Commercial Lease Form
EXHIBIT
10.5
Commercial
Lease Form
1.
Parties.
This
Lease dated December 11, 1996, is made by and between The Richlar Partnership
(a
California general partnership) (herein called "Lessor") and Digital Domain,
Inc. (a Delaware corporation) (herein called "Lessee).
2.
Premises.
Lessor
hereby leases to Lessee and Lessee leases from Lessor for the term, at the
rental, and upon all of the conditions set forth herein, that certain premises
situated in the County of Los Angeles, State of California, commonly known
as
000 Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, consisting of approximately 21,295 square
feet of offices and warehouse (see Exhibit A) (herein called "The
Premises").
3.
Term.
3.1
Term.
The term
of this Lease shall be for five (5) years commencing on January 1, 1997 and
ending on December 31, 2001 unless sooner terminated pursuant to any provision
hereof.
3.2
Delay in Commencement.
Notwithstanding said commencement date, if for any reason Lessor cannot deliver
possession of the Premises to Lessee on said date, Lessor shall not be subject
to any liability therefor, nor shall such failure affect the validity of this
Lease or the obligations of Lessee hereunder or extend the term hereof, but
in
such case Lessee shall not be obligated to pay rent until possession of the
Premises is tendered to Lessee. If Lessee occupies the Premises prior to said
commencement date (any such occupancy to be only with Lessor's consent), such
occupancy shall be subject to all provisions hereof, such occupancy shall be
subject to all provisions hereof, such occupancy shall not advance the
termination date, and Lessee shall pay rent for such period at the initial
monthly rates set forth below.
4.
Rent.
Lessee
shall pay to Lessor rent for the Premises at an annual rate
of (See
Addendum) payable in equal monthly payments of (See
Addendum) in advance, on the first day of each month of the term hereof. Lessee
shall pay Lessor upon execution hereof $19,493.96 as base rent for January
1997.
Rent
for
any period during the term hereof which is for less than one month shall be
a
pro rata portion
of the monthly installment. Rent shall be payable without deduction or offset,
in lawful money of the United States, to Lessor at
the
address stated herein or to such other persons or at such other places as Lessor
may designate in writing.
5.
Security Deposit.
Lessee
shall deposit with Lessor upon execution hereof $21,295 as security for Lessee's
faithful performance of Lessee's
obligation hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or any other charge in default beyond any applicable grace
period or for the payment of any other sum which the Lessor may spend or become
obligated
to spend by reason of Lessee's default, or to compensate Lessor for any loss
or
damage which Lessor may suffer thereby. If
Lessor
so uses or applies all or any portion of said deposit, Lessee shall within
ten
(10) days after demand therefor deposit cash
with
Lessor in an amount sufficient to restore said deposit to the full amount
hereinbefore stated and Lessee's failure to do so shall
be
a material breach of this Lease. Lessor shall not be required to keep said
deposit separate from its general accounts. If Lessee
performs all of Lessee's obligations hereunder as of the expiration of the
Lease, said deposit, or so much thereof as has
not
been theretofore applied by Lessor,
shall be
returned, without payment of interest or other increment for its use, to
Lessee
(or, at Lessor's option,
to the
last assignee, if any, of Lessee's interest hereunder) at the expiration of
the
term hereof, and after
Lessee has vacated the Premises. No trust relationship is created herein between
Lessor and Lessee with respect to said Security
Deposit.
6.
Use
6.1
Use.
The
Premises shall be used and occupied only for an entertainment, communications,
computer applications and film production
firm and related office and support functions and parking therefor and for
no
other purpose.
6.2
Compliance with Law.
Lessee
shall, at Lessee's expense, comply promptly with all applicable statutes,
ordinances, rules, regulations,
orders, restrictions of record, and requirements in effect during the term
or
any part of the term hereof regulating the use by Lessee of the Premises, Lessee
shall not use nor permit the use of the Premises in any manner that will tend
to
create waste or a nuisance
or, if there shall be more than one tenant in the building containing the
Premises, shall tend to disturb other tenants.
6.3
Condition of Premises.
Lessee
hereby accepts the Premises in their condition existing as of the date of the
execution hereof, subject
to all applicable zoning, municipal, county and state laws, ordinances and
regulations governing and regulating the use of the Premises,
and accepts this Lease subject thereto and to all matters disclosed thereby
and
by any exhibits attached hereto. Lessee acknowledges
that neither Lessor nor Lessor's agent has made any representation or warranty
as to the suitability of the Premises for the
conduct of Lessee's business.
7.
Maintenance, Repairs and Alterations.
7.1
Lessee's Obligations.
Lessee
shall keep in good order, condition and repair the Premises and every part
thereof, structural (excepting
pre-existing structural defects) and nonstructural whether or not such portion
of the Premises requiring repair, or the means
of
repairing the same are reasonable or readily accessible to Lessee and whether
or
not the need for such repairs occurs as a result
of
Lessee's use, any prior use, the elements or age of such portion of the
equipment within the Premises, fixtures, walls (interior and
exterior), foundations, ceilings, roofs (interior and exterior), floors,
windows, doors, plate glass and skylights located within the Premises,
and all landscaping, driveways, parking lots, fences and signs located on the
Premises and sidewalks and parkways adjacent
to the Premises.
7.2
Surrender.
On the
last day of the term hereof, or on any sooner termination, Lessee shall
surrender the Premises to Lessor in good
condition and repair, broom clean, ordinary wear and tear and casualty excepted.
Lessee shall repair any damage to the Premises
occasioned by
the
installation and/or removal of Lessee's trade fixtures, furnishings and
equipment pursuant to Paragraph 7.5(d), which repair shall include without
limitation the patching and filling of holes and repair of structural
damage.
7.3
Lessor's Rights.
If
Lessee fails to perform Lessee's obligations under this Paragraph 7, Lessor
may
at its option (but shall not be
required to) enter upon the Premises, after ten (10) days' prior notice to
Lessee, and put the same in good order, condition and repair, and the reasonable
cost thereof together with interest thereon at the maximum rate permitted by
law
shall become due and shall be collectible as additional rental to Lessor
together with Lessee's next rental installment.
7.4
Lessor's Obligation.
Except
for the obligations of Lessor under Paragraph 9 (relating to destruction of
the
Premises) and under
Paragraph 14 (relating to condemnation of the Premises), it is intended by
the
parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises nor the building located
thereon nor the equipment therein, whether structural (excepting pre-existing
structural defects) or non-structural,
all of
which obligations are intended to be those of Lessee under Paragraph 7.1 hereof.
Lessee expressly waives the benefit of any statute now or hereinafter
in effect which would otherwise afford Lessee the right to make repairs at
Lessor's expense or to terminate this Lease because of Lessor's failure to
keep
the Premises in good order, condition and repair.
7.5
Alterations and Additions.
(a)
Lessor may require Lessee to
provide
Lessor, at Lessee's sole cost and expense, a lien and completion bond in an
amount equal
to
one and one-half times the estimated cost of such improvements, to insure Lessor
against any liability for mechanic's and materialmen's liens and to insure
completion of the work. Should Lessee make any alterations, improvements,
additions or Utility Installations without the prior approval of Lessor, Lessor
may require that Lessee remove any or all of the same.
(b)
Deleted.
(c)
Lessee shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Lessee at or for use in the Premises,
which claims are or may be secured by any mechanic's or materialmen's lien
against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior
to
the commencement of any work in the Premises, and
Lessor shall have the right to post notices of non-responsibility in or on
the
Premises as provided by law. Lessee shall discharge,
by bond or otherwise, within ten (10) days after the filing thereof, any
mechanic's lien filed against the Premises for work claimed
to have been done for, or materials claimed to have been furnished to, Lessee.
If Lessee shall, in good faith, contest the validity
of any such lien, claim or demand, then Lessee shall, at its sole expense,
defend itself and Lessor against the same and shall pay
and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises,
upon condition that Lessor may require Lessee to furnish to Lessor a surety
bond
satisfactory to Lessor in an amount equal
to
such contested lien, claim or demand indemnifying Lessor against liability
for
the same and holding the Premises free from
the
effect of such a lien or claim. In addition, Lessor may require Lessee to pay
Lessor's attorneys' fees and costs in participating
in such an action if Lessor shall decide it is to its best interest to do
so.
(d)
Unless Lessor requires their removal, as set forth in Paragraph 7.5(a), all
alterations, improvements, additions and Utility Installations
(whether or not such Utility Installations constitute trade fixtures of Lessee),
which may be made on the Premises, shall become the property of Lessor and
remain upon and be surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7 5(d), Lessee's machinery
and
equipment, other than that which is affixed to the Premises so that it
cannot
be
removed without material damage to the Premises, shall remain the property
of
Lessee and may be removed by Lessee subject to the provisions of Paragraph
7.2.
7.6
Lessor's Option.
Upon
reasonable advance notice and notwithstanding anything to the contrary contained
herein and in addition to the rights provided Lessor in Paragraph 7.3, Lessor
may at its option (but shall not be required to) enter upon the Premises
at any time during
the term hereof and perform any maintenance, repairs or alterations which Lessor
is entitled to perform under
the
terms of the Lease, and Lessee shall pay Lessor Lessee's share of the cost
of
any such maintenance, repairs or alterations, as
such
share shall be equitably determined by Lessor, promptly upon Lessor's billing
Lessee therefor. Lessor's reasonable determination
thereof, in good faith, shall be conclusive. Lessor agrees to perform any such
work in a manner which reasonably minimizes disruption to Lessee's business
activities.
8.
Insurance and Indemnity.
8.1
Insuring Party.
As used
in this Paragraph 8, the term "insuring party" shall mean Lessor. Lessee shall
reimburse Lessor for the
cost
of the insurance obtained in monthly installments as additional rent hereunder
in accordance with the provisions of Paragraph
16.24. If the Premises is a part of a larger building or group of buildings
and
is not separately insured, Lessee's liability shall
be
an equitable proportion of the insurance costs for all of the insured property,
such equitable proportion to be reasonably determined by Lessor in a manner
reasonably satisfactory to Lessee.
8.2
Liability Insurance.
Lessee,
at its sole cost and expense, shall maintain during the term hereof
comprehensive (commercial) general liability insurance on an "occurrence basis"
against claims for "personal injury", including without limitation bodily
injury, death and/or damage, occurring upon, in or about the Premises in a
combined single limit or not less than $1,000,000 per occurrence and with policy
aggregate limit of no less than $2,000,000 (or such higher amounts thereof
as
may be reasonably requested by Lessor not to exceed a policy aggregate limit
of
$5,000,000 from time to time during this Lease). Said insurance shall name
Lessor as an additional insured; shall be written by companies and in form
satisfactory to Lessor (which companies shall be authorized to do business
in
California); shall apply primary to any other comparable liability coverage;
and
shall contain an endorsement requiring thirty (30) days' prior written notice
sent by certified or registered mail, return receipt requested, to Lessor at
the
address set forth below, or such other address as may be provided to any such
insurer by Lessor, before cancellation thereof or change in the coverage, scope
or amount of such policy or policies. Lessee shall provide Lessor with a
Certificate of Insurance as evidence of such insurance within twenty (20) days
of the date of this Lease. In the event Lessee fails to obtain such insurance
as
provided in this Lease, Lessor may obtain any such insurance, and the cost
thereof shall be paid by Lessee as additional rent with the first payment of
rent which is due subsequent to Lessor's incurring such cost, and Lessor shall
have all remedies to collect the same as rent in the Lease provided, and/or
as
otherwise provided by law for the collection of rent. The policy shall contain
"cross-liability" or "separation of insureds" coverage and shall insure
performance by Lessee of the indemnity provisions of this Paragraph 8. The
limits of said insurance shall not, however, limit the liability of Lessee
hereunder. In the event that the Premises constitutes a part of a larger
property, said insurance shall have a Lessor's Protective Liability endorsement
attached thereto.
8.3
Property Insurance.
(a)
The
insuring party shall obtain and keep in force during the term of this lease
a
policy or policies of insurance covering loss or damage
to
the Premises, in the amount of the full replacement value thereof, as the same
may exist from time to time, which replacement value is now $2,000,000.00,
against all perils included within the classification of fire, extended
coverage, vandalism, malicious
mischief, special extended perils (all risk), sprinkler leakage and,
at
Lessors option, earthquake. Said insurance shall provide
for payment of loss thereunder to lessor or to the holders of mortgages or
deeds
of trust on the Premises. The insuring party shall,
in
addition, obtain and keep in force during the term of this Lease a policy of
rental income insurance covering a period of twelve
(12) months, with loss payable to Lessor, which insurance shall also cover
all
real estate taxes and insurance costs for said period.
If such insurance coverage has a deductible clause, Lessee shall be liable
for
the deductible amount.
(b)
If
the Premises are part of a larger building, or if the Premises are part of
a
group of buildings owned by Lessor which are adjacent to the Premises, then
Lessee shall pay for any increase in the property insurance of such other
building or buildings if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises.
(c)
Lessee shall not do or permit to be done anything which shall invalidate the
insurance policies referred to in Paragraph 8.3. If Lessee does or permits
to be
done anything which shall increase the cost of the insurance policies referred
to in Paragraph 8.3, then Lessee shall forthwith upon Lessor's demand reimburse
Lessor for any additional premiums attributable to any act or omission or
operation
of Lessee causing such increase in the cost of insurance.
8.4
Waiver of Subrogation.
Lessee
and Lessor each hereby waive any
and
all rights of recovery against the other, or against the officers,
employees, agents and representatives of the other, for loss of or damage to
such waiving party or its property or the property
of others under its control to the extent that such loss or damage is insured
against under any insurance policy in force at the time
of
such loss or damage. The insuring party shall, if possible, in obtaining the
policies of insurance required hereunder, obtain policies
which permit such waiver.
8.5
Indemnity.
Lessee
shall indemnify and hold harmless Lessor from and against any and all claims
arising out of any alleged defective
or unsafe condition of the Premises and from Lessee's use of the Premises,
or
from the conduct of Lessee's business or from
any
activity, work or things done, permitted or suffered by Lessee in or about
the
Premises or elsewhere unless due to the willful acts
or
gross negligence of Lessor, its employees, agents or contractors and shall
further indemnify and hold harmless Lessor from and
against any and all claims arising from any breach or default in the performance
of any obligation on Lessee's part to be performed under the terms-of
this
Lease, or arising from willful acts or gross negligence of Lessee, or any of
Lessee's agents, contractors,
or employees, and from and against all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against Lessor by reason of any such
claim, Lessee upon notice from Lessor shall defend the same at Lessee's expense
by counsel satisfactory to Lessor. Lessee, as a material part of 'he
consideration to Lessor, hereby assumes all risk of damage to property or injury
to persons in, upon, or about the Premises arising from any cause and Lessee
hereby waives all claims in respect thereof against Lessor.
8.6
Exemption of Lessor from Liability.
Unless
due to the willful acts or gross negligence of Lessor, its employees, agents
or
contractors,
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares,
merchandise or other property of Lessee, Lessee's employees, invitees,
customers, agents, contractors, or any other person in or
about
the Premises, nor shall Lessor be liable for injury to the person of Lessee,
Lessee's employees, invitees, customers, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether the said damage or injury results from conditions arising upon the
Premises or upon other portions of the building of which the Premises is a
part,
or from other sources or places, and regardless of whether the cause of such
damage or
injury
or the means of repairing the same is inaccessible to Lessee. Lessor shall
not
be liable for any damages arising from any act
or
neglect of any other tenant, if any, of the building in which the Premises
is
located.
9.
Damage or Destruction.
9.1
If the
Premises shall be partially damaged by fire or other cause, then the Premises
shall be repaired by and at the expense of Lessor
and the rent, until such repairs shall be made, shall be apportioned according
to the part of the Premises which is usable by Lessee.
No penalty shall accrue for reasonable delay which may arise by reason of
adjustment of fire insurance on the part of Lessor or
Lessee, for reasonable delay on account of "labor troubles", or any other cause
beyond Lessors control. If (i) the Premises are totally
damaged or are rendered wholly untenantable, (ii) the Premises are totally
or
partially damaged by uninsured fire or other uninsured
cause, or (iii) the Premises shall be so damaged that Lessor shall decide to
demolish the entire Premises, then within ninety
(90) days after the occurrence of the event or damage or destruction Lessor
may
elect, by written notice to Lessee, to terminate
this Lease. In such event, the term of this Lease shall expire by lapse of
time
upon the third day after such notice is given, and
Lessee shall vacate the Premises and surrender the same to Lessor. If Lessor
does not elect to terminate this Lease pursuant to the
preceding sentence, then: Lessor shall diligently undertake and prosecute to
completion the repair of the Premises, to substantially
their condition immediately prior to the event of damage or destruction; and
rent shall be apportioned according to the part
of
the Premises which is usable by Lessee, until such restoration or rebuilding
is
complete. Notwithstanding anything to the contrary
contained herein, if Lessor notifies Lessee of Lessor's election to terminate
this Lease pursuant to the foregoing, then for a period of ten (10) days
following Lessee's receipt of written notice of such election, Lessee may elect,
by written notice to Lessor, at Lessee's own cost and expense, to restore or
rebuild the Premises to substantially their condition immediately prior to
the
event of damage
or
destruction, in which event: (i) this Lease shall continue thereafter in full
force and effect, as if Lessors election to terminate had never been made;
(ii)
Lessee shall diligently cause the Premises to be restored or rebuilt in
accordance with the foregoing;
and (iii) rent shall be apportioned according to the part of the Premises which
is usable by Lessee until such restoration or rebuilding is complete, to the
extent of rental loss insurance available to Lessor.
Notwithstanding
anything to the contrary contained herein, in the event that Lessor does not
or
may not elect to terminate this Lease
pursuant to the terms of this Paragraph 9.1, then within sixty (60) following
the occurrence of any event of damage or destruction
to the Premises, Lessor shall provide Lessee with written notice, prepared
by a
licensed California contractor, reasonably estimating
the period of time which will be required to repair or rebuild the Premises
to
substantially the condition in which they existed
immediately prior to such damage or destruction. If such reparation or
rebuilding is not reasonably estimated to be complete within two hundred forty
(240) days following the occurrence of such damage or destruction, then Lessee
may elect by written notice to Lessor with ten (10) business days of Lessor's
notice to terminate this Lease in which event: (i) the term of this Lease shall
expire by
lapse
of time upon the third day after such notice is given, and (ii) Lessee shall
vacate the Premises and surrender the same to Lessor.
No
penalty shall accrue for reasonable delay which may arise by reason of
adjustment of fire insurance on the part of Lessor or Lessee, for reasonable
delay on account of "labor troubles", or any other cause beyond the control
of
Lessor or Lessee.
9.2
Damage Near End of Term.
If the
Premises are partially destroyed or damaged during the last six (6) months
of
the term of this
Lease, either party hereto may at its option cancel and terminate this Lease
as
of the date of occurrence of such damage by giving
notice to the other party of its election to do so within thirty (30) days
after
the date of occurrence of such damage.
9.3
Termination - Advance Payments.
Upon
termination of this Lease pursuant to this Paragraph 9, an equitable adjustment
shall be
made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so
much
of Lessee's security deposit as has not theretofore been applied by
Lessor.
9.4
Waiver.
Lessee
waives the provisions of California Civil Code Sections 1932(2) and 1933(4)
which relate to termination of leases when the thing leased is destroyed and
all
rights under any law in existence during the term of this Lease authorizing
a
tenant to make repairs at the expense of a landlord or to terminate a lease
on
complete or partial destruction of the leased premises, and agrees that any
such
event shall be governed by the terms of this Lease.
10.
Real Property Taxes.
10.1
Payment of Taxes.
Lessee
shall pay to Lessor in monthly installments, as additional rent, Lessee's share
of the real property taxes
applicable to the Premises in accordance with the provisions of Paragraph
16.24.
10.2
Definition of "Real Property" Tax.
As used
herein, the term "real property tax" shall include any form of assessment,
license fee,
commercial rental tax, levy, penalty, or tax (other than inheritance or estate
tax or State or Federal income tax of Lessor), imposed
by any authority having the direct or indirect power to tax, including any
city,
county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement district
thereof,
as
against any legal or equitable interest of Lessor in the Premises
or in the real property of which the Premises are a part, as against Lessor's
right to rent or other income therefrom, or as against
Lessor's business of leasing the Premises or any tax imposed in substitution,
partially or totally, of any tax previously included
within the definition of real property tax, or any additional tax the nature
of
which was previously included within the definition of
real
property tax. Any surcharge or regulatory fee imposed by any governmental entity
with reference to parking applicable to the Premises
shall also be included within the term "real property tax."
10.3
Proration of Taxes.
If the
Premises are not separately assessed, Lessee's liability shall be an equitable
proportion of the real property
taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor
from the respective valuations assigned in the assessor's work sheets or such
other information as may be reasonable available.
Lessor's reasonable determination thereof shall be reasonably acceptable to
Lessee.
10.4
Personal Property Taxes.
(a)
Lessee shall pay prior to delinquency all taxes assessed against and levied
upon
trade fixtures, furnishings, equipment and all other personal property of Lessee
contained in the Premises or elsewhere. When possible, Lessee, shall cause
said
trade fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property of Lessor.
(b)
If
any of Lessee's said personal property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable
to Lessee in accordance with the provisions of Paragraph 16.24.
11.
Utilities. Lessee
shall pay for all water, gas, heat, light, power, telephone and other utilities
and services supplied to the Premises, together with any taxes thereon. If
any
such services are not separately metered to Lessee, Lessee shall pay a
reasonable proportion to be determined
by Lessor of all charges jointly metered with other premises.
12.
Assignment. Mortgage and Subletting. (See Addendum-Paragraph
21.)
12.1
Lessor's Consent.
Neither
Lessee, nor Lessee's legal representatives, successors or assigns, shall assign,
mortgage or encumber
this Lease, or sublet, or use or occupy or permit the Premises or any part
thereof to be used or occupied by others, without the
prior
consent of Lessor and the payment of any applicable processing fee in each
instance, and any such assignment, mortgage, encumbrance,
sublease or permission without such consent and payment shall be voidable at
the
option of Lessor and, at the further
option of Lessor, shall terminate this Lease subject to the provisions of
Paragraph 13 "Defaults; Remedies". If this Lease
be
assigned, or if the Premises or any part thereof be sublet or occupied by any
party other than Lessee, Lessor may, after default
by Lessee, collect rent from the assignee, subtenant or occupant,
and
apply the net amount collected to the rent herein reserved,
but no such assignment, subletting, occupancy or collection shall be deemed
a
waiver of this covenant or the acceptance of the
assignee, subtenant or occupant as tenant, or a release of Lessee from the
further performance by Lessee of the obligations on the
part
of Lessee herein contained. The consent by Lessor to an assignment or subletting
shall not in any wise be construed to relieve
Lessee, the assignee or the subtenant from obtaining the express consent of
Lessor to any further assignment or subletting or to release Lessee from any
liability, whether past, present or future, under this Lease or to release
Lessee from any liability under this Lease
because of Lessor's failure to give notice of default under or in respect of
any
of the terms, covenants, conditions, provisions or agreements
of this Lease. Notwithstanding the consent of Lessor to such assignment or
subletting, Lessee shall remain liable for the payment
of all bills rendered by Lessor for the charges incurred by the assignee or
subtenant for services and materials supplied to the
Premises. A transfer of control of Lessee shall be deemed an assignment under
this Lease and shall be subject to all the provisions
of this Article, including but not limited to the requirement of obtaining
Lessor's prior consent, unless Lessee at the time of the
proposed transfer is then a publicly held corporation freely traded on a major
stock exchange.
Notwithstanding
any contrary provision of the immediately preceding provisions of this Paragraph
12.1, but subject to the provisions
of Subparagraph 12.2(b), Lessee may assign this Lease or sublet the Premises
or
any portion thereof upon the following express
conditions:
(1)
that
the proposed assignee or subtenant shall be subject to the prior consent of
Lessor, which consent will not be unreasonably
withheld or delayed more than ten (10) business days after Lessor's receipt
of
all information required from Lessee but, without
limiting the generality of the foregoing, it shall be reasonable for Lessor
to
deny such consent if:
(a)
the
use to be made of the Premises by the proposed assignee or subtenant is a use
which would be prohibited by any other portion
of this Lease (including but not limited to any Rules and Regulations then
in
effect) or a use which would impose any additional
burden upon Lessor in the operation of the Building; however, Lessor shall
not
unreasonably withhold its consent to a use differing
from those set forth in Paragraph 6.1 of this Lease; or
(b)
the
character, moral stability, reputation and financial responsibility of the
proposed assignee or subtenant are not reasonably satisfactory
to Lessor or in any event not at least equal to those which were possessed
by
Lessee as of the date of execution of this Lease;
(2)
that
Lessee shall reimburse Lessor for all reasonable costs incurred by Lessor in
connection with such assignment or subletting
including without limitation all attorneys' fees applicable
thereto;
(3)
that
the proposed assignee or subtenant shall execute an agreement pursuant to which
it shall agree to perform faithfully and be bound
by
all of the terms, covenants, conditions, provisions and agreements of this
Lease;
(4)
that
an executed duplicate original of said assignment and assumption agreement
or
sublease, as the case may be, on Lessor's then
standard form, shall be delivered to Lessor within five (5) days after the
execution thereof, and that such assignment or subletting
shall not be binding upon Lessor until the delivery thereof to Lessor;
and
(5)
that
Lessee shall pay to Lessor, as additional rent, one-half (1/2) of any
consideration given to Lessee by the proposed assignee or
subtenant for or in connection with such assignment or subletting. Lessor and
Lessee have each given full consideration to the possibility
that the rental value of the Premises may appreciate during the term of the
Lease. In such regard, Lessor and Lessee have expressly
allocated the possibility of such rental value increase as part of their
negotiations of this Lease. Lessor and Lessee freely negotiated all of the
terms
and conditions of this Lease, including but not limited to, the possibility
that
this Lease may be terminated by
Lessor
pursuant to this Paragraph 12 Lessor and Lessee expressly thus agree that any
such rental increase value is not an element of value or property right granted
to Lessee, and that Lessor retains all rights thereto, including, but not
limited to, the termination
and allocation rights herein set forth.
12.2
Procedure.
(a)
At
least thirty (30) days prior to any proposed subletting or assignment or
mortgage, Lessee shall submit to Lessor a statement containing the name and
address of the proposed subtenant or assignee or mortgagee and all of the
principal terms and conditions of the
proposed subletting or assignment or mortgage including, but not limited to,
in
the event of a subletting the proposed commencement
and expiration dates of the term thereof. If the proposed sublet area shall
not
constitute the entire Premises, such statement
shall be accompanied by a floor plan delineating the proposed sublet area.
Lessor shall have a reasonable amount of time but
in no
event less than ten (10) business days from the receipt of any such notice
to
consent, decline to consent or make one of the elections
provided in Subparagraph (b) below.
(b)
In
lieu of consenting or not consenting, Lessor may, at its option (i) terminate
this Lease in its entirety if Lessee submits a written
request for an assignment or subletting, for substantially the entire remaining
term of the Lease, of the Premises in its entirety, (ii)
elect to enter into a lease directly with the proposed assignee or with the
proposed subtenant as to that portion of the Premises which
Lessee has proposed to sublet, (iii) terminate this Lease as to that portion
of
the Premises which Lessee had proposed to sublet,
or (iv) elect, where the rental charged in the sublease exceeds the pro rata
portion of the rental for such space charged in this Lease, to receive from
Lessee monthly, as additional rent, one-half (1/2) of the excess of the rental
charged in the sublease, over the rental
charged in this Lease for the subleased space, after deducting from such
one-half of the excess the amounts, if any, which Lessee
has reimbursed Lessor pursuant to Paragraph 12.1.(2), Lessor's termination
rights under this subparagraph shall be exercisable only in the case of (i)
a
sublease or assignment occurring with the last two (2) years of the Lease Term
or (ii) a sublease
or assignment of more than fifty percent (50%) of the floor area of the
buildings comprising the Premises.
12.3
Bankruptcy.
(a)
If
Lessee shall file a petition for voluntary bankruptcy or reorganization under
any provision of the Bankruptcy Code as then in effect,
or if Lessee be adjudicated a bankrupt in involuntary bankruptcy proceedings
and
such adjudication shall not have been vacated
within ninety (90) days from the date thereof, or a receiver or trustee be
appointed of Lessee’s property in any involuntary proceeding and the order
appointing such receiver or trustee be not set aside or vacated within ninety
(90) days after the entry thereof,
or if Lessee shall assign Lessee’s estate or effects for the benefit of
creditors, or if Lessee becomes insolvent, or if this Lease shall otherwise
by
operation of law devolve or pass to any person or persons other than Lessee,
then and in any such events Lessor may,
at
its option, with or without notice of such election and with or without entry
or
action by Lessor, forthwith terminate this Lease, and
notwithstanding any other provisions of this Lease, Lessor, in addition to
any
and all rights and remedies allowed by law or equity,
shall upon such termination be entitled to recover damages in an amount equal
to
the then present value of the rent reserved in
this
Lease for the entire residue of the stated term hereof, less the fair rental
value of the Premises for the residue of the stated term hereof, and neither
Lessee nor any person claiming through or under Lessee or by virtue of any
statute or order of any court shall be entitled to possession of the Premises
but shall forthwith quit and surrender the Premises to Lessor.
(b)
Without limiting any of the foregoing provisions of this Paragraph, if pursuant
to the Bankruptcy Reform Act of 1978 Lessee is permitted to assign this Lease
notwithstanding the restrictions contained in this Lease, Lessee agrees that
adequate assurance of future
performance by an assignee expressly permitted under such Code shall be deemed
to mean the deposit of cash security in an amount equal to the sum of one year's
rent reserved hereby plus an amount equal to additional rent under Paragraph
4.1
hereof for the
calendar year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Lessor
in
accordance with Paragraph 5 for the balance of the term, without interest,
as
security for the full performance of all of the obligations under this Lease
on
Lessee's part to be performed.
12.4
Identification of Lessee.
(a)
If
more than one person executes this Lease as Lessee, (i) each of them shall
be
jointly and severally liable for the keeping, observing and performing of all
of
the terms, covenants, conditions, provisions and agreements of this Lease to
be
kept, observed and
performed by Lessee, and (ii) the term "Lessee" as used in this Lease shall
mean
and include each of them jointly and severally and
the
act of or notice from, or notice or refund to, or the signature of, any one
or
more of them, with respect to tenancy of this Lease,
including, but not limited to any renewal, extension, expiration, termination
or
modification of this Lease as Lessee shall have the
same
force and effect as if each and all of them had so acted or so given or received
such notice or refund or so signed.
(b)
If
Lessee is a partnership (or is comprised of two or more persons, individually
and as co-partners of a partnership) or if Lessee's interest in this Lease
shall
be assigned to a partnership (or to two or more persons individually and as
co-partners of a partnership) pursuant to Paragraph 12.2 hereof (any such
partnership and such persons are referred to in this Subparagraph as
Partnership
Tenant): (i) the liability of each of the parties comprising Partnership Tenant
shall be joint and several, and (ii) each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to
be
bound by, any written instrument which may hereafter
be executed, changing, modifying or discharging this Lease, in whole or in
part,
or surrendering all or any part of the Premises
to Lessor, any notices, demands, requests or other communications which may
hereafter be given by Partnership Tenant or any of the parties comprising
Partnership Tenant, and (iii) any bills, statements, notices, demands, requests
or other communications given or rendered to Partnership Tenant or to any of
the
parties comprising Partnership Tenant shall be deemed given or rendered to
Partnership
Tenant and to all such parties and shall be binding upon Partnership Tenant
and
all such parties, and (iv) if Partnership Tenant
shall admit new partners, all of such new partners shall, by their admission
to
Partnership Tenant, be deemed to have assumed
performance of all of the terms, covenants -and conditions of this Lease on
Lessee's part to be observed and performed, and (v)
Partnership Tenant shall give prompt notice to Lessor of the admission of any
such new partners, and, upon demand of Lessor, shall cause each such new partner
to execute and deliver to Lessor an agreement in form satisfactory to Lessor,
wherein each new partner shall assume performance of all of the terms, covenants
and conditions of this Lease on Lessee's part to be observed and performed,
but
neither Lessor's failure to request any such agreement nor the failure of any
such new partner to execute or deliver any
such
agreement to Lessor shall vitiate the provisions of this Subparagraph.
Notwithstanding the foregoing, the individual shareholders,
officers and directors of the partnership corporations shall not be personally
liable hereunder.
13.
Defaults; Remedies.
13.1
Defaults.
The
occurrence of any one or more of the following events shall constitute a
material default and breach of this Lease
by
Lessee:
(a)
The
vacating or abandonment of the Premises by Lessee for three (3) consecutive
months.
(b)
The
failure by Lessee to make any payment of rent or any other payment required
to
be made by Lessee hereunder, as and when due after three (3) days’ notice having
been given by Lessor to Lessee.
(c)
The
failure by Lessee to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by Lessee, other than
described in paragraph (b) above, where such failure shall continue for a period
of thirty (30) days after
written notice hereof from Lessor to Lessee; provided, however,
that if
the nature of Lessee's default is such that more than thirty (30)
days
are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion.
(d)(i)
The making by Lessee of any general assignment or general arrangement for the
benefit of creditors;'(ii) the filing by or against Lessee of a petition to
have
Lessee 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 Lessee, the same is dismissed within ninety (90) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all
of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within
ninety
(90) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within ninety
(90)
days.
(e)
The
discovery by Lessor that any financial statement given to Lessor by Lessee,
an
assignee of Lessee, any subtenant of Lessee, any successor in interest of Lessee
or any guarantor of Lessee's obligations hereunder, and any of them, was
materially false.
(f)
The
removal by Lessee of substantially all of Lessee's furniture from the Premises
for three (3) consecutive months.
(g)
The
failure by Lessee to move into or take possession of the Premises within fifteen
(15) days after the commencement of the term of this Lease.
(h)
Deleted.
(i)
Deleted.
(j)
Any
default by Lessee with respect to any other lease between (i) Lessor and Lessee,
or (ii) any parent company or subsidiary company or affiliate or agent of Lessor
and Lessee.
(k)
The
assignment or other transfer by Lessee of substantially all of the assets used
in connection with the business conducted in the Premises.
13.2
Remedies.
In the
event of any such material default or breach by Lessee, Lessor may at any time
thereafter, with or without notice or demand and without limiting Lessor in
the
exercise of any right or remedy which Lessor may have by reason of such default
or breach:
(a)
Terminate Lessee's right to possession of the Premises by any lawful means,
in
which case this Lease shall terminate and Lessee shall immediately surrender
possession of the premises to Lessor.
(b)
Maintain Lessee's right to possession in which case this Lease shall continue
in
effect whether or not Lessee shall have abandoned the Premises. In such event
Lessor shall be entitled to enforce all of Lessor's rights and remedies under
this Lease, including the right to recover the rent as it becomes due hereunder.
Lessor shall not be deemed to have elected to terminate unless Lessor gives
Lessee notice of such election to terminate, and in no event shall Lessor's
acts
of maintenance or preservation of the Premises, efforts to relet the Premises,
or obtaining the appointment of a receiver to protect the interest of Lessor
under this Lease be deemed to constitute such termination.
(c)
Pursue any other remedy now or hereafter available to Lessor under the laws
or
judicial decisions of the State in which the Premises are located.
(d)
In
the event Lessor elects to terminate this Lease and Lessee's right to possession
in accordance with this Paragraph, or the same are terminated by operation
of
law, Lessor may recover as damages from Lessee the following:
(i)
The
worth at the time of award of the unpaid rental (including but not limited
to
any additional rent payable under Paragraph 4.1 hereof even if determined at
a
later date) and other sums due hereunder which had been earned at the time
of
the termination of this Lease, and (ii) The worth at the time of award of the
amount by which the unpaid rental (including but not limited to any additional
rent payable under Paragraph 4.1 hereof) and other sums due hereunder which
would have been earned after the date of termination of this Lease until the
time of award exceeds the amount of such loss of rental and other sums due
that
Lessee proves could have been reasonably avoided; and (iii) The worth at the
time of the award of the amount by which the unpaid rental (including but not
limited to any additional rent payable under Paragraph 4.1 hereof) and other
sums due hereunder for the balance of the term after the time of award exceeds
the amount of the loss of such rental and other sums that Lessee proves could
be
reasonably avoided: and (iv) Any other amount, including attorneys' fees and
court costs, necessary to compensate Lessor for all detriment proximately caused
by Lessee's act of default or which in the ordinary course of things would
be
likely to result therefrom. The "worth at the time of award" of the amounts
referred to in (i) and (ii) above, is computed by allowing interest at the
maximum rate allowed by law. The "worth at the time of award" of the amount
referred to in (iii) above, is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent.
13.3
Late Charges.
Lessee
hereby acknowledges that late payment by Lessee to Lessor of rent and other
sums
due hereunder will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Lessor by the terms of any mortgage or trust
deed covering the Premises. Accordingly, if any installment of rent or any
other
sum due from Lessee shall not be received by Lessor or Lessor's designee within
ten (10) days after such amount shall be due, Lessee shall pay to Lessor a
late
charge equal to 6% of such overdue amount. The parties hereby agree that such
late charge by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising any
of
the other rights and remedies granted hereunder. If the payment of rent is
received late for two consecutive months or more than four times within any
twelve month period, then, upon notice to Lessee by Lessor, rent for the balance
of the Lease term shall be payable quarterly, in advance.
14.
Condemnation.
If the
Premises or any portion thereof are taken under the power of eminent domain,
or
sold under the threat of the exercise of said power (all of which are herein
called "condemnation"), this Lease shall terminate as to the part so taken
as of
the date the condemning authority takes title or possession, whichever first
occurs. If more than 10% of the floor area of the improvements on the Premises,
or more than 25% of the land area of the Premises which is not occupied by
any
improvements, is taken by condemnation, Lessor or Lessee may, at either party's
option, to be exercised in writing only within ten (10) days after Lessor shall
have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date of the condemning authority
takes possession. If neither party terminates this Lease in accordance with
the
foregoing, this Lease shall remain in full force and effect as to the portion
of
the Premises remaining, except that the rent shall be reduced in proportion
that
the floor area taken bears to the total floor area of the building situated
on
the Premises. Any award for the taking of all or any part of the Premises under
the power of eminent domain or any payment made under threat of the exercise
of
such power shall be the property of Lessor, whether such award shall be made
as
compensation for diminution in value of the leasehold or for the taking of
the
fee, or as severance damages. In the event that this Lease is not terminated
by
reason of such condemnation, Lessor shall, to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage
to
the Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. Lessee shall pay any
amount in excess of such severance damages required to complete such
repair.
15.
Brokers.
In
connection with this Lease, Lessee and Lessor warrant and represent to each
other that neither has had dealings with any broker or finder and that each
knows of no person who is or might be entitled to a commission, finder's fee
or
other like payment in connection herewith and do hereby indemnify and agree
to
hold each other harmless from and against any and all loss, liability and
expenses that the other may incur should such warranty and representation prove
incorrect.
16.
General Provisions.
16.1
Estoppel Certificate.
(a)
Lessee shall, each time and from time to time upon receipt of request therefor
from Lessor, within five (5) business days after receipt of such request,
execute, acknowledge and deliver to Lessor a statement in writing addressed
to
Lessor or its designee: (i) certifying that this Lease is unmodified and in
full
force and effect (or, if modified, stating the nature of such modification
and
certifying that this Lease as so modified is in full force and effect), (ii)
setting forth the dates to which the rental and other charges are paid (and
if
any amounts are paid in advance so stating), and (iii) acknowledging that there
are not any uncured defaults on the part of Lessor or Lessee (or if any defaults
are claimed, specifying the same). Such statement as given by Lessee (or Lessor
pursuant to subparagraph (b) hereof) may be relied upon by a prospective
purchaser or encumbrancer of the real property or any part thereof of which
the
Premises are a part. Lessor shall also agree to provide, upon request by Lessee,
and within five (5) days of request, the same information as described in
16.1(a)(i), (ii) and (iii).
(b)
The
failure or refusal of Lessee to deliver the statement(s) as requested by Lessor
pursuant to subparagraph (a) hereof within the time provided shall, at the
option of Lessor, constitutes a default under this Lease, and in the event
of
any such failure or refusal Lessee shall be conclusively bound by any statement
of such import given by Lessor.
(c)
If
Lessor desires to finance or refinance the Premises, or any part thereof, and
from time to time during the term of this Lease, at the sole discretion of
Lessor, Lessee hereby agrees to deliver to any lender designated by Lessor
such
financial statements and tax returns of Lessee as may be reasonably requested
by
Lessor. Such statements shall include the past three years' financial statements
of Lessee or such shorter period based on the time Lessee has been in existence.
All such financial statements shall be received in confidence and shall be
used
only for the purposes herein set forth.
16.2
Lessor's Liability.
The term
“Lessor” as used herein shall mean only the owner or owners at the time in
question of the fee title or a lessee's interest in a ground lease of the
Premises. In the event of any transfer of such title or interest, Lessor herein
named (and in case of any subsequent transfers the then grantor) shall be
relieved from and after the date of such transfer of all liability as respects
Lessor's obligations thereafter to be performed, provided that any funds in
the
hands of Lessor or the then grantor at the time of such transfer, in which
Lessee has an interest, shall be delivered to the grantee. The obligations
contained in this Lease to be performed by Lessor shall, subject as aforesaid,
be binding on Lessor's successors and assigns, only during their respective
periods of ownership. Lessee agrees to look solely to Lessor’s estate and
interest in the real property of which the Premises is a part (or the proceeds
thereof) for the satisfaction of any remedy of Lessee for the collection of
a
judgment (or other judicial process) requiring the payment of money by Lessor
in
the event of any default by Lessor hereunder, and no other property or assets
of
Lessor or of any of the partners of Lessor shall be subject to levy, execution
or other enforcement procedure for the satisfaction of Lessee's remedies under
or with respect to this Lease, the relationship of Lessor and Lessee hereunder
or Lessee's use or occupancy of the Premises. This Lease and the obligations
of
Lessee hereunder shall not be affected or impaired because Lessor is unable
to
fulfill any of its obligations hereunder or is delayed in doing so if such
inability or delay is caused by reason of strike or labor troubles or any other
cause beyond the reasonable control of Lessor.
16.3
Severability.
The
invalidity of any provision of this Lease as determined by a court of competent
jurisdiction, shall in no way affect the validity of any other provision
hereof.
16.4
Interest on Past-due Obligations.
Except
as expressly herein provided to the contrary, any amount due Lessor not paid
when due shall bear interest at the maximum rate allowed by law from the date
due. Payment of such interest shall not excuse or cure any default by Lessee
under this Lease, provided, however, that interest shall not be payable on
late
charges incurred by Lessee nor on any amounts upon which late charges are paid
by Lessee.
16.5
Time of Essence.
Time is
of the essence as to Lessee's obligations hereunder.
16.6
Captions.
Article
and paragraph captions are for convenience only and shall not be referred to
for
the purpose of limiting and construing this Lease in any way.
16.7
Incorporation of Prior Agreements; Amendments.
This
Lease contains all agreements of the parties with respect to any matter
mentioned herein. No prior agreement or understanding pertaining to any such
matter shall be effective. Except as otherwise stated in this Lease, Lessee
hereby acknowledges that neither the real estate brokers listed in Paragraph
15
hereof nor any cooperating broker on this transaction nor the Lessor or any
employees or agents of any of said persons has made any oral or written
warranties or representations to Lessee relative to the condition or use by
Lessee of the Premises, or the costs of operating or the taxes with respect
to
said Premises and Lessee acknowledges that Lessee assumes all responsibility
regarding the Occupation Safety Health Act or the legal use or adaptability
of
the Premises and the compliance thereof to all applicable laws and regulations
enforced during the term of this Lease except as otherwise specifically stated
in this Lease. This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification.
16.8
Notices.
Except
as otherwise in this Lease provided, any notice, consent, approval, demand,
statement, xxxx, or other communication which Lessor may desire or be required
to give to Lessee, shall be deemed sufficiently given or rendered if, in
writing, delivered Lessee personally to the Chief Executive Officer or Chief
Financial Officer of Lessee or sent by registered or certified mail addressed
to
Lessee at the Premises or at the address set forth below, and at the time of
the
rendition of such xxxx or statement and of the giving of such notice, consent,
approval, demand or communication shall be deemed to be the time when the same
is delivered to Lessee, mailed, or left at the Premises as herein provided.
Any
notice, request, demand or communication by Lessee to Lessor must be served
by
registered or certified mail addressed to Lessor, at the address set forth
below, or at such other address as Lessor shall designate by notice given as
herein provided, and the time of giving such notice, request, demand or
communication shall be deemed to be the time when the same is mailed as herein
provided.
16.9
Waivers.
No
waiver by Lessor of any provision hereof shall be deemed a waiver of any other
provision hereof or of any subsequent breach by Lessee of the same or any other
provision. Lessor's consent to or approval of any act shall not be deemed to
render unnecessary the obtaining of Lessor's consent to or approval of any
subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall
not
be a waiver of any preceding breach at the time of acceptance of such rent.
No
payment by Lessee or receipt by Lessor of a lesser amount than the monthly
rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction and Lessor may accept such check or payment without prejudice
to
Lessors right to recover the balance of such rent or pursue any other remedy
in
this Lease provided.
16.10
Recording.
Lessee
shall not record this Lease or a short form memorandum thereof without Lessor's
prior consent, and any such recordation without Lessor's prior consent shall,
at
the option of Lessor, constitute a non-curable default of Lessee hereunder
Lessee and Lessor shall execute and acknowledge a short form memorandum of
this
Lease for recording purposes in form and content acceptable to both
parties.
16.11
Holding Over.
If
Lessee remains in possession of the Premises or any part thereof after the
expiration of the term hereof without the express consent of Lessor, such
occupancy shall be a tenancy from month-to-month at a rental equal to one and
one-half (1 1/2) the amount of the last monthly rental plus all other charges
payable hereunder, and upon all the terms hereof applicable to a month-to-month
tenancy.
16.12
Cumulative Remedies.
No
remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in
equity.
16.13
Covenants and Conditions.
Each
provision of this Lease performable by Lessee shall be deemed both a covenant
and a condition.
16.14
Binding Effect; Choice of Law.
Subject
to any provisions hereof restricting assignment, encumbrancing or subletting
by
Lessee and subject to the provisions of Paragraph 16.2, this Lease shall bind
the parties, their personal representatives, successors and assigns. This Lease
shall be governed by the laws of the State in which the Premises are
located.
16.15
Subordination.
(a)This
Lease, at Lessor's option, shall be subordinate or superior to any ground lease,
mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the real property of which the Premises is a part and
to
any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
(b)
Lessee agrees to execute any documents required to effectuate such subordination
or to make this Lease prior to the lien of any mortgage, deed of trust or ground
lease, as the case may be, provided Lessor shall furnish Lessee with a
reasonably acceptable non-disturbance agreement.
(c)
Subject to all of the provisions of this Lease, including without limitations
this Paragraph 16.15, Lessee agrees to attorn to a lender or any other party
who
acquires ownership of the Premises by reason of a foreclosure.
16.16
Attorneys' Fees. (See
Addendum - Paragraph 22)
(a)
In
the event that Lessor should bring suit for the possession of the Premises,
for
the recovery of any sum due under this Lease, or because of the breach of any
provision of this Lease, or for any other relief against Lessee hereunder,
then
all costs and expenses, including reasonable attorneys' fees, incurred by Lessor
therein shall be paid by Lessee, which obligation on the part of Lessee shall
be
deemed to have accrued on the date of the commencement of such action and shall
be enforceable whether or not the action is prosecuted to
judgement.
(b)
Should Lessor be named as a defendant in any suit brought against Lessee in
connection with or arising out of Lessee's occupancy hereunder, Lessee shall
pay
to Lessor its costs and expenses incurred in such suit, including reasonable
attorneys' fees.
(c)
Lessor and Lessee covenant and agree that in any suit or proceeding arising
out
of, under, or by virtue of this Lease, Lessor and Lessee do hereby waive trial
by jury.
16.17
Lessor's Access. (See
Addendum-Paragraph 23.)
Lessor
and Lessor's agents shall have the right to enter the Premises at reasonable
times for the purpose of inspecting the same, showing the same to prospective
purchasers, or lenders, or lessees, and making such alterations, repairs,
improvements or additions to the Premises or to the building of which they
are a
part as may be reasonable required pursuant hereto. Lessor may at any time
place
on or about the Premises any ordinary "For Sale" signs and Lessor may at any
time during the last 120 days of the term hereof place on or about the Premises
any ordinary "For Lease" signs, all without rebate of rent or liability to
Lessee.
16.18
Signs and Auctions. (See Addendum-Paragraph 24.)
Lessee
shall not place any sign upon the Premises or conduct any auction thereon
without Lessor's prior consent.
16.19
Merger.
The
voluntary or other surrender of this Lease by Lessee, or a mutual cancellation
hereof, or a termination by Lessor, shall not work as a merger, and shall,
at
the option of Lessor, terminate all or any existing subtenancies or may, at
the
option of Lessor, operate as an assignment to Lessor of any or all of such
subtenancies.
16.20
Corporate Authority.
If
Lessee is a corporation, each individual executing this Lease on behalf of
said
corporation represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the Bylaws of said corporation, and that this Lease is binding
upon said corporation in accordance with its terms. If Lessee is a corporation
Lessee shall, within thirty (30) days after execution of this Lease, deliver
to
Lessor a certified copy of a resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.
16.21
Guarantor.
In the
event that there is a guarantor of this Lease, said guarantor shall have the
same obligations as Lessee under Paragraphs 16.1 and 16.20 of this
Lease.
16.22
Quiet Possession.
Upon
Lessee paying the fixed rent reserved hereunder and observing and performing
all
of the covenants, conditions and provisions on Lessee's part to be observed
and
performed hereunder, Lessee shall have quiet possession of the Premises for
the
entire term hereof subject to all of the provisions of this Lease, including
without limitation the provisions of Paragraph 16.15.
16.24
Common Areas and Building Costs. As
used
herein, "Common Areas" shall mean all areas within the building and grounds
which are not specifically leased or held for lease by Lessor, including,
without limiting the foregoing, parking areas, driveways, sidewalks, loading
areas, access and egress roads, corridors, landscaped and planted areas and
all
other improvements provided by Lessor for the common use of lessees. Lessor
may
from time to time change the size, location, nature, and use of any of the
Common Areas including converting any portion of the Common Areas to leasable
areas and increasing or decreasing common area land and/or
facilities.
Lessee,
its employees, agents, customers, and business invitees shall have the
non-exclusive right (in common with other lessees and all others whom Lessor
has
granted or may grant such rights) to use the Common Areas for the purposes
intended, subject to such reasonable rules and regulations relating to such
use
as Lessor may from time to time establish. Lessee agrees, after notice thereof,
to abide by such rules and regulations and to use its best efforts to cause
its
officers, employees, agents, customers, and business invitees to conform thereto
Lessor may at any time close any Common Areas to effect construction, repairs,
or changes thereto, or to prevent the acquisition of public rights in such
areas, and may do such other acts in and to the Common Areas as in its judgement
may be desirable to improve the convenience thereof. Lessee shall not at any
time interfere with the rights of Lessor, or other lessees, or of any person
entitled to use the Common Areas or to use any part thereof.
Lessor
shall operate, manage, equip, clean, sweep, remove refuse, light, patrol,
repair, replace, and maintain the Common Areas for their intended purposes
in
such manner as Lessor shall in its sole discretion determine to be reasonably
appropriate.
Lessee
shall pay to Lessor, in the manner provided in the following paragraph hereof,
Lessee's pro-rata share of all the costs of operating, managing, leasing,
maintaining, repairing, and replacing the Common Areas and the building of
which
the Premises forms a part. Such costs shall include all costs and expenses
incurred by Lessor for the operation and maintenance of the Common Areas and
the
building of which the Premises forms a part during the Lease term (including
appropriate reserves) including, without limiting the foregoing: costs and
expenses of gardening and landscaping; water and sewage charges; maintenance
and
signs (other than Lessee's signs); premiums for liability, property damage,
fire
and other types of casualty and worker's compensation insurance (including,
but
not limited to, liability insurance procured by Lessor pursuant to Paragraph
8.2); all taxes levied on or attributable to the Common Areas and the building
of which the Premises forms a part (including, but not limited to, "real
property taxes" as defined in Paragraph 10 2 and 10.4), fees for required
licenses and permits; management and similar administrative fees; costs and
expenses of repairs, resurfacing, repaving, maintenance, painting, lighting,
cleaning, refuse removal, security, parking attendants, and other
items.
Lessee's
pro-rata share of the costs referred to in the previous subparagraph shall
be
reasonably determined by Lessor and such reasonable determination made in good
faith shall be conclusive. Lessee's annual pro-rata share as estimated by Lessor
shall be paid as additional rent in monthly installments, in advance, on the
first day of each calendar month of the Lease term after commencement thereof
(pro-rated for any fractional month). Lessor shall deliver to Lessee within
sixty (60) days after the expiration of each calendar year a reasonably detailed
statement showing Lessee's share of the actual costs incurred during the
preceding year. If Lessee's payments under this Paragraph 16.24 during said
preceding year exceed Lessee's pro-rata share as indicated on said statement,
Lessee shall be entitled to credit the amount of such overpayment against
Lessee's pro-rata share of such costs next falling due. If Lessee's payments
under this Paragraph during said preceding year were less than Lessee's pro-rata
share as indicated on said statement, Lessee shall pay to Lessor the amount
of
the deficiency as additional rent within ten (10) days after delivery by Lessor
to Lessee of said statement.
17.
Hazardous Materials. (See Addendum-Paragraph 25.)
17.1
Reportable Uses Require Consent.
The term
"Hazardous Substance" as used in this Lease shall mean any product, substance,
chemical, material or waste whose presence, nature, quantity and/or intensity
of
existence, use, manufacture, disposal, transportation,
spill, release or effect, either by itself or in combination with other
materials expected to be on the Premises, is either: (i) potentially injurious
to the public health, safety or welfare, the environment, or the Premises;
(ii)
regulated or monitored by any governmental
authority; or (iii) a basis for potential liability or Lessor to any
governmental agency or third party under any applicable statute
or common law theory. Hazardous Substance shall include, but not be limited
to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Lessor and compliance
in
a
timely manner (at Lessee's sole cost and expense) with all Applicable
Requirements (as defined in Paragraph 17.4). "Reportable Use"
shall mean (i) the installation or use of any above or below ground storage
tank, (ii) the generation, possession, storage, use, transportation,
or disposal of a Hazardous Substance that requires a permit from, or with
respect to which a report, notice, registration
or business plan is required to be filed with, any governmental authority,
and
(iii) the presence in, on or about the Premises
of a Hazardous Substance with respect to which any applicable laws require
that
a notice be given to persons, entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may, without Lessor's prior
consent, but upon notice to Lessor and in compliance with all Applicable
Requirements, use any ordinary and customary materials reasonably required
to be
used by Lessee in the normal course of the Permitted Use, so long as such use
is
not a Reportable Use and does not expose the Premises or neighboring properties
to any meaningful risk of contamination or damage or expose Lessor to any
liability therefor In addition, Lessor may (but without any obligation to do
so)
condition its consent to any Reportable Use of any Hazardous Substance
by Lessee upon Lessee's giving Lessor such additional assurances as Lessor,
in
its reasonable discretion, deems necessary
to protect itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor,
including but not limited to the installation (and, at Lessor's option, removal
on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Premises (such as
concrete encasements) and/or the deposit of an
additional Security Deposit under Paragraph 5 hereof.
17.2
Duty to Inform Lessor.
If
Lessee knows, or has reasonable cause to believe, that a Hazardous Substance
has
come to be located
in, on, under or about the Premises or the Building, other than as previously
consented to by Lessor, Lessee shall immediately
give Lessor written notice thereof, together with a copy of any statement,
report, notice, registration, application, permit, business plan, license,
claim, action, or proceeding given to, or received from, any governmental
authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous Substance
including but not limited to all such documents as may be involved in any
Reportable Use involving the Premises. Lessee shall not cause or permit any
Hazardous Substance to be spilled
or released in, on, under or about the Premises (including, without limitation,
through the plumbing or sanitary sewer system).
17.3
Indemnification.
Lessee
shall indemnify, protect, defend and hold Lessor, its agents, employees, lenders
and ground lessor, if any, and the Premises, harmless from and against any
and
all damages, liabilities, judgements, costs, claims, liens, expenses, penalties,
loss of permits and attorneys' and consultants' fees arising out of or involving
any Hazardous Substance brought onto the Premises by or for Lessee or by anyone
under Lessee's control. Lessee's obligations under this Paragraph 17.3 shall
include, but not be
limited to, the effects of any contamination or injury to person, property
or
the environment created or suffered by Lessee, and the cost
of
investigation (including consultants' and attorneys' fees and testing), removal,
remediation, restoration and/or abatement thereof,
or of any contamination therein involved, and shall survive the expiration
or
earlier termination of this Lease. No termination, cancellation
or release agreement entered into by Lessor and Lessee shall release Lessee
from
its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such
agreement.
17.4
Lessee's Compliance with Requirements.
Lessee
shall, at Lessee's sole cost and expense, fully, diligently and in a timely
manner,
comply with all "Applicable Requirements," which term is used in this Lease
to
mean all laws, rules, regulations, ordinances, directives, covenants, easements
and restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but
not
limited to matters pertaining to (i) industrial hygiene, (ii) environmental
conditions on, in, under or about the Premises, including
soil and groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage, spill,
or release of any Hazardous Substance), now in effect or which may hereafter
come into effect. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including but not limited to
permits, registration, manifests, applications, reports and certificates,
evidencing Lessee's compliances, reports
and certificates, evidencing Lessee's compliance with any Applicable
Requirements specified by Lessor, and shall immediately
upon receipt, notify Lessor in writing (with copies of any documents involved)
of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or
the
Premises to comply with any Applicable Requirements.
18.
Examination Lease.
Submission of this instrument for examination or signature by Lessee does not
constitute a reservation of or option
for lease, and it is not effective as a lease or otherwise until execution
and
delivery by both Lessor and Lessee. The parties hereto
have executed this Lease as of the date first set forth above. The Addendum
attached containing Paragraphs 19-38 is incorporated
as a part of this Lease. In the event of any conflict between the printed
portion of the Lease and the typed Addendum, the typed Addendum provisions
shall
prevail. (See Addendum-Paragraph 19-27.)
| AGREED AND ACCEPTED: | ||||||||
| LESSOR: | LESSEE: | |||||||
|
THE
RICHLAR PARTNERSHIP
(a
California general partnership)
|
DIGITAL DOMAIN, INC.
(a
Delaware corporation)
|
|||||||
|
By: THE RILAR PARTNERSHIP,
General
Partner
|
||||||||
| By: |
XXXXXXXXX
R.E. INVESTMENTS,
|
By: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||
| INC., General Partner |
Xxxxxx X. Xxxxxxxxxx, CFO |
|||||||
| By: | /s/ Xxxxxxxx X. Field | Date: 12/31/96 | ||||||
|
Xxxxxxxx X. Field, President |
||||||||
| Date: 12/31/96 | ||||||||
| ADDRESS | ||||||||
|
000
X. Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
|
000
Xxxx Xxxxxx
Xxxxxx, XX
9029
|
|||||||
ADDENDUM
TO LEASE DATED DECEMBER 11, 1996 BY AND BETWEEN THE RICHLAR PARTNERSHIP (A
CALIFORNIA GENERAL PARTNERSHIP), AS LESSOR, AND DIGITAL DOMAIN, INC. (A DELAWARE
CORPORATION), AS LESSEE, FOR THE PREMISES LOCATED AT 000 XXXX XXXXXX, XXXXXX,
XXXXXXXXXX.
|
19.
|
Lessee
shall take occupancy of the Premises in "as-is"
condition.
|
|
20.
|
Rent
Schedule
|
Lessee
shall pay Lessor base monthly rent during the lease term as
follows:
|
Term
|
|
Base
Monthly Rent
|
|
|
01/01/97
- 04/30/97
|
|
$19,493.96
|
|
|
05/01/97
- 10/31/98
|
|
$20,559.96
|
|
|
11/01/98
- 04/30/00
|
|
$21,623.96
|
|
|
05/01/00
- 12/31/01
|
|
$22,688.96
|
|
|
21.
|
Option
to Extend Term.
|
Lessor
hereby grants to Lessee an Option to Extend the term of this Lease for a sixty
(60) month period
commencing upon the expiration of the initial lease term upon the following
terms and conditions:
|
a)
|
Lessee
shall give Lessor written notice of its intent to exercise the Option
at least
six (6) months
and no more than nine (9) months prior to expiration of the initial
lease
term.
|
|
b)
|
Both
at the time of giving the notice of its intent to exercise the Option
and
at the time any agreement pursuant to such notice is entered into,
Lessee
shall not be in default, nor have been
in default during the initial lease
term.
|
|
c)
|
In
the event Lessee elects to exercise this Option, the initial rental
rate
during the Option period
shall be at ninety-five percent (95%) Fair Market Value, but in no
event
less than 105% or
greater than 115% of the base rental paid for the sixtieth (60th)
month of
the initial lease term
with annual CPI adjustments
thereafter.
|
|
d)
|
"Fair
Market Value" shall be determined by rental rates quoted for
office/production space (built out with at least fifty percent (50%)
office space) in the Venice/Santa Xxxxxx area in clean
condition, with adjacent free parking ranging in size from 12,500
to
17,500 square feet.
|
| 22. |
Assignment
Mortgage and Subletting.
|
Notwithstanding
anything contained in the Lease to the contrary, Lessee shall be permitted
to
sublease or
assign
all or any portion of the Premises at any time during the term of the Lease
to
any subsidiary or affiliate
of Lessee without obtaining the prior approval or consent of Lessor. Lessee
shall, however, provide
to Lessor within thirty (30) days following the execution of any such sublease
or assignment a copy
of
said documentation for Lessor's files. In the case of any assignment or
subleasing, Lessee shall remain fully liable under the terms of the
Lease.
| 23. |
Attorneys'
Fees
|
Supplementing
Paragraph 16.16, in the event that legal action arises out of any dispute
connected with this
Lease, if Lessee is the prevailing party therein, Lessee shall then be entitled
to reasonable attorney's
fees and court costs.
| 24. |
Lessor's
Access.
|
Supplementing
Paragraph 16.17, but notwithstanding anything to the contrary contained in
the
Lease, Lessor's
right of access to the Premises shall be subject (except upon occasions when
entry shall be required
by emergency circumstances) to Lessor giving Lessee reasonable prior notice
of
any such entry by Lessor and to Lessee's reasonable right to preserve areas
of
the Premises as are security areas
in
the operation of Lessee's business from such showing and such work to the extent
that the parameters
of such security areas have theretofore been clearly indicated by Lessee to
Lessor. Further, in
the
event Lessor erects any "For Lease" signs pertaining to the Premises only,
Lessee shall have the right
(subject to the provisions of Paragraph 28) to erect its own sign indicating
that Lessee will be moving
to
another location.
| 25. |
Signage.
|
Lessee
may install at Lessee's expense any such signage as may be permitted by law
and
no other signs may installed on the property without the approval of Lessee.
Prior to the installation of any such signs, Lessee shall submit detailed
plans
thereof to Lessor for Lessor's prior approval which approval shall not be
unreasonably withheld.
| 26. |
Hazardous
Materials
|
To
the
best of Lessors knowledge, there is no asbestos or hazardous/toxic materials
located at the Premises.
Lessor indemnifies Lessee from liability arising from any hazardous substance
conditions which
existed prior to lease commencement.
| 27. |
Parking
|
Lessee
shall be allocated fifty (50) reserved parking spaces at the front and rear
parking lot at no charge
during the lease term.
| AGREED AND ACCEPTED: | |||||||||
| LESSOR: | LESSEE: | ||||||||
|
By:
THE RICHLAR PARTNERSHIP
(a
California general partnership)
|
DIGITAL DOMAIN, INC.
(a
Delaware corporation)
|
||||||||
| By: | THE
RILAR PARTNERSHIP
General
Partner
|
||||||||
| By: |
XXXXXXXXX
R.E. INVESTMENTS, INC.,
General Partner
|
By: | /s/ Xxxxxx X. Xxxxxxxxx | ||||||
|
Xxxxxx X. Xxxxxxxxxx, CFO |
|||||||||
| By: | /s/ Xxxxxxxx X. Field | Date: 12/31/96 | |||||||
|
Xxxxxxxx X. Field, President |
|||||||||
| Date: 12/31/96 | |||||||||
Exhibit
A:
AMENDMENT
NO 1 TO LEASE DATED DECEMBER 11, 1996, BY AND BETWEEN THE RICHLAR PARTNERSHIP
(A
CALIFORNIA GENERAL PARTNERSHIP), AS LESSOR, AND DIGITAL DOMAIN, INC. (A DELAWARE
CORPORATION), AS LESSEE, FOR THE PREMISES LOCATED AT 000 XXXX XXXXXX, XXXXXX,
XXXXXXXXXX.
| 1. |
Option
to Extend.
|
Pursuant
to Paragraph 21 of the Lease, Lessee exercises its Option to Extend the Lease
for the period commencing January 1, 2002 and expiring December 31, 2006
(hereinafter referred to as "Extension Period").
| 2. |
Extension
Period Rent.
|
Pursuant
to Paragraph 21 (c) of the Lease, commencing January 1, 2002, Lessee’s base
monthly rental shall be adjusted to $26,092.30 with the annual CPI
adjustments.
|
3.
|
Except
for the above modifications, all other terms, covenants and conditions
of
the Lease shall remain unmodified and in full force and
effect.
|
| AGREED AND ACCEPTED: | |||||||||
| LESSOR: | LESSEE: | ||||||||
|
By: THE RICHLAR PARTNERSHIP
(a
California general partnership)
|
DIGITAL DOMAIN, INC.
(a
Delaware corporation)
|
||||||||
| By: |
THE
RIHLAR PARTNERSHIP,
General
Partner
|
||||||||
| By: | XXXXXXXXX R.E. INVESTMENTS, INC., General Partner | By: | /s/ X. Xxxxxxx Call | ||||||
|
X. Xxxxxxx Call, SVP |
|||||||||
| By: | /s/ Xxxxxxxx X. Field | Date: 6/26/01 | |||||||
|
Xxxxxxxx X. Field, President |
|||||||||
| Date: 07/02/01 | |||||||||
| ADDRESS | |||||||||
|
000
X. Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
|
000
Xxxx Xxxxxx
Xxxxxx, XX
9029
|
||||||||
