EXHIBIT 10.45
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
OFFICE LEASE
This Office Lease (the "LEASE"), dated as of the date set forth in
Section 1 of the Summary of Basic Lease Information (the "SUMMARY"), below, is
made by and between XXXXXX REALTY, L.P., a Delaware limited partnership
("LANDLORD"), and AMN HEALTHCARE, INC., a Nevada corporation ("TENANT").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE DESCRIPTION
-------------- -----------
1. Date: April 2, 2002
2. Premises
2.1 Building: That certain six (6)-story,
"Class-A" office building to
be constructed by Landlord and
located at 00000 Xxxx Xxxxx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000 in the "Project" in Del
Mar Heights, which Building
shall contain approximately
208,961 rentable (193,766)
usable square feet of space
(assuming a multi-tenant
second (2nd) floor).
2.2 Premises: Approximately 172,259 rentable
(160,801 usable) square feet
of space, consisting of all of
the first (1st), third (3rd),
fourth (4th), fifth (5th) and
sixth (6th) floors of the
Building, as further set forth
in EXHIBIT A to the Office
Lease.
2.3 Project: The Building is part of a
single-office building (with
adjoining parking structure)
project known as the "SAN
DIEGO CORPORATE CENTER LOT #7
PROJECT", as further set forth
in Section 1.1.2 of this
Lease, the legal description
of which is set forth in
EXHIBIT A-1 to this Lease.
3. Lease Term
(Article 2).
3.1 Length of Term: Fifteen (15) years and no (0)
months.
3.2 Lease Commencement Date: The earlier to occur of (i)
the date upon which Tenant
first commences to conduct
business in
-1-
the Premises and (ii) the date
upon which the Premises are
"Ready for Occupancy," as that
term is set forth in Section
5.1 of the Tenant Work Letter
attached as EXHIBIT B to the
Lease, which date is
anticipated to be August 1,
2003.
3.3 Lease Expiration Date: The date immediately preceding
the fifteenth anniversary of
the Lease Commencement Date.
3.4 Option Term(s): Two (2) five (5)-year options
to renew, as more particularly
set forth in Section 2.2 of
this Lease.
4. Base Rent (Article 3):
Monthly
Monthly Rental Rate
Annual Installment per Rentable
Lease Year Base Rent of Base Rent Square Foot
---------- --------- ------------ -----------
1 - 3 $6,594,075.00 $549,506.25 $3.190
4 - 6 $7,400,247.00 $616,687.25 $3.580
7* - 8 $7,918,263.00 $659,855.25 $3.831
9* - 10 $8,472,543.00 $706,045.25 $4.099
11* - 12 $9,065,619.00 $755,468.25 $4.386
13* - 14 $9,700,215.00 $808,351.25 $4.693
15* $10,379,229.00 $864,935.75 $5.021
To the extent Tenant elects to increase the amount of the Tenant Improvement
Allowance pursuant to Section 2.2.2 of the Tenant Work Letter, such "TIA
Increase," as that term is defined in Section 2.2.2 of the Tenant Work Letter,
shall be amortized over the initial Lease Term using an amortization rate of
twelve and one-half percent (12 1/2%) per annum, the monthly payment of which
shall be payable in the same place and in the same manner as Base Rent for each
month of the initial Lease Term as "Additional Rent," as that term is set forth
in Section 4.1 of the Lease. Accordingly, for each dollar of TIA Increase
utilized by Tenant, the Base Rent payable by Tenant during the first six (6)
Lease Years, as set forth in Section 4 of the Summary, shall be increased by an
amount equal to $0.01233 per rentable square foot of the Premises per month,
with the Base Rent for subsequent Lease Years calculated as set forth below.
*Commencing as of the seventh (7th) Lease Year, and continuing as of the ninth
(9th), eleventh (11th), thirteenth (13th) and fifteenth (15th) Lease Years,
Annual Base Rent (and Monthly Installment of Base Rent/Monthly Rental Rate per
Rentable Square Foot) was calculated using seven percent (7.0%) increases over
the previously existing amounts; provided, however, that in each instance
(including Lease Years one (1) through six (6)), the resulting actual Monthly
Installment of Base Rent was rounded up or down, as applicable, to the nearest
twenty-five cents ($0.25), and the scheduled Annual Base Rent is, therefore, an
amount equal to twelve (12) times such rounded Monthly Installment of Base Rent
amount.
-2-
5. Base Year The twelve (12)-month period
(Article 4): commencing as of the Lease
Commencement Date.
6. Tenant's Share Approximately 82.44%.
(Article 4):
7. Permitted Use Tenant shall use the Premises
(Article 5): solely for general office
purposes, customer service and
to the extent permitted by
applicable law, research and
development. Tenant's use
shall at all times be
consistent with applicable
zoning, the San Diego
Corporate Center P.I.D., (the
"P.I.D.") and the character of
the Building as a first-class
office building (including,
without limitation, Tenant's
administrative offices, sales
and marketing office and
incidental uses relating
thereto (specifically
including Tenant's non-retail
use of its "cafeteria" and
"work-out" areas), and Tenant
shall not use or permit the
Premises to be used for any
other purpose or purposes
whatsoever.
8. Security Deposit An amount equal to the Monthly
(Article 21): Installment of Base Rent for
the last month of the initial
Lease Term ($903,804.00,
subject to adjustment pursuant
to Section 4 of this Summary,
Section 1.2 of the Lease and
Section 2.2.2 of the Tenant
Work Letter). In addition to
the Security Deposit, Tenant
shall have additional security
obligations, in the form more
particularly set forth in
Section 21.2, and subject to
reductions pursuant to the
TCC's of Section 21.2.
9. Parking Pass Ratio Six hundred (600) unreserved
(Article 28): parking spaces attributable to
the first 100,000 rentable
square feet of the Premises,
and four (4) unreserved
parking spaces for every 1,000
rentable square feet of the
Premises in excess of 100,000
rentable square feet, of which
twenty-five (25) spaces shall
be for the use of reserved
parking spaces; provided,
however, that in addition to
such twenty-five (25) parking
spaces, all of the parking
spaces located on the "Extra
Parking Level," as that term
is set forth in Section 28.2
of the Lease, shall be
reserved parking spaces
-3-
exclusively for Tenant's use.
10. Address of Tenant AMN Healthcare, Inc.
(Section 29.18): 00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(Prior to Lease Commencement Date)
and
AMN Healthcare, Inc.
at the Premises to the attention
of Xxxxxx X. Xxxxxxx, Esq.
(After Lease Commencement Date)
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx, Esq.
11. Address of Landlord
(Section 29.18): See Section 29.18 of the Lease.
12. Broker(s)
(Section 29.24): Xxxxxx Xxxxxx (for Tenant) and
Business Real Estate (BRE)
(for Landlord)
13. Tenant Improvement Allowance
(Section 2 of EXHIBIT B): $6,432,040.00 (which amount
was calculated based upon
$40.00 per Usable Square Foot
for each of the 160,801 Usable
Square Feet of space in the
Premises).
-4-
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the premises which are to be constructed by Landlord
and are set forth in Section 2.2 of the Summary (the "PREMISES"). The outline of
the Premises is set forth in EXHIBIT A attached hereto. The parties hereto agree
that the lease of the Premises is upon and subject to the terms, covenants and
conditions (collectively, the "TCCS") herein set forth, and Tenant covenants as
a material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance. The parties
hereto hereby acknowledge that the purpose of EXHIBIT A is to show the
approximate location of the Premises in the "BUILDING," as that term is defined
in Section 1.1.2, below, only, and such exhibit is not meant to constitute an
agreement, representation or warranty as to the construction of the Premises,
the precise area thereof or the specific location of the "COMMON AREAS," as that
term is defined in Section 1.1.3, below, or the elements thereof or of the
accessways to the Premises or the "PROJECT," as that term is defined in Section
1.1.2, below. Except as specifically set forth in this Lease and in the Tenant
Work Letter attached hereto as EXHIBIT B (the "TENANT WORK LETTER"), Landlord
shall not be obligated to provide or pay for any improvement work or services
related to the improvement of the Premises. Tenant also acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty regarding the condition of the Premises, the Building or the Project or
with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter. Subject to the completion of "Landlord's Work," as that term is set
forth in Section 1.1 of the Tenant Work Letter, pursuant to the TCCs (including
the correction of any deficiencies thereof) of such Tenant Work Letter, the
taking of possession of the Premises by Tenant shall conclusively establish that
the Premises and the Building were at such time in good and sanitary order,
condition and repair.
1.1.2 THE BUILDING AND THE PROJECT. The Premises are a part of
the building set forth in Section 2.1 of the Summary (the "BUILDING"). The
Building is part of a single-office building project known as "San Diego
Corporate Center, Lot #7 Project." The term "PROJECT," as used in this Lease,
shall mean (i) the Building and the Common Areas, (ii) the parking facility
being constructed on the Project adjacent to the Building (the "PARKING
FACILITY"), and (iii) the land (which is improved with landscaping and other
improvements) upon which the Building, the Parking Facility and the Common Areas
are located.
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, the Parking Facility and
those portions of the Project which are provided, from time to time, for use in
common by Landlord, Tenant and any other tenants of the Project (such areas,
together with such other portions of the Project designated by Landlord, in its
discretion, including certain areas designated for the exclusive use of certain
tenants, or to be shared by Landlord and certain tenants, are collectively
referred to herein as the "COMMON
-5-
AREAS"). Landlord shall operate and maintain the Common Areas in a manner that
is consistent with a first class office building in the Del Mar
Heights/University Town Center ("UTC") area and the use thereof shall be subject
to such rules, regulations and restrictions as Landlord may make from time to
time. Landlord reserves the right to close temporarily, make alterations or
additions to, or change the location of elements of the Project and the Common
Areas, so long as the alterations or additions do not materially and adversely
diminish Tenant's rights to quiet enjoyment and use and enjoyment of the
Premises and Common Areas (except that such restriction shall not apply to
alterations and additions required by Law).
1.2 VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES AND BUILDING. For
purposes of this Lease, "rentable square feet" and "usable square feet" shall be
calculated pursuant to Standard Method of Measuring Floor Area in Office
Building, ANSI Z65.1 - 1996 ("BOMA"). Within thirty (30) days after the Lease
Commencement Date, Landlord's space planner/architect shall measure the rentable
and usable square feet of the Premises in accordance with the provisions of this
Section 1.2 and the results thereof shall be presented to Tenant in writing.
Tenant's space planner/architect may review Landlord's space planner/architect's
determination of the number of rentable square feet and useable square feet of
the Premises and Tenant may, within fifteen (15) business days after Tenant's
receipt of Landlord's space planner/architect's written determination, object to
such determination by written notice to Landlord. Tenant's failure to deliver
written notice of such objection within said fifteen (15) business day period
shall be deemed to constitute Tenant's acceptance of Landlord's space
planner/architect's determination. If Tenant objects to such determination,
Landlord's space planner/architect and Tenant's space planner/architect shall
promptly meet and attempt to agree upon the rentable and useable square footage
of the Premises. If Landlord's space planner/architect and Tenant's space
planner/architect cannot agree on the rentable and useable square footage of the
Premises within thirty (30) days after Tenant's objection thereto, Landlord and
Tenant shall mutually select an independent third party space measurement
professional to field measure the Premises under the BOMA Standard. Such third
party independent measurement professional's determination shall be conclusive
and binding on Landlord and Tenant. Landlord and Tenant shall each pay one-half
( 1/2) of the fees and expenses of the independent third party space measurement
professional. If the Lease Term commences prior to such final determination,
Landlord's determination shall be utilized until a final determination is made,
whereupon an appropriate adjustment, if necessary, shall be made retroactively,
and Landlord shall make appropriate payment (if applicable) to Tenant. In the
event that pursuant to the procedure described in this Section 1.2 above, it is
determined that the square footage amounts shall be different from those set
forth in this Lease, all amounts, percentages and figures appearing or referred
to in this Lease based upon such incorrect amount (including, without
limitation, the amount of the "RENT" and any "SECURITY DEPOSIT," as those terms
are defined in Section 4.1 and Article 21 of this Lease, respectively, and the
amount of the Tenant Improvement Allowance, as that term is defined in Section
2.1 of EXHIBIT B, attached hereto) shall be modified in accordance with such
determination. If such determination is made, it will be confirmed in writing by
Landlord to Tenant.
1.3 EXPANSION RIGHT. Landlord hereby grants to the Tenant originally
named in this Lease (the "ORIGINAL TENANT"), its Affiliates and any assignee of
the Original Tenant's interest in this Lease pursuant to the TCCs of Article 14
of this Lease (each, a "PERMITTED ASSIGNEE"), the right to expand the Premises
to include one half ( 1/2) or all of the second floor of the Building (the
"EXPANSION SPACE").
-6-
1.3.1 PROCEDURE FOR ELECTION. The right contained in this Section
1.3 shall be exercised by Tenant, if at all, only in the manner set forth in
this Section 1.3.1. Tenant shall deliver written notice (the "EXPANSION NOTICE")
to Landlord on or before October 31, 2002 (the "OUTSIDE EXPANSION DATE"),
stating that Tenant is exercising its right to expand the Premises to include
the Expansion Space, which Expansion Notice shall set forth whether the
Expansion Space is to consist of one half ( 1/2) or all of the second floor of
the Building; provided, however, that to the extent such exercised Expansion
Space is to constitute only one-half ( 1/2) of the second floor, Landlord shall
be entitled to determine which one-half ( 1/2) of such second floor Landlord
shall retain.
1.3.2 EXPANSION RENT. Upon the timely and properly exercise of
Tenant's expansion rights hereunder, the Premises shall be immediately expanded
to include the Expansion Space, and the Annual Base Rent (and Monthly
Installment of Base Rent) set forth in Section 4 of the Summary shall be
recalculated based upon such increased Rentable Square Footage of the total
Premises (including both the initial Premises and the Expansion Space), the
Rental Rate per Rentable Square Foot being identical for both the initial
Premises and the Expansion Space.
1.3.3 CONSTRUCTION OF EXPANSION SPACE. Provided that Tenant
timely and properly exercise its expansion rights hereunder, the initial
improvements therein shall be constructed by Landlord pursuant to the TCCs of
the Tenant Work Letter as if the Expansion Premises were part of the initial
Premises. In such event the Tenant Improvement Allowance shall be recalculated
based upon such increased Rentable Square Footage of the total Premises
(including both the initial Premises and the Expansion Space).
1.3.4 AMENDMENT TO LEASE. If Tenant timely and properly exercises
Tenant's right to lease Expansion Space as set forth herein, Landlord and Tenant
shall, within fifteen (15) days thereafter, execute an amendment to this Lease
adding such Expansion Space to this Lease upon the same terms and conditions as
the initial Premises, except as otherwise set forth in this Section 1.3. The
lease term of the Expansion Space shall commence on the Lease Commencement Date
and shall expire on the Expiration Date.
1.4 SECOND FLOOR RIGHT OF FIRST REFUSAL. Provided that Tenant has not
previously leased all of second floor of the Building pursuant to the TCCs of
Section 1.3 of this Lease, then from the date occurring after the expiration of
Tenant's right to lease the Expansion Space through the end of the initial Lease
Term, Landlord hereby grants to the Original Tenant and its Affiliates, separate
and apart from the rights granted in Section 1.3, a right of first refusal with
respect to the second floor of the Building (the "SECOND FLOOR FIRST REFUSAL
SPACE").
1.4.1 PROCEDURE FOR LEASE.
1.4.1.1 PROCEDURE FOR OFFER. Landlord shall notify Tenant
(the "SECOND FLOOR FIRST REFUSAL NOTICE") from time-to-time when and if Landlord
receives a "bona-fide third-party offer" for the Second Floor First Refusal
Space. Pursuant to such Second Floor First Refusal Notice, Landlord shall offer
to lease to Tenant the applicable Second Floor First Refusal Space. The Second
Floor First Refusal Notice shall describe the Second Floor First Refusal Space,
and the lease term, rent and other fundamental economic terms and conditions,
-7-
including the method of measurement of rentable and usable square feet, upon
which Landlord proposes to lease such Second Floor First Refusal Space pursuant
to the bona-fide third-party offer. For purposes of this Section 1.4, a
"BONA-FIDE THIRD-PARTY OFFER" shall mean a counter-offer received by Landlord to
lease Second Floor First Refusal Space from an unaffiliated and qualified third
party. For purposes of example only, the following would each constitute a
bone-fide third-party offer:
(i) Landlord receives a request for proposal from
an unaffiliated and qualified third party. Landlord responds to the request for
proposal with a lease proposal and subsequently receives a written bona-fide
counter proposal from the unaffiliated and qualified third party.
(ii) Landlord receives a written offer to lease
from an unaffiliated and qualified third party. Landlord responds to the offer
with a written counter offer and subsequently receives a bona-fide counter to
Landlord's counter offer from the unaffiliated and qualified third party.
1.4.1.2 PROCEDURE FOR ACCEPTANCE. If Tenant wishes to
exercise Tenant's right of first refusal with respect to the Second Floor First
Refusal Space described in the Second Floor First Refusal Notice, then within
seven (7) business days of delivery of the Second Floor First Refusal Notice to
Tenant, Tenant shall deliver notice to Landlord of Tenant's exercise of its
right of first refusal with respect to all of the Second Floor First Refusal
Space described in the Second Floor First Refusal Notice at the rent, for the
term and upon the other fundamental economic terms and conditions contained in
such Second Floor First Refusal Notice, including, but not limited to rental
concessions and improvement allowances. If Tenant does not so notify Landlord
within such seven (7) business day period of Tenant's exercise of its first
refusal right, then Landlord shall be free to negotiate and enter into a lease
for the Second Floor First Refusal Space to anyone whom it desires on terms
which are no more favorable (except as set forth at the end of this sentence) to
the tenant than those set forth in the Second Floor First Refusal Notice, within
a period of one hundred eighty (180) days commencing upon the expiration of the
seven (7) day period, after which time, Tenant's rights to such space under this
Section 1.4 shall renew; provided, however, that notwithstanding the foregoing
Landlord may modify the rentable square feet of the Second Floor First Refusal
Space by up to five percent (5%), and may modify the lease term by up to five
percent (5%) than that set forth in the Second Floor First Refusal Notice and
may rent such Second Floor First Refusal Space at a rent and other fundamental
economic terms and conditions which together, on an average annual "present
value" "net effective" basis, as those terms are defined below, are no more than
five percent (5%) more favorable to the tenant than set forth in the Second
Floor First Refusal Notice. As used in this Section 1.4.1.2, for purposes of
determining "net effective" value of the rent, the determined face (or gross)
rent to be paid under the terms of a particular lease shall be adjusted based
upon the value of all monetary concessions (specifically including, without
limitation, any such tenant improvement allowance and any free rental period),
where the value of such concessions are evenly spread over the entire lease term
on a straight-line basis, without interest. As used in this Section 1.4.1.2,
"present value" shall mean the present value as of the proposed lease
commencement date of the net effective basis using a discount rate of eight
percent (8%) and adjusted to an annual basis. After Landlord enters into any
lease of Second Floor First Refusal Space to any such third party in accordance
with the foregoing ("THIRD PARTY LEASE"),
-8-
Tenant's rights under this Section 1.4 shall be subordinate to the rights of the
tenant under the Third Party Lease with respect to the space leased and
encumbered pursuant to the provisions of the Third Party Lease, all extensions
and renewals thereof, all pure expansion options contained therein which are
stated as Landlord delivery obligations within a certain time frame for a
certain amount of space, and all right of first offer expansions contained
therein.
1.4.2 AMENDMENT TO LEASE. If Tenant timely exercises Tenant's
right of first refusal to lease Second Floor First Refusal Space as set forth
herein, Landlord and Tenant shall within thirty (30) days thereafter execute an
amendment to this Lease (the "SECOND FLOOR FIRST REFUSAL SPACE AMENDMENT") for
such Second Floor First Refusal Space upon the terms set forth in the Second
Floor First Refusal Notice, including, but not limited to rent (the "SECOND
FLOOR FIRST REFUSAL SPACE RENT"), but otherwise upon the TCCs set forth in this
Lease and this Section 1.4. Notwithstanding the foregoing, Landlord may, at its
sole option, require that a separate lease be executed by Landlord and Tenant in
connection with Tenant's lease of the Second Floor First Refusal Space, in which
event such lease (the "SECOND FLOOR FIRST REFUSAL SPACE LEASE") shall be on the
same TCCs as this Lease with regard to the Initial Premises, except as provided
in this Section 1.4 and specifically in this Lease to the contrary. The Second
Floor First Refusal Lease, if applicable, shall be executed by Landlord and
Tenant within thirty (30) days following Tenant's exercise of its right to lease
the Second Floor First Refusal Space.
1.4.3 NO DEFAULTS. The rights contained in this Section 1.4 shall
be personal to the Original Tenant and its Affiliates and may only be exercised
by the Original Tenant or an Affiliate (and not any assignee, subleasee or other
transferee of the Original Tenant's interest in this Lease) either (i) prior to
the Lease Commencement Date, or (ii) thereafter, if the Original Tenant and/or
an Affiliate occupies not less than seventy-five percent (75%) of the then
existing Premises. The right to lease Expansion Space as provided in this
Section 1.4 may not be exercised if, as of the date of the attempted exercise of
the expansion option by Tenant, or as of the scheduled date of delivery of such
Expansion Space to Tenant, Tenant is in economic Default under this Lease, with
any applicable cure periods having expired.
1.4.4 SECOND FLOOR FIRST REFUSAL SPACE COMMENCEMENT DATE. The
commencement date for the Second Floor First Refusal Space shall be the date set
forth in the bona-fide third-party offer (the "SECOND FLOOR FIRST REFUSAL SPACE
COMMENCEMENT DATE"), unless otherwise agreed to by Landlord and Tenant. The term
of Tenant's occupancy of the Second Floor First Refusal Space shall be referred
to herein as a "SECOND FLOOR LEASE TERM."
ARTICLE 2
INITIAL LEASE TERM; OPTION TERM(S)
2.1 INITIAL LEASE TERM. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "LEASE
TERM") shall be as set forth in Section 3.1 of the Summary, shall commence on
the date set forth in Section 3.2 of the Summary (the "LEASE COMMENCEMENT
DATE"), and shall terminate on the date set forth in Section 3.3 of the Summary
(the "LEASE EXPIRATION DATE") unless this Lease is sooner terminated as
hereinafter provided. For purposes of this Lease, the term "LEASE YEAR" shall
mean each consecutive twelve (12) month period during the Lease Term; provided,
however, that if the
-9-
Lease Commencement Date occurs on a date other than the first (1st) day of a
calendar month, then the first Lease Year shall commence on the Lease
Commencement Date and end on the last day of the eleventh month thereafter and
the second and each succeeding Lease Year shall commence on the first day of the
next calendar month; and further provided that the last Lease Year shall end on
the Lease Expiration Date. At any time during the Lease Term, Landlord may
deliver to Tenant a notice in the form as set forth in EXHIBIT C, attached
hereto, as a confirmation only of the information set forth therein, which
Tenant shall, after confirming the accuracy thereof, execute and return to
Landlord within five (5) business days of receipt thereof.
2.2 OPTION TERM(s).
2.2.1 OPTION RIGHT. Landlord hereby grants the Original Tenant,
its Affiliates and any Permitted Assignee two (2) options to extend the Lease
Term for the entire initial Premises, as the same may be increased pursuant to
Sections 1.3 and/or 1.4 of this Lease (the total of such identified space shall
be, collectively, the "OPTION PREMISES"), each by a period of five (5) years
(each, an "OPTION TERM"). Such option shall be exercisable only by Notice
delivered by Tenant to Landlord as provided below, provided that, as of the date
of delivery of such Notice, Tenant is not in Default under this Lease (with all
applicable cure periods having expired). Upon the proper exercise of such option
to extend, and provided that, as of the end of the then applicable Lease Term,
Tenant is not in Default under this Lease (with all applicable cure periods
having expired), the Lease Term, as it applies to the entire then-existing
Option Premises, shall be extended for a period of five (5) years. The rights
contained in this Section 2.2 shall only be exercised by the Original Tenant,
its Affiliates and any Permitted Assignee (and not any other assignee, sublessee
or other transferee of the Original Tenant's interest in this Lease).
2.2.2 OPTION RENT. The Rent payable by Tenant during the Option
Term (the "OPTION RENT") shall be equal to the Market Rent as set forth below;
provided, however, that the average annual, effective (including free rent, if
applicable, spread on a straight line basis) base rent component of Market Rent,
shall not be lower than the Base Rent for the month immediately preceding such
Option Term. For purposes of this Lease, the term "MARKET RENT" shall mean rent
(including additional rent and considering any "base year" or "expense stop"
applicable thereto), including all escalations, at which new tenants (as opposed
to renewing tenants), as of the commencement of the applicable term are,
pursuant to transactions completed within the eighteen (18) months prior to the
date of the applicable Exercise Notice leasing non-sublease, non-encumbered,
non-synthetic, non-equity, non-renewal space (unless such space was leased
pursuant to a definition of "fair market" comparable to the definition of Market
Rent) comparable in size, location and quality to the Premises for a "Comparable
Term," as that term is defined in this Section 2.2.2 (the "COMPARABLE DEALS"),
which comparable space is located in the "Comparable Buildings," as that term is
defined in this Section 2.2.2, giving appropriate consideration to the annual
rental rates per rentable square foot (adjusting the base rent component of such
rate to reflect a net value after accounting for whether or not utility expenses
are directly paid by the tenant such as Tenant's direct utility payments
provided for in Section 6.1.2 of this Lease), the standard of measurement by
which the rentable square footage is measured, the ratio of rentable square feet
to usable square feet, and taking into consideration only, and granting only,
the following concessions (provided that the rent payable in Comparable Deals in
which the terms of such Comparable Deals are determined by use of a discounted
fair
-10-
market rate formula shall be equitably increased in order that such Comparable
Deals will not reflect a discounted rate) (collectively, the "RENT
CONCESSIONS"): (a) rental abatement concessions or build-out periods, if any,
being granted such tenants in connection with such comparable spaces; (b) tenant
improvements or allowances provided or to be provided for such comparable space,
taking into account the value of the existing improvements in the Option
Premises, such value to be based upon the age, quality and layout of the
improvements and the extent to which the same could be utilized by general
office users as contrasted with this specific Tenant, (c) other reasonable
monetary concessions, if any, being granted such tenants in connection with such
comparable space; provided, however, that notwithstanding anything to the
contrary herein, no consideration shall be given to the fact that Landlord is or
is not required to pay a real estate brokerage commission in connection with the
applicable term or the fact that the Comparable Deals do or do not involve the
payment of real estate brokerage commissions. The term "COMPARABLE TERM" shall
refer to the length of the lease term, without consideration of options to
extend such term, for the space in question. In addition, the determination of
the Market Rent shall include a determination as to whether, and if so to what
extent, Tenant must provide Landlord with financial security, such as a letter
of credit or guaranty, for Tenant's rent obligations during any Option Term.
Such determination shall be made by reviewing the extent of financial security
then generally being imposed in Comparable Transactions upon tenants of
comparable financial condition and credit history to the then existing financial
condition and credit history of Tenant (with appropriate adjustments to account
for differences in the then-existing financial condition of Tenant and such
other tenants) If in determining the Market Rent, Tenant is entitled to a tenant
improvement or comparable allowance for the improvement of the Option Premises
(the "OPTION TERM TI ALLOWANCE"), Landlord may, at Landlord's sole option, elect
any or a portion of the following: (A) to grant some or all of the Option Term
TI Allowance to Tenant in the form as described above (i.e., as an improvement
allowance), and/or (B) to reduce the rental rate component of the Market Rent to
be an effective rental rate which takes into consideration (including the
application of the appropriate interest rate to any such unfunded Option Term TI
Allowance) that Tenant will not receive the total dollar value of such excess
Option Term TI Allowance (in which case the Option Term TI Allowance evidenced
in the effective rental rate shall not be granted to Tenant). The term
"COMPARABLE BUILDINGS" shall mean the Building and other first-class office
buildings which are comparable to the Building in terms of age (based upon the
date of completion of construction or major renovation as to the building
containing the portion of the Premises in question), quality of construction,
level of services and amenities, size and appearance, and are located in the Del
Mar Heights/UTC area (the ("COMPARABLE AREA").
2.2.3 EXERCISE OF OPTION. The option contained in this Section
2.2 shall be exercised by Tenant, if at all, only in the manner set forth in
this Section 2.2.3. Tenant shall deliver notice (the "EXERCISE NOTICE") to
Landlord not more than eighteen (18) months nor less than twelve (12) months
prior to the expiration of the then Lease Term, stating that Tenant is
exercising its option. Concurrently with such Exercise Notice, Tenant shall
deliver to Landlord Tenant's calculation of the Market Rent (the "TENANT'S
OPTION RENT CALCULATION"). Landlord shall deliver notice (the "LANDLORD RESPONSE
NOTICE") to Tenant on or before the date which is thirty (30) days after
Landlord's receipt of the Exercise Notice and Tenant's Option Rent Calculation
(the "LANDLORD RESPONSE DATE"), stating that (A) Landlord is accepting Tenant's
Option Rent Calculation as the Market Rent, or (B) rejecting Tenant's Option
Rent Calculation and setting forth Landlord's calculation of the Market Rent
(the "LANDLORD'S OPTION RENT
-11-
CALCULATION"). Within fifteen (15) business days of its receipt of the Landlord
Response Notice, Tenant may, at its option, accept the Market Rent contained in
the Landlord's Option Rent Calculation. If Tenant does not affirmatively accept
or Tenant rejects the Market Rent specified in the Landlord's Option Rent
Calculation, the parties shall follow the procedure, and the Market Rent shall
be determined as set forth in Section 2.2.4.
2.2.4 DETERMINATION OF MARKET RENT. In the event Tenant objects
or is deemed to have objected to the Market Rent, Landlord and Tenant shall
attempt to agree upon the Market Rent using reasonable good-faith efforts. If
Landlord and Tenant fail to reach agreement within sixty (60) days following
Tenant's receipt of the Landlord Response Notice (the "OUTSIDE AGREEMENT DATE"),
then the issue of Option Rent shall be submitted to arbitration pursuant to the
TCCs of this Section 2.2.4, but subject to the conditions, when appropriate, of
Sections 2.2.2 and 2.2.3.
2.2.4.1 Landlord and Tenant shall mutually appoint one
arbitrator (the "ARBITRATOR") who shall by profession be a licensed Southern
California MAI appraiser who shall have been active over the five (5)-year
period ending on the date of such appointment in the leasing of first-class
office properties in the Comparable Area. The determination of the Arbitrator
shall be limited solely to the issue of whether Landlord's Option Rent
Calculation or Tenant's Option Rent Calculation, is the closest to the actual
Market Rent as determined by the Arbitrator, taking into account the
requirements of Section 2.2.2 of this Lease. Such Arbitrator shall be appointed
within fifteen (15) days after the applicable Outside Agreement Date. Landlord
and Tenant may not directly or indirectly, consult with the Arbitrator prior to,
or subsequent to, his or her appointment.
2.2.4.2 The Arbitrator shall within thirty (30) days of
appointment reach a decision as to Market Rent and determine whether the
Landlord's Option Rent Calculation or Tenant's Option Rent Calculation as
submitted pursuant to Section 2.2.4 of this Lease is closest to Market Rent as
determined by the Arbitrator and simultaneously publish a ruling ("AWARD")
indicating whether Landlord's Option Rent Calculation or Tenant's Option Rent
Calculation is closest to the Market Rent as determined by the Arbitrator.
Following notification of the Award, the Landlord's Option Rent Calculation or
Tenant's Option Rent Calculation, whichever is selected by the Arbitrator as
being closest to Market Rent shall become the then applicable Market Rent.
2.2.4.3 The Award issued by the Arbitrator shall be
binding upon Landlord and Tenant.
2.2.4.4 If Landlord and Tenant fail to appoint an
Arbitrator within fifteen (15) days after the applicable Outside Agreement Date,
either party may petition the presiding judge of the Superior Court of San Diego
County to appoint such Arbitrator subject to the criteria in Section 2.2.4.1 of
this Lease, or if he or she refuses to act, either party may petition any judge
having jurisdiction over the parties to appoint such Arbitrator.
2.2.4.5 The cost of arbitration shall be paid (i) by
Landlord if Tenant's Option Rent Calculation is closest to the Market Rent as
determined by the Arbitrator, or (ii) by
-12-
Tenant if Landlord's Option Rent Calculation is closest to the Market Rent as
determined by the Arbitrator.
2.3 TERMINATION RIGHT.
2.3.1 EXERCISE OF TERMINATION RIGHT. Tenant shall have the right
to terminate and cancel this Lease effective as of the first day of the
thirteenth (13th) Lease Year or thereafter during the initial Lease Term (the
"TERMINATION DATE"), provided that, not later than twelve (12) months prior to
the Termination Date, Landlord receives (i) written notice from Tenant (the
"TERMINATION NOTICE") that Tenant intends to terminate this Lease pursuant to
the terms of this Section 2.3, and (ii) cash in the amount of the "Termination
Fee," as that term is defined below, as consideration for such early
termination. Upon Tenant's delivery of the Termination Notice to Landlord, all
of Tenant's rights under Section 1.4 (with respect to the First Offer Space) and
Section 2.2 (with respect to the Option Terms), shall automatically terminate
and be of no further force and effect regardless of whether this Lease
thereafter shall be terminated in accordance with the terms of this Section 2.3.
As used in this Lease, the "TERMINATION FEE" shall be equal to the "Unamortized
Value as of the Termination Date," as that term is defined below, of the Lease
Concessions. As used in this Lease, the "LEASE CONCESSIONS" shall be equal to
the sum of: (A) the amount of all tenant improvement costs (including, without
limitation, the Tenant Improvement Allowance) expended by Landlord in connection
with this Lease (other than amounts initially and directly reimbursed by
Tenant); (B) any free rent, reduced rent or rent abatement granted to Tenant;
(C) the amount of all real estate commissions paid to Tenant or any broker or
brokerage company in connection with the consummation of this Lease; (D) any
other monetary amounts paid by Landlord to Tenant or any other monetary
concessions granted by Landlord to Tenant in connection with this Lease or the
Premises, and (E) Landlord's deferred rent receivables. As used in this Lease,
the "UNAMORTIZED VALUE AS OF THE TERMINATION DATE" of the applicable Lease
Concessions shall be equal to the present value as of the Termination Date of
the right to receive an annuity of monthly payments equal to the applicable
"Monthly Amortization Amount," as determined below, on the first day of each
month for the period commencing on the Termination Date and ending on the Lease
Expiration Date, such present value to be determined using a discount factor
equal to the future value interest factor described in item (2), below. As used
in this Lease, the "MONTHLY AMORTIZATION AMOUNT" shall be determined in
connection with the calculation of a missing component of an annuity, using: (1)
the amount of the applicable Lease Concessions as the present value of such
annuity; (2) the annual "Bank Prime Loan" rate cited in the Federal Reserve
Statistical Release Publication G.13(415), published on the first Tuesday of
each calendar month (or such other comparable index as Landlord and Tenant shall
reasonably agree upon if such rate ceases to be published) (the "REFERENCE
RATE") in effect as of the date of the disbursement of each of the applicable
Lease Concessions, as the future value interest factor; (3) the number of months
in the Lease Term as the number of monthly payments of the annuity; and (4) the
Monthly Amortization Amount (the missing component) as the monthly payment
amount under the annuity. For purposes of example only, assuming (x) a
Termination Date on the first day of the thirteenth (13th) Lease Year, (y) a
Tenant Improvement Allowance equal to $40.00 per Usable Square Foot of the
Premises, and (z) 180,000 Rentable Square Feet in the Premises, the Termination
Fee would be approximately $6,900,000.00.
-13-
2.3.2 TERMINATION OF LEASE. Provided that Tenant timely elects to
terminate this Lease in accordance with Section 2.3.1, above, this Lease
(including any subtenancies) shall automatically terminate and be of no further
force or effect, and Landlord and Tenant shall be relieved of their respective
obligations under this Lease, as of the Termination Date, except with respect to
those obligations set forth in this Lease which specifically survive the
expiration or earlier termination of this Lease, including, without limitation,
the payment by Tenant of all amounts owed by Tenant under this Lease. The
termination right contained in this Section 2.3 shall be personal to the
Original Tenant and its Affiliates, and may only be exercised by Original Tenant
or its Affiliates (and not by any other assignee, sublessee or other
"Transferee," as that term is defined in Section 14.1 of this Lease, of Tenant's
interest in this Lease).
2.3.3 NO TENANT DEFAULT. Notwithstanding anything to the contrary
contained in this Section 2.3, Tenant shall have no right to exercise the
termination right set forth in this Section 2.3 if Tenant is in default under
this Lease as of the date of Tenant's delivery to Landlord of the Termination
Notice or, at Landlord's option, at any time prior to the Termination Date;
provided, however, Tenant may retain its right to so exercise if the Termination
Fee is increased by an amount sufficient to cure any such default. Except to the
extent Tenant cures the applicable default pursuant to the TCCs of the preceding
sentence, if Tenant is in default under the Lease following Tenant's delivery to
Landlord of the Termination Notice but prior to the Termination Date, then, at
Landlord's option, the Termination Notice shall be null and void and of no
further force or effect, and Landlord shall have the right to add the
Termination Fee to the "Security Deposit," as that term is defined in Article
21, below, held by Landlord under this Lease and, therefore, if Tenant defaults
with respect to any provisions of this Lease, then Landlord shall have the
right, without notice to Tenant, but not the obligation, to apply all or any
part of the Termination Fee for the payment of any Rent or any other sum in
default in accordance with Article 21, below. Tenant hereby waives the
provisions of Section 1950.7 of the California Civil Code, or any successor
statute, with respect to Landlord's use of the Termination Fee in connection
with Tenant's default under this Lease.
ARTICLE 3
BASE RENT; LATE DELIVERY ABATEMENT
3.1 BASE RENT. Tenant shall pay, without prior notice or demand, to
Landlord or Landlord's agent at such place as Landlord may from time to time
designate in writing, by a check for currency which, at the time of payment, is
legal tender for private or public debts in the United States of America, base
rent ("BASE RENT") as set forth in Section 4 of the Summary, payable in equal
monthly installments as set forth in Section 4 of the Summary in advance on or
before the first day of each and every calendar month during the Lease Term,
without any setoff or deduction whatsoever. The Base Rent for the first full
month of the Lease Term which occurs after the expiration of any free rent
period shall be paid at the time of Tenant's execution of this Lease. If any
Rent payment date (including the Lease Commencement Date) falls on a day of the
month other than the first day of such month or if any payment of Rent is for a
period which is shorter than one month, the Rent for any fractional month shall
accrue on a daily basis for the period from the date such payment is due to the
end of such calendar month or to the end of the Lease Term at a rate per day
which is equal to 1/365 of the applicable annual Rent. All other
-14-
payments or adjustments required to be made under the terms of this Lease that
require proration on a time basis shall be prorated on the same basis.
3.2 LATE DELIVERY CREDIT. In the event the Premises is not Ready for
Occupancy on or before August 16, 2003 (subject to extension due to "Force
Majeure" and "Tenant Delays," as those terms are set forth, respectively, in
Section 29.16 of this Lease and Section 5.2 of the Tenant Work Letter, the
"FIRST OUTSIDE RFO DATE"), then Tenant shall receive a credit against Base Rent
equal to Two Thousand Five Hundred and No/100 Dollars ($2,500.00) per day of the
period commencing on the First Outside RFO Date and ending on the earlier to
occur of (i) the date the Premises is Ready for Occupancy, or (ii) the day
immediately preceding the "Second Outside RFO Date". In addition to the
foregoing, in the event the Premises is not Ready for Occupancy on or before
August 24, 2003 (subject to extension due to Force Majeure and Tenant Delays,
the "SECOND OUTSIDE RFO DATE"), then Tenant shall receive a credit against Base
Rent equal to Three Thousand Five Hundred and No/100 Dollars ($3,500.00) per day
of the period commencing on the Second Outside RFO Date and ending on the
earlier to occur of (iii) the date the Premises is Ready for Occupancy, or (iv)
the day immediately preceding the "Third Outside RFO Date". In addition to the
foregoing, in the event the Premises is not Ready for Occupancy on or before
September 1, 2003 (subject to extension due to Force Majeure and Tenant Delays,
the "THIRD OUTSIDE RFO DATE"), then Tenant shall receive a credit against Base
Rent equal to Five Thousand and No/100 Dollars ($5,000.00) per day of the period
commencing on the Third Outside RFO Date and ending on the the date the Premises
is Ready for Occupancy. Notwithstanding anything to the contrary set forth
above, to the extent the selected "Contractor," as that term is set forth in
Section 4.1.1 of the Tenant Work Letter is a general contractor other than Reno
Contracting, then each of the First Outside RFO Date, the Second Outside RFO
Date and the Third Outside RFO Date, shall be automatically extended (in
addition to any extension due to Force Majeure and/or Tenant Delays) by a period
equal to one (1) month.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "TENANT'S SHARE" of the annual "DIRECT
EXPENSES," as those terms are defined in Sections 4.2.6 and 4.2.2 of this Lease,
respectively, which are in excess of the amount of Direct Expenses applicable to
the "Base Year," as that term is defined in Section 4.2.1, below; provided,
however, that in no event shall any decrease in Direct Expenses for any Expense
Year below Direct Expenses for the Base Year entitle Tenant to any decrease in
Base Rent or any credit against sums due under this Lease. Such payments by
Tenant, together with any and all other amounts payable by Tenant to Landlord
pursuant to the terms of this Lease, are hereinafter collectively referred to as
the "ADDITIONAL RENT", and the Base Rent and the Additional Rent are herein
collectively referred to as "RENT." All amounts due under this Article 4 as
Additional Rent shall be payable for the same periods and in the same manner as
the Base Rent. Without limitation on other obligations of Tenant which survive
the expiration of the Lease Term, the obligations of Tenant to pay the
Additional Rent provided for in this Article 4 shall survive the expiration of
the Lease Term, provided that Landlord bills Tenant for such Additional Rent
within one (1) year following the calendar year in which the Lease Term expires,
except where the failure to timely furnish such xxxx as to any particular item
includable as Additional Rent is
-15-
beyond Landlord's reasonable control (e.g., tax assessments that are late in
arriving from the assessor), in which case such one (1) year limit shall not be
applicable.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:
4.2.1 "BASE YEAR" shall mean the period set forth in Section 5 of
the Summary.
4.2.2 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.3 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires, provided that Landlord, upon notice to Tenant, may
change the Expense Year from time to time to any other twelve (12) consecutive
month period, and, in the event of any such change, Tenant's Share of Direct
Expenses shall be equitably adjusted for any Expense Year involved in any such
change.
4.2.4 "OPERATING EXPENSES" shall be calculated under accounting
principles consistently applied from year to year and shall mean all expenses,
costs and amounts of every kind and nature which, in accordance with sound real
estate management principles (consistently applied), Landlord pays or accrues
during any Expense Year because of or in connection with the ownership,
management, maintenance, security, repair, replacement, restoration or operation
of the Project, or any portion thereof. Without limiting the generality of the
foregoing, Operating Expenses shall specifically include any and all of the
following: (i) the cost of supplying all utilities, the cost of operating,
repairing, maintaining, and renovating the utility, telephone, mechanical,
sanitary, storm drainage, and elevator systems, and the cost of maintenance and
service contracts in connection therewith; (ii) the cost of licenses,
certificates, permits and inspections and the cost of contesting any
governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with a transportation system management program or
similar program; (iii) the cost of all insurance carried by Landlord in
connection with the Project; provided, however, that if Landlord does not carry
earthquake/flood insurance for the Real Property and/or the Building during any
part of the Base Year but subsequently obtains earthquake/flood insurance for
the Real Property and/or the Building during the Lease Term, then from and after
the date upon which Landlord obtains such earthquake/flood insurance and
continuing throughout the period during which Landlord maintains such insurance,
Operating Expenses for the Base Year shall be deemed to be increased by the
amount of the premium Landlord reasonably estimates it would have incurred had
Landlord maintained such insurance for the same period of time during the Base
Year as such insurance was maintained by Landlord during such subsequent Expense
Year; provided further, however, any such earthquake/flood insurance shall be
subject to Tenant's reasonable approval (Tenant acknowledging and agreeing,
however, that it shall be deemed unreasonable for Tenant to withhold such
consent to the extent (A) such earthquake/flood insurance is mandated by
applicable governmental entities or Landlord's lender, or (B) landlords of
Comparable Buildings are requiring such earthquake/flood insurance policies be
maintained and Landlord's earthquake/flood insurance policy is commercially
reasonably vis-a-vis such third party policies); (iv) the cost of landscaping,
relamping, and all supplies, tools, equipment and materials used in the
operation, repair and maintenance of the Project, or any portion thereof; (v)
costs incurred in connection with the
-16-
parking areas servicing the Project; (vi) fees and other costs, including
management fees, consulting fees, legal fees and accounting fees, of all
contractors and consultants in connection with the management, operation,
maintenance and repair of the Project (which fees shall be commercially
reasonable vis-a-vis the competitive fees being charged for similar services at
Comparable Buildings in the Comparable Area); (vii) payments under any equipment
rental agreements and the fair rental value of any management office space;
(viii) wages, salaries and other compensation and benefits, including taxes
levied thereon, of all persons engaged in the operation, maintenance and
security of the Project; (ix) costs under any instrument pertaining to the
sharing of costs by the Project; (x) operation, repair, maintenance and
replacement of all systems and equipment and components thereof of the Building;
(xi) the cost of janitorial, alarm, security and other services, replacement of
wall and floor coverings, ceiling tiles and fixtures in common areas,
maintenance and replacement of curbs and walkways, repair to roofs and
re-roofing; (xii) amortization (including interest on the unamortized cost) of
the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof; (xiii)
the cost of capital improvements or other costs incurred in connection with the
Project (A) which are intended to effect economies in the operation or
maintenance of the Project, or any portion thereof, (B) that are required to
comply with present or anticipated conservation programs, (C) which are
replacements or modifications of nonstructural items located in the Common Areas
required to keep the Common Areas in good order or condition, or (D) that are
required under any governmental law or regulation enacted after construction of
the Building; provided, however, that any capital expenditure shall be amortized
with interest over its useful life in accordance with sound real estate
management and accounting principles; (xiv) costs, fees, charges or assessments
imposed by, or resulting from any mandate imposed on Landlord by, any federal,
state or local government for fire and police protection, trash removal,
community services, or other services which do not constitute "Tax Expenses" as
that term is defined in Section 4.2.5, below; and (xv) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Building.
If Landlord is not furnishing any particular work or service (the cost
of which, if performed by Landlord, would be included in Operating Expenses) to
a tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Project is not
at least ninety-five percent (95%) occupied during all or a portion of the Base
Year or any Expense Year, Landlord may elect to make an appropriate adjustment
to the components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been incurred had the Project been
ninety-five percent (95%) occupied; and the amount so determined shall be deemed
to have been the amount of Operating Expenses for such year. Operating Expenses
for the Base Year shall not include cost increases due to extraordinary
circumstances, including, but not limited to, Force Majeure boycotts, strikes,
conservation surcharges, embargoes or shortages, or amortized costs relating to
capital improvements. In no event shall the components of Direct Expenses for
any Expense Year related to Project utilities, services, or insurance costs be
less than the components of Direct Expenses related to Project utilities,
services, or insurance costs in the Base Year. If Landlord, in any Expense Year
following the Base Year, begins providing any new services, then for such period
of time in which such new
-17-
services apply, Operating Expenses for the Base Year shall be increased by the
amount that Landlord reasonably determines it would have incurred had Landlord
provided such new service during the same period of time during the Base Year as
such new service was provided during such subsequent Expense Year.
Notwithstanding the foregoing, no adjustment to the Operating Expenses for the
Base Year shall occur to the extent such new service (1) is attributable to
Tenant's use of the Premises (as opposed to office use generally), in which case
Landlord may elect (Y) to include the cost of such new services in Operating
Expenses, or (Z) to invoice Tenant directly for such costs, depending upon the
nature of the service and the extent to which the need for such service is
directly attributable to Tenant's use, as determined in Landlord's reasonable
discretion, (2) is being offered by landlords in the majority of Comparable
Buildings, or (3) is required by "Applicable Laws," as that Term is set forth in
Article 24. If Landlord, in any Expense Year after the Base Year, discontinues
any service then for such period of time in which such services are
discontinued, Operating Expenses for the Base Year shall be decreased by the
amount that Landlord reasonably determines it incurred for such service
throughout the Base Year.
Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not include:
(i) bad debt expenses and interest, principal,
points and fees on debts (except in connection with the financing of items which
are expressly included in the definition of Operating Expenses above) or
amortization or rent, attorneys' fees or other transaction costs on any ground
lease, mortgage or mortgages or any other debt instrument encumbering the
Building or the Project, transaction costs or fees incurred in the sale or
refinancing of the Project or any Building within the Project;
(ii) marketing costs, including leasing
commissions, attorneys' fees in connection with the negotiation and preparation
of letters, deal memos, letters of intent, leases, subleases and/or assignments,
space planning costs, and other costs and expenses incurred in connection with
lease, sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Project;
(iii) costs, including permit, license,
construction and inspection costs, incurred with respect to the installation of
other tenants' or occupants' improvements made for tenants or other occupants in
the Project or incurred in renovating or otherwise improving, decorating,
painting or redecorating vacant space for tenants, prospective tenants or other
occupants in the Project;
(iv) any costs expressly excluded from Operating
Expenses elsewhere in this Lease;
(v) costs of any items (including, but not
limited to, costs incurred by Landlord for the repair of damage to the Building)
to the extent Landlord receives reimbursement from insurance proceeds or from a
third party;
(vi) costs of capital improvements, capital
replacements, capital repairs, capital restorations and capital additions except
those set forth in Sections 4.2.4(xii) and (xiii) above;
-18-
(vii) depreciation, amortization and interest
payments, except as specifically included in Operating Expenses pursuant to the
terms of this Lease and except on materials, tools, supplies and vendor-type
equipment purchased by Landlord to enable Landlord to supply services Landlord
might otherwise contract for with a third party, where such depreciation,
amortization and interest payments would otherwise have been included in the
charge for such third party's services, all as determined in accordance with
sound real estate management and accounting principles, consistently applied,
and when depreciation or amortization is permitted or required, the item shall
be amortized over its reasonably anticipated useful life;
(viii) costs, including attorneys' fees and
costs, incurred by Landlord relating to disputes with ground lessors, lenders,
brokers, tenants or prospective tenants;
(ix) Landlord's general corporate overhead,
general and administrative expenses and costs of operation of the business of
Landlord as contrasted with operation of the Project, including within this
exclusion, costs related to the sale, financing or refinancing of the Project or
any part thereof or interest therein and wages, salaries or other compensation
paid to any executive employees of Landlord above the grade of Asset manager
(but the Project engineer shall be considered below the grade of Asset manager);
(x) advertising and promotional expenditures;
(xi) interest and tax penalties incurred as a
result of Landlord's negligence, inability or unwillingness to make payments or
file returns when due;
(xii) costs arising from Landlord's charitable or
political contributions;
(xiii) costs for acquisition of sculpture,
paintings or other objects of art;
(xiv) supervisory fees, overhead or profit to
Landlord (1) for Landlord's repairs or maintenance services, except to the
extent that (i) the percentage of the cost of such services resulting in such
fees, overhead or profit is consistent with the percentage rate commonly charged
by third party managers of service providers in the vicinity of the Project and
(ii) the total cost of such fees, overhead or profit included in Operating
Expenses is consistent with the total cost associated with such services
commonly charged by comparable providers in the vicinity of the Project, or (2)
relating to Tenant's alterations or repairs;
(xv) construction costs, development fees,
permits and similar costs relating to Landlord's construction of the initial
Landlord Work (as defined in the Tenant Work Letter), and any costs associated
with correcting any defects in the construction of such Landlord Work;
(xvi) the cost of any after-hour utilities or
other services provided to a tenant of the Project, which are available to
Tenant without additional charge, or for which Landlord is entitled to receive
direct payment from the requesting tenant;
-19-
(xvii) operating reserves or contingency amounts
in excess of the percentage of Operating Expenses allocated thereto in the Base
Year; and
(xviii) costs for which the Landlord is directly
reimbursed by any tenant or occupant of the Project (including Tenant, if
applicable, i.e., "Excess Parking Costs") or by insurance by its carrier or any
tenant's carrier or by anyone else, and electric power costs for which any
tenant directly contracts with the local public service company.
4.2.5 TAXES.
4.2.5.1 "TAX EXPENSES" shall mean all federal, state,
county, or local governmental or municipal taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate taxes, general and
special assessments, transit taxes, leasehold taxes or taxes based upon the
receipt of rent, including gross receipts or sales taxes applicable to the
receipt of rent, unless required to be paid by Tenant, personal property taxes
imposed upon the fixtures, machinery, equipment, apparatus, systems and
equipment, appurtenances, furniture and other personal property used in
connection with the Project, or any portion thereof), excluding fines, default
interest and penalties (unless due to Tenant's failure to pay Additional Rent
when due), which shall be paid or accrued during any Expense Year (without
regard to any different fiscal year used by such governmental or municipal
authority) because of or in connection with the ownership, leasing and operation
of the Project, or any portion thereof. All assessments shall be paid by
Landlord in the maximum number of installments permitted by law and shall not be
included as Tax Expenses except in the year in which the assessment installment
is actually paid.
4.2.5.2 Tax Expenses shall include, without limitation:
(i) Any tax on the rent; (ii) Any assessment, tax, fee, levy or charge in
addition to, or in substitution, partially or totally, of any assessment, tax,
fee, levy or charge previously included within the definition of real property
tax, it being acknowledged by Tenant and Landlord that Proposition 13 was
adopted by the voters of the State of California in the June 1978 election
("PROPOSITION 13") and that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants, and,
in further recognition of the decrease in the level and quality of governmental
services and amenities as a result of Proposition 13, Tax Expenses shall also
include any governmental or private assessments or the Project's contribution
towards a governmental or private cost-sharing agreement for the purpose of
augmenting or improving the quality of services and amenities normally provided
by governmental agencies; (iii) Any assessment, tax, fee, levy, or charge
allocable to or measured by the area of the Premises or the Rent payable
hereunder; and (iv) Any assessment, tax, fee, levy or charge, upon this
transaction or any document to which Tenant is a party, creating or transferring
an interest or an estate in the Premises (provided that Tax Expenses shall not
include any documentary transfer taxes associated with the conveyance of
Landlord's interest in any portion of the Project).
-20-
4.2.5.3 Any costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid. Except as set forth in Section 4.2.5.4, below,
refunds of Tax Expenses shall be credited against Tax Expenses and refunded to
Tenant regardless of when received, based on the Expense Year to which the
refund is applicable, provided that in no event shall the amount to be refunded
to Tenant for any such Expense Year exceed the total amount paid by Tenant as
Additional Rent under this Article 4 for such Expense Year. If Tax Expenses for
any period during the Lease Term or any extension thereof are increased after
payment thereof for any reason, including, without limitation, error or
reassessment by applicable governmental or municipal authorities, Tenant shall
pay Landlord upon demand Tenant's Share of any such increased Tax Expenses
provided, however, Landlord shall diligently pursue an appeal thereof should
Tenant reasonably conclude that such increase is not warranted. Notwithstanding
anything to the contrary contained in this Section 4.2.5 (except as set forth in
Section 4.2.5.1, above), there shall be excluded from Tax Expenses (i) all
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents, receipts or income attributable to operations at the Project),
(ii) any items included as Operating Expenses, and (iii) any items paid by
Tenant under Section 4.5 of this Lease.
4.2.5.4 Notwithstanding anything to the contrary set forth
in this Lease, the amount of Tax Expenses for the Base Year and any Expense Year
shall be calculated without taking into account any decreases in real estate
taxes obtained in connection with Proposition 8, and, therefore, the Tax
Expenses in the Base Year and/or an Expense Year may be greater than those
actually incurred by Landlord, but shall, nonetheless, be the Tax Expenses due
under this Lease; provided that (i) any costs and expenses incurred by Landlord
in securing any Proposition 8 reduction shall not be included in Direct Expenses
for purposes of this Lease, and (ii) tax refunds under Proposition 8 shall not
be deducted from Tax Expenses, but rather shall be the sole property of
Landlord. Landlord and Tenant acknowledge that this Section 4.2.5.4 is not
intended to in any way affect (A) the inclusion in Tax Expenses of the statutory
two percent (2.0%) annual increase in Tax Expenses (as such statutory increase
may be modified by subsequent legislation), or (B) the inclusion or exclusion of
Tax Expenses pursuant to the terms of Proposition 13, which shall be governed
pursuant to the terms of Sections 4.2.5.1 through 4.2.5.3, above.
4.2.5.5 Landlord shall not voluntarily issue any
assessments or bonds for the Project which would increase Tenant's payment of
Tax Expenses without Tenant's prior written consent.
4.2.6 "TENANT'S SHARE" shall mean the percentage set forth in
Section 6 of the Summary (as the same may be adjusted pursuant to Section 1.2
above). Tenant's Share shall be calculated by dividing the rentable square
footage of the Premises by the total rentable square footage of the Building.
4.2.7 "OPERATING EXPENSE BUDGET" shall mean the estimated
Operating Expenses for the Base Year prepared by Landlord and attached hereto as
EXHIBIT G. Tenant
-21-
acknowledges that the Operating Expense Budget is merely an estimate and that
actual Operating Expenses may exceed or be less than the Operating Expense
Budget for the Base Year.
4.3 INTENTIONALLY OMITTED.
4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Direct Expenses
for such Expense Year exceeds Tenant's Share of Direct Expenses applicable to
the Base Year, then Tenant shall pay to Landlord, in the manner set forth in
Section 4.4.1, below, and as Additional Rent, an amount equal to the excess (the
"EXCESS").
4.4.1 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY TENANT.
Landlord shall endeavor to give to Tenant following the end of each Expense
Year, but in no event later than July 1, a statement (the "STATEMENT") which
shall state the Direct Expenses incurred or accrued for such preceding Expense
Year, and which shall indicate the amount of the Excess. Upon receipt of the
Statement for each Expense Year commencing or ending during the Lease Term, if
an Excess is present, Tenant shall pay, with its next installment of Base Rent
due, the full amount of the Excess for such Expense Year, less the amounts, if
any, paid during such Expense Year as "ESTIMATED EXCESS," as that term is
defined in Section 4.4.2, below. The failure of Landlord to timely furnish the
Statement for any Expense Year shall not prejudice Landlord from collecting the
Excess for a period of one (1) year after the expiration of the Expense Year for
which the Statement applies, except where the failure to timely furnish the
Statement as to any particular item includable in the Statement is beyond
Landlord's reasonable control (e.g. tax assessments that are late in arriving
from the assessor), in which case such one (1) year limit shall not be
applicable. Notwithstanding anything contained in this Section 4.4.1, except for
estimated payments by Tenant pursuant to Section 4.4.2 below, Tenant shall not
be obligated to pay the Excess unless and until Tenant is furnished with the
Statement. Even though the Lease Term has expired and Tenant has vacated the
Premises, when the final determination is made of Tenant's Share of Direct
Expenses for the Expense Year in which this Lease terminates, if an Excess if
present, Tenant shall immediately pay to Landlord such amount. The provisions of
this Section 4.4.1 shall survive the expiration or earlier termination of the
Lease Term.
4.4.2 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition,
Landlord shall endeavor to give Tenant a yearly expense estimate statement (the
"ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate (the
"ESTIMATE") of what the total amount of Direct Expenses for the then-current
Expense Year shall be and the estimated excess (the "ESTIMATED EXCESS") as
calculated by comparing the Direct Expenses for such Expense Year, which shall
be based upon the Estimate, to the amount of Direct Expenses for the Base Year.
The failure of Landlord to timely furnish the Estimate Statement for any Expense
Year shall not preclude Landlord from enforcing its rights to collect any
Estimated Excess under this Article 4; provided, however, Tenant shall not be
obligated to pay any Estimated Excess until the Estimate Statement is provided
to Tenant. Until a new Estimate Statement is furnished, Tenant shall pay
monthly, with the monthly Base Rent installments, an amount equal to one-twelfth
(1/12) of the total Estimated Excess set forth in the previous Estimate
Statement delivered by Landlord to Tenant. Thereafter, Tenant shall pay, with
its next installment of Base Rent due, a fraction of the Estimated Excess for
the then-current Expense Year (reduced by any amounts paid pursuant to
-22-
the next to last sentence of this Section 4.4.2). Such fraction shall have as
its numerator the number of months which have elapsed in such current Expense
Year, including the month of such payment, and twelve (12) as its denominator.
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days
before delinquency, taxes levied against Tenant's equipment, furniture, fixtures
and any other personal property located in or about the Premises. If any such
taxes on Tenant's equipment, furniture, fixtures and any other personal property
are levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 If the tenant improvements in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for real property
tax purposes at a valuation higher than the valuation at which tenant
improvements conforming to Landlord's "building standard" in other space in the
Building are assessed, then the Tax Expenses levied against Landlord or the
property by reason of such excess assessed valuation shall be deemed to be taxes
levied against personal property of Tenant and shall be governed by the
provisions of Section 4.5.1, above; provided, however, Landlord's "building
standard" shall be reasonably established vis-a-vis the customary level of
tenant improvements for a first-class office building campus in the Del Mar
Heights/UTC area.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall
pay prior to delinquency any (i) rent tax or sales tax, service tax, transfer
tax or value added tax, or any other applicable tax on the rent or services
herein or otherwise respecting this Lease, (ii) taxes assessed upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion of
the Project, including the Project parking facility; or (iii) taxes assessed
upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.
4.6 LANDLORD'S BOOKS AND RECORDS. Within ninety (90) days after receipt
of a Statement by Tenant ("REVIEW PERIOD"), if Tenant disputes the amount set
forth in the Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a regionally recognized accounting
firm), designated by Tenant, may, after reasonable notice to Landlord and at
reasonable times, inspect Landlord's records at Landlord's offices, provided
that Tenant is not then in default after expiration of all applicable cure
periods of any obligation under this Lease (including, but not limited to, the
payment of the amount in dispute) and provided further that Tenant and such
accountant or representative shall, and each of them shall use their
commercially reasonable efforts to cause their respective agents and employees
to, maintain all information contained in Landlord's records in strict
confidence. Notwithstanding the foregoing, Tenant shall only have the right to
review Landlord's records one (1) time during any twelve (12) month period.
Tenant's failure to dispute the amounts set forth
-23-
in any Statement within the Review Period shall be deemed to be Tenant's
approval of such Statement and Tenant, thereafter, waives the right or ability
to dispute the amounts set forth in such Statement. If after such inspection,
but within thirty (30) days after the Review Period, Tenant notifies Landlord in
writing that Tenant still disputes such amounts, a certification as to the
proper amount shall be made, at Tenant's expense, by an independent certified
public accountant selected by Landlord and who is a member of a nationally or
regionally recognized accounting firm, which certification shall be binding upon
Landlord and Tenant. Landlord shall cooperate in good faith with Tenant and the
accountant to show Tenant and the accountant the information upon which the
certification is to be based. However, if such certification by the accountant
proves that the Direct Expenses set forth in the Statement were overstated by
more than five percent (5%), then the cost of the accountant and the cost of
such certification shall be paid for by Landlord. Promptly following the parties
receipt of such certification, the parties shall make such appropriate payments
or reimbursements, as the case may be, to each other, as are determined to be
owing pursuant to such certification, together with interest at the Interest
Rate (as defined in Article 25 below). Tenant agrees that this section shall be
the sole method to be used by Tenant to dispute the amount of any Direct
Expenses payable by Tenant pursuant to the terms of this Lease, and Tenant
hereby waives any other rights at law or in equity relating thereto.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises solely for the
Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or
permit the Premises or the Project to be used for any other purpose or purposes
whatsoever without the prior written consent of Landlord, which may be withheld
in Landlord's sole discretion.
5.2 PROHIBITED USES. The uses prohibited under this Lease shall include,
without limitation, use of the Premises or a portion thereof for (i) offices of
any agency or bureau of the United States or any state or political subdivision
thereof; (ii) offices or agencies of any foreign governmental or political
subdivision thereof; (iii) operational offices of any health care professionals;
(iv) schools or other training facilities which are not ancillary to corporate,
executive or professional office use; (v) retail or restaurant uses; or (vi)
communications firms such as radio and/or television stations. Tenant further
covenants and agrees that Tenant shall not use, or suffer or permit any person
or persons to use, the Premises or any part thereof for any use or purpose
contrary to the provisions of the Rules and Regulations set forth in EXHIBIT D,
attached hereto, or in violation of the laws of the United States of America,
the State of California, or the ordinances, regulations or requirements of the
local municipal or county governing body or other lawful authorities having
jurisdiction over the Project) including, without limitation, any such laws,
ordinances, regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or hereafter in
effect. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way damage the reputation of the Project or obstruct
or interfere with the rights of other tenants or occupants of the Building, or
injure or unreasonably annoy them or use or allow the Premises to be used for
any unlawful or reasonably objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises.
-24-
5.3 CC&RS. Tenant shall comply with all recorded covenants, conditions,
and restrictions currently affecting the Project. Additionally, Tenant
acknowledges that the Project may be subject to any future covenants,
conditions, and restrictions (the "CC&RS") which Landlord, in Landlord's
discretion, deems reasonably necessary or desirable, and Tenant agrees that this
Lease shall be subject and subordinate to such CC&Rs; provided, however, such
future CC&R's shall not materially adversely affect Tenant's use or occupancy of
the Premises nor any of its rights hereunder. Landlord shall have the right to
require Tenant to execute and acknowledge, within fifteen (15) business days of
a request by Landlord, a "Recognition of Covenants, Conditions, and
Restriction," in a form substantially similar to that attached hereto as EXHIBIT
F, agreeing to and acknowledging the CC&Rs. Landlord represents and warrants
that use of the Premises for general office use, including customer service,
conforms with currently recorded CC&R's.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Subject to limitations imposed by all governmental rules,
regulations and guidelines applicable thereto, Landlord shall provide heating
and air conditioning ("HVAC") when necessary for normal comfort for normal
office use in the Premises from 6:00 A.M. to 7:00 P.M. Monday through Friday,
and on Saturdays from 8:00 A.M. to 1:00 P.M. (collectively, the "BUILDING
HOURS"), except for the date of observation of New Year's Day, Presidents Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and,
at Landlord's reasonable discretion, other locally or nationally recognized
holidays (collectively, the "HOLIDAYS"); provided, however, in no event shall
Holidays include "Xxxxxx Xxxxxx Xxxx Day," "Columbus Day" and "Veterans Day".
6.1.2 Landlord shall provide adequate electrical wiring and
facilities for connection to Tenant's lighting fixtures and incidental use
equipment consistent with the "Base Building Plans and Specifications" set forth
on Schedule 2 to the Tenant Work Letter. Tenant shall bear the cost of
replacement of lamps, starters and ballasts for non-Building standard lighting
fixtures within the Premises. All electrical usage for the Premises (including,
without limitation, electrical usage associated with the operation of the HVAC
equipment) shall be separately metered pursuant to a meter or meters to be
installed pursuant to the Tenant Work Letter as a charge to the Tenant
Improvement Allowance. Tenant shall contract directly with the utility provider
selected by Tenant and reasonably approved by Landlord to provide such
electrical services to the Premises and Tenant shall pay all such electrical
charges directly to the provider as reflected by such meter.
6.1.3 Landlord shall provide city water for lifesafety systems in
accordance with the Base Building Plans and Specifications, and from the regular
Building outlets for drinking, lavatory and toilet purposes in the Building
Common Areas. In the event Tenant wishes to use more water than the amount which
Landlord is required to furnish pursuant to this Section 6.1.3 (for the use of
Tenant's "cafeteria," "work-out" area, or excess lavatory use, to the extent the
-25-
same is in excess of the Base Building Plans and Specifications), Tenant shall
pay all costs associated with providing such excess water to the Premises and
for separately metering such excess water supplied to the Premises.
6.1.4 Landlord shall provide janitorial services to the Premises,
except the date of observation of the Holidays, in and about the Premises and
window washing services at a minimum of twice per year.
6.1.5 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours, shall have one elevator
available at all other times, except on the Holidays, and shall provide
nonexclusive, non-attended automatic passenger elevator service during Building
Hours only.
6.1.6 Landlord shall provide nonexclusive freight elevator
service subject to scheduling by Landlord.
6.1.7 Landlord shall provide security personnel and xxxxxx
service during Business Hours, in and about the Premises.
6.1.8 Landlord will use its reasonable efforts to work with local
exchange carriers to provide fiberoptic services to the Premises. Landlord
agrees that it will not unreasonably exclude any qualified carrier from
providing services to the Premises for the benefit of Tenant; however, Tenant
acknowledges that Landlord reserves the right to negotiate the terms under which
any such carrier shall have access to any multi-tenant building within the
Project.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.
6.2 OVERSTANDARD TENANT USE. Tenant shall not, without Landlord's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the Premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Landlord pursuant to the terms of Section
6.1 of this Lease. If such consent is given, Landlord shall have the right to
install supplementary air conditioning units or other facilities in the
Premises, including supplementary or additional metering devices, and the cost
thereof, including the cost of installation, operation and maintenance,
increased wear and tear on existing equipment and other similar charges, shall
be paid by Tenant to Landlord upon billing by Landlord. If Tenant uses water,
electricity, heat or air conditioning in excess of that supplied by Landlord
pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord, upon
billing, the cost of such excess consumption, the cost of the installation,
operation, and maintenance of equipment which is installed in order to supply
such excess consumption, and the cost of the increased wear and tear on existing
equipment caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, on demand, at the rates charged by the
public utility company furnishing the same, including the cost of such
-26-
additional metering devices. Tenant's use of electricity shall never exceed the
capacity of the feeders to the Project or the risers or wiring installation, and
subject to the terms of Section 29.32, below, Tenant shall not install or use or
permit the installation or use of any computer or electronic data processing
equipment in the Premises, without the prior written consent of Landlord. If
Tenant desires to use heat, ventilation or air conditioning during hours other
than those for which Landlord is obligated to supply such utilities pursuant to
the terms of Section 6.1 of this Lease, Tenant shall give Landlord such prior
notice, if any, as Landlord shall from time to time establish as appropriate, of
Tenant's desired use in order to supply such utilities, and Landlord shall
supply such utilities to Tenant at a (which shall be treated as Additional Rent)
reasonably determined by Landlord to be its actual cost of providing such
service, including a reasonable administration expense.
6.3 INTERRUPTION OF USE. Except as otherwise expressly set forth in
Section 6.4, below, Tenant agrees that Landlord shall not be liable for damages,
by abatement of Rent or otherwise, for failure to furnish or delay in furnishing
any service (including telephone and telecommunication services), or for any
diminution in the quality or quantity thereof, when such failure or delay or
diminution is occasioned, in whole or in part, by breakage, repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
Project after reasonable effort to do so, by any riot or other dangerous
condition, emergency, accident or casualty whatsoever, by act or default of
Tenant or other parties, or by any other cause; and such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
or performing any of its obligations under this Lease. Furthermore, Landlord
shall not be liable under any circumstances for a loss of, or injury to,
property or for injury to, or interference with, Tenant's business, including,
without limitation, loss of profits, however occurring, through or in connection
with or incidental to a failure to furnish any of the services or utilities as
set forth in this Article 6. Landlord may comply with voluntary controls or
guidelines promulgated by any governmental entity relating to the use or
conservation of energy, water, gas, light or electricity or the reduction of
automobile or other emissions without creating any liability of Landlord to
Tenant under this Lease, provided that the Premises are not thereby rendered
untenantable.
6.4 RENT ABATEMENT. If Landlord fails to perform the obligations
required of Landlord under the TCCs of this Lease and such failure causes all or
a portion of the Premises to be untenantable and unusable by Tenant and such
failure relates to the nonfunctioning of the heat, ventilation, and air
conditioning system in the Premises, the electricity in the Premises, the
nonfunctioning of the elevator service to the Premises, or a failure to provide
access to the Premises, Tenant shall give Landlord notice (the "INITIAL
NOTICE"), specifying such failure to perform by Landlord (the "LANDLORD
DEFAULT"). If Landlord has not cured such Landlord Default within five (5)
business days after the receipt of the Initial Notice (the "ELIGIBILITY
PERIOD"), Tenant may deliver an additional notice to Landlord (the "ADDITIONAL
NOTICE"), specifying such Landlord Default and Tenant's intention to xxxxx the
payment of Rent under this Lease. If Landlord does not cure such Landlord
Default within five (5) business days of receipt of the Additional Notice,
Tenant may, upon written notice to Landlord, immediately xxxxx Rent payable
under this Lease for that portion of the Premises rendered untenantable and not
used by Tenant, for the period beginning on the date five (5) business days
after the Initial Notice to the earlier of the date Landlord cures such Landlord
Default or the date Tenant recommences the use
-27-
of such portion of the Premises. Notwithstanding anything contained in this
Section 6.4, in the event such Landlord Default is shown by Tenant to be
directly attributable to the negligence or intentional acts of Landlord, its
agents or employees, and if Tenant is unable to utilize the Premises for a
period of two hundred seventy (270) cumulative days within any twenty-four
(24)-month period after Landlord's receipt of the Initial Notice, Tenant may
terminate this Lease by written notice to Landlord at any time after the number
of said two hundred seventy (270) days has been exceeded, until the date upon
which such services or utilities are restored. Tenant's rights set forth in this
Section 6.4 shall be Tenant's sole and exclusive remedy at law or in equity for
a Landlord Default. Except as provided in this Section 6.4, nothing contained
herein shall be interpreted to mean that Tenant is excused from paying Rent due
hereunder.
ARTICLE 7
REPAIRS
7.1 LANDLORD'S RESPONSIBILITY. Landlord shall (as an Operating Expense,
except as provided in Section 7.2 below or subject to exclusion from Operating
Expenses in accordance with Section 4.2.4 above) repair and maintain the
structural portions of the Building including the foundation, floor/ceiling
slabs, roof, curtain walls, exterior glass and moldings, columns, beams, shafts
(including elevator shafts), stairs, stairwells, elevator cabs and all Common
Areas and shall also maintain and repair the basic mechanical, electrical,
life-safety, plumbing and sprinkler systems and HVAC systems (except for any
distribution of such systems exclusively to the Premises and for Tenant's twenty
four (24) hour systems). Notwithstanding any provision set forth in this Article
7 to the contrary, if Tenant provides written notice to Landlord of an event or
circumstance which requires the action of Landlord with respect to repair and/or
maintenance of the Premises only (and not any other portion of the Project), and
Landlord fails to provide such action within a reasonable period of time, given
the circumstances, after the receipt of such notice, but in no event earlier
than thirty (30) days after Landlord's receipt of such notice, then Tenant may
proceed to take the required action upon delivery of an additional ten (10)
business days notice to Landlord specifying that Tenant is taking such required
action, and if such action was required under the terms of this Lease to be
taken by Landlord and was not taken by Landlord within such ten (10) day period,
then Tenant shall be entitled to prompt reimbursement by Landlord of Tenant's
actual, reasonable costs in taking such action. In the event Tenant takes such
action, and such work will affect the systems of the Building or the structural
integrity of the Building, Tenant shall use only those contractors used by
Landlord in the Project for work on such Building systems or structure unless
such contractors are unwilling or unable to perform, or timely perform, such
work, in which event Tenant may utilize the services of any other qualified
contractor which normally and regularly performs similar work in first-class
office buildings in the Del Mar Heights/UTC area.
7.2 STRUCTURAL REPAIRS. Capital repairs and replacements which Landlord
is obligated to make pursuant to Section 7.1 above to the curtain walls,
foundations, structural elements of the roofs (as opposed to roof membranes) and
underground utilities may be referred to herein as "STRUCTURAL REPAIRS".
Notwithstanding anything to the contrary contained in this Lease, but subject to
Article 22 below, the cost of any Structural Repairs shall be excluded from
Operating Expenses; provided, however, that to the extent any Structural Repairs
are necessitated due to the negligence or willful misconduct of Tenant, its
agents, employees or contractors,
-28-
Tenant shall be responsible for the cost of such repairs to the extent such
repairs are not covered by insurance carried by Landlord.
7.3 TENANT'S RESPONSIBILITY. Tenant shall, at Tenant's own expense,
pursuant to the terms of this Lease, including without limitation Article 8
hereof, keep the Premises, including all improvements, fixtures and furnishings
therein, and the floor or floors of the Building on which the Premises are
located, in good order, repair and condition at all times during the Lease Term.
In addition, Tenant shall, at Tenant's own expense, but under the supervision
and subject to the prior approval of Landlord, and within any reasonable period
of time specified by Landlord, pursuant to the terms of this Lease, including
without limitation Article 8 hereof, promptly and adequately repair all damage
to the Premises and replace or repair all damaged, broken, or worn fixtures and
appurtenances, except for damage caused by ordinary wear and tear or beyond the
reasonable control of Tenant; provided however, that, at Landlord's option, or
if Tenant fails to make such repairs, Landlord may, but need not, make such
repairs and replacements, and Tenant shall pay Landlord the cost thereof,
including a percentage of the cost thereof (to be uniformly established for the
Building and/or the Project) sufficient to reimburse Landlord for all overhead,
general conditions, fees and other costs or expenses arising from Landlord's
involvement with such repairs and replacements forthwith upon being billed for
same. Landlord may, but shall not be required to, enter the Premises at all
reasonable times to make such repairs, alterations, improvements or additions to
the Premises or to the Project or to any equipment located in the Project as
Landlord shall desire or deem necessary or as Landlord may be required to do by
governmental or quasi-governmental authority or court order or decree. Tenant
hereby waives any and all rights under and benefits of subsection 1 of Section
1932 and Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical, plumbing or HVAC facilities or systems pertaining to the Premises
(collectively, the "ALTERATIONS") without first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant not less than ten (10) business days prior to the commencement thereof,
and which consent shall not be unreasonably withheld by Landlord, provided it
shall be deemed reasonable for Landlord to withhold its consent to any
Alteration which adversely affects the structural portions or the systems or
equipment of the Building or is visible from the exterior of the Building. The
construction of the initial improvements to the Premises shall be governed by
the terms of the Tenant Work Letter and not the terms of this Article 8.
Notwithstanding anything to the contrary contained herein, Tenant may make
strictly cosmetic changes to the finish work in the Premises (the "COSMETIC
ALTERATIONS"), without Landlord's consent, provided that the aggregate cost of
any such alterations does not exceed $100,000 in any twelve (12) month period,
and further provided that such alterations do not (i) require any structural or
other substantial modifications to the Premises, (ii) require any changes to,
nor adversely affect, the systems and equipment of the Building, or (iii) affect
the exterior appearance of the Building. Tenant shall give Landlord at least
fifteen (15) days prior notice of such Cosmetic Alterations,
-29-
which notice shall be accompanied by reasonably adequate evidence that such
changes meet the criteria contained in this Section 8.1.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its reasonable discretion may deem
desirable, including, but not limited to, the requirement that Tenant utilize
for such purposes only contractors, subcontractors, materials, mechanics and
materialmen selected by Tenant from a list provided and approved by Landlord,
the requirement that upon Landlord's request, (which request must be made, if at
all, at the time of Landlord's consent to the Alteration), Tenant shall, at
Tenant's expense, remove such Alterations upon the expiration or any early
termination of the Lease Term. If such Alterations will involve the use of or
disturb hazardous materials or substances existing in the Premises, Tenant shall
comply with Landlord's rules and regulations concerning such hazardous materials
or substances. Tenant shall construct such Alterations and perform such repairs
in a good and workmanlike manner, in conformance with any and all applicable
federal, state, county or municipal laws, rules and regulations and pursuant to
a valid building permit, issued by the City of San Diego, all in conformance
with Landlord's construction rules and regulations. In the event Tenant performs
any Alterations in the Premises which require or give rise to governmentally
required changes to the "Base Building," as that term is defined below, then
Landlord shall, at Tenant's expense, make such changes to the Base Building. The
"BASE BUILDING" shall include the structural portions of the Building, and the
public restrooms and the systems and equipment located in the internal core of
the Building on the floor or floors on which the Premises are located. In
performing the work of any such Alterations, Tenant shall have the work
performed in such manner so as not to obstruct access to the Project or any
portion thereof, by any other tenant of the Project, and so as not to obstruct
the business of Landlord or other tenants in the Project. Tenant shall not use
(and upon notice from Landlord shall cease using) contractors, services,
workmen, labor, materials or equipment that, in Landlord's reasonable judgment,
would disturb labor harmony with the workforce or trades engaged in performing
other work, labor or services in or about the Building or the Common Areas. In
addition to Tenant's obligations under Article 9 of this Lease, upon completion
of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded
in the office of the Recorder of the County of San Diego in accordance with
Section 3093 of the Civil Code of the State of California or any successor
statute, and Tenant shall deliver to the Project management office a
reproducible copy of the "as built" drawings of the Alterations as well as all
permits, approvals and other documents issued by any governmental agency in
connection with the Alterations, if such Alterations are of a type for which
as-built plans are reasonably available.
8.3 PAYMENT FOR IMPROVEMENTS. If payment is made directly to
contractors, Tenant shall comply with Landlord's requirements for final lien
releases and waivers in connection with Tenant's payment for work to
contractors. Whether or not Tenant orders any work directly from Landlord,
Tenant shall pay to Landlord a percentage of the cost of such work sufficient to
compensate Landlord for all overhead, general conditions, fees and other costs
and expenses arising from Landlord's involvement with such work.
8.4 CONSTRUCTION INSURANCE. In addition to the requirements of Article
10 of this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries "BUILDER'S ALL
-30-
RISK" insurance in an amount approved by Landlord covering the construction of
such Alterations, and such other insurance as Landlord may require, it being
understood and agreed that all of such Alterations shall be insured by Tenant
pursuant to Article 10 of this Lease immediately upon completion thereof. In
addition, if the cost of any Alteration exceeds One Hundred Thousand Dollars
($100,000.00), Landlord may, in its discretion, require Tenant to obtain a lien
and completion bond or some alternate form of security satisfactory to Landlord
in an amount sufficient to ensure the lien-free completion of such Alterations
and naming Landlord as a co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures,
equipment and/or appurtenances which may be installed or placed in or about the
Premises, from time to time, shall be at the sole cost of Tenant and shall be
and become the property of Landlord, except that Tenant may remove any
Alterations, improvements, fixtures and/or equipment which Tenant can
substantiate to Landlord have not been paid for with any Tenant improvement
allowance funds provided to Tenant by Landlord, provided Tenant repairs any
damage to the Premises and Building caused by such removal and returns the
affected portion of the Premises to a building standard tenant improved
condition as determined by Landlord. Furthermore, Landlord may, by written
notice to Tenant prior to the end of the Lease Term, or given following any
earlier termination of this Lease, require Tenant, at Tenant's expense, to (i)
remove any Alterations or improvements in the Premises, and/or (ii) remove any
"Extraordinary Alterations," as that term is defined in Section 2.4 of the
Tenant Work Letter, located within the Premises and replace the same with then
existing "Building Standard Tenant Improvements," as that term is defined in
Section 2.3 of the Tenant Work Letter, and to repair any damage to the Premises
and Building caused by such removal and returns the affected portion of the
Premises to a building standard tenant improved condition as determined by
Landlord. If Tenant fails to complete such removal and/or to repair any damage
caused by the removal of any Alterations or improvements in the Premises, and
returns the affected portion of the Premises to a building standard tenant
improved condition as determined by Landlord, then at Landlord's option, either
(A) Tenant shall be deemed to be holding over in the Premises and Rent shall
continue to accrue in accordance with the terms of Article 16, below, until such
work shall be completed, or (B) Landlord may do so and may charge the cost
thereof to Tenant. Tenant hereby protects, defends, indemnifies and holds
Landlord harmless from any liability, cost, obligation, expense or claim of lien
in any manner relating to the installation, placement, removal or financing of
any such Alterations, improvements, fixtures and/or equipment in, on or about
the Premises, which obligations of Tenant shall survive the expiration or
earlier termination of this Lease.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least twenty (20) days prior to the commencement of any such
work on the Premises (or such additional time as may be necessary under
applicable laws) to afford Landlord the opportunity of posting and
-31-
recording appropriate notices of non-responsibility. Tenant shall remove any
such lien or encumbrance by bond or otherwise within ten (10) business days
after notice by Landlord, and if Tenant shall fail to do so, Landlord may pay
the amount necessary to remove such lien or encumbrance, without being
responsible for investigating the validity thereof. The amount so paid shall be
deemed Additional Rent under this Lease payable upon demand, without limitation
as to other remedies available to Landlord under this Lease. Nothing contained
in this Lease shall authorize Tenant to do any act which shall subject
Landlord's title to the Building or Premises to any liens or encumbrances
whether claimed by operation of law or express or implied contract. Any claim to
a lien or encumbrance upon the Building or Premises arising in connection with
any such work or respecting the Premises not performed by or at the request of
Landlord shall be null and void, or at Landlord's option shall attach only
against Tenant's interest in the Premises and shall in all respects be
subordinate to Landlord's title to the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. To the extent not prohibited by law and
except as otherwise expressly provided herein, Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever and agrees that Landlord, its partners, subpartners and their
respective officers, agents, servants, employees, and independent contractors
(collectively, "LANDLORD PARTIES") shall not be liable for, and are hereby
released from any responsibility for, any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant or
by other persons claiming through Tenant. Tenant shall indemnify, defend,
protect, and hold harmless the Landlord Parties from any and all loss, cost,
damage, expense and liability (including without limitation court costs and
reasonable attorneys' fees) incurred in connection with or arising from any
cause in, on or about the Premises, any acts, omissions or negligence of Tenant
or of any person claiming by, through or under Tenant, or of the contractors,
agents, servants, employees, invitees, guests or licensees of Tenant or any such
person, in, on or about the Project or any breach of the terms of this Lease,
either prior to, during, or after the expiration of the Lease Term. However,
notwithstanding the foregoing, Tenant shall not be required to indemnify and/or
hold Landlord harmless from any loss, cost, liability, damage or expense,
including, but not limited to, penalties, fines, attorneys' fees or costs
(collectively, "CLAIMS"), to any person, property or entity to the extent
resulting from the negligence or willful misconduct of Landlord or its agents,
contractors, or employees (except for damage to the Tenant Improvements and
Tenant's personal property, fixtures, furniture and equipment in the Premises in
which case Tenant shall be responsible to the extent Tenant is required to
obtain the requisite insurance coverage pursuant to this Lease); provided,
however, Tenant hereby indemnifies and holds Landlord harmless from any Claims
to the extent such Claim is covered by Tenant's insurance, even if such Claim is
resulting from the negligent acts, omissions, or willful misconduct of Landlord
or those of its agents, contractors, or employees. Subject to Section 10.5
below, Landlord hereby indemnifies Tenant and holds Tenant harmless from any
Claims to the extent resulting from the negligence or willful misconduct of
Landlord or its agents, contractors or employees and not covered by insurance
required to be carried under this Lease by Tenant or actually carried by Tenant;
provided, however, that (i) Landlord hereby indemnifies and holds Tenant
harmless from any
-32-
Claims to any property outside of the Premises to the extent such Claim is
covered by such insurance, even if resulting from the negligent acts, omissions,
or willful misconduct of Tenant or those of its agents, contractors, or
employees, and (ii) because Tenant must carry insurance pursuant to Section
10.3.2 to cover its personal property within the Premises and the Improvements,
Tenant hereby indemnifies and holds Landlord harmless from any Claim to any
property within the Premises, to the extent such Claim is covered by such
insurance, even if resulting from the negligent acts, omissions or willful
misconduct of Landlord or those of its agents, contractors, or employees. The
provisions of this Section 10.1 shall survive the expiration or sooner
termination of this Lease with respect to any claims or liability arising in
connection with any event occurring prior to such expiration or termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE. To
the extent Tenant has been provided notice thereof, Tenant shall, at Tenant's
expense, comply with all insurance company requirements pertaining to the use of
the Premises. If Tenant's conduct or use of the Premises causes any increase in
the premium for such insurance policies then Tenant shall reimburse Landlord for
any such increase. Tenant, at Tenant's expense, shall comply with all rules,
orders, regulations or requirements of the American Insurance Association
(formerly the National Board of Fire Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages
in the following amounts.
10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
(including loss of use thereof) arising out of Tenant's operations, and
contractual liabilities (covering the performance by Tenant of its indemnity
agreements) including a Broad Form endorsement covering the insuring provisions
of this Lease and the performance by Tenant of the indemnity agreements set
forth in Section 10.1 of this Lease, for limits of liability not less than:
Bodily Injury and $3,000,000 each occurrence
Property Damage Liability $3,000,000 annual aggregate
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate
0% Insured's participation
These limits may be satisfied by a general liability and an umbrella policy so
long as all other requirements under this Section 10.3 are met. Notwithstanding
the insurance provisions of this Lease to the contrary, Tenant shall have the
right to self-insure with respect to any of the insurance required to be carried
by Tenant under this Section 10.3.1, provided that (i) Tenant is a publicly
traded United States corporation whose stock is traded on a nationally
recognized exchange, (ii) Tenant has not assigned its interest in this Lease to
an entity other than an Affiliate, (iii) Tenant maintains a minimum net worth of
at least One Hundred Fifty Million Dollars ($150,000,000.00) according to its
most recent audited financial statements; provided, however, for purposes of
determining such net worth, Tenant shall be deemed to include its Affiliates on
a consolidated basis, (iv) Tenant governs and manages (either internally or
through a third-party administrator) its self-insurance program, and maintains
sufficient reserves on its
-33-
balance sheet committed to its self-insurance program liabilities, in a manner
consistent with comparable programs managed by prudent businesses whose stock is
publicly traded on nationally recognized exchanges; and (v) applicable law(s) do
not prohibit or render unenforceable Tenant's indemnification obligations under
this Lease. Upon request, Tenant shall supply to Landlord from time to time with
evidence reasonably satisfactory to Landlord of Tenant's net worth and the
satisfaction of the conditions set forth above. If Tenant elects to self-insure
and without limiting Tenant's responsibility or liability, Tenant shall itself
be responsible for losses or liabilities which would have been assumed by
insurance companies which would have issued the insurance required by Tenant
under this Lease in conformance with Landlord's insurance requirements set forth
in this Section 10.3.1 and Tenant shall accept Landlord's tender of defense for
any claims within the scope of Tenant's indemnity obligations as if Landlord,
Landlord's lender and any other party reasonably identified by Landlord (to the
extent such third party has a vested economic interest in the Project), if any,
were named as additional insureds on any liability policy maintained by Tenant
meeting such requirements. Tenant will notify Landlord in advance of any period
for which Tenant intends to self-insure and shall provide Landlord with
satisfactory evidence that it complies with the requirements set forth herein in
order to give Landlord an opportunity to confirm the satisfaction of the
conditions set forth herein. For so long as Tenant self-insures, Tenant, for
applicable periods, shall indemnify, defend and hold harmless Landlord, its
partners, agents, employees and representatives from and against all costs,
damages, or expenses (including reasonable attorneys' fees) incurred or paid by
Landlord as a result of any claim which would have been covered by the insurance
which would otherwise be required to be carried by Tenant pursuant to this
Section 10.3.1 above. Notwithstanding the foregoing, if any of Landlord's
lenders objects to Tenant's self-insurance rights under this Section 10.3.1,
then during such portion of the Lease Term that such lender's loan is secured by
the Premises and Tenant meets all of the conditions for maintaining a program of
self-insurance provided above, then in lieu of the policy of Commercial General
Liability Insurance required to be maintained by Tenant under this Section
10.3.1, Tenant shall be required to obtain and maintain a policy of Premises
Liability Insurance with similar limits for the Building (excluding
Products-Completed Operations Coverage), and any liabilities which are not
covered by such insurance, and which would otherwise be covered by the
Commercial General Liability Insurance required to be maintained by Tenant under
Section 10.3.1 of this Lease shall be considered to be self-insured by Tenant in
accordance with this Section 10.3.1. Furthermore, throughout the period that
Tenant self-insures any of the insurance required to be carried by Tenant under
this Section 10.3.1, Landlord shall have the right, at Landlord's sole cost and
expense, to obtain forced-place insurance of all or any portion of such coverage
and Tenant agrees to cooperate with Landlord's efforts to obtain any such
coverage, at Landlord's sole cost and expense.
10.3.2 Physical Damage Insurance covering (i) all office
furniture, business and trade fixtures, office equipment, free-standing cabinet
work, movable partitions, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the "Tenant
Improvements," as that term is defined in Section 2.1 of the Tenant Work Letter,
and any other improvements which exist in the Premises as of the Lease
Commencement Date (excluding the Base Building) (the "ORIGINAL IMPROVEMENTS"),
and (iii) all other improvements, alterations and additions to the Premises.
Such insurance shall be written on an "all risks" of physical loss or damage
basis, for the full replacement cost value (subject to reasonable deductible
amounts) new without deduction for depreciation of the
-34-
covered items and in amounts that meet any co-insurance clauses of the policies
of insurance and shall include coverage for damage or other loss caused by fire
or other peril including, but not limited to, vandalism and malicious mischief,
theft, water damage of any type, including sprinkler leakage, bursting or
stoppage of pipes, and explosion, and providing business interruption coverage
for a period of one year. Notwithstanding anything to the contrary contained
herein, the Original Tenant or any Affiliated Assignee (and not any other
assignee, subtenant or other transferee) may, subject to the provisions of this
Section 10.3.2, fulfill its insurance obligations under Section 10.3.2(i) above
by self-insurance. Any self-insurance so maintained by Tenant shall be deemed to
contain all of the terms and conditions applicable to such insurance as required
in this Article 10, including, without limitation, a deemed waiver of
subrogation; consequently, Landlord shall be treated, for all purposes, as if
Tenant had actually purchased such insurance from a third party. If Tenant
elects to so self-insure, then with respect to any claims which may result from
incidents occurring during the Lease Term, such self-insurance obligation shall
survive the expiration or earlier termination of this Lease to the same extent
as the insurance required hereunder would survive.
10.3.3 Worker's Compensation and Employer's Liability or other
similar insurance pursuant to all applicable state and local statutes and
regulations.
10.3.4 Primary automobile liability insurance with limits of not
less than $1,000,000 per occurrence covering owned, hired and non-owned vehicles
used by Tenant.
10.4 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, Landlord's
lender and any other party reasonably identified by Landlord (to the extent such
third party has a vested economic interest in the Project), as an additional
insured; (ii) specifically cover the liability assumed by Tenant under this
Lease, including, but not limited to, Tenant's obligations under Section 10.1 of
this Lease; (iii) be issued by an insurance company having a rating of not less
than A-X in Best's Insurance Guide or which is otherwise acceptable to Landlord
and licensed to do business in the State of California; (iv) be primary
insurance as to all claims thereunder and provide that any insurance carried by
Landlord is excess and is non-contributing with any insurance requirement of
Tenant; (v) be in form and content reasonably acceptable to Landlord; and (vi)
provide that said insurance shall not be canceled or coverage changed unless
thirty (30) days' prior written notice shall have been given to Landlord and any
mortgagee of Landlord. Tenant shall deliver said policy or policies or
certificates and applicable endorsements thereof to Landlord on or before the
Lease Commencement Date and at least thirty (30) days before the expiration
dates thereof. In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificate, Landlord may, at its option, upon notice
to Tenant and the expiration of a fifteen (15) day cure period, procure such
policies for the account of Tenant, and the cost thereof shall be paid to
Landlord within five (5) days after delivery to Tenant of bills therefor.
10.5 SUBROGATION. Landlord and Tenant intend that their respective
property loss risks shall be borne by reasonable insurance carriers to the
extent above provided, and Landlord and Tenant hereby agree to look solely to,
and seek recovery only from, their respective insurance carriers in the event of
a property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such
-35-
losses, and waive all rights of subrogation of their respective insurers,
provided such waiver of subrogation shall not affect the right to the insured to
recover thereunder. The parties agree that their respective insurance policies
are now, or shall be, endorsed such that the waiver of subrogation shall not
affect the right of the insured to recover thereunder, so long as no material
additional premium is charged therefor.
10.6 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10 and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord.
10.7 LANDLORD'S INSURANCE. Landlord shall, as an Operating Expense,
maintain the following coverages throughout the Lease Term: (i) Commercial
General Liability Insurance covering claims of bodily injury, personal injury
and property damage within the Common Areas for commercially reasonable limits
of liability, and (ii) Physical Damage Insurance including building ordinance
coverage for the Project written on a standard Causes of Loss -- Special Form
basis covering risks of physical loss or damage, for the full replacement cost
value new without deduction for depreciation of the covered items. Landlord's
insurance shall contain commercially reasonable deductible amounts.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord, provided that access to the Premises and any common
restrooms serving the Premises shall not be materially impaired. Upon the
occurrence of any damage to the Premises, upon notice (the "LANDLORD REPAIR
NOTICE") to Tenant from Landlord, Tenant shall assign to Landlord (or to any
party designated by Landlord) all insurance proceeds payable to Tenant under
Tenant's insurance required under Section 10.3 of this Lease, and Landlord shall
repair any injury or damage to the Tenant Improvements and the Original
Improvements installed in the Premises and shall return such Tenant Improvements
and Original Improvements to their original condition; provided that if the cost
of such repair by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant's insurance carrier, as assigned by Tenant, the cost of
such repairs shall be paid by Tenant to Landlord prior to Landlord's
commencement of repair of the damage. In the event that Landlord does not
deliver the Landlord Repair Notice within sixty (60) days following the date the
casualty becomes known to Landlord, Tenant shall, at its sole cost and expense,
repair any injury
-36-
or damage to the Tenant Improvements and the Original Improvements installed in
the Premises and shall return such Tenant Improvements and Original Improvements
to their original condition. Whether or not Landlord delivers a Landlord Repair
Notice, prior to the commencement of construction, Tenant shall submit to
Landlord, for Landlord's review and approval, all plans, specifications and
working drawings relating thereto, and Landlord shall select the contractors to
perform such improvement work. Landlord shall not be liable for any
inconvenience or annoyance to Tenant or its visitors, or injury to Tenant's
business resulting in any way from such damage or the repair thereof; provided
however, that if such fire or other casualty shall have damaged the Premises or
Common Areas necessary to Tenant's occupancy, Landlord shall allow Tenant a
proportionate abatement of Rent, during the time and to the extent the Premises
are unfit for occupancy for the purposes permitted under this Lease, and not
occupied by Tenant as a result thereof; provided, further, however, that if the
damage or destruction is due to the negligence or willful misconduct of Tenant
or any of its agents, employees, contractors, invitees or guests, Tenant shall
be responsible for any reasonable, applicable insurance deductible (which shall
be payable to Landlord upon demand) and there shall be no rent abatement except
to the extent Landlord is reimbursed from the proceeds of rental interruption
insurance purchased by Landlord as part of the Operating Expenses. In the event
that Landlord shall not deliver the Landlord Repair Notice, Tenant's right to
rent abatement pursuant to the preceding sentence shall terminate as of the date
which is reasonably determined by Landlord to be the date Tenant should have
completed repairs to the Premises assuming Tenant used reasonable due diligence
in connection therewith. In the event this Lease is terminated due to a damage
or destruction of the Premises (in accordance with the terms of this Article 11
below), then the insurance proceeds received by Tenant attributable to Tenant
Improvements and Alterations under the insurance required under Sections
10.3.2(ii) and (iii) above shall be split between Landlord and Tenant as
follows: (i) Landlord shall first receive proceeds in an amount equal to the
Tenant Improvement Allowance, and (ii) after Landlord has been reimbursed for
the Tenant Improvement Allowance, Tenant shall be entitled to fractions of the
excess proceeds with (A) each fraction to apply to each separate set of
completed Tenant Improvements and Alterations and (B) the numerator of each such
fraction equal to the number of months from the date of termination of this
Lease until the Lease Expiration Date and the denominator of each such fraction
equal to the number of months from the date such set of Tenant Improvements or
Alterations was completed until the Lease Expiration Date, and Landlord shall be
entitled to the remaining fraction of any such excess proceeds. By way of
example only, and not as a limitation upon the foregoing, if the amount of
insurance proceeds received by Tenant and attributable to Tenant Improvements
are $43.00 per rentable square foot and the amount of insurance proceeds
received by Tenant and attributable to Alterations are $5.00 per rentable square
foot, and if the Alterations were completed upon the date of expiration of the
fourth (4th) Lease Year, and if this Lease is terminated under this Article 11
below as of the last day of the ninth (9th) Lease Year, then Landlord shall
first receive proceeds in an amount equal to $40.00 per rentable square foot
(i.e., the Tenant Improvement Allowance) and the remaining $8.00 per rentable
square foot would be split as follows: (a) the $3.00 per rentable square foot
excess attributable to the Tenant Improvements would be split $1.20 per rentable
square foot to Tenant (i.e., 72/180 times $3.00) and $1.80 per rentable square
foot to Landlord, and (b) the $5.00 per rentable square foot excess attributable
to the Alterations would be split $2.727 per rentable square foot to Tenant
(i.e., 72/132 times $5.00) and $2.273 to Landlord.
-37-
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after the
date of discovery of the damage, such notice to include a termination date
giving Tenant ninety (90) days to vacate the Premises, but Landlord may so elect
only if the Building or Project shall be damaged by fire or other casualty or
cause, whether or not the Premises are affected, and one or more of the
following conditions is present: (i) in Landlord's reasonable judgment, repairs
cannot reasonably be completed within two hundred seventy (270) days after the
date of discovery of the damage (when such repairs are made without the payment
of overtime or other premiums); (ii) the holder of any mortgage on the Building
or Project or ground lessor with respect to the Building or Project shall
require that the insurance proceeds or any portion thereof be used to retire the
mortgage debt, or shall terminate the ground lease, as the case may be; (iii)
the damage is not fully covered by Landlord's insurance policies; or (iv)
Landlord decides to rebuild the Building or Common Areas so that they will be
substantially different structurally or architecturally; (v) the damage occurs
during the last twelve (12) months of the Lease Term. Notwithstanding the
foregoing, Tenant may negate Landlord's termination right by paying any overtime
costs or other premiums required in order to cause the repairs to be completed
within the two hundred seventy (270) day period set forth above. If Landlord
does not elect to terminate this Lease pursuant to Landlord's termination right
as provided above, and the required repairs cannot be completed within two
hundred seventy (270) days after being commenced, Tenant may elect, not later
than thirty (30) days after Tenant's receipt of notice of the damage or
destruction and the time required to effectuate such repairs, to terminate this
Lease by written notice to Landlord effective as of the date specified in
Tenant's notice.
11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.
11.4 DAMAGE NEAR END OF TERM. In the event that the Premises is
destroyed or damaged to any substantial extent during the last twelve (12)
months of the Lease Term (as such Lease Term may be extended in accordance with
Section 2.2 above), then notwithstanding anything contained in this Article 11,
Landlord shall have the option to terminate this Lease by giving written notice
to Tenant of the exercise of such option within thirty (30) days after Landlord
learns of the necessity for repairs as the result of such damage or destruction,
in which event this Lease shall cease and terminate as of the date of such
notice, Tenant shall pay the Base Rent and Additional Rent, properly apportioned
up to such date of damage, and both parties hereto shall thereafter be freed and
discharged of all further obligations hereunder, except as provided for in
provisions of this Lease which by their terms survive the expiration or earlier
termination of the Lease Term.
-38-
ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE 13
CONDEMNATION
If the whole or any part of the Premises, Building or Project shall be
taken by power of eminent domain or condemned by any competent authority for any
public or quasi-public use or purpose, or if any adjacent property or street
shall be so taken or condemned, or reconfigured or vacated by such authority in
such manner as to require the use, reconstruction or remodeling of any part of
the Premises, Building or Project, or if Landlord shall grant a deed or other
instrument in lieu of such taking by eminent domain or condemnation, Landlord
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. If more than twenty
percent (20%) of the rentable square feet of the Premises is taken or more than
twenty-five percent (25%) of Tenant's parking spaces are taken (and Landlord
does not provide Tenant with substitute parking spaces within thirty (30) days
after such taking sufficient to cause the total number of parking spaces
available to Tenant to be at least seventy-five percent (75%) of Tenant's total
allocated parking spaces), or if access to the Premises is substantially
impaired, in each case for a period in excess of one hundred eighty (180) days,
Tenant shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. Tenant shall not
because of such taking assert any claim against Landlord or the authority for
any compensation because of such taking and Landlord shall be entitled to the
entire award or payment in connection therewith, except that Tenant shall have
the right to file any separate claim available to Tenant for any taking of
Tenant's personal property and fixtures belonging to Tenant and removable by
Tenant upon expiration of the Lease
-39-
Term pursuant to the terms of this Lease, and for moving expenses, so long as
such claims do not diminish the award available to Landlord, its ground lessor
with respect to the Building or Project or its mortgagee, and such claim is
payable separately to Tenant. All Rent shall be apportioned as of the date of
such termination. If any part of the Premises shall be taken, and this Lease
shall not be so terminated, the Rent shall be proportionately abated. Tenant
hereby waives any and all rights it might otherwise have pursuant to Section
1265.130 of The California Code of Civil Procedure. Notwithstanding anything to
the contrary contained in this Article 13, in the event of a temporary taking of
all or any portion of the Premises for a period of one hundred and eighty (180)
days or less, then this Lease shall not terminate but the Base Rent and the
Additional Rent shall be abated for the period of such taking in proportion to
the ratio that the amount of rentable square feet of the Premises taken bears to
the total rentable square feet of the Premises. Landlord shall be entitled to
receive the entire award made in connection with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into any
license or concession agreements or otherwise permit the occupancy or use of the
Premises or any part thereof by any persons other than Tenant and its employees
and contractors (all of the foregoing are hereinafter sometimes referred to
collectively as "TRANSFERS" and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a "TRANSFEREE"). If
Tenant desires Landlord's consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the "TRANSFER NOTICE") shall include (i) the proposed
effective date of the Transfer, which shall not be less than fifteen (15) days
nor more than one hundred eighty (180) days after the date of delivery of the
Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the "SUBJECT SPACE"), (iii) all of the terms of the proposed
Transfer and the consideration therefor, including calculation of the "TRANSFER
PREMIUM", as that term is defined in Section 14.3 below, in connection with such
Transfer, the name and address of the proposed Transferee, and a copy of all
existing executed and/or proposed documentation pertaining to the proposed
Transfer, including all existing operative documents to be executed to evidence
such Transfer or the agreements incidental or related to such Transfer, provided
that Landlord shall have the right to require Tenant to utilize Landlord's
standard Transfer documents in connection with the documentation of such
Transfer, (iv) current financial statements of the proposed Transferee certified
by an officer, partner or owner thereof, business credit and personal references
and history of the proposed Transferee and any other information required by
Landlord which will enable Landlord to determine the financial responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee's business and proposed use of the Subject Space and (v) an executed
estoppel certificate from Tenant in the form attached hereto as EXHIBIT E. Any
Transfer made without Landlord's prior written consent shall, at Landlord's
option, be null, void and of no effect, and shall, at Landlord's option,
constitute a default by Tenant under this Lease. Whether or not Landlord
consents to any proposed Transfer, Tenant shall pay Landlord's reasonable review
and processing fees, as well as
-40-
any reasonable professional fees (including, without limitation, attorneys',
accountants', architects', engineers' and consultants' fees) incurred by
Landlord in connection with any proposed Transfer, not to exceed One Thousand
Dollars ($1,000.00) per proposed Transfer, within thirty (30) days after written
request by Landlord.
14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged
in a business which is not consistent with the quality of the Building or the
Project, or would be a significantly less prestigious occupant of the Building
than Tenant;
14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or
instrumentality thereof which is inconsistent with the character of the Project
as a first-class office project;
14.2.4 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
14.2.5 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease;
14.2.6 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right); or
14.2.7 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee is negotiating with Landlord to lease
space in the Project; or
14.2.8 The Transferee does not intend to occupy at lease sixty
percent (60%) of the Subject Space and conduct its business therefrom for a
substantial portion of the term of the Transfer.
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any changes in the terms and conditions from those specified in the Transfer
Notice (i) such that Landlord would
-41-
initially have been entitled to refuse its consent to such Transfer under this
Section 14.2, or (ii) which would cause the proposed Transfer to be more
favorable to the Transferee than the terms set forth in Tenant's original
Transfer Notice, Tenant shall again submit the Transfer to Landlord for its
approval and other action under this Article 14 (including Landlord's right of
recapture, if any, under Section 14.4 of this Lease). Notwithstanding anything
to the contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent under Section 14.2 or
otherwise has breached or acted unreasonably under this Article 14, their sole
remedies shall be a declaratory judgment and an injunction for the relief sought
without any monetary damages, and Tenant hereby waives all other remedies,
including, without limitation, any right at law or equity to terminate this
Lease, on its own behalf and, to the extent permitted under all applicable laws,
on behalf of the proposed Transferee. Tenant shall indemnify, defend and hold
harmless Landlord from any and all liability, losses, claims, damages, costs,
expenses, causes of action and proceedings involving any third party or parties
(including without limitation Tenant's proposed subtenant or assignee) who claim
they were damaged by Landlord's wrongful withholding or conditioning of
Landlord's consent.
14.3 TRANSFER PREMIUM. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord fifty percent (50%) of any "Transfer Premium," as that term is
defined in this Section 14.3, received by Tenant from such Transferee. "TRANSFER
PREMIUM" shall mean all rent, additional rent or other consideration payable by
such Transferee in connection with the Transfer in excess of the Rent and
Additional Rent payable by Tenant under this Lease during the term of the
Transfer on a per rentable square foot basis if less than all of the Premises is
transferred, after deducting the reasonable expenses incurred by Tenant for (i)
any changes, alterations and improvements to the Premises in connection with the
Transfer, (ii) any free base rent reasonably provided to the Transferee, and
(iii) any brokerage commissions in connection with the Transfer. "Transfer
Premium" shall also include, but not be limited to, key money, bonus money or
other cash consideration paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
In the calculations of the Rent (as it relates to the Transfer Premium
calculated under this Section 14.3), and the Transferee's Rent and Quoted Rent
under Section 14.2 of this Lease, the Rent paid during each annual period for
the Subject Space, and the Transferee's Rent and the Quoted Rent, shall be
computed after adjusting such rent to the actual effective rent to be paid,
taking into consideration any and all leasehold concessions granted in
connection therewith, including, but not limited to, any rent credit and tenant
improvement allowance. For purposes of calculating any such effective rent all
such concessions shall be amortized on a straight-line basis over the relevant
term.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding anything to
the contrary contained in this Article 14, in the case of a sublease which, when
added to all then existing subleases applicable to the Premises, would result in
fifty percent (50%) or more of the rentable square footage of the Premises being
subject to subleases (in the aggregate), Landlord shall have the option, by
giving written notice to Tenant (the "RECAPTURE NOTICE") within thirty (30) days
after receipt of any Transfer Notice, to recapture the Subject Space. Such
Recapture Notice shall cancel and terminate this Lease with respect to the
Subject Space as of the date stated in the Transfer Notice as the effective date
of the proposed Transfer until the last day of
-42-
the term of the Transfer as set forth in the Transfer Notice (or at Landlord's
option, shall cause the Transfer to be made to Landlord or its agent, in which
case the parties shall execute the Transfer documentation promptly thereafter).
However, if Landlord delivers a Recapture Notice to Tenant, Tenant may, within
ten (10) days after Tenant's receipt of the Recapture Notice, deliver written
notice to Landlord indicating that Tenant is rescinding its request for consent
to the proposed Transfer, in which case such Transfer shall not be consummated
and this Lease shall remain in full force and effect as to the portion of the
Premises that was the subject of the Transfer. Tenant's failure to so notify
Landlord in writing within said ten (10) day period shall be deemed to
constitute Tenant's election to allow the Recapture Notice to be effective. In
the event of a recapture by Landlord, if this Lease shall be canceled with
respect to less than the entire Premises, the Rent reserved herein shall be
prorated on the basis of the number of rentable square feet retained by Tenant
in proportion to the number of rentable square feet contained in the Premises,
and this Lease as so amended shall continue thereafter in full force and effect,
and upon request of either party, the parties shall execute written confirmation
of the same. If Landlord declines, or fails to elect in a timely manner to
recapture the Subject Space under this Section 14.4, then, provided Landlord has
consented to the proposed Transfer, Tenant shall be entitled to proceed to
transfer the Subject Space to the proposed Transferee, subject to provisions of
this Article 14.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than five percent (5%), Tenant shall pay
Landlord's costs of such audit.
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term
"TRANSFER" shall also include (i) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of fifty percent (50%) or
more of the partners, or transfer of fifty percent (50%) or more of partnership
interests, within a twelve (12)-month period, or the dissolution of the
partnership without immediate reconstitution thereof, and (ii) if Tenant is a
closely held corporation (i.e., whose stock is not publicly held and not traded
through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant or (B) the sale or other
transfer of an aggregate of fifty percent (50%) or more of the voting shares of
Tenant (other than to immediate family members by reason of gift or death),
within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or
pledge of an aggregate of fifty
-43-
percent (50%) or more of the value of the unencumbered assets of Tenant within a
twelve (12)-month period.
14.7 OCCURRENCE OF DEFAULT. Any Transfer hereunder shall be subordinate
and subject to the provisions of this Lease, and if this Lease shall be
terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as cancelled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant's agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord's enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord's right to
enforce any term of this Lease against Tenant or any other person. If Tenant's
obligations hereunder have been guaranteed, Landlord's consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.
14.8 AFFILIATE TRANSFERS. The term "AFFILIATE" shall mean (i) any entity
that is controlled by, controls or is under common control with, Tenant or (ii)
any entity that merges with, is acquired by, or acquires Tenant through the
purchase of stock or assets and where the net worth of the surviving entity as
of the date such transaction is completed is not less than that of Tenant
immediately prior to the transaction calculated under generally accepted
accounting principles. Notwithstanding anything to the contrary contained in
this Article 14, an assignment or subletting of all or a portion of the Premises
to an Affiliate of Tenant shall not be deemed a Transfer under this Article 14,
provided that (a) Tenant notifies Landlord of any such assignment or sublease
and promptly supplies Landlord with any documents or information requested by
Landlord regarding such assignment or sublease or such affiliate, (b) Tenant
shall not be released from its obligations under this Lease and (c) such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. An assignee of Tenant's entire interest in this Lease pursuant
to the immediately preceding sentence may be referred to herein as an
"AFFILIATED ASSIGNEE." "CONTROL," as used in this Article 14, shall mean the
possession of the power to direct or cause the direction of the management or
policies of an entity, whether through ownership or voting securities, or by
contract or otherwise.
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by
-44-
Landlord of a surrender of the Premises unless such intent is specifically
acknowledged in writing by Landlord. The delivery of keys to the Premises to
Landlord or any agent or employee of Landlord shall not constitute a surrender
of the Premises or effect a termination of this Lease, whether or not the keys
are thereafter retained by Landlord, and notwithstanding such delivery Tenant
shall be entitled to the return of such keys at any reasonable time upon request
until this Lease shall have been properly terminated. The voluntary or other
surrender of this Lease by Tenant, whether accepted by Landlord or not, or a
mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, business and trade
fixtures, free-standing cabinet work, movable partitions and other articles of
personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises, and such similar articles of any other persons claiming
under Tenant, as Landlord may, in its sole discretion, require to be removed,
and Tenant shall repair at its own expense all damage to the Premises and
Building resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable on a per diem basis for the first thirty (30) days after the
expiration of the Lease Term at a rate equal to one hundred twenty-five percent
(125%) of the Base Rent payable during the last month of the Lease Term and,
thereafter, at a monthly rate equal to one hundred fifty percent (150%) of the
Base Rent applicable during the last rental period of the Lease Term under this
Lease. Such month-to-month tenancy shall be subject to every other applicable
term, covenant and agreement contained herein. For purposes of this Article 16,
a holding over shall include Tenant's remaining in the Premises after the
expiration or earlier termination of the Lease Term, as required pursuant to the
terms of Section 8.5, above, to remove any Alterations or Above Building
Standard Tenant Improvements located within the Premises and replace the same
with Building Standard Tenant Improvements. Nothing contained in this Article 16
shall be construed as consent by Landlord to any holding over by Tenant, and
Landlord expressly reserves the right to require Tenant to surrender possession
of the Premises to Landlord as provided in this Lease upon the expiration or
other termination of this Lease. The provisions of this Article 16 shall not be
deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
upon the termination or expiration of this Lease, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold
-45-
Landlord harmless from all loss, costs (including reasonable attorneys' fees)
and liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by any succeeding tenant founded
upon such failure to surrender and any lost profits to Landlord resulting
therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) business days following a request in writing by
Landlord, Tenant shall execute, acknowledge and deliver to Landlord an estoppel
certificate, which, as submitted by Landlord, shall be substantially in the form
of EXHIBIT E, attached hereto (or such other form as may be required by any
prospective mortgagee or purchaser of the Project, or any portion thereof),
indicating therein any exceptions thereto that may exist at that time, and shall
also contain any other factual information reasonably requested by Landlord or
Landlord's mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. At any time during the Lease Term, Landlord may require Tenant to
provide Landlord with a current financial statement and financial statements of
the two (2) years prior to the current financial statement year. Such statements
shall be prepared in accordance with generally accepted accounting principles
and, if such is the normal practice of Tenant, shall be audited by an
independent certified public accountant. Failure of Tenant to timely execute,
acknowledge and deliver such estoppel certificate or other instruments shall
constitute an acceptance of the Premises and an acknowledgment by Tenant that
statements included in the estoppel certificate are true and correct, without
exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
mortgage, trust deed or other encumbrances now or hereafter in force against
Landlord's interest in the Building or Project or any part thereof, if any, and
to all renewals, extensions, modifications, consolidations and replacements
thereof, and to all advances made or hereafter to be made upon the security of
such mortgages or trust deeds, unless the holders of such mortgages, trust deeds
or other encumbrances, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Tenant covenants
and agrees in the event any proceedings are brought for the foreclosure of any
such mortgage or deed in lieu thereof (or if any ground lease is terminated), to
attorn, without any deductions or set-offs whatsoever, to the lienholder or
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof (or to the ground lessor), if so requested to do so by such
purchaser or lienholder or ground lessor, and to recognize such purchaser or
lienholder or ground lessor as the lessor under this Lease, provided such
lienholder or purchaser or ground lessor shall agree to accept this Lease and
not disturb Tenant's occupancy, so long as Tenant timely pays the rent and
observes and performs the terms, covenants and conditions of this Lease to be
observed and performed by Tenant. Landlord's interest herein may be assigned as
security at any time to any lienholder. Tenant
-46-
shall, within ten (10) business days of request by Landlord, execute such
further instruments or assurances as Landlord may reasonably deem necessary (or
as may be customarily required generally by lienholders or lessors) to evidence
or confirm the subordination or superiority of this Lease to any such mortgages,
trust deeds, ground leases or underlying leases. Tenant waives the provisions of
any current or future statute, rule or law which may give or purport to give
Tenant any right or election to terminate or otherwise adversely affect this
Lease and the obligations of the Tenant hereunder in the event of any
foreclosure proceeding or sale. Landlord agrees to provide Tenant with
commercially reasonable non-disturbance agreement(s) relating to all of Tenant's
interest in the Project, this Lease and its rights hereunder in favor of Tenant
from any ground lessors, mortgage holders and deed of trust beneficiaries of
Landlord who come into existence at any time after execution of this Lease and
prior to expiration of the Lease Term, in consideration of, and as a condition
precedent to, Tenant's agreement to subordinate its interest in this Lease.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due unless such
failure is cured within five (5) business days after notice; or
19.1.2 Except where a specific time period is otherwise set forth
for Tenant's performance in this Lease, in which event the failure to perform by
Tenant within such time period shall be a default by Tenant under this Section
19.1.2, any failure by Tenant to observe or perform any other provision,
covenant or condition of this Lease to be observed or performed by Tenant where
such failure continues for thirty (30) days after written notice thereof from
Landlord to Tenant; provided that if the nature of such default is such that the
same cannot reasonably be cured within a thirty (30) day period, Tenant shall
not be deemed to be in default if it diligently commences such cure within such
period and thereafter diligently proceeds to rectify and cure such default, but
in no event exceeding a period of time in excess of ninety (90) days after
written notice thereof from Landlord to Tenant; or
19.1.3 To the extent permitted by law, a general assignment by
Tenant or any guarantor of this Lease for the benefit of creditors, or the
taking of any corporate action in furtherance of bankruptcy or dissolution
whether or not there exists any proceeding under an insolvency or bankruptcy
law, or the filing by or against Tenant or any guarantor of any proceeding under
an insolvency or bankruptcy law, unless in the case of a proceeding filed
against Tenant or any guarantor the same is dismissed within sixty (60) days, or
the appointment of a trustee or receiver to take possession of all or
substantially all of the assets of Tenant or any guarantor, unless possession is
restored to Tenant or such guarantor within thirty (30) days, or any execution
or other judicially authorized seizure of all or substantially all of Tenant's
assets located upon the Premises or of Tenant's interest in this Lease, unless
such seizure is discharged within thirty (30) days; or
-47-
19.1.4 The failure by Tenant to observe or perform according to
the provisions of Articles 5, 14, 17 or 18 of this Lease where such failure
continues for more than five (5) business days after notice from Landlord; or
The notice periods provided herein are in lieu of, and not in addition
to, any notice periods provided by law.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default
by Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice
or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of any unpaid rent
which has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount
by which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) The worth at the time of award of the
amount by which the unpaid rent for the balance of the Lease Term after the time
of award exceeds the amount of such rental loss that Tenant proves could have
been reasonably avoided; plus
(iv) 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, specifically including but not limited to,
brokerage commissions and advertising expenses incurred, expenses of remodeling
the Premises or any portion thereof for a new tenant, and any special
concessions made to obtain a new tenant; and
(v) 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
applicable law.
The term "RENT" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Paragraphs
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Paragraph 19.2.1(iii) above, the "worth at the time of award" shall be
computed by discounting
-48-
such amount at the discount rate of the Federal Reserve Bank of San Francisco at
the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has the
right to sublet or assign, subject only to reasonable limitations). Accordingly,
if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.
19.2.3 Landlord shall at all times have the rights and remedies
(which shall be cumulative with each other and cumulative and in addition to
those rights and remedies available under Sections 19.2.1 and 19.2.2, above, or
any law or other provision of this Lease), without prior demand or notice except
as required by applicable law, to seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof.
19.3 SUBLEASES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant, as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of three
(3) monetary defaults by Tenant within any eighteen (18) month time period,
Landlord shall have the right to require that any or all subsequent amounts paid
by Tenant to Landlord hereunder, whether to cure the default in question or
otherwise, be paid in the form of cash, money order, cashier's or certified
check drawn on an institution acceptable to Landlord, or by other means approved
by Landlord, notwithstanding any prior practice of accepting payments in any
different form.
19.5 EFFORTS TO RELET. No re-entry or repossession, repairs,
maintenance, changes, alterations and additions, reletting, appointment of a
receiver to protect Landlord's interests hereunder, or any other action or
omission by Landlord shall be construed as an election by Landlord to terminate
this Lease or Tenant's right to possession, or to accept a surrender of the
Premises, nor shall same operate to release Tenant in whole or in part from any
of Tenant's obligations hereunder, unless express written notice of such
intention is sent by Landlord to Tenant. Tenant hereby irrevocably waives any
right otherwise available under any law to redeem or reinstate this Lease.
-49-
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant shall, during the Lease Term, peaceably
and quietly have, hold and enjoy the Premises subject to the terms, covenants,
conditions, provisions and agreements hereof without interference by any persons
lawfully claiming by or through Landlord. The foregoing covenant is in lieu of
any other covenant express or implied.
ARTICLE 21
SECURITY DEPOSIT; LETTER OF CREDIT
21.1 SECURITY DEPOSIT. Concurrent with Tenant's execution of this Lease,
Tenant shall deposit with Landlord a security deposit (the "SECURITY DEPOSIT")
in the amount set forth in Section 8 of the Summary, as security for the
faithful performance by Tenant of all of its obligations under this Lease. If
Tenant defaults with respect to any provisions of this Lease, including, but not
limited to, the provisions relating to the payment of Rent, the removal of
property and the repair of resultant damage, Landlord may, without notice to
Tenant, but shall not be required to apply all or any part of the Security
Deposit for the payment of any Rent or any other sum in default and Tenant
shall, upon demand therefor, restore the Security Deposit to its original
amount. Any unapplied portion of the Security Deposit shall be returned to
Tenant, or, at Landlord's option, to the last assignee of Tenant's interest
hereunder, within forty-five (45) days following the expiration of the Lease
Term. Tenant shall not be entitled to any interest on the Security Deposit.
Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code, or any successor statute.
21.2 LETTER OF CREDIT.
21.2.1 DELIVERY OF LETTER OF CREDIT. Unless the conditions of
Section 21.2.2.2 below are then being satisfied, Tenant shall deliver to
Landlord, concurrently with the mutual execution of this Lease, an
unconditional, clean, irrevocable letter of credit (the "L-C") in an amount as
set forth in Section 21.2.2, below (the "L-C AMOUNT"), which L-C shall be issued
by a money-center bank (a bank which accepts deposits, maintains accounts, has a
local San Diego office which will negotiate a letter of credit, and whose
deposits are insured by the FDIC) reasonably acceptable to Landlord, and which
L-C shall be in the form of EXHIBIT H, attached hereto. Tenant shall pay all
expenses, points and/or fees incurred by Tenant in obtaining the L-C. Landlord
acknowledges that the conditions of Section 21.2.2.2 are, as of the date of this
Lease, initially being satisfied and, accordingly, Tenant is not initially
obligated to deliver the L-C concurrently with the mutual execution of this
Lease.
21.2.2 L-C AMOUNT.
21.2.2.1 CALCULATION OF L-C AMOUNT. For purposes of this
Lease, the "L-C Amount" shall be, at any and all times during the Lease Term, an
amount equal to twelve (12) months of the then-current Monthly Installment of
Base Rent.
-50-
21.2.2.2 CONDITIONAL INCREASE/REDUCTION OF L-C AMOUNT.
Landlord and Tenant hereby acknowledge and agree that the L-C Amount is subject
to increase and reduction throughout the Lease Term at the end of each financial
quarter as set forth in this Section 21.2.2.2. The starting L-C Amount shall be
determined pursuant to the calculation set forth in Section 21.2.2.1, above, as
of the close of the financial quarter ended December 31, 2001; provided,
however, Tenant shall not be required to initially deliver such L-C to the
extent (A) Tenant has "Working Capital" in excess of Sixty-Five Million Dollars
($65,000,000.00), and (B) Tenant has "Market Capitalization" in excess of Three
Hundred Fifty Million Dollars ($350,000,000.00) (such thresholds to be,
collectively, the "REQUIRED THRESHOLDS"); provided, however, for purposes of
determining whether Tenant is maintaining such Required Thresholds, Tenant shall
be deemed to include its Affiliates on a consolidated basis. "WORKING CAPITAL"
means then-current assets of Tenant less then-current liabilities from Tenant's
previous quarterly financial statements, which Working Capital shall include
then-current receivables (zero (0) to sixty (60) days only). "MARKET
CAPITALIZATION" means the product of (1) the number of outstanding shares of
Tenant on the last day of the applicable financial quarter (i.e., the most
recently completed quarter), and (2) the average closing share price during the
last thirty (30) calendar days of the applicable financial quarter. Thereafter,
(i) to the extent that Tenant continues to maintain the Required Thresholds for
four (4) consecutive financial quarters, the then-determined L-C Amount shall be
reduced by fifty percent (50%), (ii) to the extent that Tenant continues to
maintain the Required Thresholds for eight (8) consecutive financial quarters,
the then-determined L-C Amount shall be reduced to $0.00, and (iii) to the
extent that Tenant is no longer maintaining the Required Thresholds, the L-C
Amount shall be recalculated pursuant to Section 21.2.2.1 based on the Market
Capitalization and Cash as of the completion of such quarter and the L-C shall
immediately be reissued in the "Required L-C Amount". In the event that such
recalculated L-C Amount (at any given time during the Lease Term, the "REQUIRED
L-C AMOUNT"), is less than the then-current L-C Amount, Tenant shall have the
right to cause the L-C Amount to be reduced to the Required L-C Amount, and
Landlord shall timely execute and deliver such commercially reasonable documents
to the issuer(s) of the L-C as are presented to Landlord by such issuer(s) and
as may be reasonably necessary to effectuate the change to the Required L-C
Amount. Likewise, following the completion of each financial quarter throughout
the Lease Term, in the event that the Required L-C Amount is greater than the
then-current L-C Amount, Tenant shall upon its receipt of written notice from
Landlord (the "REESTABLISHMENT NOTICE"), cause the L-C Amount to be increased to
equal the Required L-C Amount; provided, however, to facilitate Landlord's
quarterly determination, Tenant shall submit to Landlord, within forty-five (45)
days following the end of each calendar quarter, Tenant's financial statements
(which shall be prepared in accordance with generally accepted accounting
principals); provided further, however, that if Tenant fails to provide such
statements within ten (10) business days following its receipt of notification
from Landlord that the same was not received within such forty-five (45) day
period, then the Required Thresholds shall be deemed not to have been
maintained, in which event the Reestablishment Notice shall be deemed to have
been delivered by landlord to Tenant as of the expiration of such ten (10)
business day period.
21.2.2.3 FAILURE TO REINSTATE; LIQUIDATED DAMAGES. IN THE
EVENT THAT TENANT FAILS, WITHIN THIRTY (30) DAYS FOLLOWING TENANT'S RECEIPT OF A
REESTABLISHMENT NOTICE WITH REGARD TO THIS LEASE, THEN TENANT'S MONTHLY
INSTALLMENT OF BASE RENT SHALL BE INCREASED BY ONE HUNDRED TWENTY-FIVE (125%) OF
ITS THEN EXISTING
-51-
LEVEL DURING THE PERIOD COMMENCING ON THE DATE WHICH IS THIRTY (30) DAYS AFTER
SUCH REESTABLISHMENT NOTICE AND ENDING ON THE EARLIER TO OCCUR OF (I) THE DATE
SUCH L-C IS REESTABLISHED PURSUANT TO THE TERMS OF THIS SECTION 21.2, OR (II)
THE DATE WHICH IS NINETY (90) DAYS AFTER THE DATE OF SUCH REESTABLISHMENT
NOTICE. IN THE EVENT THAT TENANT FAILS, DURING SUCH NINETY (90) DAY PERIOD
FOLLOWING THE DATE OF THE REESTABLISHMENT NOTICE, TO CAUSE THE L-C TO BE
REESTABLISHED, THEN TENANT'S MONTHLY INSTALLMENT OF BASE RENT SHALL BE INCREASED
BY ONE HUNDRED FIFTY PERCENT (150%) OF ITS THEN EXISTING LEVEL DURING THE PERIOD
COMMENCING ON THE DATE WHICH IS NINETY (90) DAYS AFTER THE DATE OF SUCH
REESTABLISHMENT NOTICE AND ENDING ON THE DATE SUCH L-C IS
RE-ISSUED/REESTABLISHED PURSUANT TO THE TERMS OF THIS SECTION 21.2. THE PARTIES
AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE
ACTUAL DAMAGES SUFFERED BY LANDLORD AS A RESULT OF TENANT'S FAILURE TO TIMELY
REESTABLISH THE L-C FOLLOWING THE REESTABLISHMENT NOTICE AS REQUIRED IN THIS
SECTION 21.2, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS
LEASE, THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION 21.2.2.3 REPRESENT A
REASONABLE ESTIMATE OF THE DAMAGES WHICH LANDLORD WILL INCUR AS A RESULT OF SUCH
FAILURE, PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT WAIVE OR AFFECT
LANDLORD'S RIGHTS AND TENANT'S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF
THIS LEASE (EXCEPT THAT THE PARTIES SPECIFICALLY AGREE THAT THE FOREGOING
PROVISION WAS AGREED TO IN LIEU OF MAKING FAILURE TO RE-ESTABLISH THE L-C A
DEFAULT UNDER THE LEASE). THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING
OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO LANDLORD PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671.
THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH
THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION 21.2.2.3.
--------------------- ------------------
LANDLORD'S INITIALS TENANT'S INITIALS
21.2.3 APPLICATION OF LETTER OF CREDIT. The L-C shall be held by
Landlord as security for the faithful performance by Tenant of all the TCC's of
this Lease to be kept and performed by Tenant during the Lease Term. The L-C
shall not be mortgaged, assigned or encumbered in any manner whatsoever by
Tenant without the prior written consent of Landlord. If Tenant defaults with
respect to any provisions of this Lease, including, but not limited to, the
provisions relating to the payment of Rent, or if Tenant fails to renew the L-C
at least thirty (30) days before its expiration, Landlord may, but shall not be
required to, draw upon all or any portion of the L-C for payment of any Rent or
any other sum in default, or for the payment of any amount that Landlord may
reasonably spend or may become obligated to spend by reason of Tenant's default,
or to compensate Landlord for any other loss or damage that Landlord may
-52-
suffer by reason of Tenant's default. The use, application or retention of the
L-C, or any portion thereof, by Landlord shall not prevent Landlord from
exercising any other right or remedy provided by this Lease or by law, it being
intended that Landlord shall not first be required to proceed against the L-C
and shall not operate as a limitation on any recovery to which Landlord may
otherwise be entitled. Any amount of the L-C which is drawn upon by Landlord,
but is not used or applied by Landlord, shall be held by Landlord and deemed a
security deposit (the "L-C SECURITY DEPOSIT"), and, in connection with any such
L-C Security Deposit, Tenant hereby waives the provisions of Section 1950.7 of
the California Civil Code, or any successor statute. If any portion of the L-C
is drawn upon, Tenant shall, within ten (10) days after written demand therefor,
either (i) deposit cash with Landlord (which cash shall be applied by Landlord
to the L-C Security Deposit) in an amount sufficient to cause the sum of the L-C
Security Deposit and the amount of the remaining L-C to be equivalent to the
amount of the L-C then required under this Lease or (ii) reinstate the L-C to
the amount then required under this Lease, and if any portion of the L-C
Security Deposit is used or applied, Tenant shall, within ten (10) days after
written demand therefor, deposit cash with Landlord (which cash shall be applied
by Landlord to the L-C Security Deposit) in an amount sufficient to restore the
L-C Security Deposit to the amount then required under this Lease, and Tenant's
failure to do so shall be a default under this Lease; provided, however, that
upon Tenant's satisfaction of its economic obligations and restoration of the
L-C Security Deposit pursuant to this sentence, any unused portion of the drawn
upon funds shall be returned to Tenant. Tenant acknowledges that Landlord has
the right to transfer or mortgage its interest in the Real Property and the
Center and in this Lease and Tenant agrees that in the event of any such
transfer or mortgage, Landlord shall have the right to transfer or assign the
L-C Security Deposit and/or the L-C to the transferee or mortgagee, and in the
event of such transfer, Tenant shall look solely to such transferee or mortgagee
for the return of the L-C Security Deposit and/or the L-C. Landlord shall pay
all costs associated with the transfer or re-issuance of the L-C due to
Landlord's transfer or assignment. Tenant shall, within five (5) days of request
by Landlord, execute such further instruments or assurances as Landlord may
reasonably deem necessary to evidence or confirm Landlord's transfer or
assignment of the L-C Security Deposit and/or the L-C to such transferee or
mortgagee. If Tenant is not then in default under this Lease, the L-C Security
Deposit and/or the L-C, or any balance thereof, shall be returned to Tenant
within thirty (30) days following the expiration of the Lease Term.
ARTICLE 22
COMMUNICATION EQUIPMENT
Subject to all Laws and CC&R's, Tenant and Tenant's contractors (which
shall first be reasonably approved by Landlord) shall have the non-exclusive
right and access to install, repair, replace, remove, operate and maintain
so-called "satellite dish(es)" or other similar device(s), such as antennae
(collectively, "COMMUNICATION EQUIPMENT"), together with all cable, wiring,
conduits and related equipment, for the purpose of receiving and sending radio,
television, computer, data or other communication signals, at a location(s) on
the roof of the Building(s) mutually agreeable to Landlord and Tenant, in good
faith. Tenant shall retain Landlord's designated roofing contractor to make any
necessary penetrations and associated repairs to the roof in order to preserve
Landlord's roof warranty; provided, however, that if such penetrations and
associated repairs to the roof cannot be made in such a manner so as to preserve
Landlord's roof warranty, then notwithstanding Article 7 of this Lease, any
costs Landlord incurs in
-53-
connection with maintenance and repair of the roof that would otherwise have
been covered by the roof warranty but for Tenant's installation, repair,
replacement, removal, operation or maintenance of the Communication Equipment,
shall be included in Operating Expenses. Landlord shall not charge Tenant any
rental for Tenant's use of the Communication Equipment. Tenant's right to use
and operate the Communication Equipment may not be assigned or otherwise
transferred to any third party except in connection with an assignment of
Tenant's interest in this Lease or a sublease of all or a portion of the
Premises, where such assignment or sublease has been reasonably approved by
Landlord pursuant to Article 14 above and where such assignee's or subtenant's
use of the Communication Equipment is ancillary to its normal business office
use of the applicable portion of the Premises. Tenant shall not be entitled to
license its Communication Equipment to any unrelated third party, nor shall
Tenant be permitted to receive any revenues, fees or any other consideration for
the use of such Communication Equipment by an unrelated third party. Tenant's
installation and operation of the Communication Equipment shall be governed by
the following terms and conditions:
(i) All plans and specifications for the Communication Equipment
shall be subject to Landlord's reasonable approval.
(ii) All costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits and connections to the
Project's electrical system) shall be borne by Tenant, except for any damage
caused by Landlord Parties.
(iii) Tenant shall use the Communication Equipment so as not to
cause any interference to other occupants in the Project or interfere with the
normal operation of the Project.
(iv) Landlord makes no representation that the Communication
Equipment will be able to receive or transmit communication signals without
interference or disturbance and Tenant agrees that Landlord shall not be liable
to Tenant therefor.
(v) Tenant shall (a) be solely responsible for any damage caused
as a result of the Communication Equipment, except for any damage caused by
Landlord Parties, (b) promptly pay any tax, license or permit fees charged
pursuant to any Laws in connection with the installation, maintenance or use of
the Communication Equipment and comply with all precautions and safeguards
recommended by all governmental authorities, and (c) repair, replace and
maintain the Communication Equipment in good condition.
(vi) The Communication Equipment shall remain the sole property
of Tenant. Tenant shall remove the Communication Equipment and related equipment
at Tenant's sole cost and expense upon the expiration or sooner termination of
this Lease or upon the imposition of any Law which may require removal, and
shall repair the Building upon such removal to the extent required by such work
of removal. If Tenant fails to remove the Communication Equipment and repair the
Building within fifteen (15) days after the expiration or earlier termination of
this Lease, Landlord may do so at Tenant's expense. The provisions of this
Section 22(vi) shall survive the expiration or earlier termination of this
Lease.
-54-
(vii) The Communication Equipment shall be deemed to constitute a
portion of the Premises for purposes of Article 10 of this Lease.
(viii) Landlord reserves the concurrent right to use the roof for
its own use and for third-party use for installation of satellite dish and
antenna devices similar to the Communications Equipment (collectively, the
"LANDLORD CE"), provided such Landlord CE shall not interfere with Tenant's
operations on the roof of the Building, and provided Landlord maintains,
restores and repairs the Building rooftop space associated with such Landlord
CE. To the extent Landlord elects to install Landlord CE on the Building
rooftop, Landlord shall be responsible for the maintenance, repair and
restoration of such Landlord CE. Landlord shall be responsible for (and shall
make all necessary repairs and replacements for) any damage to the
Communications Equipment due to the actions or omissions of Landlord or Landlord
Parties (or any third party to whom Landlord has granted roof access rights).
Tenant shall be responsible for (and shall make all necessary repairs and
replacements for) any damage to the Landlord CE due to the negligence or willful
misconduct of Tenant.
ARTICLE 23
SIGNS
23.1 FULL FLOORS. Subject to Landlord's prior written approval, in its
sole discretion, and provided all signs are in keeping with the quality, design
and style of the Building and Project, Tenant, if the Premises comprise an
entire floor of the Building, at its sole cost and expense, may install
identification signage anywhere in the Premises including in the elevator lobby
of the Premises, provided that such signs must not be visible from the exterior
of the Building.
23.2 MULTI-TENANT FLOORS. If other tenants occupy space on the floor on
which the Premises is located, Tenant's identifying signage shall be provided by
Landlord, at Tenant's cost, and such signage shall be comparable to that used by
Landlord for other similar floors in the Building and shall comply with
Landlord's Building standard signage program.
23.3 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
separately approved by Landlord may be removed without notice by Landlord at the
sole expense of Tenant. Tenant may not install any signs on the exterior or roof
of the Project or the Common Areas. Any signs, window coverings, or blinds (even
if the same are located behind the Landlord-approved window coverings for the
Building), or other items visible from the exterior of the Premises or Building,
shall be subject to the prior approval of Landlord, in its sole discretion.
23.4 TENANT'S SIGNAGE. Tenant shall be entitled to install the following
signage in connection with Tenant's lease of the Premises (collectively, the
"TENANT'S SIGNAGE"):
(i) One (1) building-top sign identifying Tenant's name and
logo located at the top of the Building; and
(ii) Exclusive signage on (x) a monument to be located on the
Project at the main entrance point to the Project, and (y)
to the extent any requisite
-55-
permits/approvals from applicable governmental entities is
secured by Tenant, a monument to be located adjacent to
the entrance of the Building, both locations to be
mutually and reasonably agreed to between the parties;
provided, however, Landlord may, subject to Tenant's
reasonable approval and at Landlord's sole cost and
expense, place a standard "owned and managed" sign at a
location on the Project reasonably approved by Tenant. In
no event shall such Landlord identification sign be more
than fifty percent (50%) of the size of, or more prominent
than, any of Tenant's Signage. Landlord may also, subject
to Tenant's reasonable approval and at Landlord's sole
cost and expense, install a small sign indicating its
ownership and management of the Building in the interior
of the Building lobby in a location and of a size
reasonably approved by Tenant.
23.4.1 SPECIFICATIONS AND PERMITS. Tenant's Signage shall set
forth Tenant's name and logo as determined by Tenant in its sole discretion;
provided, however, in no event shall Tenant's Signage include an "Objectionable
Name," as that term is defined in Section 23.4.2, of this Lease. The graphics,
materials, color, design, lettering, lighting, size, illumination,
specifications and exact location of Tenant's Signage (collectively, the "SIGN
SPECIFICATIONS") shall be subject to the prior written approval of Landlord,
which approval shall not be unreasonably withheld, conditioned or delayed, and
shall be consistent and compatible with the quality and nature of the San Diego
Corporate Center Lot #7 Project. For purposes of this Section 23.4.1, the
reference to "name" shall mean name and/or logo. In addition, Tenant's Signage
shall be subject to Tenant's receipt of all required governmental permits and
approvals and shall be subject to all Applicable Law and to any covenants,
conditions and restrictions affecting the Project. Landlord shall use
commercially reasonable efforts to assist Tenant in obtaining all necessary
governmental permits and approvals for Tenant's Signage. Tenant hereby
acknowledges that, notwithstanding Landlord's approval of Tenant's Signage,
Landlord has made no representation or warranty to Tenant with respect to the
probability of obtaining all necessary governmental approvals and permits for
Tenant's Signage. In the event Tenant does not receive the necessary
governmental approvals and permits for Tenant's Signage, Tenant's and Landlord's
rights and obligations under the remaining TCCs of this Lease shall be
unaffected.
23.4.2 OBJECTIONABLE NAME. To the extent Original Tenant and/or
its Affiliates desires to change the name and/or logo set forth on Tenant's
Signage, such name and/or logo shall not have a name which relates to an entity
which is of a character or reputation, or is associated with a political faction
or orientation, which is inconsistent with the quality of the Project, or which
would otherwise reasonably offend a landlord of the Comparable Buildings (an
"OBJECTIONABLE NAME"). The parties hereby agree that the name "AMN Healthcare
Services, Inc.," or any reasonable derivation thereof, shall not be deemed an
Objectionable Name.
23.4.3 TERMINATION OF RIGHT TO TENANT'S SIGNAGE. The rights
contained in this Section 23.4 shall be personal to the Original Tenant, and may
only be exercised by the Original Tenant and/or its Affiliates (and not any
other assignee, sublessee or other transferee of the Original Tenant's interest
in this Lease).
23.4.4 COST AND MAINTENANCE. The costs of the actual signs
comprising Tenant's Signage and the installation, design, construction, and any
and all other costs associated
-56-
with Tenant's Signage, including, without limitation, utility charges and
hook-up fees, permits, and maintenance and repairs, shall be the sole
responsibility of Tenant; provided, however, the actual costs of such initial
installation, design and construction shall be subject to reimbursement from the
Tenant Improvement Allowance pursuant to Section 2.2.1 of the Tenant Work
Letter. Should Tenant's Signage require repairs and/or maintenance, as
determined in Landlord's reasonable judgment, Landlord shall have the right to
provide Notice thereof to Tenant and Tenant shall cause such repairs and/or
maintenance to be performed within thirty (30) days after receipt of such Notice
from Landlord, at Tenant's sole cost and expense; provided, however, if such
repairs and/or maintenance are reasonably expected to require longer than thirty
(30) days to perform, Tenant shall commence such repairs and/or maintenance
within such thirty (30) day period and shall diligently prosecute such repairs
and maintenance to completion. Should Tenant fail to perform such repairs and/or
maintenance within the periods described in the immediately preceding sentence,
Landlord shall, upon the delivery of an additional ten (10) business days' prior
written notice, have the right to cause such work to be performed and to charge
Tenant as Additional Rent for the Actual Cost of such work. Upon the expiration
or earlier termination of this Lease, Tenant shall, at Tenant's sole cost and
expense, cause Tenant's Signage to be removed and shall cause the areas in which
such Tenant's Signage was located to be restored to the condition existing
immediately prior to the placement of such Tenant's Signage except for ordinary
wear and tear. If Tenant fails to timely remove such Tenant's Signage or to
restore the areas in which such Tenant's Signage was located, as provided in the
immediately preceding sentence, then Landlord may perform such work, and all
Actual Costs incurred by Landlord in so performing shall be reimbursed by Tenant
to Landlord within thirty (30) days after Tenant's receipt of an invoice
therefor. The TCCs of this Section 23.4.4 shall survive the expiration or
earlier termination of this Lease.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises or the Project which will in any way conflict with any law,
statute, ordinance or other governmental rule, regulation or requirement now in
force or which may hereafter be enacted or promulgated including any
"Environmental Laws," as that term is set forth in Section 29.33 of this Lease
(collectively, "APPLICABLE LAWS"). At its sole cost and expense, Tenant shall
promptly comply with all such Applicable Laws which relate to (i) Tenant's use
of the Premises for non-general office use, (ii) the Alterations or Tenant
Improvements in the Premises, or (iii) the Base Building, but, as to the Base
Building, only to the extent such obligations are triggered by Tenant's
Alterations, the Tenant Improvements, or use of the Premises for other than
normal and customary implementation of the Permitted Use. Should any standard or
regulation now or hereafter be imposed on Landlord or Tenant by a state, federal
or local governmental body charged with the establishment, regulation and
enforcement of occupational, health or safety standards for employers,
employees, landlords or tenants, then Tenant agrees, at its sole cost and
expense, to comply promptly with such standards or regulations to the extent
such standards or regulations relate to Tenant's particular manner of use of the
Premises for other than general office purposes, the Tenant Improvements located
in the Premises, or any Alterations thereof; provided that Landlord shall comply
with any standards or regulations which relate to (A) the Base Building (but
excluding the Tenant Improvements constructed by Tenant pursuant to the
-57-
Tenant Work Letter), or (B) the Common Areas, unless such compliance obligations
are triggered by the Tenant Improvements or the Alterations in the Premises, in
which event such compliance obligations shall be at Tenant's sole cost and
expense; provided further, and notwithstanding the foregoing, that Tenant shall
not be required to make any repair to, modification of, or addition to the Base
Building (but excluding the Tenant Improvements constructed by Tenant pursuant
to the Tenant Work Letter) except and to the extent required because of Tenant's
use of the Premises for other than the Permitted Use. The judgment of any court
of competent jurisdiction or the admission of Tenant in any judicial action,
regardless of whether Landlord is a party thereto, that Tenant has violated any
of said governmental measures, shall be conclusive of that fact as between
Landlord and Tenant.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) business days after
Tenant's receipt of notice that said amount was not paid when due, then Tenant
shall pay to Landlord a late charge equal to three and one-half percent (3 1/2%)
of the overdue amount plus any attorneys' fees incurred by Landlord by reason of
Tenant's failure to pay Rent and/or other charges when due hereunder. The late
charge shall be deemed Additional Rent and the right to require it shall be in
addition to all of Landlord's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Landlord's remedies
in any manner. In addition to the late charge described above, any Rent or other
amounts owing hereunder which are not paid when due shall bear interest from the
date when due until paid at a rate per annum (the "INTEREST RATE") equal to the
lesser of (i) the annual "BANK PRIME LOAN" rate cited in the Federal Reserve
Statistical Release Publication G.13(415), published on the first Tuesday of
each calendar month (or such other comparable index as Landlord and Tenant shall
reasonably agree upon if such rate ceases to be published) plus four (4)
percentage points, and (ii) the highest rate permitted by applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent, except to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant's part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by
Landlord to Tenant of statements therefor: (i) sums equal to expenditures
reasonably made and obligations incurred by
-58-
Landlord in connection with the remedying by Landlord of Tenant's defaults
pursuant to the provisions of Section 26.1; (ii) sums equal to all losses,
costs, liabilities, damages and expenses referred to in Article 10 of this
Lease; and (iii) sums equal to all expenditures made and obligations incurred by
Landlord in collecting or attempting to collect the Rent or in enforcing or
attempting to enforce any rights of Landlord under this Lease or pursuant to
law, including, without limitation, all legal fees and other amounts so
expended. Tenant's obligations under this Section 26.2 shall survive the
expiration or sooner termination of the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times, subject to Tenant's
reasonable security requirements and upon reasonable notice to Tenant (except in
the case of an emergency or regularly scheduled service) to enter the Premises
to (i) inspect them; (ii) show the Premises to prospective purchasers,
mortgagees or tenants, or to current or prospective mortgagees, ground or
underlying lessors or insurers; (iii) post notices of nonresponsibility; or (iv)
alter, improve or repair the Premises or the Building, or for structural
alterations, repairs or improvements to the Building or the Building's systems
and equipment. Notwithstanding anything to the contrary contained in this
Article 27, Landlord may enter the Premises at any time upon reasonable prior
written notice to Tenant (except that no notice shall be required in an
emergency or to perform regularly scheduled service, such as janitorial service)
to (A) perform services required of Landlord, including janitorial service; (B)
take possession due to any breach of this Lease in the manner provided herein;
and (C) perform any covenants of Tenant which Tenant fails to perform. Landlord
may make any such entries without the abatement of Rent and may take such
reasonable steps as required to accomplish the stated purposes. For each of the
above purposes, Landlord shall at all times have a key with which to unlock all
the doors in the Premises, excluding Tenant's vaults, safes and special security
areas designated in advance by Tenant. In an emergency, Landlord shall have the
right to use any means that Landlord may deem proper to open the doors in and to
the Premises. Any entry into the Premises by Landlord in the manner hereinbefore
described shall not be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an actual or constructive eviction of Tenant from
any portion of the Premises. No provision of this Lease shall be construed as
obligating Landlord to perform any repairs, alterations or decorations except as
otherwise expressly agreed to be performed by Landlord herein.
ARTICLE 28
TENANT PARKING
28.1 GENERALLY. Tenant shall have the right to use, commencing on the
Lease Commencement Date, the amount of parking spaces set forth in Section 9 of
the Summary, on a monthly basis throughout the Lease Term, which parking spaces
shall pertain to the Project parking facility. Tenant's continued right to use
the parking spaces is conditioned upon Tenant abiding by all rules and
regulations which are prescribed from time to time for the orderly operation and
use of the parking facility where the parking spaces are located, including any
sticker or other identification system established by Landlord, Tenant's
cooperation in seeing that
-59-
Tenant's employees and visitors also comply with such rules and regulations and
Tenant not being in default under this Lease. Landlord specifically reserves the
right to (i) change the size, configuration, design, layout and all other
aspects of the Project parking facility at any time as long as the changes do
not materially and adversely affect Tenant (provided that such restriction shall
not apply to changes required by Laws) and/or (ii) perform repairs to the
Parking Facilities, and Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of Rent
under this Lease, from time to time, close-off or restrict access to the Project
parking facility (for a period not to exceed thirty (30) days, as such thirty
(30) day period may be extended by a Force Majeure), or relocate Tenant's
parking spaces to other parking structures and/or surface parking areas within a
reasonable distance of the Premises, for purposes of permitting or facilitating
any such construction, alteration, improvements or repairs with respect to the
Parking Facilities or to accommodate or facilitate renovation, alteration,
construction or other modification of other improvements or structures located
on the Real Property, provided that Landlord shall use reasonable efforts to
minimize any inconvenience to Tenant. Tenant hereby acknowledges that Landlord
shall have the right to designate up to twenty-five (25) parking spaces within
the Parking Facility (excluding the Extra Parking Level) as reserved spaces for
use by the other Project tenants. Landlord may delegate its responsibilities
hereunder to a parking operator in which case such parking operator shall have
all the rights of control attributed hereby to the Landlord. The parking spaces
provided to Tenant pursuant to this Article 28 are provided to Tenant solely for
use by Tenant's own personnel and such spaces may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Landlord's prior approval.
Tenant may validate visitor parking by such method or methods as the Landlord
may establish, at the validation rate from time to time generally applicable to
visitor parking.
28.2 EXCESS PARKING COSTS. Landlord and Tenant hereby acknowledge that,
at the request of Tenant, Landlord is designing/constructing an extra
subterranean level into the Parking Facility (the "EXTRA PARKING LEVEL"), the
initial design/permitting/construction costs of such Extra Parking Level is
anticipated to total approximately $2,400,000.00. As a result of landlord's
design/construction of such Extra Parking Level, additional recurring charges
(as opposed to initial design/construction costs) shall be incurred (the "EXCESS
PARKING COSTS"), consisting of, but not limited to, the following: (i) increased
real estate taxes attributable to such Extra Parking Level improvements, (ii)
insurance, (iii) exhaust system operation and maintenance, (iv) fire protection
system operation and maintenance, (v) security system operation and maintenance,
and (vi) other recurring expenses related directly to such Extra Parking Level.
Tenant shall pay directly to Landlord, within thirty (30) days of its receipt of
an invoice therefor, such Excess Parking Costs; provided, however, such Excess
Parking Costs shall be excluded from Operating Expenses; provided further,
however, in no event shall Tenant be obligated to reimburse Landlord for more
than $50,000.00 of such Excess Parking Costs per Lease Year.
28.3 ACCESS CONTROL. Notwithstanding anything to the contrary set forth
in this Article 28, Tenant shall be entitled, at is sole cost and expense, and
subject to the reasonable approval of Landlord, to cause an access control
system (card key activated or otherwise) to be installed at the point of entry
into the Extra Parking Level (the "ACCESS CONTROL SYSTEM"); provided, however,
that to the extent the Premises is expanded (pursuant to the TCCs of Section 1.3
or 1.4 of this Lease, or otherwise) to consist of one hundred percent (100%) of
the
-60-
Building, then Tenant may elect to have such Access Control System installed at
the main entry point to the Parking Facility. Such Access Control System shall
be constructed pursuant to the TCCs of Article 8 of this Lease.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 TERMS; CAPTIONS. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The necessary grammatical
changes required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed. The captions of
Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections.
29.2 BINDING EFFECT. Subject to all other provisions of this Lease, each
of the covenants, conditions and provisions of this Lease shall extend to and
shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
29.3 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
29.4 MODIFICATION OF LEASE. Should any current or prospective mortgagee
or ground lessor for the Building or Project require a modification of this
Lease, which modification will not cause an increased cost or expense to Tenant
or in any other way materially and adversely change the rights and obligations
of Tenant hereunder, then and in such event, Tenant agrees that this Lease may
be so modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. At the request of Landlord or any mortgagee or ground lessor,
Tenant agrees to execute a short form of Lease and deliver the same to Landlord
within ten (10) days following the request therefor.
29.5 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project or
Building and in this Lease, and Tenant agrees that in the event of any such
transfer, Landlord shall automatically be released from all liability under this
Lease which accrues from and after the date of such transfer provided such
transferee assumes such liability in writing (and further provided that such
release shall include any liability which accrues prior to the transfer in the
event the transferee assumes such liability in writing) and Tenant agrees to
look solely to such transferee for the performance of Landlord's obligations
hereunder after the date of transfer. Tenant further acknowledges that Landlord
may assign its interest in this Lease to a mortgage lender as additional
security and
-61-
agrees that such an assignment shall not release Landlord from its obligations
hereunder and that Tenant shall continue to look to Landlord for the performance
of its obligations hereunder.
29.6 RECORDING. A "Memorandum of Lease," substantially in the form
attached hereto as EXHIBIT I, shall be executed and acknowledged by Landlord and
Tenant concurrently with the execution of this Lease and either Landlord or
Tenant may, at such party's sole cost and expense, record such Memorandum of
Lease.
29.7 LANDLORD'S TITLE. Landlord's title is and always shall be paramount
to the title of Tenant. Nothing herein contained shall empower Tenant to do any
act which can, shall or may encumber the title of Landlord.
29.8 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.
29.9 APPLICATION OF PAYMENTS. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.
29.10 TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
29.11 PARTIAL INVALIDITY. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.12 NO WARRANTY. In executing and delivering this Lease, Tenant has
not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.
29.13 LANDLORD EXCULPATION. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the
Premises shall be limited solely and exclusively to an amount which is equal to
the the equity interest of Landlord in the Building, provided that in no event
shall such liability extend to any sales or insurance proceeds received by
Landlord or the Landlord Parties in connection with the Project, Building or
Premises. Neither Landlord, nor any of the Landlord Parties shall have any
personal liability therefor, and Tenant hereby expressly waives and releases
such personal liability on behalf of itself and all persons claiming by, through
or under Tenant. The limitations of liability contained in this Section 29.13
shall inure to the benefit of
-62-
Landlord's and the Landlord Parties' present and future partners, beneficiaries,
officers, directors, trustees, shareholders, agents and employees, and their
respective partners, heirs, successors and assigns. Under no circumstances shall
any present or future partner of Landlord (if Landlord is a partnership), or
trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have
any liability for the performance of Landlord's obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances for injury or damage to, or
interference with, Tenant's business, including but not limited to, loss of
profits, loss of rents or other revenues, loss of business opportunity, loss of
goodwill or loss of use, in each case, however occurring.
29.14 ENTIRE AGREEMENT. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease constitutes the parties' entire agreement with respect to the leasing of
the Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in writing signed by the parties hereto.
29.15 RIGHT TO LEASE. Landlord reserves the absolute right to effect
such other tenancies in the Project as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building
or Project. Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.
29.16 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, acts of war, terrorist acts, inability to
obtain services, labor, or materials or reasonable substitutes therefor,
governmental actions, civil commotions, fire or other casualty, and other causes
beyond the reasonable control of the party obligated to perform, except with
respect to the obligations imposed with regard to Rent and other charges to be
paid by Tenant pursuant to this Lease and except as to Tenant's obligations
under Articles 5 and 24 of this Lease (collectively, a "FORCE MAJEURE"),
notwithstanding anything to the contrary contained in this Lease, shall excuse
the performance of such party for a period equal to any such prevention, delay
or stoppage and, therefore, if this Lease specifies a time period for
performance of an obligation of either party, that time period shall be extended
by the period of any delay in such party's performance caused by a Force
Majeure.
29.17 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives, for Tenant
and for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant's right of occupancy of the Premises after any termination of this
Lease.
29.18 NOTICES. All notices, demands, statements, designations, approvals
or other communications (collectively, "NOTICES") given or required to be given
by either party to the other hereunder or by law shall be in writing, shall be
(A) sent by United States certified or registered mail, postage prepaid, return
receipt requested ("MAIL"), (B) transmitted by telecopy, if such telecopy is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
-63-
recognized overnight courier, or (D) delivered personally. Any Notice shall be
sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord
may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the telecopy is transmitted, (iii) the date the overnight courier delivery
is made, or (iv) the date personal delivery is made or attempted to be made. If
Tenant is notified of the identity and address of Landlord's mortgagee or ground
or underlying lessor, Tenant shall give to such mortgagee or ground or
underlying lessor written notice of any default by Landlord under the terms of
this Lease by registered or certified mail, and such mortgagee or ground or
underlying lessor shall be given a reasonable opportunity to cure such default
prior to Tenant's exercising any remedy available to Tenant. As of the date of
this Lease, any Notices to Landlord must be sent, transmitted, or delivered, as
the case may be, to the following addresses:
Xxxxxx Realty Corporation
0000 Xxxx Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
with copies to:
Xxxxxx Realty Corporation
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
and
Xxxxx Xxxxxxx Xxxx Xxxxxx & Xxxxxxx
1901 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
29.19 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.20 AUTHORITY. If Tenant is a corporation, trust or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant's state of
incorporation and (ii) qualification to do business in California.
-64-
29.21 ATTORNEYS' FEES. In the event that either Landlord or Tenant
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 the other, then all costs and expenses,
including reasonable attorneys' fees, incurred by the prevailing party therein
shall be paid by the other party, which obligation on the part of the other
party 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
judgment.
29.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT
TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA,
(II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN
THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S
USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY
PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT
SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH
COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE
RELEGATED TO AN INDEPENDENT ACTION AT LAW.
29.23 SUBMISSION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of, option for or
option to lease, and it is not effective as a lease or otherwise until execution
and delivery by both Landlord and Tenant.
29.24 BROKERS. Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, excepting only the real estate brokers or
agents specified in Section 12 of the Summary (the "BROKERS"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. Each party agrees to indemnify and defend the other
party against and hold the other party harmless from any and all claims,
demands, losses, liabilities, lawsuits, judgments, costs and expenses (including
without limitation reasonable attorneys' fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of any
dealings with any real estate broker or agent, other than the Brokers, occurring
by, through, or under the indemnifying party.
29.25 INDEPENDENT COVENANTS. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord.
-65-
29.26 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord shall have the
right at any time to change the name of the Project or Building and to install,
affix and maintain any and all signs on the exterior and on the interior of the
Project or Building as Landlord may, in Landlord's sole discretion, desire;
provided, however, Landlord shall provide Tenant with notice of the change.
Tenant shall not use the name of the Project or Building or use pictures or
illustrations of the Project or Building in advertising or other publicity or
for any purpose other than as the address of the business to be conducted by
Tenant in the Premises, without the prior written consent of Landlord.
29.27 COUNTERPARTS. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.28 CONFIDENTIALITY. Tenant acknowledges that the content of this
Lease and any related documents are confidential information. Tenant shall keep
such confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant's financial,
legal, and space planning consultants.
29.29 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future governmentally required programs intended to manage parking,
transportation or traffic in and around the Building, and in connection
therewith, Tenant shall take responsible action for the transportation planning
and management of all employees located at the Premises by working directly with
Landlord, any governmental transportation management organization or any other
transportation-related committees or entities.
29.30 BUILDING RENOVATIONS. It is specifically understood and agreed
that Landlord has made no representation or warranty to Tenant and has no
obligation and has made no promises to alter, remodel, improve, renovate, repair
or decorate the Premises, Building, or any part thereof and that no
representations respecting the condition of the Premises or the Building have
been made by Landlord to Tenant except as specifically set forth herein or in
the Tenant Work Letter. However, Tenant hereby acknowledges that Landlord is
currently renovating or may during the Lease Term renovate, improve, alter, or
modify (collectively, the "RENOVATIONS") the Project, the Building and/or the
Premises including without limitation the parking structure, common areas,
systems and equipment, roof, and structural portions of the same, which
Renovations may include, without limitation, (i) installing sprinklers in the
Building common areas and tenant spaces, (ii) modifying the common areas and
tenant spaces to comply with applicable laws and regulations, including
regulations relating to the physically disabled, seismic conditions, and
building safety and security, and (iii) installing new floor covering, lighting,
and wall coverings in the Building common areas, and in connection with any
Renovations, Landlord may, among other things, erect scaffolding or other
necessary structures in the Building, limit or eliminate access to portions of
the Project, including portions of the common areas, or perform work in the
Building, which work may create noise, dust or leave debris in the Building.
Tenant hereby agrees that such Renovations and Landlord's actions in connection
with such Renovations shall in no way constitute a constructive eviction of
Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no
responsibility or for any reason be liable to Tenant for any direct or indirect
injury to or interference with Tenant's business arising from the Renovations,
nor shall Tenant be entitled to any compensation or damages from Landlord for
loss of the use of the
-66-
whole or any part of the Premises or of Tenant's personal property or
improvements resulting from the Renovations or Landlord's actions in connection
with such Renovations, or for any inconvenience or annoyance occasioned by such
Renovations or Landlord's actions.
29.31 NO VIOLATION. Tenant hereby warrants and represents that neither
its execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys' fees
and costs, arising from Tenant's breach of this warranty and representation.
29.32 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "LINES") at the Project in or serving the Premises, provided
that (i) Tenant shall use an experienced and qualified contractor and comply
with all of the other provisions of Articles 7 and 8 of this Lease, (ii) an
acceptable number of spare Lines and space for additional Lines shall be
maintained for existing and future occupants of the Project, as determined in
Landlord's reasonable opinion, (iii) the Lines therefor (including riser cables)
shall be appropriately insulated to prevent excessive electromagnetic fields or
radiation, and shall be surrounded by a protective conduit reasonably acceptable
to Landlord, (iv) any new or existing Lines servicing the Premises shall comply
with all applicable governmental laws and regulations, (v) as a condition to
permitting the installation of new Lines, Landlord may require that Tenant
remove existing Lines located in or serving the Premises and repair any damage
in connection with such removal, and (vi) Tenant shall pay all costs in
connection therewith. Landlord reserves the right to require that Tenant remove
any Lines located in or serving the Premises which are installed in violation of
these provisions, or which are at any time in violation of any laws or represent
a dangerous or potentially dangerous condition.
29.33 HAZARDOUS SUBSTANCES.
29.33.1 DEFINITIONS. For purposes of this Lease, the following
definitions shall apply: "HAZARDOUS MATERIAL(s)" shall mean any substance or
material that is described as a toxic or hazardous substance, waste, material,
pollutant, contaminant or infectious waste, or any matter that in certain
specified quantities would be injurious to the public health or welfare, or
words of similar import, in any of the "Environmental Laws," as that term is
defined below in this Section 29.33.1, or any other words which are intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity or reproductive
toxicity and includes, without limitation, asbestos, petroleum (including crude
oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel, or any mixture thereof), petroleum
products, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive
matter, medical waste, and chemicals which may cause cancer or reproductive
toxicity. "ENVIRONMENTAL LAWS" shall mean all federal, state, local and
quasi-governmental laws (whether under common law, statute or otherwise),
ordinances, decrees, codes, rulings, awards, rules, regulations and guidance
documents now or hereafter be enacted or promulgated as amended from time to
time, in any way relating to or regulating Hazardous Materials.
-67-
29.33.2 COMPLIANCE WITH ENVIRONMENTAL LAWS. Landlord covenants
that during the Lease Term, Landlord shall comply with all Environmental Laws in
accordance with, and as required by, the TCCs of Article 24 of this Lease.
Tenant shall not allow the storage or use of Hazardous Materials nor allow to be
brought into the Project any such materials or substances, except that Tenant
may maintain reasonable amounts of products in the Premises which are incidental
to the operation of its offices, such as photocopy supplies, secretarial
supplies, limited janitorial supplies which products contain chemicals which are
categorized as Hazardous Materials, and, in connection with the "Back-Up
Generator" identified in Section 29.35 of this Lease, fuel and lubricants;
provided, however, that the use of such products in the Premises by Tenant shall
be in compliance with applicable laws and shall be in the manner in which such
products are designed to be used . If any lender or governmental agency shall
ever require testing to ascertain whether or not there has been any release of
Hazardous Materials, then the reasonable cost thereof shall be reimbursed by
Tenant to Landlord upon demand as Additional Rent if such requirement applies to
the Premises and there is reasonable cause to believe that a release has
occurred on the Premises. In addition, Tenant shall execute affidavits,
representations and the like from time to time at Landlord's request concerning
Tenant's best knowledge and belief regarding the presence of Hazardous Materials
on the Premises.
29.33.3 INDEMNIFICATIONS. Landlord agrees to indemnify, defend,
protect and hold harmless the Tenant Parties from any and all Claims arising
from any Hazardous Materials to the extent placed in, on, under or about the
Project by Landlord or a Landlord Party. Tenant agrees to indemnify, defend,
protect and hold harmless the Landlord Parties from any and all Claims arising
from any Hazardous Materials to the extent placed in, on, under or about the
Premises or the Project by Tenant or Tenant Parties.
29.34 NO DISCRIMINATION. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any
person claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.
29.35 BACKUP GENERATOR. Subject to Landlord's prior approval of all
plans and specifications, which approval shall not be unreasonably withheld, and
Tenant's receipt of any required permits, Landlord shall permit Tenant to
install and maintain, at Tenant's sole cost and expense, a backup generator at a
location designated by Landlord. Such backup generator shall, subject to
compliance with all laws, be used by Tenant only during (i) testing and regular
maintenance, and (ii) any period of electrical power outage in the Project.
Tenant shall be entitled to operate the generator for testing and regular
maintenance only upon notice to Landlord and at times reasonably approved by
Landlord. Tenant shall submit the specifications for design, operation,
installation and maintenance of the backup generator for Landlord's consent,
which consent shall not be unreasonably withheld or delayed and may be
conditioned on Tenant complying with such reasonable requirements imposed by
Landlord, based on the advice of Landlord's structural and mechanical engineers,
so that the Project's systems and
-68-
equipment are not adversely affected. In addition, Tenant shall ensure that the
backup generator does not result in any Hazardous Materials being introduced to
the Project (other than lubricants and fuel to the extent required for the
operation of such generator), and Section 29.33 will apply to Tenant's use of
the backup generator. Further, Tenant shall be responsible for ensuring that the
backup generator does not interfere with the use of the Project by other
tenants. In the event another tenant of the Project or of a neighboring project
complains of problems caused by the generator, Tenant shall take whatever steps
are reasonably necessary to remedy the problem complained of, including removal
of the backup generator if another solution is not available. Tenant shall
ensure that the design and installation of the backup generator is performed in
a manner so as to minimize or eliminate any noise or vibration cause by such
generator. Any repairs and maintenance of such generator shall be the sole
responsibility of Tenant and Landlord makes no representation or warranty with
respect to such generator. Upon the expiration or earlier termination of this
Lease, Tenant shall remove the generator and repair any damage to the Project
caused by such removal. Such generator shall be deemed to be a part of the
Premises for purposes of Article 10 of this Lease.
ARTICLE 30
RIGHT OF FIRST OFFER TO PURCHASE
30.1 RIGHT OF FIRST OFFER. Subject to the TCCs of Section 30.5, below,
Landlord hereby grants to the Original Tenant and its Affiliates, a one-time
right of first offer contained herein with respect to the entire Project.
Tenant's right of first offer shall be on the TCCs set forth in this Article 30.
Tenant hereby acknowledges that the rights contained in this Article 30 shall
terminate to the extent Landlord sells the Project to a subsequent owner as part
of a multi-property (or portfolio) sales transaction (which shall be deemed to
include, but not limited to, a transaction, whether by foreclosure, a
deed-in-lieu of foreclosure, or otherwise, where Landlord's lender takes
ownership).
30.2 PROCEDURE FOR OFFER. Landlord shall notify Tenant (the "FIRST OFFER
NOTICE") in the event (and to the extent) Landlord intends to market (as
available for sale to third parties) the Project for sale on a single-asset
basis. Pursuant to such First Offer Notice, Landlord shall identify the
"Offering Price" and the other fundamental (economic and non-economic) terms
upon which Landlord is willing to sell the Project.
30.3 PROCEDURE FOR ACCEPTANCE. If Tenant wishes to exercise Tenant's
right of first offer, then within seven (7) business days following Tenant's
receipt of such First Offer Notice, Tenant shall deliver written notice to
Landlord ("TENANT'S ELECTION NOTICE"), pursuant to which Tenant shall elect
either to (i) purchase the Project at the Offering Price and upon the other
fundamental terms contained in Landlord's First Offer Notice, or (ii) not
purchase the Project, in which event Landlord shall be free to sell the Project,
on a single-asset basis, to anyone to whom Landlord desires on fundamental
economic terms which total no less than ninety-seven percent (97%) of the
fundamental economic terms set forth in the First Offer Notice, during the six
(6) month period following the date of Landlord's receipt of Tenant's Election
Notice (the "FIRST OFFER WAIVER PERIOD"). If Tenant does not notify Landlord of
its election of any of the options in clauses (i) or (ii) hereinabove, Tenant
shall be deemed to have elected the option in clause (ii). If Landlord does not
sell the Project to a third party during the First Offer Waiver Period (or
-69-
if a purchase and sale agreement for the sale of the Project is executed by
Landlord and such third-party buyer within such First Offer Waiver Period), then
when, and if, Landlord determines it wants to re-market the Project for sale on
a single-asset basis, Tenant shall continue to have a right of first offer to
purchase the Project pursuant to the provisions of this Article 30, as if the
initial First Offer Notice was never delivered.
30.4 CLOSING DATE. The "CLOSING DATE" shall occur on the date which is
one hundred twenty (120) days following the date of Landlord's receipt of the
Exercise Notice in accordance with the terms of Section 30.2, above.
30.5 PERMITTED PURCHASER. Notwithstanding anything to the contrary set
forth in this Article 30, Tenant may, only in connection with Tenant's
structuring of a synthetic lease or a similar financing vehicle, designate
another entity, whether or not affiliated with Tenant, to take title to the
Project at the Closing Date. In no event shall Tenant be permitted to assign the
right of first offer set forth in this Article 30 to any person or entity other
than a party facilitating a synthetic lease (or similar financing vehicle) for
Tenant ("PERMITTED PURCHASER").
30.6 TERMINATION OF RIGHT OF FIRST OFFER. The rights contained in this
Article 30 shall be personal to the Original Tenant, and may only be exercised
by the Original Tenant or its Affiliates (and not any other assignee, sublessee
or other transferee of the Original Tenant's interest in this Lease). The right
of first offer granted herein shall terminate upon a subsequent non-Affiliate
owner taking ownership of the Project as part of a multi-property (or portfolio)
sales transaction (which shall be deemed to include, but not limited to, a
transaction, whether by foreclosure, a deed-in-lieu of foreclosure, or
otherwise, where Landlord's lender takes ownership). Tenant shall not have the
right to purchase the Project, as provided in this Article 30, if, as of the
date of the attempted exercise of the right of first offer by Tenant, or as of
the scheduled Closing Date, (i) Tenant is in default under this Lease (beyond
any applicable notice and cure periods); provided, however, Tenant may retain
its right to purchase the Project if Tenant cures any such default within three
(3) business days of (A) Landlord's receipt of Tenant's Election Notice, or (B)
the originally scheduled Closing Date, as the case may be, or (ii) Tenant has
previously been in economic default under this Lease (beyond any applicable
notice and cure periods) more than twice during the previous nine (9) month
period.
[continued on following page]
-70-
30.7 NO BROKERS OR COMMISSIONS. Each party represents to the other that
there are no brokers which are owed any real estate brokerage commission or
finder's fee in connection with the Purchase Option. Landlord and Tenant each
agree to indemnify and hold the other harmless from and against all liability,
claims, demands, damages, or costs of any kind arising from or connected with
any broker's or finder's fee or commission or charge claimed to be due from any
person arising from the indemnifying party's conduct with respect to the
contemplated purchase and sale.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"LANDLORD":
XXXXXX REALTY, L.P.,
a Delaware limited partnership
By: Xxxxxx Realty Corporation,
a Maryland corporation,
General Partner
By: /s/ Xxxxx Xxxxx
-------------------------------------
Its: Senior Vice President
---------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Its: Executive Vice President, Chief
Operating Officer
---------------------------------
"TENANT":
AMN HEALTHCARE, INC.,
a Nevada corporation
By: /s/ Xxxxxx Xxxxxxx
------------------------------------------
Its: President
--------------------------------------
By: /s/ Xxxxxx Xxxx
------------------------------------------
Its: Chief Financial Officer
--------------------------------------
-71-
EXHIBIT A
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
OUTLINE OF PREMISES
EXHIBIT A
-1-
EXHIBIT A-1
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
LEGAL DESCRIPTION
EXHIBIT A-1
-1-
EXHIBIT B
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
TENANT WORK LETTER
EXHIBIT B
-1-
EXHIBIT C
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
NOTICE OF LEASE TERM DATES
EXHIBIT C
-1-
EXHIBIT D
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
RULES AND REGULATIONS
EXHIBIT D
-2-
EXHIBIT E
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
FORM OF TENANT'S ESTOPPEL CERTIFICATE
-3-
EXHIBIT F
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
-4-
EXHIBIT G
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
OPERATING EXPENSE BUDGET
EXHIBIT G
-1-
EXHIBIT H
SAN DIEGO CORPORATE CENTER, LOT #7 PROJECT
FORM OF LETTER OF CREDIT
-1-
EXHIBIT I
SAN DIEGO CORPORATE CENTER LOT 7 PROJECT
SHORT FORM OF MEMORANDUM OF LEASE
-2-
