord at its discretion, but in no event more than ten
percent (10%) in any one calendar year.
7. The monthly rate for parking is payable one (1) month in advance and
must be paid on or before the fifth (5th) day of each calendar month during the
entire Term of the Lease.
PAGE 43
Failure to do so shall cause a penalty to be assessed against Tenant, which
penalty shall be the greater of five percent (5%) of the overdue amount or
$100.00. No deductions or allowances from the monthly rate will be made for
the days a xxxxxx does not use Parking Facilities.
8. Tenant, at Tenant's cost, may validate visitor parking by such method
or methods as Landlord may approve or establish, at a validation rate from time
to time established by Landlord to be paid upon receipt of validation.
9. Landlord (and its operator) may refuse to permit any person who
violates the within rules to park in the Parking Facility, and any violation of
the rules shall subject the automobile to removal from the Parking Facility at
the xxxxxx'x expense. In either of said events, Landlord (or its operator)
shall refund a pro rata portion of the current monthly parking rate, and the
sticker, or any other form of identification supplied by Landlord (or its
operator).
10. Parking Facility managers or attendants are not authorized to make or
allow any exceptions to these rules and regulations.
11. Every xxxxxx is required to park and lock his/her own automobile.
All responsibility for any loss or damage to automobiles or any personal
property therein is assumed by the xxxxxx.
12. Loss or theft of parking identification devices from automobiles must
be reported to the Parking Facility manager immediately, and a lost or stolen
report must be filed by the xxxxxx at that time.
13. The Parking Facility is for the sole purpose of parking one (1)
automobile per space. Washing, waxing, cleaning or servicing of any vehicle by
the xxxxxx or his/her agents is prohibited except by persons expressly
authorized to do so in advance by Landlord.
14. Landlord (and its operator) reserves the right to refuse the issuance
of monthly stickers or other parking identification devices to any tenant
and/or its employees who refuse to comply with the above Rules and Regulations
and all posted and unposed city, state or federal ordinances, laws or
agreements.
15. Tenant agrees to acquaint all employees with these rules and
regulations.
