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EXHIBIT 10.3
OFFICE SPACE LEASE
BETWEEN
THE IRVINE COMPANY
AND
XXXXXX XXXXX & ASSOCIATES, INC.
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OFFICE SPACE LEASE
THIS LEASE is made as of the 18th day of December, 1996, by and between
THE IRVINE COMPANY, a Michigan corporation, hereafter called "Landlord," and
XXXXXX XXXXX & ASSOCIATES, INC., a California corporation, hereinafter called
"Tenant."
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean
and refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.
1. Tenant's Trade Name: N/A
2. Premises: Suite No. 800 (the Premises are more particularly described in
Section 2.1).
Address of Building: 0000 XxxXxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000
Project Description (if applicable): MacArthur Court
3. Use of Premises: General Office and for no other use.
4. Estimated Commencement Date: August 1, 1997
5. Lease Term: One Hundred Twenty (120) months, plus such additional days as
may be required to cause this Lease to terminate on the final day of the
calendar month.
6. Basic Rent: Thirty-Four Thousand Two Hundred Ninety-Seven Dollars
($34,297.00) per month.
Rental Adjustments:
Commencing on the first day of the thirteenth (13th) month of the Lease
Term, the Basic Rent shall be Thirty-Five Thousand Six Hundred Sixty-One
Dollars ($35,661.00) per month.
Commencing on the first day of the twenty-fifth (25th) month of the Lease
Term, the Basic Rent shall be Thirty-Seven Thousand Twenty-Five Dollars
($37,025.00) per month.
Commencing on the first day of the thirty-seventh (37th) month of the
Lease Term, the Basic Rent shall be Thirty-Eight Thousand Five Hundred
Eighty-Four Dollars ($38,584.00) per month.
Commencing on the first day of the forty-ninth (49th) month of the Lease
Term, the Basic Rent shall be Forty Thousand One Hundred Forty-Three
Dollars ($40,143.00) per month.
Commencing on the first day of the sixty-first (61st) month of the Lease
Term, the Basic Rent shall be Forty Thousand Nine Hundred Twenty-Three
Dollars ($40,923.00) per month.
Commencing on the first day of the seventy-third (73rd) month of the Lease
Term, the Basic Rent shall be Forty-Two Thousand Four Hundred Eighty-Two
Dollars ($42,482.00) per month.
Commencing on the first day of the eighty-fifth (85th) month of the Lease
Term, the Basic Rent shall be Forty-Four Thousand Four Hundred Thirty
Dollars ($44,430.00) per month.
Commencing on the first day of the ninety-seventh (97th) month of the
Lease Term, the Basic Rent shall be Forty-Six Thousand One Hundred
Eighty-Four Dollars (46,184.00) per month.
Commencing on the first day of the one hundred ninth (109th) month of the
Lease Term, the Basic Rent shall be Forty-Eight Thousand One Hundred
Thirty-Three Dollars (48,133.00) per month.
7. Property Tax Base: The Property Taxes per rentable square foot actually
incurred by Landlord during the twelve month period ending June 30, 1998.
Building Cost Base: The Building Costs per rentable square foot actually
incurred by Landlord during the twelve month period ending June 30, 1998.
Expense Recovery Period: Every twelve month period during the Term (or
portion thereof during the last Lease year) ending June 30. The first
Expense Recovery Period shall commence July 1, 1998.
8. Floor Area of Premises: approximately 19,487 rentable square feet
9. Security Deposit: $134,401.00 (See Section 4.3)
10. Broker(s): Xxxxx & Xxxxx and Principal Funding of California, each as to a
fifty percent (50%) commission.
11. Plan Approval Date: December 20, 1996.
12. Parking: Five (5) contiguous reserved vehicle parking spaces on the ground
floor of the parking structure and Sixty-Nine (69) unreserved parking
spaces in the parking structure.
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13. Address for Payments and Notices:
LANDLORD TENANT
The Irvine Company Xxxxxx Xxxxx Associates, Inc.
c/o PM Realty Group 0000 XxxXxxxxx Xxxxxxxxx
0000 XxxXxxxxx Xxxxx, Xxxxx 000 Xxxxx 000
Xxxxxxx Xxxxx, XX 00000 Xxxxxxx Xxxxx, XX 00000
Attn: Property Manager Attn: Xx. Xxxxxxx X. Xxxxxxxx
Executive Vice President
with a copy of notices to:
THE IRVINE COMPANY
X.X. Xxx 0000
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Vice President, Operations - Office Properties
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ARTICLE II. PREMISES
SECTION 2.1. LEASED PREMISES.
(a) Landlord leases to Tenant and Tenant rents from Landlord the
premises shown in Exhibit A (the "Premises"), containing approximately the floor
area set forth in Item 8 of the Basic Lease Provisions and known by the suite
number identified in Item 2 of the Basic Lease Provisions. The Premises are
located in the building identified in Item 2 of the Basic Lease Provisions
(which together with the underlying real property, is called the "Building"),
and is a portion of the project described in Item 2 (the "Project"). If, upon
completion of the space plans for the Premises, Landlord's architect or space
planner determines that the rentable square footage of the premises differs from
that set forth in the Basic Lease Provisions, then Landlord shall so notify
Tenant and the Basic Rent (as shown in Item 6 of the Basic Lease Provisions)
shall be promptly adjusted in proportion to the change in square footage. Within
five (5) days following Landlord's request, the parties shall memorialize the
adjustments by executing an amendment to this Lease prepared by Landlord.
(b) Provided Tenant is not then in default hereunder, Landlord hereby
grants Tenant a one-time right ("First Right") to lease the entire rentable
area of the seventh (7th) floor of the Building ("First Right Space") in
accordance with and subject to the provisions of this Section 2.1(b). The
parties agree that because Tenant will not require the First Right Space in the
immediate future, Landlord shall be authorized to lease that space, in one or
more transactions, to third party tenant(s) following the vacation thereof by
Sheppard, Mullin, Xxxxxxx & Hampton, the current tenant in possession. This
Section 2.1(b) shall not be applicable to such initial releasing of the First
Right Space. Thereafter, prior to leasing the First Right Space, or any
portion thereof, to any other party, and following Landlord's receipt of bona
fide third party interest in that space, Landlord shall give Tenant written
notice of the basic economic terms including but not limited to the Basic Rent,
term, Operating Expense Allowance, and tenant improvement allowance
(collectively, the "Economic Terms"), upon which Landlord is willing to lease
such particular First Right Space to Tenant or to a third party; provided that
the Economic Terms shall exclude brokerage commissions and other Landlord
payments that do not directly inure to the tenant's benefit. It is understood
that should Landlord intend to lease other space in addition to the First Right
Space as part of a single transaction, then Landlord's notice shall so provide
and all such space shall collectively be subject to the following provisions.
Within three (3) business days after receipt of Landlord's notice, Tenant must
give Landlord written notice pursuant to which Tenant shall elect to (i) lease
all, but not less than all, of the space specified in Landlord's notice (the
"Designated Space") upon such Economic Terms and the same non-Economic Terms
as set forth in this Lease; (ii) refuse to lease the Designated Space,
specifying that such refusal is not based upon the Economic Terms, but upon
Tenant's lack of need for the Designated Space, in which event Landlord may
lease the Designated Space upon any terms it deems appropriate and Tenant shall
have no further rights or options thereto; or (iii) refuse to lease the
Designated Space, specifying that such refusal is based upon said Economic
Terms, in which event Tenant shall also specify revised Economic Terms upon
which Tenant shall be willing to lease the Designated Space. In the event that
Tenant does not so respond in writing to Landlord's notice pursuant to clause
(iii) above, Landlord may elect to either (x) lease the Designated Space to
Tenant upon such revised Economic Terms and the same other non-Economic Terms
as set forth in this Lease, or (y) lease the Designated Space to any third
party upon Economic Terms which are not materially more favorable to such party
than those Economic Terms proposed by Tenant, in which event Tenant shall have
no further rights or options to that space. Should Landlord so elect to lease
the Designated Space to Tenant, then Landlord shall promptly prepare and
deliver to Tenant an amendment to this Lease consistent with the foregoing, and
Tenant shall execute and return same to Landlord within ten (10) days. Tenant's
failure to timely return the amendment shall entitle Landlord to specifically
enforce Tenant's commitment to lease the Designated Space, to lease such space
to a third party, and/or to pursue any other available legal remedy.
Notwithstanding the foregoing, it is understood that Tenant's First Right shall
be subject to any extension or expansion rights granted by Landlord to any
third party tenant hereafter occupying the First Right Space or any portion
thereof, and in no event shall any such First Right Space be deemed available
for leasing until the existing tenant thereof shall have vacated the First
Right Space. Tenant's rights under this Section 2.1(b) shall belong solely to
Xxxxxx Xxxxx & Associates, Inc., a California corporation and may not be
assigned or transferred by it except in connection with an assignment of this
Lease to a Tenant Affiliate as described in Section 9.1(e). Any other attempted
assignment or transfer shall be void and of no force or effect.
SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that
neither Landlord nor any representative of Landlord has made any representation
or warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, except as set forth in this Lease; provided
that Landlord represents that all work performed by Landlord's contractor
pursuant to Exhibit X hereto shall comply with all applicable laws and building
codes, including without limitation the existing provisions of the Americans
with Disabilities Act (the "ADA"). The taking of possession or use of the
Premises by Tenant for any purpose other than construction shall conclusively
establish that the Premises and the Building were in satisfactory condition and
in conformity with the provisions of this Lease in all respects, except for
those matters which Tenant shall have brought to Landlord's attention on a
written punch list. The list shall be limited to any items required to be
accomplished by Landlord under the Work Letter (if any) attached as Exhibit X,
and shall be delivered to Landlord within thirty (30) days after the term
("Term") of this Lease commences as provided in Article III below.
Notwithstanding the foregoing, however, Landlord agrees that it shall be
responsible for the repair of any defective items within the Premises of which
Landlord is notified within one (1) year following the Commencement Date.
Nothing contained in this Section shall affect the commencement of the Term or
the obligation of Tenant to pay rent. Landlord shall diligently complete all
punch list items of which it is notified as provided above.
SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any
name selected by Landlord from time to time for the Building and/or the Project
as any part of Tenant's corporate or trade name. Landlord shall have the right
to change the name, number or designation of the Building or Project without
liability to Tenant.
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ARTICLE III. TERM
SECTION 3.1. GENERAL.
(a) The Term shall be for the period shown in Item 5 of the Basic
Lease Provisions. The Term shall commence ("Commencement Date") on the earlier
of (a) subject to the provisions of Section 3.2, the Estimated Commencement
Date as set forth in Item 4 of the Basic Lease Provisions, or (b) the date
Tenant commences its business activities within the Premises. Promptly
following request by Landlord, the parties shall memorialize on a form provided
by Landlord the actual Commencement Date and the expiration date ("Expiration
Date") of this Lease.
(b) Provided that Tenant is not in default under any provision of
this Lease, either at the time of exercise of the extension right granted
herein or at the time of the commencement of such extension, and provided
further that Tenant is occupying the entire Premises and has not assigned or
sublet any of its interest in this Lease, Tenant shall have two (2) successive
options to extend the Term of this Lease for periods of sixty (60) months each.
Tenant shall exercise its right to extend the Term by and only by (i)
delivering to Landlord, not less than nine (9) months or more than twelve (12)
months prior to the then-current expiration date of the Term, Tenant's written
notice of its commitment to extend (the "Commitment Notice"); and (ii)
returning to Landlord, within fifteen (15) days after receipt, an executed
amendment to this Lease (to be prepared by Landlord upon receipt of the
Commitment Notice) setting forth the Basic Rent and other charges payable
during the extension term. The Basic Rent payable under the Lease during each
extension of the Term shall be at the prevailing market rental rate (including
periodic adjustments) for comparable and similarly improved space within the
Building as of the commencement of the applicable extension period, as
determined by Landlord based on a reasonable extrapolation of its then-current
leasing rates. In no event shall the monthly Basic Rent payable for the
extension period be less than the Basic Rent payable during the month
immediately preceding the commencement of such extension period. If Tenant
fails to timely comply with any of the provisions of this paragraph, Tenant's
right to extend the Term shall be extinguished and the Lease shall
automatically terminate as of the expiration date of the Term, without any
extension and without any liability to Landlord. Any attempt to assign or
transfer any right or interest created by this paragraph shall be void from its
inception. Unless agreed to in a writing signed by Landlord and Tenant, any
extension of the Term, whether created by an amendment to this Lease or by a
holdover of the Premises by Tenant, or otherwise, shall be deemed a part of,
and not in addition to, any duly exercised extension period permitted by this
paragraph.
SECTION 3.2. DELAY IN POSSESSION.
(a) Subject to subsection (b) below, if Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant on or before
the Estimated Commencement Date, this Lease shall not be void or voidable nor
shall Landlord be liable to Tenant for any resulting loss or damage. However,
Tenant shall not be liable for any rent and the Commencement Date shall not
occur until Landlord delivers possession of the Premises and the Premises are
in fact ready for occupancy as defined below, except that if Landlord's failure
to so deliver possession on the Estimated Commencement Date is attributable to
any action or inaction by Tenant (including without limitation any Tenant Delay
described in the Work Letter, if any, attached to this Lease), then the
Commencement Date shall not be advanced to the date on which possession of the
Premises is tendered to Tenant, and Landlord shall be entitled to full
performance by Tenant (including the payment of rent) from the date Landlord
would have been able to deliver the Premises to Tenant but for Tenant's
delay(s). The Premises shall be deemed ready for occupancy upon the tendered
date, but only if and when Landlord, to the extent applicable, (a) has put into
operation all building services essential for the use of the Premises by
Tenant, (b) has provided reasonable access to the Premises for Tenant so that
they may be used without unnecessary interference, (c) has substantially
completed all the work required to be done by Landlord in this Lease, and (d)
has obtained requisite governmental approvals to Tenant's occupancy.
(b) If Landlord fails to deliver possession of the Premises, ready
for occupancy as described above, by the date ("Penalty Date") that is sixty
(60) days following the Estimated Commencement Date, as the Penalty Date shall
be extended both for the period of any Tenant Delays and for the period (but
not to exceed an additional sixty (60) days) of other delays resulting from
matters beyond Landlord's reasonable control as set forth in Section 20.9, then
Tenant shall have the right to terminate this Lease by giving written notice
thereof to Landlord after the Penalty Date but prior to Landlord's delivery of
the Premises ready for Tenant's occupancy as aforesaid. If, from time to time
prior to the Penalty Date, Landlord determines that it will not be able
to deliver possession of the Premises, ready for occupancy, by the Penalty Date,
Landlord shall deliver to Tenant a written notice setting forth Landlord's
opinion as to the revised outside date by which it shall be able to deliver the
Premises to Tenant, ready for occupancy. Within five (5) business days following
delivery of that notice, Tenant may elect by written notice to Landlord to
terminate this Lease; otherwise, the Penalty Date shall be deemed extended to
the revised date set forth in Landlord's notice.
ARTICLE IV. RENT AND OPERATING EXPENSES
SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset a Basic Rent for the Premises
in the total amount shown (including subsequent adjustments, if any) in Item 6
of the Basic Lease Provisions. Any rental adjustment shown in Item 6 shall be
deemed to occur on the specified monthly anniversary of the Commencement Date,
whether or not that date occurs at the end of a calendar month. The rent shall
be due and payable in advance commencing on the Commencement Date (as prorated
for any partial month) and continuing thereafter on the first day of each
successive calendar month of the Term. No demand, notice or invoice shall be
required. An installment of rent in the amount of one (1) full month's Basic
Rent at the initial rate specified in Item 6 of the Basic Lease Provisions
shall be delivered to Landlord concurrently with Tenant's execution of this
Lease and shall be applied against the Basic Rent first due hereunder.
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SECTION 4.2. OPERATING EXPENSE INCREASE.
(a) Commencing July 1, 1998, Tenant shall compensate Landlord, as
additional rent, for Tenant's proportionate shares of "Building Costs" and
"Property Taxes," as those terms are defined below, incurred by Landlord in the
operation of the Building and Project. Property Taxes and Building Costs are
mutually exclusive and may be billed separately or in combination as determined
by Landlord. Tenant's proportionate share of Property Taxes shall equal the
product of the rentable floor area of the Premises multiplied by the difference
of (i) Property Taxes per rentable square foot less (ii) the Property Tax Base
set forth in Item 7 of the Basic Lease Provisions. Tenant's proportionate share
of Building Costs shall equal the product of the rentable floor area of the
Premises multiplied by the difference of (i) Building Costs per rentable square
foot less (ii) the Building Cost Base set forth in Item 7 of the Basic Lease
Provisions. Tenant acknowledges Landlord's rights to make changes or additions
to the Building and/or Project from time to time pursuant to Section 6.5 below,
in which event the total rentable square footage within the Building and/or
Project may be adjusted. For convenience of reference, Property Taxes and
Building Costs may sometimes be collectively referred to as "Operating
Expenses."
(b) Commencing prior to the start of the first full "Expense
Recovery Period" of the Lease (as defined in Item 7 of the Basic Lease
Provisions), and prior to the start of each full or partial Expense Recovery
Period thereafter, Landlord shall give Tenant a written estimate of the amount
of Tenant's proportionate shares of Building Costs and Property Taxes for the
Expense Recovery Period or portion thereof. Commencing July 1, 1996, Tenant
shall pay the estimated amounts to Landlord in equal monthly installments, in
advance, with Basic Rent. If Landlord has not furnished its written estimate
for any Expense Recovery Period by the time set forth above, Tenant shall
continue to pay cost reimbursements at the rates established for the prior
Expense Recovery Period, if any; provided that when the new estimate is
delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued cost reimbursements based upon the new estimates. Landlord may from
time to time change the Expense Recovery Period to reflect a calendar year or a
new fiscal year of Landlord, as applicable, in which event Tenant's share of
Operating Expenses shall be equitably prorated for any partial year.
(c) Within one hundred twenty (120) days after the end of each
Expense Recovery Period, Landlord shall furnish to Tenant a statement showing
in reasonable detail the actual or prorated Property Taxes and Building
Costs incurred by Landlord during the period, and the parties shall within
thirty (30) days thereafter make any payment or allowance necessary to adjust
Tenant's estimated payments, if any, to Tenant's actual proportionate shares as
shown by the annual statement. If Tenant has not made estimated payments during
the Expense Recovery Period, any amount owing by Tenant pursuant to subsection
(a) above shall be paid to Landlord in accordance with Article XVI. If actual
Property Taxes or Building Costs allocable to Tenant during any Expense Recovery
Period are less than the Property Tax Base or the Building Cost Base,
respectively, Landlord shall not be required to pay the differential to Tenant.
Should Tenant fail to object in writing to Landlord's determination of actual
Operating Expenses within one (1) year following delivery of Landlord's expense
statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on the
parties.
(d) Even though the Lease has terminated and the Tenant has vacated
the Premises, when the final determination is made of Tenant's share of
Property Taxes and Building Costs for the Expense Recovery Period in which the
Lease terminates, Tenant shall upon notice pay the entire increase due over the
estimated expenses paid. Conversely, any overpayment made in the event expenses
decrease shall be rebated by Landlord to Tenant.
(e) If, at any time during any Expense Recovery Period, any one or
more of the Operating Expenses are increased to a rate(s) or amount(s) in
excess of the rate(s) or amount(s) used in calculating the estimated expenses
for the year, then Tenant's estimated share of Property Taxes or Building
Costs, as applicable, shall be increased for the month in which the increase
becomes effective and for all succeeding months by an amount equal to Tenant's
proportionate share of the increase. Landlord shall give Tenant written notice
of the amount or estimated amount of the increase, the month in which the
increase will become effective, Tenant's monthly share thereof and the months
for which the payments are due. Tenant shall pay the increase to Landlord as a
part of Tenant's monthly payments of estimated expenses as provided in
paragraph (b) above, commencing with the month in which effective.
(f) The term "Building Costs" shall include all expenses of
operation and maintenance of the Building and the Project, together with all
appurtenant Common Areas (as defined in Section 6.2), and shall include the
following charges by way of illustration but not limitation: water and sewer
charges; insurance premiums or reasonable premium equivalents should Landlord
elect to self-insure any risk that Landlord is authorized to insure hereunder;
license, permit, and inspection fees; heat; light; power; janitorial services;
repairs; air conditioning; supplies; materials; equipment; tools; tenant
services; programs instituted to comply with transportation management
requirements; amortization of capital investments reasonably intended to
produce a reduction in operating charges or energy conservation; amortization
of capital investments necessary to bring the Building into compliance with
applicable laws and building codes enacted subsequent to the completion of
construction of the Building (which amortization shall be based on the
reasonably estimated useful life of the applicable capital improvement and
shall not necessarily coincide with the depreciation period for such
improvement pursuant to applicable tax laws); labor; reasonably allocated wages
and salaries, fringe benefits, and payroll taxes for administrative and other
personnel directly applicable to the Building and/or Project, including both
Landlord's personnel and outside personnel; any expense incurred pursuant to
Sections 6.1, 6.2, 6.4, 7.2, and 10.2 and Exhibits B and C below; and a
reasonable overhead/management fee that shall be competitive with the fees
charged at comparable first-class office projects in the vicinity. It is
understood that Building Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord. The term "Property
Taxes" as used herein shall include the following: (i) all real estate taxes or
personal property taxes, as such property taxes may be reassessed from time to
time; and (ii) other taxes, documentary transfer fees, charges and assessments
which are levied with respect to this Lease or to the Building and/or the
Project, and any improvements, fixtures and equipment and other property of
Landlord located in the Building and/or the Project, except that general net
income and franchise taxes imposed against Landlord shall be excluded; and
(iii) any tax, surcharge or assessment which shall be levied in addition to or
in lieu of real estate or personal property taxes, other than taxes covered by
Article VIII; and (iv) costs and expenses incurred in contesting the amount or
validity of any Property Tax by appropriate proceedings. A copy of Landlord's
unaudited statement of expenses shall be
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made available to Tenant upon request. The Building Costs may be extrapolated by
Landlord to reflect at least ninety-five percent (95%) occupancy of the rentable
area of the Building.
(g) Notwithstanding the foregoing, Building Costs shall exclude the
following items:
(i) Costs of decorating, redecorating, or a special cleaning of any
tenant suite;
(ii) Wages, salaries, fees, and fringe benefits paid to executive
personnel or officers or partners of Landlord;
(iii) Any charge for depreciation of the Building or equipment and any
interest or other financing charge, except as otherwise authorized herein;
(iv) Any charge for Landlord's income taxes, excess profit taxes,
franchise taxes, or similar taxes on Landlord's business;
(v) All costs relating to activities for the solicitation and execution
of leases of space in the Building or Project;
(vi) All costs for which Tenant or any other tenant in the Project is
being charged other than pursuant to the Operating Expense clauses;
(vii) The cost of correcting material defects in the construction of
the Building or in the Building equipment;
(viii) The cost of any repair made by Landlord because of the total or
partial destruction of the Building or the condemnation of a portion of the
Building to the extent the cost of such repair exceeds Ten Thousand Dollars
($10,000.00) or, if the repair does not result from a loss covered by Landlord's
property insurance, One Hundred Thousand Dollars ($100,000.00);
(ix) Any increase in insurance premiums to the extent that such
increase is caused by or attributable to the use, occupancy or act of another
tenant;
(x) The cost of any items for which Landlord is reimbursed by Insurance
or otherwise compensated by parties other than tenants of the Project;
(xi) Except as specifically authorized above, the cost of any repairs,
alterations, additions, changes, replacement, and other items which under
generally accepted accounting principles are properly classified as capital
expenditures;
(xii) The cost of any removal, treatment or abatement of asbestos,
lead-based paint or any other hazardous substance or gas in the Building not
introduced by Tenant or its employee, representatives or contractors;
(xiii) Any operating expense representing an amount paid to a related
corporation, entity, or person which is in excess of the amount which would be
paid in the absence of such relationship;
(xiv) The cost of tools and equipment used initially in the
construction of the Building;
(xv) The cost of any work or service performed for or facilities
furnished to any tenant of the Project to a greater extent or in a manner more
favorable to such tenant than that available to Tenant without additional
charge;
(xvi) The cost of alterations of space in the Project leased to other
Tenants;
(xvii) The cost of overtime or other expense to Landlord in curing its
defaults or performing work expressly provided in this Lease to be borne at
Landlord's expense;
(xviii) Ground rent or similar payments to a ground lessor; and
(xix) Any material new expense category that was not included in the
Building Cost Base if (A) such expense is not then generally being incurred, and
passed through to tenants, by landlords of other first class high-rise office
projects in the vicinity, and (B) as the result of the inclusion of the expense,
total Building Costs exceed those of comparable first class office projects in
the vicinity.
(h) Provided Tenant is not then in default hereunder, Tenant shall have
the right to cause a certified public accountant to audit Landlord's Operating
Expenses not more than once during any Expense Recovery Period. Tenant shall
give notice to Landlord of Tenant's intent to audit within one (1) year after
Tenant's receipt of Landlord's expense statement which sets forth Landlord's
actual Operating Expenses. Such audit shall be conducted at a mutually agreeable
time during normal business hours at the office of Landlord or its management
agent where the records are maintained. If Tenant's audit determines that actual
Operating Expenses have been overstated by more than five percent (5%), then
subject to Landlord's right to review and/or contest the audit results, Landlord
shall reimburse Tenant for the reasonable out-of-pocket costs of such audit.
Tenant's rent shall be appropriately adjusted to reflect any overstatement in
Operating Expenses. In addition, if any component of Operating Expenses is
determined to be either inappropriate or excessive during an Expense Recovery
Period, and if the Building Cost Base or Property Tax Base also included such
component, than the appropriate Base shall concurrently be adjusted if and to
the extent appropriate. In
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the event of a dispute between Landlord and Tenant regarding the results of such
audit, either party may elect to submit the matter for binding arbitration with
JAMS/ENDISPUTE or its successor in Orange County, California. All of the
information obtained by Tenant and/or its auditor in connection with such
audit, as well as any compromise, settlement, or adjustment reached between
Landlord and Tenant as a result thereof, shall be held in strict confidence
and, except as may be required pursuant to litigation, shall not be disclosed
to any third party, directly or indirectly, by Tenant or its auditor or any of
their officers, agents or employees. Landlord may require Tenant's auditor to
execute a separate confidentiality agreement affirming the foregoing as a
condition precedent to any audit. In the event of a violation of this
confidentiality covenant in connection with any audit, then in addition to any
other legal or equitable remedy available to Landlord, Tenant shall have no
further audit rights under this Lease.
SECTION 4.3. SECURITY DEPOSIT.
(a) Concurrently with Tenant's delivery of this Lease,
Tenant shall deposit with Landlord the sum stated in Item 9 of the Basic Lease
Provisions (the "Security Deposit") to be held by Landlord as security for the
full and faithful performance of Tenant's obligations under this Lease to pay
any rent as and when due, including without limitation such additional rent as
may be owing under any provision hereof, and to maintain the Premises as
required by Sections 7.1 and 15.3. Upon any breach of those obligations by
Tenant, Landlord may apply all or part of the Security Deposit (or any accrued
interest thereon as described below) as full or partial compensation. If any
portion of the principal amount of the Security Deposit is so applied, Tenant
shall within five (5) days after written demand by Landlord deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its
pre-existing amount. Except as otherwise provided in subsection (b) below,
Landlord shall not be required to keep this Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on the Security
Deposit. If Tenant fully performs its obligations under this Lease, the
Security Deposit or any balance thereof shall be returned to Tenant or, at
Landlord's option, to the last assignee of Tenant's interest in this Lease.
(b) From the total Security Deposit stated in Item 9 of
the Basic Lease Provisions, Landlord shall segregate the sum of Eighty-One
Thousand Four Hundred Fifty-Five Dollars ($81,455.00) (the "Segregated
Portion"). The Segregated Portion shall be deposited by Landlord into an
interest bearing account and shall accrue interest for the benefit of Landlord
during the Term of this Lease. In the event of a default by Tenant, Landlord
may elect to utilize any accrued interest to cure any such default before
applying the principal balance of the Security Deposit. Provided Tenant has not
been in default under the Lease, Landlord shall return the Segregated Portion
of the Security Deposit to Tenant upon the earlier of: (i) four (4) years
following the Commencement Date of the Lease; or (ii) at such time as Tenant
has sold its common stock pursuant to a public offering and has attained a net
worth of not less than Ten Million Dollars ($10,000,000.00) as evidenced by
audited financial statements provided to Landlord. In the event the Segregated
Portion of the Security Deposit is returned early to Tenant as set forth in the
preceding sentence, then Tenant shall be afforded a credit against the Basic
Rent next payable under this Lease in the amount of the accrued interest earned
by Landlord on the Segregated Portion.
ARTICLE V. USES
SECTION 5.1. USE. Tenant shall use the Premises only for the
purposes stated in Item 3 of the Basic Lease Provisions. The parties agree that
any contrary use shall be deemed to cause material and irreparable harm to
Landlord and shall entitle Landlord to injunctive relief in addition to any
other available remedy. Tenant shall not do or permit anything to be done in
or about Premises which will in any way interfere with the rights or quiet
enjoyment of other occupants of the Building or the Project, or use or allow
the Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises or the Project. Tenant shall not
do or permit to be done anything which will invalidate or increase the cost of
any insurance policy(ies) covering the Building, the Project and/or their
contents, and shall comply with all applicable insurance underwriters rules
and the requirements of the Pacific Fire Rating Bureau or any other
organization performing a similar function. Tenant shall comply at its expense
with all present and future laws, ordinances and requirements of all
governmental authorities that pertain to Tenant or its use of the Premises,
including without limitation all federal and state occupational health and
safety and handicap access requirements, whether or not Tenant's compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises; provided, however, that should a capital expenditure be required to
effect compliance with any such legal requirement, then such expenditure shall
be the responsibility of Landlord (subject to inclusion in Building Costs
pursuant to Section 4.2) if and only if the requirement applies to office
users generally and not to Tenant's specific use of the Premises. Tenant shall
not generate, handle, store or dispose of hazardous or toxic materials (as such
materials may be identified in any federal, state or local law or regulation)
in the Premises or Project without the prior written consent of Landlord;
provided that the foregoing shall not be deemed to proscribe the use by Tenant
of customary office supplies in normal quantities so long as such use comports
with all applicable laws. Tenant agrees that it shall promptly complete and
deliver to Landlord any disclosure form regarding hazardous or toxic materials
that may be required by any governmental agency, provided such disclosure form
either relates to materials introduced by Tenant or is otherwise required to be
completed by a tenant rather than a landlord. Tenant shall also, from time to
time upon request by Landlord, execute such affidavits concerning Tenant's best
knowledge and belief regarding the presence of hazardous or toxic materials in
the Premises. Landlord shall have the right at any time to perform an
assessment of the environmental condition of the Premises and of Tenant's
compliance with this Section. As part of any such assessment, Landlord shall
have the right, upon reasonable prior notice to Tenant, to enter and inspect
the Premises and to perform tests (including physically invasive tests),
provided those tests are performed in a manner that minimizes disruption to
Tenant. Tenant will cooperate with Landlord in connection with any assessment
by, among other things, promptly responding to inquiries and providing relevant
documentation and records. Landlord shall have no liability to Tenant with
respect to the results of any such assessments, inspections or tests. The
reasonable cost of the assessment/testing shall be reimbursed by Tenant to
Landlord if such assessment/testing determines that Tenant failed to comply
with the requirements of this Section, and in that event Tenant shall accept
custody and arrange for the disposal of any hazardous materials found in the
test samples. In all events, Tenant shall indemnify Landlord in the manner
elsewhere provided in this Lease from any release of hazardous or toxic
materials caused by Tenant, its agents, employees, contractors, subtenants or
licensees. Landlord represents that to the best of
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Landlord's knowledge, there are no hazardous or toxic materials (other than
normal maintenance, janitorial and office supplies) on or under the Project;
should any such materials be discovered, and should Landlord be required to
remediate them, then so long as the materials were not introduced by Tenant or
its agents, employees, subtenants, or contractors, Landlord shall do so at its
expense and shall indemnify, defend and hold Tenant harmless from any
liability, cost or expense in connection therewith. The foregoing covenants
shall survive the expiration or earlier termination of this Lease.
SECTION 5.2. SIGNS.
(a) Tenant, upon obtaining the approval of Landlord in
writing, may affix a sign (restricted solely to Tenant's name as set forth
herein or "SM&A" or such other name as Landlord may consent to in writing) in
the eighth floor elevator lobby or adjacent to the entry door of the Premises
and shall maintain the sign in good condition and repair during the Term. The
sign shall conform to the criteria for signs established by Landlord and shall
be ordered through Landlord. Landlord shall also make available signage for
Tenant in its lobby tenant directory, provided that the cost of directory
strips shall be borne by Tenant. Tenant shall not place or allow to be placed
any other sign, decoration or advertising matter of any kind that is visible
from the exterior of the Premises. Any violating sign or decoration may be
immediately removed by Landlord at Tenant's expense without notice and without
the removal constituting a breach of this Lease or entitling Tenant to claim
damages.
(b) Tenant shall have the right to install one line of
signage in the third position on the north block monument sign at the Building,
which signage shall consist only of the name "Xxxxxxx Xxxxx Assoc." or SM&A".
The type, location and design of such signage shall be subject to Landlord's
prior written approval and shall be subject to the MacArthur Court Sign
Criteria. Fabrication and installation of such signage shall be at Tenant's sole
cost and expense. Except for the foregoing, no sign, advertisement or notice
visible from the exterior of the Premises shall be inscribed, painted or affixed
by Tenant on any part of the Premises without the prior consent of Landlord.
Tenant's signage right shall belong solely to Xxxxxx Xxxxx & Associates, Inc., a
California corporation and may not be transferred or assigned without Landlord's
prior written consent, which may be withheld by Landlord in Landlord's sole
discretion. In the event Tenant, exclusively or any subtenant(s), fails to
occupy the entire Premises, then Tenant shall, within thirty (30) days following
notice from Landlord, remove the monument signage at Tenant's expense. Tenant
shall also remove such signage promptly following the expiration or earlier
termination of this Lease. Any such removal shall be at Tenant's sole expense,
and Tenant shall bear the cost of any resulting repairs to the monument sign
that are reasonably necessary due to the removal.
ARTICLE VI. LANDLORD SERVICES
SECTION 6.1. UTILITIES AND SERVICES. Landlord shall furnish to the
Premises the utilities and services described in Exhibit B, subject to the
conditions and payment obligations and standards set forth in this Lease.
Landlord shall not be liable for any failure to furnish any services or
utilities when the failure is the result of any accident or other cause beyond
Landlord's reasonable control, nor shall Landlord be liable for damages
resulting from power surges or any breakdown in telecommunications facilities
or services. Landlord's temporary inability to furnish any services or
utilities shall not entitle Tenant to any damages, relieve Tenant of the
obligation to pay rent or constitute a constructive or other eviction of
Tenant, except that Landlord shall diligently attempt to restore the service or
utility promptly. Tenant shall comply with all rules and regulations which
Landlord may reasonably establish for the provision of services and utilities,
and shall cooperate with all reasonable conservation practices established by
Landlord. Landlord shall at all reasonable times have free access to all
electrical and mechanical installations of Landlord. Notwithstanding the
foregoing, however, in the event a utility interruption renders the Premises
untenantable for more than five (5) consecutive business days except as the
result of Tenant's negligence or any casualty event governed by Article XI,
then Tenant's rent shall xxxxx from and after the sixth business day until the
utility is restored.
SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the
Term, Landlord shall operate and maintain in good condition and repair all
Common Areas within the Building and the Project. The term "Common Areas" shall
mean all areas within the Building and other buildings in the Project which are
not held for exclusive use by persons entitled to occupy space, and all other
appurtenant areas and improvements provided by Landlord for the common use of
Landlord and tenants and their respective employees and invitees, including
without limitation parking areas and structures, driveways, sidewalks,
landscaped and planted areas, hallways and interior stairwells not located
within the premises of any tenant, common entrances and lobbies, elevators, and
restrooms not located within the premises of any tenant.
SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the
Premises shall include the use of the Common Areas in common with Landlord and
with all others for whose convenience and use the Common Areas may be provided
by Landlord, subject, however, to compliance with all rules and regulations as
are prescribed from time to time by Landlord. Landlord shall at all times
during the Term have exclusive control of the Common Areas, and may restrain
any use or occupancy, except as authorized by Landlord's rules and regulations.
Tenant shall keep the Common Areas clear of any obstruction or unauthorized use
related to Tenant's operations. Landlord may temporarily close any portion of
the Common Areas for repairs, remodeling and/or alterations, to prevent a
public dedication or the accrual of prescriptive rights, or for any other
reasonable purpose.
SECTION 6.4. PARKING. Landlord hereby leases to Tenant, and Tenant
hereby agrees to lease from Landlord for the term of this Lease, the number of
reserved vehicle parking spaces set forth in Item 12 of the Basic Lease
Provisions and up to the number of unreserved spaces set forth in Item 12.
Notwithstanding the foregoing, Tenant agrees that it shall commit to lease, for
the remainder of the Term, the number of unreserved spaces that Tenant or its
employees are actually leasing as of the end of the sixth (6th) month of the
Term; any additional spaces shall thereafter be subject to their availability
as determined by Landlord. The parking spaces shall be provided in accordance
with the provisions set forth in Exhibit C to this Lease.
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SECTION 6.5 CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. No change shall entitle Tenant
to any abatement of rent or other claim against Landlord, provided that the
change does not deprive Tenant of reasonable access to or use of the Premises,
does not materially adversely affect Tenant's parking rights, and does not
materially impair the visibility of Tenant's monument sign.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall make all repairs necessary to keep the Premises in the condition as
existed on the Commencement Date (or on any later date that the improvements
may have been installed), excepting ordinary wear and tear. All repairs shall
be at least equal in quality to the original work, shall be made only by a
licensed, bonded contractor approved in writing in advance by Landlord and
shall be made only at the time or times approved by Landlord. Any contractor
utilized by Tenant shall be subject to Landlord's standard requirements for
contractors, as modified from time to time. Landlord may impose reasonable
restrictions and requirements with respect to repairs, as provided in Section
7.3, and the provisions of Section 7.4 shall apply to all repairs.
Alternatively, Landlord may elect to make any such repair on behalf of Tenant
and at Tenant's expense, and Tenant shall promptly reimburse Landlord as
additional rent for all costs incurred upon submission of an invoice.
SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR.
(a) Subject to Section 7.1 and Article XI, Landlord shall
provide service, maintenance and repair with respect to any air conditioning,
ventilating or heating equipment which serves the Premises (exclusive of any
supplemental HVAC equipment installed by or at the request of Tenant) and shall
maintain in good repair the roof, foundations, footings, the exterior surfaces
of the exterior walls of the Building, and the structural, electrical and
mechanical systems, except that Tenant at its expense shall make all repairs
which Landlord deems reasonably necessary as a result of the act or negligence
of Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord's affiliates or
divisions, to perform any service, repair or maintenance function. Landlord
need not make any other improvements or repairs except as specifically required
under this Lease, and nothing contained in this Section shall limit Landlord's
right to reimbursement from Tenant for maintenance, repair costs and
replacement costs as provided elsewhere in this Lease. Tenant understands that
it shall not make repairs at Landlord's expense or by rental offset.
(a) Except as provided in Sections 11.1 and 12.1 below, there
shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interfere with Tenant's business arising from the making of any
repairs, alterations or improvements to any portion of the Building, including
repairs to the Premises, nor shall any related activity by Landlord constitute
an actual or constructive eviction; provided, however, that in making repairs,
alterations or improvements, Landlord shall interfere as little as reasonably
practicable with the conduct of Tenant's business in the Premises.
SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises without the prior written consent of Landlord.
Landlord's consent shall not be unreasonably withheld as long as the proposed
changes do not affect the structural, electrical or mechanical components or
systems of the Building and are not visible from the exterior of the Premises.
Landlord may impose, as a condition to its consent, any requirements that
Landlord in its discretion may deem reasonable or desirable, including but not
limited to a requirement that all work be covered by a lien and completion bond
satisfactory to Landlord and requirements as to the manner, time, and
contractor for performance of the work. Without limiting the generality of the
foregoing, Tenant shall use Landlord's designated mechanical and electrical
contractors for all work affecting the mechanical or electrical systems of the
Building. Tenant shall obtain all required permits for the work and shall
perform the work in compliance with all applicable laws, regulations and
ordinances, and Landlord shall be entitled to a supervision fee in the amount
of five percent (5%) of the cost of the work. Under no circumstances shall
Tenant make any improvement which incorporates asbestos-containing construction
materials into the Premises. Any request for Landlord's consent shall be made
in writing and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord. Unless Landlord otherwise agrees in
writing, all alterations, additions or improvements affixed to the Premises
(excluding moveable trade fixtures and furniture) shall become the property of
Landlord and shall be surrendered with the Premises at the end of the Term,
except that Landlord may, by notice to Tenant given at the time of Landlord's
consent to the alteration or improvement, require Tenant to remove by the
Expiration Date, or sooner termination date of this Lease, all or any
alterations, decorations, fixtures, additions, improvements and the like
installed either by Tenant or by Landlord at Tenant's request and to repair any
damage to the Premises arising from that removal. Landlord may require Tenant
to remove an improvement provided as part of the initial build-out pursuant to
Exhibit X, if any, if and only if the improvement is a non-building standard
item and Tenant is notified of the requirement prior to the build-out. Except
as otherwise provided in this Lease or in any Exhibit to this Lease, should
Landlord make any alteration or improvement to the Premises at the request of
Tenant, Landlord shall be entitled to prompt reimbursement from Tenant for all
costs incurred.
SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free from
any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall
promptly cause any such lien to be released by posting a bond in accordance
with California Civil Code Section 3143 or any successor statute. In the
event that Tenant shall not, within thirty (30) days following the imposition
of any lien, cause the lien to be released of record by payment or posting of a
proper bond, Landlord shall have, in addition to all other available remedies,
the right to cause the lien to be released by any means it deems proper,
including payment of or defense against the claim giving rise to the lien. All
expenses so incurred by Landlord's attorney's fees, shall be reimbursed by
Tenant promptly following Landlord's demand, together with interest from the
date of payment by Landlord at the maximum rate permitted by law until paid.
Tenant shall give Landlord no less than twenty (20) days' prior notice in
writing before commencing construction of any kind on the Premises so that
Landlord may post and maintain notices of nonresponsibility on the Premises.
SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable
times have the right to enter the Premises to inspect them, to supply services
in accordance with this Lease, to protect the interests of Landlord in the
Premises, to make repairs and renovations as reasonably deemed necessary by
Landlord, and submit the Premises to prospective or actual purchasers or
encumbrance holders (or, during the last one hundred and eighty (180) days of
the Term or when an uncured Tenant default exists, to prospective tenants), all
without being deemed to have caused an eviction of Tenant and without abatement
of rent except as provided elsewhere in this Lease. Landlord shall at all times
have and retain a key which unlocks all of the doors in the Premises,
excluding Tenant's vaults and safes, and Landlord shall have the right to use
any and all means which Landlord may deem proper to open the doors in an
emergency in order
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to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord shall not under any circumstances be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant
from the Premises.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY
Tenant shall be liable for and shall pay before delinquency, all taxes and
assessments levied against all personal property of Tenant located in the
Premises. When possible Tenant shall cause its personal property to be assessed
and billed separately from the real property of which the Premises form a part.
If any taxes on Tenant's personal property are levied against Landlord or
Landlord's property and if Landlord pays the same, or if the assessed value of
Landlord's property is increased by the inclusion of a value placed upon the
personal property of Tenant and if Landlord pays the taxes based upon the
increased assessment, Tenant shall pay to Landlord the taxes so levied against
Landlord or the proportion of the taxes resulting from the increase in the
assessment.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1. RIGHTS OF PARTIES.
(a) Notwithstanding any provision of this Lease to the contrary,
Tenant will not, either voluntarily or by operation of law, assign, sublet,
encumber, or otherwise transfer all or any part of Tenant's interest in this
lease, or permit the Premises to be occupied by anyone other than Tenant,
without Landlord's prior written consent, which consent shall not unreasonably
be withheld in accordance with the provisions of Section 9.1.(c). Landlord
hereby approves a subletting of a portion of the Premises to Summit Aviation,
Inc., a California corporation, a wholly-owned subsidiary of Tenant. No other
assignment (whether voluntary, involuntary or by operation of law) or
subletting shall be valid or effective without Landlord's prior written consent
and, at Landlord's election, shall constitute a material default of this Lease.
Landlord shall not be deemed to have given its consent to any assignment or
subletting by any other course of action, including its acceptance of any name
for listing in the Building directory. To the extent not prohibited by
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord's standard for consent as set forth
in Section 9.1(c) of this Lease. If this Lease is assigned to any person or
entity pursuant to the provisions of the Bankruptcy Code, any and all monies or
other considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord
an instrument confirming that assumption.
(b) If Tenant or any guarantor of Tenant ("Tenant's Guarantor") is a
corporation, or is an unincorporated association or partnership, the transfer of
any stock or interest in the corporation, association or partnership which
results in a change in the voting control of Tenant or Tenant's Guarantor, if
any, shall be deemed an assignment within the meaning and provisions of this
Article. In addition, any change in the status of the entity, such as, but not
limited to, the withdrawal of a general partner, shall be deemed an assignment
within the meaning of this Article.
(c) If Tenant desires to transfer an interest in this Lease, it shall
first notify Landlord of its desire and shall submit in writing to Landlord: (i)
the name and address of the proposed transferee; (ii) the nature of any proposed
subtenant's or assignee's business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment; and (iv) any other
information requested by Landlord and reasonably related to the transfer. Except
as provided in Subsection (d) of this Section, Landlord shall not unreasonably
withhold its consent, provided: (1) the use of the Premises will be consistent
with the provisions of this Lease and with Landlord's commitment to other
tenants of the Building and Project; (2) fifty percent (50%) of any excess rent
received by the Tenant from the assignment or subletting, whether during or
after the Term of this Lease, shall be paid to Landlord when received after
amortizing and deducting the out-of-pocket costs (i.e., tenant improvements,
brokerage commissions, and the like) incurred by Tenant in effecting the
transfer; (3) any proposed subtenant or assignee demonstrates that it is
financially responsible by submission to Landlord of all reasonable information
as Landlord may request concerning the proposed subtenant or assignee,
including, but not limited to, a balance sheet of the proposed subtenant or
assignee as of a date within ninety (90) days of the request for Landlord's
consent and statements of income or profit and loss of the proposed subtenant or
assignee for the two-year period preceding the request for Landlord's consent;
(4) any proposed subtenant or assignee demonstrates to Landlord's reasonable
satisfaction a record of successful experience in business; (5) the proposed
assignee or subtenant is neither an existing tenant of the Building or Project
nor a prospective tenant with whom Landlord is then actively negotiating; and
(6) the proposed transfer will not impose additional burdens or adverse tax
effects on Landlord. If Landlord consents to the proposed transfer, Tenant may
within ninety (90) days after the date of the consent effect the transfer upon
the terms described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set forth
in this Section. Landlord shall approve or disapprove any requested transfer
within thirty (30) days following receipt of Tenant's written request and the
information set forth above. Tenant shall pay to Landlord a transfer fee of Five
Hundred Dollars ($500.00) if and when any transfer requested by Tenant is
approved.
(d) Notwithstanding the provisions of Subsection (c) above, in lieu
of consenting to a proposed assignment or subletting, Landlord may elect to
(i) sublease the Premises (or the portion proposed to be subleased), or take an
assignment of Tenant's interest in this Lease, upon the same terms as offered to
the proposed subtenant or assignee (excluding terms relating to the purchase of
personal property, the use of Tenant's name or the continuation of Tenant's
business), or (ii) terminate this Lease as to the portion of the Premises
proposed to be subleased or assigned with a proportionate abatement in the rent
payable under this Lease, effective on the date that the proposed sublease or
assignment would have become effective. Landlord may thereafter, at its option,
assign or re-let any space so recaptured to any third party, including without
limitation the proposed transferee or Tenant. Notwithstanding the foregoing,
however, should Landlord exercise its right of recapture pursuant to this
subsection, Tenant may, within five (5) business days following delivery of
Landlord's recapture notice, elect by written notice to rescind Tenant's
request to sublease or assign this Lease, in which event Landlord's recapture
election shall be null and void.
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(e) Notwithstanding Article IX or anything to the contrary
contained herein, Tenant shall have the right, without Landlord's consent but
with prior written notice to Landlord, to assign this Lease or sublet all of
the Premises for the then remaining term of this Lease to any of the following
entities ("Tenant Affiliate"); (a) any corporation which owns one hundred
percent (100%) of Tenant's stock (Tenant's parent); (b) any corporation in which
Tenant owns one hundred percent (100%) of the stock hereof (Tenant's
subsidiary); (c) any company which directly or indirectly has a controlling
interest in Tenant or in which Tenant has a controlling interest; (d) a
corporation which succeeds to the assets or business of Tenant or Tenant's
parent as a result of merger or consolidation; or (e) a corporation or other
business entity acquiring all or substantially all of Tenant's assets or capital
stock. No such assignment, sublease or other transfer shall release the original
Tenant or any assigns thereof from liability under this Lease, except that a
Tenant/assignor shall be released in the event of merger or consolidation
involving that Tenant/assignor where such party is not the surviving entity and
the survivor assumes liability hereunder.
SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even
with the consent of Landlord, shall relieve Tenant, or any successor-in-interest
to Tenant hereunder, of its obligation to pay rent and to perform all its other
obligations under this Lease. Moreover, Tenant shall indemnify and hold Landlord
harmless, as provided in Section 10.3, for any act or omission by an
assignee or subtenant. Each assignee, other than Landlord, shall be deemed to
assume all obligations of Tenant under this Lease and shall be liable jointly
and severally with Tenant for the payment of all rent, and for the due
performance of all of Tenant's obligations under this Lease. Such joint and
several liability shall not be discharged or impaired by any subsequent
modification or extension of this Lease; provided that no subsequent
modification shall increase the financial liability of a prior transferor
unless such modification either memorializes the exercise of an option existing
at the time of the transfer or is otherwise agreed to in writing by the
transferor. No transfer shall be binding on a Landlord unless any document
memorializing the transfer is delivered to Landlord and both the
assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements of
this Article. The acceptance by Landlord of any payment due under this Lease
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any transfer. Consent by Landlord
to one or more transfers shall not operate as a waiver or estoppel to the
future enforcement by Landlord of its rights under this Lease. In addition to
the foregoing, no change in the status of Tenant or any party jointly and
severally liable with Tenant as aforesaid (e.g., by conversion to a limited
liability company or partnership) shall serve to abrogate the liability of any
person or entity for the obligations of Tenant, including any obligations that
may be incurred by Tenant after the status change by exercise of a
pre-existing right in this Lease.
SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be included in each sublease:
(a) Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default occurs
in the performance of Tenant's obligations under this Lease, Tenant shall have
the right to receive and collect the sublease rentals. Landlord shall not, by
reason of this assignment or the collection of sublease rentals, be deemed
liable to the subtenant for the performance of any of Tenant's obligations
under the sublease. Tenant hereby irrevocably authorizes and directs any
subtenant, upon receipt of a written notice from Landlord stating that an
uncured default exists in the performance of Tenant's obligations under this
Lease, to pay to Landlord all sums then and thereafter due under the sublease.
Tenant agrees that the subtenant may rely on that notice without any duty of
further inquiry and notwithstanding any notice or claim by Tenant to the
contrary. Tenant shall have no right or claim against the subtenant or Landlord
for any rentals so paid to Landlord. In the event Landlord collects amounts from
subtenants that exceed the total amount then due from Tenant hereunder,
Landlord shall promptly remit the excess to Tenant.
(b) In the event of the termination of this Lease, Landlord may, at
its sole option, take over Tenant's entire interest in any sublease and, upon
notice from Landlord, the subtenant shall attorn to Landlord. In no event,
however, shall Landlord be liable for any previous act or omission by Tenant
under the sublease or for the return of any advance rental payments or deposits
under the sublease that have not been actually delivered to Landlord, nor shall
Landlord be bound by any sublease modification executed without Landlord's
consent or for any advance rental payment by the subtenant in excess of one
month's rent. The general provisions of this Lease, including without
limitation those pertaining to insurance and indemnification, shall be deemed
incorporated by reference into the sublease despite the termination of this
Lease.
(c) Tenant agrees that Landlord may, at its sole option, authorize a
subtenant of the Premises to cure a default by Tenant under this Lease. Should
Landlord accept such cure, the subtenant shall have a right of reimbursement
and offset from and against Tenant under the applicable sublease.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.
SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election,
provide any or all of the following types of insurance, with or without
deductible and in amounts and coverages as may be determined by Landlord in its
discretion: "all risk" property insurance, subject to standard exclusions,
covering the Building or Project, and such other risks as Landlord or its
mortgagees may from time to time deem appropriate, and commercial general
liability coverage. Landlord shall not be required to carry insurance of any
kind on Tenant's trade fixtures, furnishings, equipment, signs and all other
items of personal property, and shall not be obligated to repair or replace
that property should damage occur; provided that Landlord's property insurance
policy shall cover building standard tenant improvement, which improvements
shall at all times by owned by Landlord. All proceeds of insurance maintained by
Landlord upon the Building and Project shall be the property of Landlord,
whether or not Landlord is obligated to or elects to make any repairs.
SECTION 10.3. INDEMNITY.
(a) To the fullest extent permitted by law, but subject to Section
10.5, Tenant shall defend, indemnify and hold harmless Landlord, its agents,
lenders, and any and all affiliates of Landlord, from and against any and all
claims, liabilities, costs or expenses arising either before or after the
Commencement Date from Tenant's use or occupancy of the Premises, the Building
or the Common Areas, or from the conduct of its business, or from any activity,
work, or thing done, permitted or suffered by Tenant or its agents, employees,
subtenants, invitees or licensees in or about
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the Premises, the Building or the Common Areas, or from any default in the
performance of any obligation on Tenant's part to be performed under this
Lease, or from any act or negligence of Tenant or its agents, employees,
subtenants, invitees or licensees. Landlord may, at its option, require Tenant
to assume Landlord's defense in any action covered by this Section through
counsel reasonably satisfactory to Landlord.
(b) To the fullest extent permitted by law, but subject to Sections
10.4 and 10.5, Landlord shall indemnify and hold harmless Tenant from and
against any and all claims, liabilities, costs or expenses arising either
before or after the Commencement Date from any default in the performance of
Landlord's obligations hereunder or from the negligent or willful misconduct of
Landlord or its agents or employees.
SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord, its employees and agents for loss of or damage to any
property, or any injury to any person, or loss or interruption of business or
income, resulting from any condition including, but not limited to, fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak or flow from or into any part of the Premises or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building. It is understood that any
such condition may require the temporary evacuation or closure of all or a
portion of the Building. Should Tenant elect to receive any service from a
concessionaire, licensee or third party tenant of Landlord, Tenant shall not
seek recourse against Landlord for any breach or liability of that service
provider. Neither Landlord nor its agents shall be liable for interference with
light or other similar intangible interests. Tenant shall immediately notify
Landlord in case of fire or accident in the Premises, the Building or the
Project and of defects in any improvements or equipment.
SECTION 10.5. WAIVER OF SUBROGATION. Each party hereby agrees to waive
any right of recovery against the other party for any damage to or loss of the
property of the waiving party to the extent such damage or loss is covered by a
property insurance policy carried by the waiving party. Each party further
agrees to cause its property insurance policy to provide for or authorize a
waiver of subrogation in favor of the other party hereto.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1. RESTORATION.
(a) If the Building of which the Premises are a part is damaged as
the result of an event of casualty, Landlord shall repair that damage as soon
as reasonably possible unless: (i) Landlord reasonably determines that the cost
of repair would exceed ten percent (10%) of the full replacement cost of the
Building ("Replacement Cost") and the damage is not covered by Landlord's fire
and extended coverage insurance (or by a normal extended coverage policy should
Landlord fail to carry that insurance); or (ii) Landlord reasonably determines
that the cost of repair would exceed twenty-five percent (25%) of the
Replacement Cost; or (iii) Landlord reasonably determines that the cost of
repair would exceed ten percent (10%) of the Replacement Cost and the damage
occurs during the final twelve (12) months of the Term. Should Landlord elect
not to repair the damage for one of the preceding reasons, Landlord shall so
notify Tenant in the "Casualty Notice" (as defined below), and this Lease shall
terminate as of the date of delivery of that notice.
(b) As soon as reasonably practicable following the casualty event
but not later than sixty (60) days thereafter, Landlord shall notify Tenant in
writing ("Casualty Notice") of Landlord's election, if applicable, to terminate
this Lease. If this Lease is not so terminated, the Casualty Notice shall set
forth the anticipated period for repairing the casualty damage. If the
anticipated repair period exceeds the period (the "Maximum Period") that
commences on the date of the casualty and extends thereafter for two hundred
(210) days (or ninety (90) days if the casualty occurs during the final twelve
months of the Lease Term, as the Term may have been extended), and if the
damage is so extensive as to reasonably prevent Tenant's substantial use and
enjoyment of the Premises, then Tenant may elect to terminate this Lease by
written notice to Landlord within ten (10) days following delivery of the
Casualty Notice. In the event this Lease is not terminated by either party,
Landlord shall update Tenant monthly on its current construction schedule for
the repair work. If the anticipated repair period as set forth in the Casualty
Notice is less than the Maximum Period but Landlord determines subsequently
that the actual repair period will exceed the Maximum Period, then Landlord
shall so notify Tenant and Tenant may, within five (5) business days
thereafter, elect to terminate this Lease by written notice to Landlord;
otherwise, the Maximum Period shall be deemed extended as set forth in
Landlord's notice. Conversely, should Tenant at any time reasonably determine
that Landlord will be unable to substantially complete the repair work within
the Maximum Period (as the Maximum Period may be extended as set forth above),
then subject to Landlord's right to contest that determination by arbitration
pursuant to Section 14.7, Tenant may elect to terminate this Lease by written
notice to Landlord.
(c) Except for Tenant's obligation to pay for its proportionate
share of Landlord's cost of repair as part of Operating Expenses (subject to
the limitation set forth in Section 4.2(g) above), the rental to be paid under
this Lease shall be abated in the same proportion that the floor area of the
Premises that is rendered unusable by the damage from time to time bears to the
total floor area of the Premises.
(d) Notwithstanding the provisions of subsections (a), (b) and (c)
of this Section, but subject to Section 10.5 above, the cost of any repairs
shall be borne by Tenant, and Tenant shall not be entitled to rental abatement
or termination rights, if the damage is due to the fault or neglect of Tenant
or its employees, subtenants, invitees or representatives. In addition, the
provisions of this Section shall not be deemed to require Landlord to repair
any improvements or fixtures that Tenant is obligated to repair or insure
pursuant to any other provision of this Lease.
SECTION 11.2 LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1 TOTAL OR PARTIAL TAKING. If all or a material portion of
the Premises or the parking structure for the Project is taken by any lawful
authority by exercise of the right of eminent domain, or sold to prevent a
taking, either Tenant or Landlord may terminate this Lease effective as of the
date possession is required to be surrendered to the authority. In the event
title to a portion of the Building or Project, other than the Premises, is
taken or sold in lieu of
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taking, and if Landlord elects to restore the Building in such a way as to
alter the Premises materially, either party may terminate this Lease, by
written notice to the other party, effective on the date of vesting of title.
In the event neither party has elected to terminate this Lease as provided
above, then Landlord shall promptly, after receipt of a sufficient condemnation
award, proceed to restore the Premises and Common Areas to substantially their
condition prior to the taking, and a proportionate allowance shall be made to
Tenant for the rent corresponding to the time during which, and to the part of
the Premises of which, Tenant is deprived on account of the taking and
restoration. In the event of a taking, Landlord shall be entitled to the entire
amount of the condemnation award without deduction for any estate or interest
of Tenant; provided that nothing in this Section shall be deemed to give
Landlord any interest in, or prevent Tenant from seeking any award against the
taking authority for, the taking of personal property and fixtures belonging to
Tenant or for relocation or business interruption expenses recoverable from the
taking authority.
SECTION 12.2 TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease, and any award specifically attributable to a temporary
taking of the Premises shall belong entirely to Landlord. A temporary taking
shall be deemed to be a taking of the use or occupancy of the Premises for a
period of not to exceed ninety (90) days. Landlord agrees that Tenant's rent
shall xxxxx during any temporary taking of the Premises.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE
SECTION 13.1 SUBORDINATION. Tenant agrees that this Lease and its other
interests, if any, in the Project are and shall be subordinate to any first
lien now of record affecting the Premises and, if the holder of such first lien
also holds a second lien now of record affecting the Premises, to such second
lien (such first lien and such second lien, if any, being hereinafter
collectively called the "Prior Lien"), to any and all advances made or to be
made under the Prior Lien, to the interest on all obligations secured by the
Prior Lien, to all other sums secured or to be secured thereby, including
without limitation attorneys' fees, taxes and insurance premiums, and to all
renewals, replacements, extensions and modifications of the Prior Lien. Tenant
further agrees that this Lease and its other interests, if any, in the Project
shall be subordinate to any first lien that may hereafter be placed on the
Premises, to any and all advances made or to be made under such first lien, to
the interest on all obligations secured by such first lien, and to all
renewals, replacements, extensions and modifications of such first lien,
provided that the holder of such first lien delivers to Tenant an agreement by
such lien holder that Tenant's rights and interests with respect to the
Premises and the Project shall not be impaired or disturbed by foreclosure or
other enforcement or other enforcement of such first lien except as expressly
permitted under this Lease or any related agreement between Landlord and Tenant
with respect to the Project. The holder of any lien described above ("Lien
Holder"), at any time prior to foreclosure or other enforcement of its lien(s),
may elect to subordinate such lien(s) to this Lease by recording a
subordination agreement effecting such subordination and delivering a copy
thereof to Tenant at the address set forth in this Lease. The failure of any
Lien Holder to include Tenant in a judicial foreclosure action or the election
by such Lien Holder to foreclose non-judicially its encumbrance on Landlord's
reversionary interest in the Premises under this Lease only, expressly
excluding Tenant's leasehold estate under this Lease, shall be deemed (i) an
election by such Lien Holder not to impair or disturb Tenant's rights and
interests with respect to the Premises and the Project except as expressly
permitted under this Lease or any related agreement between Landlord and Tenant
with respect to the Project, and (ii) the agreement by Tenant to attorn to any
person who succeeds to Landlord's interest in the Premises. In the event of any
foreclosure or other enforcement of an encumbrance on the Premises which is
subordinate to this Lease pursuant to the foregoing provisions or otherwise,
Tenant agrees to attorn to any person who succeeds to Landlord's interest in
the Premises. Tenant further agrees that, if requested by such transferee,
Tenant shall enter into a new lease of the Premises with such transferee for
the balance then remaining of the term of the Lease and upon the same terms and
conditions as are then contained in the Lease. In the event of any foreclosure
or other enforcement of a Prior Lien or other first lien on the Premises which
is subordinate to this Lease as aforesaid, Tenant agrees that its rights to
insurance and/or condemnation proceeds pursuant to this Lease shall be
subordinate to the xxxx xxxxxx'x rights to such proceeds pursuant to its
security instruments. Any subordination or agreement to attorn by Tenant and
any subordination by a Lien Holder pursuant to this Section shall be effective
without the need for any further act of Tenant. However, within ten (10) days
of any written request from Landlord or any Lien Holder, Tenant shall execute
and deliver any documents or instruments that may be required by the Lien
Holder to effectuate any such subordination or attornment. If Tenant fails to
timely execute and deliver any such documents or instruments, then in addition
to any other available remedy, Tenant irrevocably constitutes and appoints
Landlord as Tenant's special attorney-in-fact, coupled with an interest, to
execute and deliver any such documents or instruments. Tenant acknowledges that
Landlord's Lien Holders and successors-in-interest are intended third party
beneficiaries of this Section.
SECTION 13.2 ESTOPPEL CERTIFICATE. Tenant shall, at any time upon not
less than ten (10) days prior written notice from Landlord, execute,
acknowledge and deliver to Landlord, in any form that Landlord may reasonably
require, a statement in writing in favor of Landlord and/or any prospective
purchaser or encumbrancer of the Building (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
the modification and certifying that this Lease, as modified, is in full force
and effect) and the dates to which the rental, additional rent and other
charges have been paid in advance, if any, and (ii) acknowledging that, to
Tenant's knowledge, there are no uncured defaults on the part of Landlord, or
specifying each default if any are claimed, and (iii) setting forth all further
information that Landlord may reasonably require. Tenant's statement may be
relied upon by any prospective purchaser or encumbrancer of all or any portion
of the Building or Project. Tenant's failure to deliver any estoppel statement
within the provided time shall constitute a default under this Lease and shall
be conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are
no uncured defaults in Landlord's performance, and (iii) not more than one
month's rental has been paid in advance. Upon request by Tenant in connection
with a proposed sale or financing of Tenant's business, Landlord shall furnish,
not more than once annually, a corresponding estoppel statement for Tenant's
benefit.
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1 TENANT'S DEFAULTS. In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:
(a) The failure by Tenant to make any payment of rent or additional
rent required to be made by Tenant, as and when due, where the failure
continues for a period of three (3) days after written notice from Landlord to
Tenant; provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. For purpose of these default and remedies
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provisions, the term "additional rent" shall be deemed to include all amounts of
any time whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease.
(b) Assignment, sublease, encumbrance or other transfer of
the Lease by Tenant, either voluntarily or by operation of law, whether by
judgment, execution, transfer by intestacy or testacy, or other means, without
the prior written consent of Landlord.
(c) The discovery by Landlord that any financial statement
provided by Tenant, or by any affiliate, successor or guarantor of Tenant, was
materially false.
(d) The failure or inability by Tenant to observe or
perform any of the covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 and 1161(a) as amended.
However, if the nature of the failure is such that more than thirty (30) days
are reasonably required for the cure, then Tenant shall not be deemed to be in
default if Tenant commences the cure within thirty (30) days, and thereafter
diligently pursues the cure to completion.
(e) (i) The making by Tenant of any general assignment for
the benefit of creditors; (ii) the filing by or against Tenant of a petition to
have Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code or to have
debts discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event
described in this subsection unless notification in writing is received by
Landlord, nor shall there be any presumption attributable to Landlord of
Tenant's insolvency. In the event that any provision of this subsection is
contrary to applicable law, the provision shall be of no force or effect.
SECTION 14.2 LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant, then in addition
to any other remedies available to Landlord, Landlord may exercise the
following remedies:
(i) Landlord may terminate Tenant's right to
possession of the Premises by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Premises to
Landlord. Such termination shall not affect any accrued obligations of Tenant
under this Lease. Upon termination, Landlord shall have the right to reenter
the Premises and remove all persons and property. Landlord shall also be
entitled to recover from Tenant:
(1) The worth at the time of award of the
unpaid rent and additional rent which had been earned at the time of
termination;
(2) The worth at the time of award of the
amount by which the unpaid rent and additional rent which would have been
earned after termination until the time of award exceeds the amount of such
loss than Tenant proves could have been reasonably avoided;
(3) The worth at the time of award of the
amount by which the unpaid rent and additional rent for the balance of the Term
after the time of award exceeds the amount of such loss than Tenant proves
could be reasonably avoided;
(4) Subject also to proof of mitigation,
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 from
Tenant's default, including, but not limited to, the cost of recovering
possession of the Premises, commissions and other expenses of reletting
allocable (on an amortized basis) to the remaining scheduled Term of this
Lease, including necessary repair, renovation, improvement and alteration of
the Premises for a new tenant, reasonable attorneys' fees, and any other
reasonable costs; and
(5) At Landlord's election, all other
amounts in addition to or in lieu of the foregoing as may be permitted by law.
The term "rent" as used in this Lease shall be deemed to mean the Basic Rent
and all other sums required to be paid by Tenant to Landlord pursuant to the
terms of this Lease. Any sum, other than Basic Rent, shall be computed on the
basis of the average monthly amount accruing during the twenty-four (24) month
period immediately prior to default, except that if it becomes necessary to
compute such rental before the twenty-four (24) month period has occurred, then
the computation shall be on the basis of the average monthly amount during the
shorter period. As used in subparagraphs (1) and (2) above, the "worth at the
time of award" shall be computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subparagraph (3) above, the "worth at the
time of award" shall be computed by discounting the amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).
(ii) Landlord may elect not to terminate Tenant's
right to possession of the Premises, in which event Landlord may continue to
enforce all of its rights and remedies under this Lease, including the right to
collect all rent as it becomes due. Efforts by the Landlord to maintain,
preserve or relet the Premises, or the appointment of a receiver to protect the
Landlord's interest under this Lease, shall not constitute a termination of the
Tenant's right to possession of the Premises. In the event that Landlord elects
to avail itself of the remedy provided by this subsection (ii), Landlord shall
not unreasonably withhold its consent to an assignment or subletting of the
Premises subject to the reasonable standards for Landlord's consent as are
contained in this Lease.
(b) The various rights and remedies reserved to Landlord in
this Lease or otherwise shall be cumulative and, except as otherwise provided
by California law, Landlord may pursue any or all of its rights and remedies at
the same time. No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other
than the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii)
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a waiver of Landlord's right to exercise any remedy available to Landlord by
virtue of the breach or default. The acceptance of any payment from a debtor in
possession, a trustee; a receiver or any other person acting on behalf of
Tenant or Tenant's estate shall not waive or cure a default under Section 14.1.
No payment by Tenant or receipt by Landlord of a lesser amount than the rent
required by this Lease shall be deemed to be other than a partial payment on
account of the earliest due stipulated rent, nor shall any endorsement or
statement on any check or letter be deemed an accord and satisfaction and
Landlord shall accept the check or payment without prejudice to Landlord's
right to recover the balance of the rent or pursue any other remedy available
to it. Tenant hereby waives any right of redemption or relief from forfeiture
under California Code of Civil Procedure Section 1174 or 1179, or under any
other present or future law, in the event this Lease is terminated by reason of
any default by Tenant. No act or thing done by Landlord or Landlord's agents
during the Term shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in writing and
signed by Landlord. No employee of Landlord or of Landlord's agents shall have
any power to accept the keys to the Premises prior to the termination of this
lease, and the delivery of the keys to any employee shall not operate as a
termination of the Lease or a surrender of the Premises.
SECTION 14.3. LATE PAYMENTS.
(a) Any rent due under this Lease that is not paid to Landlord
within five (5) days of the date when due shall bear interest at the rate of
ten percent (10%) per annum from the date due until fully paid. The payment of
interest shall not cure any default by Tenant under this Lease. In addition,
Tenant acknowledges that the late payment by Tenant to Landlord of rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impracticable to ascertain. Those
costs may include, but are not limited to, administrative, processing and
accounting charges, and late charges which may be imposed on Landlord by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any rent due from Tenant shall not be received by Landlord or
Landlord's designee within five (5) days after the date due, then tenant shall
pay to Landlord, in addition to the interest provided above, a late charge in
the amount of one hundred dollars ($100.00) for each delinquent payment.
Acceptance of a late charge by Landlord shall not constitute a waiver of
Tenant's default with respect to the overdue amount, nor shall it prevent
Landlord from exercising any of its other rights and remedies.
(b) Following each second consecutive installment of rent that is
not paid within five (5) days following notice of nonpayment from Landlord,
Landlord shall have the option (i) to require that beginning with the first
payment of rent next due, rent shall no longer be paid in monthly installments
but shall be payable quarterly three (3) months in advance and/or (ii) to
require that Tenant increase the amount, if any, of the Security Deposit by one
hundred percent (100%). Should Tenant deliver to Landlord, at any time during
the Term, two (2) or more insufficient checks, the Landlord may require that
all monies then and thereafter due from Tenant be paid to Landlord by cashier's
check.
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense and without any abatement of rent or right of set-off. If
Tenant fails to pay any sum of money, or fails to perform any other act on its
part to be performed under this Lease, and the failure continues beyond any
applicable grace period set forth in Section 14.1, then in addition to any
other available remedies, Landlord may, at its election make the payment or
perform the other act on Tenant's part. Landlord's election to make the payment
or perform the act on Tenant's part shall not give rise to any responsibility
of Landlord to continue making the same or similar payments or performing the
same or similar acts. Tenant shall, promptly upon demand by Landlord, reimburse
Landlord for all sums paid by Landlord and all necessary incidental costs,
together with interest at the maximum rate permitted by law from the date of
the payment by Landlord.
SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion. In the event of a default by Landlord, Tenant shall
have all remedies available at law or in equity.
SECTION 14.6. EXPENSES AND LEGAL FEES. Should either Landlord or tenant
bring any action in connection with this Lease, the prevailing party shall be
entitled to recover as a part of the action its reasonable attorneys' fees,
expert witness fees, and all other costs. The prevailing party for the purposes
of this paragraph shall be determined by the trier of the facts.
SECTION 14.7. WAIVER OF JURY TRIAL/RIGHT TO ARBITRATE.
(a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND
HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL
BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE
ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY
MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
TENANT'S USE OR OCCUPANCY ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR
DAMAGE.
(b) SHOULD A DISPUTE ARISE BETWEEN THE PARTIES REGARDING ANY MATTER
DESCRIBED ABOVE, THEN EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR FORCIBLE
DETAINER EITHER PARTY MAY CAUSE THE DISPUTE TO BE SUBMITTED TO JAMS/ENDISPUTE
OR ITS SUCCESSOR ("JAMS") IN THE COUNTY IN WHICH THE BUILDING IS SITUATED FOR
BINDING ARBITRATION BEFORE A SINGLE ARBITRATOR. HOWEVER, EACH PARTY RESERVES
THE RIGHT TO SEEK A PROVISIONAL REMEDY BY JUDICIAL ACTION. NO ARBITRATION
ELECTION BY EITHER PARTY PURSUANT TO THIS SUBSECTION SHALL BE EFFECTIVE IF
MADE LATER THAN THIRTY (30) DAYS FOLLOWING SERVICE OF A JUDICIAL SUMMONS AND
COMPLAINT BY OR UPON SUCH PARTY CONCERNING THE DISPUTE. THE ARBITRATION SHALL
BE CONDUCTED IN ACCORDANCE WITH THE RULES OF PRACTICE AND PROCEDURE OF JAMS AND
OTHERWISE PURSUANT TO THE CALIFORNIA ARBITRATION ACT (CODE OF CIVIL PROCEDURE
SECTIONS 1280 ET SEQ.). NOTWITHSTANDING THE FOREGOING, THE ARBITRATOR IS
SPECIFICALLY DIRECTED TO LIMIT DISCOVERY TO THAT WHICH IS ESSENTIAL TO THE
EFFECTIVE PROSECUTION OR DEFENSE OF THE ACTION. THE ARBITRATOR SHALL APPORTION
THE COSTS OF THE ARBITRATION, TOGETHER WITH THE ATTORNEYS' FEES OF THE PARTIES,
IN THE MANNER DEEMED EQUITABLE BY THE ARBITRATOR, IT BEING THE INTENTION OF THE
PARTIES THAT THE PREVAILING PARTY ORDINARILY BE ENTITLED TO RECOVER
15
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ITS REASONABLE COSTS AND FEES. JUDGMENT UPON ANY AWARD RENDERED BY THE
ARBITRATOR MAY BE ENTERED BY ANY COURT HAVING JURISDICTION.
ARTICLE XV. END OF TERM
SECTION 15.1. HOLDING OVER. This Lease shall terminate without
further notice upon the expiration of the Term, and any holding over by Tenant
after the expiration shall not constitute a renewal or extension of this Lease,
or give Tenant any rights under this Lease, except when in writing signed by
both parties. If Tenant holds over for any period after the expiration (or
earlier termination) of the Term, Landlord may, at its option, treat Tenant as
a tenant at sufferance only, commencing on the first (1st) day following the
termination of this Lease. Any hold-over by Tenant shall be subject to all of
the terms of this Lease, except that the monthly rental shall be two hundred
percent (200%) of the total monthly rental for the month immediately preceding
the date of termination, subject to Landlord's right to modify same upon thirty
(30) days notice to Tenant. If Tenant fails to surrender the Premises upon the
expiration of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability, including
without limitation, any claims made by any succeeding tenant relating to such
failure to surrender. Acceptance by Landlord of rent after the termination
shall not constitute a consent to a holdover or result in a renewal of this
Lease. The foregoing provisions of this Section are in addition to and do not
affect the Landlord's right of re-entry or any other rights of Landlord under
this Lease or at law.
SECTION 15.2. MERGER OR TERMINATION. The voluntary or other surrender
of this Lease by Tenant, or a mutual termination of this Lease, shall terminate
any or all existing subleases unless Landlord, at its option, elects in writing
to treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall
quit and surrender possession of the Premises to Landlord in as good order,
condition and repair as when received or as hereafter may be improved by
Landlord or Tenant, reasonable wear and tear and repairs which are Landlord's
obligation excepted. However, Tenant shall, without expense to Landlord, remove
or cause to be removed all wallpapering (exclusive of any wallpaper installed
as part of the initial Tenant improvement work) and voice and/or data
transmission cabling installed by or for Tenant (exclusive of cabling that
Landlord in good faith determines will be usable by the succeeding tenant),
together with all personal property and debris, except for any items that
Landlord may by written authorization allow to remain. Tenant shall repair all
damage to the Premises resulting from the removal, which repair shall include
the patching and filling of holes and repair of structural damage, provided
that Landlord may instead elect to repair any structural damage at Tenant's
expense. If Tenant shall fail to comply with the provisions of this Section,
Landlord may effect the removal and/or make any repairs, and the cost to
Landlord shall be additional rent payable by Tenant upon demand. If requested
by Landlord, Tenant shall execute, acknowledge and deliver to Landlord an
instrument in writing releasing and quitclaiming to Landlord all right, title
and interest of Tenant in the Premises.
ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid, without deduction
or offset, in lawful money of the United States to Landlord at its address set
forth in Item 13 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within five (5) days after demand. All
payments requiring proration shall be prorated on the basis of a thirty (30)
day month and a three hundred sixty (360) day year. Any notice, election,
demand, consent, approval or other communication to be given or other document
to be delivered by either party to the other may be delivered to the other
party, at the address set forth in Item 13 of the Basic Lease Provisions, by
personal service or telegram, telecopier, or electronic facsimile transmission,
or by any courier or "overnight" express mailing service, or may be deposited
in the United States mail, postage prepaid. Either party may, by written notice
to the other, served in the manner provided in this Article, designate a
different address. If any notice or other document is sent by mail, it shall be
deemed served or delivered three (3) business days after mailing or, if sooner,
upon actual receipt. If more than one person or entity is named as Tenant under
this Lease, service of any notice upon any one of them shall be deemed as
service upon all of them.
ARTICLE XVII. RULES AND REGULATIONS
Tenant agrees to comply with the Rules and Regulations attached as
Exhibit E, and any reasonable and nondiscriminatory amendments, modifications
and/or additions as may be adopted and published by written notice to tenants
by Landlord for the safety, care, security, good order, or cleanliness of the
Premises, Building, Project and/or Common Areas. Landlord shall not be liable
to Tenant for any violation of the Rules and Regulations or the breach of any
covenant or condition in any lease or any other act or conduct by any other
tenant, and the same shall not constitute a constructive eviction hereunder.
One or more waivers by Landlord of any breach of the Rules and Regulations by
Tenant or by any other tenant(s) shall not be a waiver of any subsequent breach
of that rule or any other. Tenant's failure to keep and observe the Rules and
Regulations shall constitute a default under this Lease. In the case of any
conflict between the Rules and Regulations and this Lease, this Lease shall be
controlling.
ARTICLE XVIII. BROKER'S COMMISSION
The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Each party warrants that it has had no dealings with any other real
estate broker or agent in connection with the negotiation of this Lease, and
agrees to indemnify and hold the other party harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by the indemnifying party in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease.
16
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ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's interest in the Premises,
the transferor shall be automatically relieved of all obligations on the part
of Landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor in which Tenant has an interest
shall be turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law. No holder of a mortgage and/or
deed of trust to which this Lease is or may be subordinate shall be responsible
in connection with the Security Deposit, unless the mortgagee or holder of the
deed of trust or the landlord actually receives the Security Deposit. It is
intended that the covenants and obligations contained in this Lease on the part
of Landlord shall, subject to the foregoing, be binding on Landlord, its
successors and assigns, only during and in respect to their respective
successive periods of ownership.
ARTICLE XX. INTERPRETATION
SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.
SECTION 20.2. HEADINGS. The captions and headings of the articles
and sections of this Lease are for convenience only, are not a part of this
Lease and shall have no effect upon its construction or interpretation.
SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person
or entity is named as Tenant, the obligations imposed upon each shall be joint
and several and the act of or notice from, or notice or refund to, or the
signature of, any one or more of them shall be binding on all of them with
respect to the tenancy of this Lease, including, but not limited to, any
renewal, extension, termination or modification of this Lease.
SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights
and liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.
SECTION 20.5. 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.
SECTION 20.6. CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.
SECTION 20.7. SEVERABILITY. If any term or provision of this Lease,
the deletion of which would not adversely affect the receipt of any material
benefit by either party or the deletion of which is consented to by the party
adversely affected, shall be held invalid or unenforceable to any extent, the
remainder of this Lease shall not be affected and each term and provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.
SECTION 20.8. WAIVER. One or more waivers by Landlord or Tenant of
any breach of any term, covenant or condition contained in this Lease shall not
be a waiver of any subsequent breach of the same or any other term, covenant or
condition. Consent to any act by one of the parties shall not be deemed to
render unnecessary the obtaining of the party's consent to any subsequent act.
No breach of this Lease shall be deemed to have been waived unless the waiver
is in a writing signed by the waiving party.
SECTION 20.9. INABILITY TO PERFORM. In the event that either party
shall be delayed or hindered in or prevented from the performance of any work or
in performing any act required under this Lease by reason of any cause beyond
the reasonable control of that party, then the performance of the work or the
doing of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent.
SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and
other attachments cover in full each and every agreement of every kind between
the parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement or
implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.
SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance
of all the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or
through Landlord.
SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.
ARTICLE XXI. EXECUTION AND RECORDING
SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or
more counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement.
SECTION 21.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation or partnership, each individual executing this Lease on behalf of
the corporation or partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation or
partnership, and that this Lease is binding upon the corporation or partnership
in accordance with its terms. Tenant shall, at Landlord's request, deliver a
certified copy
17
19
of its board of directors' resolution or partnership agreement or certificate
authorizing or evidencing the execution of this Lease.
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission
of this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.
SECTION 21.4. RECORDING. Tenant shall not record this Lease without
the prior written consent of Landlord. Tenant, upon the request of Landlord,
shall execute and acknowledge a "short form" memorandum of this Lease for
recording purposes.
SECTION 21.5. AMENDMENTS. No amendment or mutual termination of this
Lease shall be effective unless in writing signed by authorized signatories of
Tenant and Landlord, or by their respective successors in interest. No actions,
policies, oral or informal arrangements, business dealings or other course of
conduct by or between the parties shall be deemed to modify this Lease in any
respect.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Building or Project, either directly or
indirectly, without the prior written consent of the Landlord; provided,
however, that Tenant may disclose the terms to prospective subtenants or
assignees under this Lease.
SECTION 22.2. REPRESENTATIONS BY TENANT. The application, financial
statements and tax returns, if any, submitted and certified to by Tenant as an
accurate representation of its financial condition have been prepared, certified
and submitted to Landlord as an inducement and consideration to Landlord to
enter into this Lease. The application and statements are represented and
warranted by Tenant to be correct and to accurately and fully reflect the
Tenant's true financial condition as of the date of execution of this Lease by
Tenant. Tenant shall during the Term promptly furnish Landlord with annual
financial statements reflecting Tenant's financial condition upon written
request from Landlord.
SECTION 22.3. MORTGAGEE PROTECTION. No act or failure to act on the
part of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a release
or termination unless (a) Tenant has given notice by registered or certified
mail to any beneficiary of a deed or trust or mortgage covering the Building
whose address has been furnished to Tenant and (b) such beneficiary is afforded
a reasonable opportunity to cure the default by Landlord, including, if
necessary to effect the cure, time to obtain possession of the Building by power
of sale or judicial foreclosure provided that such foreclosure remedy is
diligently pursued.
SECTION 22.4. DISCLOSURE STATEMENT. Tenant acknowledges that it has
read, understands and, if applicable, shall comply with the provisions of
Exhibit F to this Lease, if that Exhibit is attached.
LANDLORD: TENANT:
THE IRVINE COMPANY, XXXXXX XXXXX & ASSOCIATES, INC.,
a Michigan corporation a California corporation
By /s/ XXXXXXX X. SIM By /s/ XXXXXXX X. XXXXXXXX
------------------------------- -------------------------------
Xxxxxxx X. Sim, Group President
Investment Properties Printed Name Xxxxxxx X. Xxxxxxxx
---------------------
Title Chief Operating Officer
----------------------------
By /s/ XXXXXXX X. XXXXXXX By /s/ XXXXX X. XXXXX
------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxx,
Vice President and General Printed Name Xxxxx X. Xxxxx
Manager, Irvine Office Company, ---------------------
a division of The Irvine Company Title Secretary/Treasurer
----------------------------
15
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III. COST OF TENANT IMPROVEMENTS
A. Landlord shall complete, or cause to be completed, the Tenant
improvements, at the construction cost shown in the approved
Final Cost Estimate (subject to the provisions of this Work
Letter), in accordance with final Working Drawings and
Specifications approved by both Landlord and Tenant. Landlord
shall pay towards the final construction costs ("Completion
Cost") as incurred a maximum of Two Hundred Seventy-Four
Thousand Six Hundred Forty Dollars ($274,640.00) ("Landlord's
Contribution"), based on $16.00 per usable square foot of the
Premises, and Tenant shall be fully responsible for the
remainder ("Tenant Contribution"). It is understood, however,
that unless due to matters beyond the reasonable control of
Landlord or its contractor, Tenant shall not be required to pay
for additional costs resulting from Landlord's failure to
perform the work in accordance with the approved Working
Drawings and Specifications. It is further specifically
understood that should the City of Newport Beach require, as a
condition to its issuance of a permit for the Tenant Improvement
work, that Landlord make improvements or alterations to the
Premises that are not reflected in the approved Preliminary Plan
in order to comply with the ADA or other handicap access
requirements, then Landlord shall be responsible for the cost of
those additional improvements or alterations; provided that
those additional costs may be applied by Landlord against any
remaining balance of the Landlord's Contribution after deducting
from the Landlord's Contribution the remainder of the Completion
Cost exclusive of the cost of Tenant Changes. If the actual cost
of completion of the Tenant Improvements is less than the
maximum amount provided for the Landlord's Contribution, Tenant
shall be entitled to apply the unused portion to other
improvements (but not towards personal property or appliances)
in the Premises prior to Tenant's occupancy; however, in no
event will a cash payment or refund to Tenant be made.
B. The Completion Cost shall include all direct costs of Landlord
in completing the Tenant Improvements, including but not limited
to the following: (i) payments made to architects, engineers,
contractors, subcontractors and other third party consultants in
the performance of the work, (ii) salaries and fringe benefits
of persons, if any, in the direct employ of Landlord performing
any part of the construction work, (iii) permit fees and other
sums paid to governmental agencies, (iv) costs of all materials
incorporated into the work or used in connection with the work,
and (v) keying and signage costs. The Completion Cost shall also
include an administrative/supervision fee to be paid to Landlord
in the amount of five percent (5%) of all such direct costs.
C. Prior to start of construction of the Tenant Improvements,
Tenant shall pay to Landlord one-half (1/2) of the amount of the
Tenant's Contribution set forth in the approved Final Cost
Estimate, unless such amount is less than $1,000, in which event
the total sum shall be then due and payable. If the actual
Completion Cost of the Tenant Improvements is greater than the
Final Cost Estimate because of modifications or extras not
reflected on the approved working drawings, or because of delays
caused by Tenant, then Tenant shall be responsible for all such
additional costs, including any additional architectural fee.
The balance of any sums not otherwise paid by Tenant shall be
due and payable on or before the Commencement Date of this
Lease. If Tenant defaults in the payment of any sums due under
this Work Letter, Landlord shall (in addition to all other
remedies) have the same rights as in the case of Tenant's
failure to pay rent under this Lease.
21
--------------------------------------------------------------------------------
TICON GENERAL CONTRACTORS -- Construction Summary
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
DATE: 11/21/96 Suite: 800 Contractor Name: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8576) Address: 0000 XxxXXXXXX XXXXX Adddress: 00000 XXXXXXX XXXXXX
Xxxxxx XX FT: 17,203 /s/ XXXX XXXXXXX
Rentable SQ. FT.: 19,487 Preliminary Pricing: [X] Final Pricing: [ ] Xxxxxx, XX 00000
Duration: 8 Weeks Plans Dated: 11/14/96 Revisions: 3 Project Manager: XXXX XXXXXXX
------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION BLDG STAND B.S. $/USF OVERSTAND O.S. $/USF TOTAL TOTAL $/USF
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
01400--CLEAN UP 3,436 0.20 3,436 0.20
------------------------------------------------------------------------------------------------------------------------------------
02110--DEMOLITION 9,875 0.57 9,876 0.57
------------------------------------------------------------------------------------------------------------------------------------
08400--CABINETRY & MILLWORK 21,990 1.26 21,990 1.28
------------------------------------------------------------------------------------------------------------------------------------
07200--INSULATION
------------------------------------------------------------------------------------------------------------------------------------
08200--DOORS/FRAMES/HARDWARE 4,929 0.29 8,202 0.36 11,131 0.65
------------------------------------------------------------------------------------------------------------------------------------
06800--GLASS & GLAZING 12,512 0.73 12,512 0.73
------------------------------------------------------------------------------------------------------------------------------------
09250--DRYWALL & INSULATION 15,302 0.89 1,499 0.09 16,801 0.98
------------------------------------------------------------------------------------------------------------------------------------
09540--ACOUSTICAL CEILING 7,355 0.43 7,355 0.43
------------------------------------------------------------------------------------------------------------------------------------
09760--FLOOR COVERING 28,085 1.63 28,085 1.83
------------------------------------------------------------------------------------------------------------------------------------
09900--PAINT & WALLCOVERING 12,975 0.75 11,904 0.89 24,879 1.45
------------------------------------------------------------------------------------------------------------------------------------
12500--WINDOW COVERING
------------------------------------------------------------------------------------------------------------------------------------
13000--SPECIAL CONSTRUCTION 1,800 0.10 1,800 0.10
------------------------------------------------------------------------------------------------------------------------------------
15400--PLUMBING 8,380 0.49 8,380 0.49
------------------------------------------------------------------------------------------------------------------------------------
15500--FIRE PROTECTION 5,994 0.35 5,994 0.35
------------------------------------------------------------------------------------------------------------------------------------
15800--HVAC 24,185 1.41 24,185 1.41
------------------------------------------------------------------------------------------------------------------------------------
16000--ELECTRICAL 25,051 1.46 6,656 0.40 31,807 1.85
------------------------------------------------------------------------------------------------------------------------------------
16600--LIFE SAFETY 10,943 0.64 10,943 0.64
------------------------------------------------------------------------------------------------------------------------------------
17000--PERMITS 2,580 0.15 2,580 0.15
------------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION SUBTOTAL 150,713 8.78 71,143 4.14 221,856 12.00
------------------------------------------------------------------------------------------------------------------------------------
GENERAL CONDITIONS 3,014 0.16 1,422 0.08 4,437 0.26
------------------------------------------------------------------------------------------------------------------------------------
CONTRACTORS FEE 13,835 0.80 6,530 0.36 20,365 1.18
------------------------------------------------------------------------------------------------------------------------------------
CONTRACTORS TOTAL 187,563 9.74 79,098 4.60 246,660 14.34
------------------------------------------------------------------------------------------------------------------------------------
KEY & SIGNAGE
------------------------------------------------------------------------------------------------------------------------------------
ARCHITECTS FEE 21,111 1.23 21,111 1.23
------------------------------------------------------------------------------------------------------------------------------------
ARCHITECTS REIMBURSABLES 300 0.02 300 0.02
------------------------------------------------------------------------------------------------------------------------------------
PLAN CHECK FEE 960 0.05 960 0.08
------------------------------------------------------------------------------------------------------------------------------------
COORDINATION FEE 9,496 0.55 3,954 0.23 13,451 0.78
------------------------------------------------------------------------------------------------------------------------------------
TOTAL COST (EXCLUDING ALTERNATES) 199,431 11.59 63,051 4.83 282,463 16.42
------------------------------------------------------------------------------------------------------------------------------------
ALTERNATES 7,204 0.42 7,204 0.42
------------------------------------------------------------------------------------------------------------------------------------
PROOJECT GRAND TOTAL $208,636 $12.01 $83,051 $4.63 $269,587 $16.84
------------------------------------------------------------------------------------------------------------------------------------
Page: S1
22
TICON GENERAL CONTRACTORS - Construction Summary
-------------------------------------------------------------------------------
Date: 11/21/96 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8576) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
-------------------------------------------------------------------------------
-SCHEDULE-
CONSTRUCTION SHOULD TAKE ABOUT 8 WEEKS DEPENDING ON THE ORDERING OF LEAD ITEMS
& IF THE SUITE IS OCCUPIED.
-------------------------------------------------------------------------------
-CLARIFICATIONS-
Price is valid for (60) days form receipt of bids
Paint Color Change May Result In Price Increase
All Work To Be Done During Normal Business Hours
DOORS HAVE THREE DIFFERENT FINISHES THRU OUT THE FLOOR, RELOCATED DOORS ARE
GROUPED TO MAINTAIN THE FINISHES AS CLOSELY TOGETHER AS POSSIBLE.
FURNITURE MOVING NOR PREMIUM TIME CAN NOT BE PRICED UNTIL I HAVE MORE OF AN
UNDERSTANDING OF THE OCCUPANCY LOAD OF THE SUITE.
THIS BID IS PRICED TO BE DONE WITH THE SUITE BEING VACATED.
THE PATCHING OF THE CORRIDOR WALLCOVERING IS BASED ON USING THE BUILDING
STANDARD MATERIAL WHICH HAS BEEN DISCONTINUED WITH A LIMITED STOCK AVAILABLE.
THE COSTS ASSOCIATED WITH THIS MATERIAL COULD BE AFFECTED.
-------------------------------------------------------------------------------
-EXCLUSIONS-
Furniture moving & relocation by others
Any concealed conditions
Any items not noted in estimate
-------------------------------------------------------------------------------
-LIST OF DRAWINGS-
This price is based on: YES NO By GENSLER
-------------------------------------------------------------------------------
Page: S2
23
TICON GENERAL CONTRACTORS - Construction Summary
Date: 11/21/96 Contractor: TICON GENERAL CONTRACTORS
Tenant Name:XXXXXX XXXXX (#8576) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
Space Plan Construction Documents Architect
DATE SHEET ARCHITECT
11/14/96 PP-1 REVISED GENSLER
Page: S3
24
TICON GENERAL CONTRACTORS - Construction Summary
-----------------------------------------------------------------------------------------------------------------------------------
Date: 11/21/96 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8576) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------------
BUILDING STANDARD OVER STANDARD TOTAL COST
Category/Description QTY U/M UNIT $ TOTAL $/USF QTY U/M UNIT $ TOTAL $/USF TOTAL $/USF
-----------------------------------------------------------------------------------------------------------------------------------
01400 - CLEAN UP
1) Construction Clean Up 12,000 SF 0.10 1,200 0.07 1,200 0.07
2) Dumpster 2 EA 430.00 860 0.05 860 0.05
3) Final Detail Clean Up 17,203 SF 0.08 1,376 0.08 1,376 0.08
----- ---- ----- ----
3,436 0.20 3,436 0.20
-----------------------------------------------------------------------------------------------------------------------------------
02110 - DEMOLITION
1) Demo Carpet, Base & VCT 1,782 SY 0.90 1,603 0.09 1,603 0.09
2) Demo Door & Frame 36 EA 25.00 900 0.05 900 0.05
3) Demo And Safe Off Electrical 1 LS 800.00 800 0.05 800 0.05
4) Demo Ceiling Height Partition 636 LF 6.00 3,628 0.22 3,628 0.22
5) Demo Existing Soffit 110 SF 3.00 330 0.02 330 0.02
6) Demo Wood Floor 1,165 SF 1.00 1,165 0.07 1,165 0.07
7) Demo Low Walls 124 LF 8.00 744 0.04 744 0.04
8) Millwork Demo 1 LS 400.00 400 0.02 400 0.02
9) Demo Existing Life Safety 1 LS 105.00 105 0.01 105 0.01
----- ---- ----- ----
9,875 0.57 9,875 0.57
-----------------------------------------------------------------------------------------------------------------------------------
06400 - CABINETRY & MILLWORK
1) ADA Approved Plastic 18 LF 235.00 4,230 0.25 4,230 0.25
Laminated Base, Top, And
Uppers - Note #17
2) Plastic Laminated Counter With 80 LF 55.00 4,400 0.26 4,400 0.26
Corbles - Note #19
3) Full Height Shelving - Note #17C 36 LF 130.00 4,680 0.27 4,680 0.27
4) Plastic Laminated Uppers At 80 LF 90.00 7,200 0.42 7,200 0.42
Note #19
5) Prefinished Base Cabinet And 8 LF 185.00 1,480 0.09 1,480 0.09
Counter Top - Note #17B ------ ---- ------ ----
21,990 1.29 21,990 1.29
-----------------------------------------------------------------------------------------------------------------------------------
Page: R1
25
TICON GENERAL CONTRACTORS - Construction Summary
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Date: 11/21/96 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8576) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
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BUILDING STANDARD OVER STANDARD TOTAL COST
Category/Description QTY U/M UNIT $ TOTAL $/USF QTY U/M UNIT $ TOTAL $/USF TOTAL $/USF
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08200 - DOORS/FRAMES/HARDWARE
1) Interior Dutch Door Note #7 1 EA 772.00 772 0.04 1 EA 485.00 485 0.03 1,237 0.07
2) 1 HR. Interior H.M. Frame, 1 EA 772.00 772 0.04 1 EA 1,202.00 1,202 0.07 1,974 0.11
Sidalle With (2) Muttons,
Glass & Door Per Note #8
3) Double Entry Door With 1 EA 1,180.00 1,180 0.07 1,180 0.07
Relocated Hardware Per
Note #4
4) Allowance For Cyper Lockset 8 EA 500.00 4,500 0.26 4,500 0.28
5) Relocate Door & Frame 16 EA 60.00 960 0.06 960 0.06
6) Rekey Interior Locks 1 EA 35.00 35 0.00 35 0.00
7) Paint Set Up 1 LG 75.00 75 0.00 75 0.00
8) Install Bldg. Std. Door To 6 EA 70.00 420 0.02 420 0.02
Existing Frames Pulled From
Prestock
9) Install Bldg. Std. Door Assy. 6 EA 125.00 750 0.04 750 0.04
Pulled From Prestock ----- ---- ----- ---- ------ ----
4,929 0.29 6,202 0.36 11,131 0.65
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08800 - GLASS & GLAZING
1) 2' Sidelight 1 EA 345.00 345 0.02 345 0.02
2) 2' Bldg. Std. Side Lights At 1 EA 847.00 847 0.05 847 0.05
Rated Wall With Wire Glass
3) 3' Sidelight With Labor To Make 8 EA 440.00 3,520 0.20 3,520 0.20
It Attached To Existing Frame
4) 3' Sidelight With Labor To Make 7 EA 400.00 2,800 0.16 2,800 0.16
It Attached To Relocated Frame
5) 3' Sidelight With One Mullion 1 EA 675.00 675 0.04 675 0.04
6) 3' Sidelight With Two Mullions 1 EA 1,025,00 1,025 0.05 1,025 0.06
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Page: R2
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[PLOT PLAN]
EXHIBIT A
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EXHIBIT B
UTILITIES AND SERVICES
The following standards for utilities and services shall be in effect
at the Building. Landlord reserves the right to adopt nondiscriminatory
modifications and additions to these standards. In the case of any conflict
between these standards and the Lease, the Lease shall be controlling. Subject
to all of the provisions of the Lease, including but not limited to the
restrictions contained in Section 6.1, the following shall apply:
1. Landlord shall furnish to the Premises during the hours of
8 a.m. to 6 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on
Saturday, generally recognized national holidays and Sundays excepted,
reasonable air conditioning, heating and ventilation services. Subject to the
provisions set forth below, Landlord shall also furnish the Building with
elevator service (if applicable), reasonable amounts of electric current for
normal lighting by Landlord's standard overhead fluorescent and incandescent
fixtures and for fractional horsepower office machines, and water for lavatory
and drinking purposes. Tenant will not, without the prior written consent of
Landlord, consume electricity in the Premises at a level in excess of 3 xxxxx
per square foot or otherwise increase the amount of electricity, gas or water
usually furnished or supplied for use of the Premises as general office space;
nor shall Tenant connect any apparatus, machine or device with water pipes or
electric current (except through existing electrical outlets in the Premises)
for the purpose of using electric current or water. This paragraph shall at all
times be subject to applicable governmental regulations.
2. Upon written request from Tenant delivered to Landlord at least
24 hours prior to the period for which service is requested, but during normal
business hours, Landlord will provide any of the foregoing building services to
Tenant at such times when such services are not otherwise available. Tenant
agrees to pay Landlord for those afterhour services at rates that Landlord may
establish from time to time, provided that Landlord's rate for after-hours HVAC
service shall be consistent with charges imposed in high-rise office projects of
comparable quality in the Xxxx Xxxxx airport area. If Tenant requires electric
current in excess of that which Landlord is obligated to furnish under this
Exhibit B, Tenant shall first obtain the consent of Landlord, and Landlord may
cause an electric current meter to be installed in the Premises to measure the
amount of electric current consumed. The cost of installation, maintenance and
repair of the meter shall be paid for by Tenant, and Tenant shall reimburse
Landlord promptly upon demand for all electric current consumed for any special
power use as shown by the meter. The reimbursement shall be at the rates charged
for electrical power by the local public utility furnishing the current, plus
any additional expense incurred in keeping account of the electric current
consumed.
3. If any lights, machines or equipment (including without
limitation electronic data processing machines) are used by Tenant in the
Premises which materially affect the temperature otherwise maintained by the air
conditioning system, or generate substantially more heat in the Premises than
would be generated by the building standard lights and usual fractional
horsepower office equipment, Landlord shall have the right at its election to
install or modify any machinery and equipment to the extent Landlord reasonably
deems necessary to restore the temperature balance. The cost of installation,
and any additional cost of operation and maintenance, shall be paid by Tenant to
Landlord promptly upon demand.
4. Landlord shall furnish water for drinking, personal hygiene and
lavatory purposes only. If Tenant requires or uses water for any purposes in
addition to ordinary drinking, cleaning or lavatory purposes, Landlord may, in
its discretion, install a water meter to measure Tenant's water consumption.
Tenant shall pay Landlord for the cost of the meter and the cost of its
installation, and for consumption throughout the duration of Tenant's occupancy.
Tenant shall keep the meter and installed equipment in good working order and
repair at Tenant's own cost and expense, in default of which Landlord may cause
the meter to be replaced or repaired at Tenant's expense. Tenant agrees to pay
for water consumed, as shown on the meter and when bills are rendered, and on
Tenant's default in making that payment Landlord may pay the charges on behalf
of Tenant. Any costs or expenses or payments made by Landlord for any of the
reasons or purposes stated above shall be deemed to be additional rent payable
by Tenant to Landlord upon demand.
5. In the event that any utility service to the Premises is
separately metered or billed to Tenant, Tenant shall pay all charges for that
utility service to the Premises and the cost of furnishing the utility to tenant
suites shall be excluded from the Operating Expenses as to which reimbursement
from Tenant is required in the Lease. If any utility charges are not paid when
due Landlord may pay them, and any amounts paid by Landlord shall immediately
become due to Landlord from Tenant as additional rent. If Landlord elects to
furnish any utility service to the Premises, Tenant shall purchase its
requirements of that utility from Landlord as long as the rates charged by
Landlord do not exceed those which Tenant would be required to pay if the
utility service were furnished it directly by a public utility.
6. Landlord shall provide janitorial services five days per week,
equivalent to that furnished in comparable buildings, and window washing as
reasonably required; provided, however, that Tenant shall pay for any additional
or unusual janitorial services required by reason of any nonstandard
improvements in the Premises, including without limitation wall coverings and
floor coverings installed by or for Tenant, or by reason of any use of Premises
other than exclusively as offices. The cleaning services provided by Landlord
shall also exclude refrigerators, eating utensils (plates, drinking containers
and silverware), and interior glass partitions. Tenant shall pay to Landlord the
cost of removal of any of Tenant's refuse and rubbish, to the extent that they
exceed the refuse and rubbish usually attendant with general office usage.
7. Tenant shall have access to the Building 24 hours per day, 7
days per week, 52 weeks per year; provided that Landlord may install access
control systems as it deems advisable for the Building. Such systems may, but
need not, include full or part-time lobby supervision, the use of a sign-in
sign-out log, a card identification access system, building parking and access
pass system, closing hours procedures, access control stations, fire stairwell
exit door alarm system, electronic guard system, mobile paging system, elevator
control system or any other access controls. In the event that Landlord elects
to provide any or all of those services, Landlord may discontinue providing them
at any time with or without notice. Landlord may impose a reasonable charge for
access control cards and/or keys issued to Tenant. Landlord shall have no
liability to Tenant for the provision by Landlord of improper access control
services, for any breakdown in service, or for the failure by Landlord to
provide access control services. Tenant further acknowledges that Landlord's
access systems may be temporarily inoperative during building emergency and
system repair periods. Tenant agrees to assume responsibility for compliance by
its employees with any regulations established by Landlord with respect to any
card key access or any other system of building access as Landlord may
establish. Tenant shall be liable to Landlord for any loss or damage resulting
from its or its employees use of any access system.
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EXHIBIT C
PARKING
The following parking regulations shall be in effect at the Building.
Landlord reserves the right to adopt reasonable, nondiscriminatory
modifications and additions to the regulations by written notice to Tenant. In
the case of any conflict between these regulations and the Lease, the Lease
shall be controlling.
1. Landlord agrees to maintain, or cause to be maintained, an
automobile parking area ("Parking Area") in reasonable proximity to the Building
for the benefit and use of the visitors and patrons and, except as otherwise
provided, employees of Tenant, and other tenants and occupants of the Building.
The Parking Area shall include, whether in a surface parking area or a parking
structure, the automobile parking stalls, driveways, entrances, exits,
sidewalks and attendant pedestrian passageways and other areas designated for
parking. Landlord shall have the right and privilege of determining the nature
and extent of the Automobile Parking Area, whether it shall be surface,
underground or other structure, and of making such changes to the Parking Area
from time to time which in its opinion are desirable and for the best interests
of all persons using the Parking Area. Landlord shall keep the Parking Area in
a neat, clean and orderly condition, and shall repair any damage to its
facilities. Landlord shall not be liable for any damage to motor vehicles of
visitors or employees, for any loss of property from within those motor
vehicles, or for any injury to Tenant, its visitors or employees, except to the
extent ultimately determined to be caused by the negligence or willful
misconduct of Landlord. Unless otherwise instructed by Landlord, every xxxxxx
shall park and lock his or her own motor vehicle. Landlord shall also have the
right to establish, and from time to time amend, and to enforce against all
users of the Parking Area all reasonable rules and regulations (including the
designation of areas for employee parking) as Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of the Parking
Area. Garage managers or attendants are not authorized to make or allow any
exceptions to these regulations.
2. Landlord may, if it deems advisable in its sole discretion,
charge for parking and may establish for the Parking Area a system of permit
parking for Tenant, its employees and visitors, which may include, but not be
limited to, a system of charges against nonvalidated parking, verification of
users, a set of regulations governing different parking locations, and an
allotment of reserved or nonreserved parking spaces based upon the charges paid
and the identity of users. In no event shall Tenant or its employees park in
reserved stalls leased to other tenants or in stalls within designated visitor
parking zones. It is understood that Landlord shall not have any obligation to
cite improperly parked vehicles or otherwise attempt to enforce reserved parking
rules during hours when parking attendants are not present at the Parking Area.
Tenant shall comply with such system in its use (and in the use of its
visitors, patrons and employees) of the Parking Area, provided, however, that
the system and rules and regulations shall apply to all persons entitled to the
use of the Parking Area, and all charges to Tenant for use of the Parking Area
shall be no greater than Landlord's then current scheduled charge for parking.
3. Tenant shall, upon request of Landlord form time to time,
furnish Landlord with a list of its employees' names and of Tenant's and its
employees' vehicle license numbers. Tenant agrees to acquaint its employees
with these regulations and assumes responsibility for compliance by its
employees with these parking provisions, and shall be liable to Landlord for
all unpaid parking charges incurred by its employees. Any amount due from Tenant
shall be deemed additional rent. In the event Landlord elects or is required to
limit or control parking by tenants, employees, visitors or invitees of the
Building, whether by validation of parking tickets, parking meters or any other
method of assessment. Tenant agrees to participate in the validation or
assessment program under reasonable rules and regulations as are established by
Landlord and/or any applicable governmental agency.
4. Landlord may establish an identification system for vehicles of
Tenant and its employees which may consist of stickers, magnetic parking cards
or other identification devices supplied by Landlord. All identification
devices shall remain the property of Landlord, shall be displayed as required
by Landlord or upon request and may not be mutilated or obliterated in any
manner. Those devices shall not be transferable and any such device in the
possession of an unauthorized holder shall be void and may be confiscated.
Landlord may impose a reasonable fee for identification devices and a
replacement charge for devices which are lost or stolen. Each identification
device shall be returned to Landlord promptly following the Expiration Date or
sooner termination of this Lease. Loss or theft of parking identification
devices shall be reported to Landlord or its Parking Area operator immediately
and a written report of the loss filed if requested by Landlord or its Parking
Area operator.
5. Persons using the Parking Area shall observe all directional
signs and arrows and any posted speed limits. Unless otherwise posted, in no
event shall the speed limit of 5 miles per hour be exceeded. All vehicles shall
be parked entirely within painted stalls, and no vehicles shall be parked in
areas which are marked as "no parking" or on or in ramps, driveways and aisles.
Only one vehicle may be parked in a parking space. In no event shall Tenant
interfere with the use and enjoyment of the Parking Area by other tenants of
the Building or their employees or invitees.
6. Parking Areas shall be used only for parking vehicles. Washing,
waxing, cleaning or servicing of vehicles, or the parking of any vehicle on an
overnight basis, in the Parking Area (other than emergency services) by any
xxxxxx or his or her agents or employees is prohibited unless otherwise
authorized by Landlord. Tenant shall have no right to install any fixtures,
equipment or personal property (other than vehicles) in the Parking Area, nor
shall Tenant make any alteration to the Parking Area.
7. It is understood the employees of Tenant and the other
tenants of Landlord within the Building and Project shall not be permitted to
park their automobiles in the portions of the Parking Area which may from time
to time be designated for patrons of the Building and/or Project and that
Landlord shall at all times have the right to establish rules and regulations
for employee parking. Landlord may authorize persons other than those described
above, including occupants of other buildings, to utilize the Parking Area. In
the event of the use of the Parking Area by other persons, those persons shall
pay for that use in accordance with the terms established above; provided,
however, Landlord may allow those persons to use the Parking Area on weekends,
holidays, and at other non-office hours without payment.
8. Notwithstanding the foregoing paragraphs 1 through 7, Landlord
shall be entitled to pass on to Tenant its proportionate share of any charges
of parking surcharge or transportation management costs levied by any
governmental agency. The foregoing parking provisions are further subject to
any governmental regulations which limit parking or otherwise seek to encourage
the use of carpools, public transit or other alternative transportation forms
or traffic reduction programs. Tenant agrees that it will use its best efforts
to cooperate, including registration and attendance, in programs which may be
undertaken to reduce traffic. Tenant acknowledges that as a part of those
programs, it may be required to distribute employee transportation information,
participate in employee transportation surveys, allow employees to participate
in commuter activities, designate a liaison for commuter transportation
activities, distribute commuter information to all employees, and otherwise
participate in other programs or services initiated under a transportation
management program.
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9. Should any parking spaces be allotted by Landlord to Tenant,
either on a reserved or nonreserved basis, Tenant shall not assign or sublet
any of those spaces, either voluntarily or by operation of law, without the
prior written consent of Landlord, except in connection with an authorized
assignment of this Lease or subletting of the Premises.
10. During the initial six (6) months of the Lease Term, Tenant
shall pay to Landlord or its agents for the use of employee parking spaces
allotted in Item 12 of the Basic Lease Provisions the amount of Forty Dollars
($40.00) per unreserved stall per month and One Hundred Ten Dollars ($110.00)
per reserved stall per month. Any stalls leased with the permission of Landlord
in excess of that allotted number shall be at Landlord's scheduled parking rates
from time to time. Thereafter and through the initial sixty (60) months of the
Lease Term, Tenant shall continue to pay those same monthly stall charges for
the reserved and unreserved stalls, as applicable, that Tenant is committed to
Lease pursuant to Section 6.4 (the "Committed Stalls"). Following that initial
sixty (60) month period, the stall charge for the Committed Stalls shall be at
Landlord's then-scheduled rate from time to time, except that Landlord agrees
such rate for the Committed Stalls during the Initial Lease Term shall not
exceed Forty-Eight Dollars ($48.00) per unreserved stall per month and One
Hundred Thirty-Four Dollars ($134.00) per reserved stall per month. Tenant
understands and agrees that any parking spaces leased by Tenant in excess of the
Committed Stalls shall be at Landlord's then scheduled rates from time to time
without limitation as aforesaid.
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EXHIBIT D
TENANT'S INSURANCE
The following standards for Tenant's insurance shall be in effect at the
Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to those standards. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.
1. Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial
general liability insurance with respect to the Premises and the operations of
or on behalf of Tenant in, on or about the Premises, including but not limited
to personal injury, nonowned automobile, blanket contractual, independent
contractors, broad form property damage, fire legal liability, products
liability (if a product is sold from the Premises), liquor law liability (if
alcoholic beverages are sold, served or consumed within the Premises), and
cross liability and severability of interest clauses, which policy(ies) shall
be written on an "occurrence" basis and for not less than $2,000,000 combined
single limit (with a $50,000 minimum limit on fire legal liability) per
occurrence for bodily injury, death, and property damage liability, or the
current limit of liability carried by Tenant, whichever is greater, and
subject to such increases in amounts as Landlord may determine from time to
time; (ii) workers' compensation insurance coverage as required by law, together
with employers' liability insurance coverage; (iii) with respect to
improvements, alterations, and the like required or permitted to be made by
Tenant under this Lease, builder's all-risk insurance, in amounts satisfactory
to Landlord; (iv) insurance against fire, vandalism, malicious mischief and such
other additional perils as may be included in a standard "all risk" form,
insuring the fixtures, furnishings, equipment and items of personal property in
the Premises, in an amount equal to not less than ninety percent (90%) of their
actual replacement cost (with replacement cost endorsement), which policy shall
also include loss of income/business interruption/extra expense coverage in an
amount not less than seven months loss of income from Tenant's business in the
Premises. In no event shall the limits of any policy be considered as limiting
the liability of Tenant under this Lease.
2. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D shall be written by responsible insurance companies authorized
to do business in the State of California and with a Best's policyholder rating
of not less than A-X subject to final acceptance and approval by Landlord. Any
insurance required of Tenant may be furnished by Tenant under any blanket
policy carried by it or under a separate policy. A true and exact copy of
each paid up policy evidencing the insurance (appropriately authenticated by the
insurer) or a certificate of insurance, certifying that the policy has been
issued, provides the coverage required by this Exhibit D and contains the
required provisions, shall be delivered to Landlord prior to the date Tenant is
given the right of possession of the Premises. Proper evidence of the renewal
of any insurance coverage shall also be delivered to Landlord not less than
thirty (30) days prior to the expiration of the coverage. Landlord may at any
time, and from time to time, inspect and/or copy any and all insurance
policies required by this Lease.
3. Each party evidencing insurance required to be carried by Tenant
pursuant to this Exhibit D shall contain the following provisions and/or
clauses satisfactory to Landlord: (i) a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be noncontributory with respect to any policies carried by Tenant: (ii) a
provision including Landlord and any other parties in interest designated by
Landlord as an additional insured, except as to workers compensation insurance;
(iii) a waiver by the insurer of any right to subrogation against Landlord, its
agents, employees, contractors and representatives which arises or might arise
by reason of any payment under the policy or by reason of any act or omission
of Landlord, its agents, employees, contractors or representatives; and (iv) a
provision that the insurer will not cancel or change the coverage provided by
the policy without first giving Landlord thirty (30) days prior written notice.
4. In the event that Tenant fails to procure, maintain and/or pay for,
at the times and for the durations specified in this Exhibit D, any insurance
required by this Exhibit D, or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following
Landlord's written demand to Tenant.
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EXHIBIT E
RULES AND REGULATIONS
The following Rules and Regulations shall be in effect at the
Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions at any time. In the case of any conflict between
these regulations and the Lease, the Lease shall be controlling.
1. Except with the prior written consent of Landlord, Tenant shall
not sell, or permit the retail sale of, newspapers, magazines, periodicals, or
theater tickets, in or from the Premises, nor shall Tenant carry on, or permit
or allow any employee or other person to carry on, the business of stenography,
typewriting or any similar business in or from the Premises for the service or
accommodation of occupants of any other portion of the Building. Tenant shall
not allow the Premises to be utilized for any manufacturing of any kind, or the
business of a public xxxxxx shop, beauty parlor, or a manicuring and
chiropodist business, or any business other than that specifically provided for
in the Lease.
2. The sidewalks, halls, passages, elevators, stairways, and other
common areas shall not be obstructed by Tenant or used by it for storage or for
any purpose other than for ingress to and egress from the Premises. The halls,
passages, entrances, elevators, stairways, balconies and roof are not for the
use of the general public, and Landlord shall in all cases retain the right to
control and prevent access to those areas of all persons whose presence, in the
judgment of Landlord, shall be prejudicial to the safety, character, reputation
and interests of the Building and its tenants. Nothing contained in this Lease
shall be construed to prevent access to persons with whom Tenant normally deals
only for the purpose of conducting its business on the Premises (such as
clients, customers, office suppliers and equipment vendors and the like) unless
those persons are engaged in illegal activities. Neither Tenant nor any
employee or contractor of Tenant shall go upon the roof of the Building without
the prior written consent of Landlord.
3. The sashes, sash doors, windows, glass lights, solar film and/or
screen, and any lights or skylights that reflect or admit light into the halls
or other places of the Building shall not be covered or obstructed. The toilet
rooms, water and wash closets and other water apparatus shall not be used for
any purpose other than that for which they were constructed, and no foreign
substance of any kind shall be thrown in those facilities, and the expense of
any breakage, stoppage or damage resulting from the violation of this rule
shall be borne by Tenant.
4. No sign, advertisement or notice visible from the exterior of the
Premises shall be inscribed, painted or affixed by Tenant on any part of the
Building or the Premises without the prior written consent of the Landlord. If
Landlord shall have given its consent at any time, whether before or after the
execution of this Lease, that consent shall in no way operate as a waiver or
release of any of the provisions of this Lease, and shall be deemed to relate
only to the particular sign, advertisement or notice so consented to by
Landlord and shall not be construed as dispensing with the necessity of
obtaining the specific written consent of Landlord with respect to any
subsequent sign, advertisement or notice. If Landlord, by a notice in writing
to Tenant, shall object to any curtain, blind, tinting, shade or screen
attached to, or hung in, or used in connection with, any window or door of the
Premises, the use of that curtain, shade or screen shall be immediately
discontinued and removed by Tenant. No awnings shall be permitted on any part
of the Premises.
5. Tenant shall not do or permit anything to be done in the
Premises, or bring or keep anything in the Premises, which shall in any way
increase the rate of fire insurance on the Building, or on the property kept in
the Building, or obstruct or interfere with the rights of other tenants, or in
any way injure or annoy them, or conflict with the regulations of the Fire
Department or the fire laws, or with any insurance policy upon the Building, or
any portion of the Building or its contents, or with any rules and ordinances
established by the Board of Health or other governmental authority.
6. The installation and location of any unusually heavy equipment
in the Premises, including without limitation file storage units, safes and
electronic data processing equipment, shall require the prior written approval
of Landlord. Landlord may restrict the weight and position of any equipment
that may exceed the weight load limits for the structure of the Building, and
may further require, at Tenant's expense, the reinforcement of any flooring on
which such equipment may be placed and/or an engineering study to be performed
to determine whether the equipment may safely be installed in the Building and
the necessity of any reinforcement. The moving of large or heavy objects shall
occur only between those hours as may be designated by, and only upon previous
written notice to, Landlord, and the persons employed to move those objects in
or out of the Building must be reasonably acceptable to Landlord. No freight,
furniture or bulky matter of any description shall be received into or moved
out of the lobby of the Building or carried in any elevator other than the
freight elevator designated by Landlord unless approved in writing by Landlord.
7. Landlord shall clean the Premises as provided in the Lease, and
except with the written consent of Landlord, no person or persons other than
those approved by Landlord will be permitted to enter the Building for that
purpose. Tenant shall not cause unnecessary labor by reason of Tenant's
carelessness and indifference in the preservation of good order and cleanliness.
Landlord shall not be responsible to Tenant or its employees for loss or damage
to property in connection with the provision of janitorial services by third
party contractors.
8. Tenant shall not sweep or throw, or permit to be swept or thrown,
from the Premises any dirt or other substance into any of the corridors or halls
or elevators, or out of the doors or windows or stairways of the Building, and
Tenant shall not use, keep or permit to be used or kept any foul or noxious gas
or substance in the Premises, or permit or suffer the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants of
the Building by reason of noise, odors, and/or vibrations, or interfere in any
way with other tenants or those having business with other tenants, nor shall
any animals or birds be kept by Tenant in or about the Building. Smoking or
carrying of lighted cigars, cigarettes, pipes or similar products anywhere
within the elevators, restrooms, common corridors, lobbies or other common areas
of the Building is strictly prohibited. Any such activity within the Premises
shall, until further notice, be permitted only absent written notification to
Landlord from another tenant of the Building that such activity is creating
fumes or odors that are offensive or objectionable; in the event such notice is
given to Landlord, Landlord may prohibit smoking within the Premises and may
enforce such prohibition pursuant to Landlord's leasehold remedies. Smoking is
permitted outside the Building and within the project only in areas designated
by Landlord.
9. No cooking shall be done or permitted by Tenant on the Premises,
except pursuant to the normal use of a U.L. approved microwave oven and coffee
maker for the benefit of Tenant's employees and invitees, nor shall the
Premises be used for the storage of merchandise or for lodging. It is
understood that Tenant shall be permitted to have a lunch room in the Premises
for its employees, which room may contain vending machines, microwaves, a
refrigerator and related amenities.
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10. Tenant shall not use or keep in the Building any kerosene, gasoline,
or inflammable fluid or any other illuminating material, or use any method of
heating other than that supplied by Landlord.
11. If Tenant desires telephone, telegraph, burglar alarm or similar
connections, Landlord will direct electricians as to where and how the wires
are to be introduced. No boring or cutting for wires or otherwise shall be made
without directions from Landlord.
12. Upon the termination of its tenancy, Tenant shall deliver to Landlord
all the keys to offices, rooms and toilet rooms and all access cards which
shall have been furnished to Tenant or which Tenant shall have had made.
13. Tenant shall not xxxx, drive nails, screw or drill into the
partitions, woodwork or plaster or in any way deface the Premises, except to
install normal wall hangings. Tenant shall not affix any floor covering to the
floor of the Premises in any manner except by a paste, or other material which
may easily be removed with water, the use of cement or other similar adhesive
materials being expressly prohibited. The method of affixing any floor covering
shall be subject to approval by Landlord. The expense of repairing any damage
resulting from a violation of this rule shall be borne by Tenant.
14. On Saturdays, Sundays and legal holidays, and on other days between
the hours of 6:00 p.m. and 8:00 a.m., access to the Building, or to the halls,
corridors, elevators or stairways in the Building or to the Premises, may be
refused unless the person seeking access complies with any access control
system that Landlord may establish. Landlord shall in no case be liable for
damages for the admission to or exclusion from the Building of any person whom
Landlord has the right to exclude under Rules 2 or 18 of this Exhibit. In case
of invasion, mob, riot, public excitement, or other commotion, or in the event
of any other situation reasonably requiring the evacuation of the Building,
Landlord reserves the right at its election and without liability to Tenant to
prevent access to the Building by closing the doors or otherwise, for the
safety of the tenants and protection of property in the Building.
15. Tenant shall be responsible for protecting the Premises from theft,
which includes keeping doors and other means of entry closed and securely
locked. Tenant shall cause all water faucets or water apparatus to be shut off
before Tenant or Tenant's employees leave the Building, and that all
electricity, gas or air shall likewise be shut off, so as to prevent waste or
damage, and for any default or carelessness Tenant shall make good all injuries
sustained by other tenants or occupants of the Building or Landlord.
16. Tenant shall not alter any lock or install a new or additional lock
or any bolt on any door of the Premises without the prior written consent of
Landlord. If Landlord gives its consent, Tenant shall in each case promptly
furnish Landlord with a key for any new or altered lock.
17. Tenant shall not install equipment, such as but not limited to
electronic tabulating or computer equipment, requiring electrical or air
conditioning service in excess of that to be provided by Landlord under the
Lease except in accordance with Exhibit B.
18. Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person. In the event any such person
is a guest or invitee of Tenant, Tenant shall notify Landlord in advance of
each desired entry, and Landlord shall authorize the person so designated to
enter the Premises, provided that in the sole and absolute discretionary
judgment of Landlord, such person will not be involved in general solicitation
activities, or the proselytizing, petitioning, or disturbance of other tenants
or their customers or invitees, or engaged or likely to engage in conduct which
may in Landlord's opinion distract from the use of the Premises for its
intended purpose. Notwithstanding the foregoing, Landlord reserves the absolute
right and discretion to limit or prevent access to the Buildings by any food or
beverage vendor, whether or not invited by Tenant, and Landlord may condition
such access upon the vendor's execution of an entry permit agreement which may
contain provisions for insurance coverage and/or the payment of a fee to
Landlord.
19. Tenant shall be required to utilize the third party contractor
designated by Landlord for the Building to provide any telephone wiring
services from the minimum point of entry of the telephone cable in the Building
to the Premises. Notwithstanding the foregoing, however, in the event Tenant
does not have a telephone switch within the Premises, Tenant may, with
Landlord's approval and supervision, use a trained contractor to provide such
wiring services, but only from the Premises to the telephone room on the floor
on which the Premises are situated.
20. Landlord may from time to time grant tenants individual and temporary
variances from these Rules, provided that any variance does not have a material
adverse effect on the use and enjoyment of the Premises by Tenant.
2
33
DOLLAR ALLOWANCE
LANDLORD'S WORK
Landlord shall, at its sole cost and expense, complete the common Facilities
(as defined in the Lease), together with the following items:
A. Structure. The building shell in which the Premises are located shall be
designed by Landlord's architect and shall be completed substantially in
accordance with the architect's designs. Exterior trim and other exterior
work normally requiring staining or painting shall be stained or painted.
B. Exterior Walls. Landlord shall provide the exterior walls of the Premises
bordering on the exterior of the building. Those walls are to be finished
on the exterior side only.
C. Air Conditioning and heating. Landlord shall install the vertical
distribution of the main heating, ventilation and air conditioning system
to the floor on which the Premises are located, together with the main duct
on said floor.
D. Electrical Distribution System. Landlord shall install electrical power to
an electrical panel located on the floor on which the Premises are located,
which power shall be sufficient to meet normal business needs (exclusive of
data processing and other extraordinary or excessive requirements).
E. Telephone system. Landlord shall install telephone conduits from telephone
manholes to a central telephone closet located on the floor on which the
Premises are looted for distribution to the Premises.
F. Sprinkler System. Landlord shall install the main loop for the wet fire
life safety sprinkler system on the floor on which the Premises are
located.
G. Restrooms. Landlord shall provide finished restroom facilities on the
floor on which the Premises are located in accordance with applicable code
requirements for normal office usage.
H. Demising Walls. Landlord shall be responsible for one-half of the cost of
the interior demising walls of the Premises.
I. Corridors. If the Premises are located on a multi-tenant floor of the
building, Landlord shall provide building standard elevator lobby finishes
and minimum common area corridors as required by applicable code
provisions, provided that one-half of the cost of the walls separating the
corridor from the Premises shall be allocated to the Tenant Improvements.
TENANT IMPROVEMENTS
The Tenant Improvement work (herein "Tenant Improvements") shall consist of any
work, exclusive of the Landlord's work specified in Article 1 of this Work
Letter, required to complete the Premises pursuant to the Tenant's approved
plans and specifications. All of the Tenant Improvement work shall be
performed by a contractor selected by Landlord and in accordance with the
following procedures and requirements:
A. Tenant and Landlord have approved both (i) a detailed space plan for the
Premises, prepared by Gensier and dated November 14, 1996, a portion of
which is attached to this Lease as Exhibit A ("Preliminary Plan"), and (ii)
an estimate of the cost for which Landlord will complete or cause to be
completed the Tenant Improvements ("Preliminary Cost Estimate") a copy of
which is attached hereto as Exhibit X-1.
B. On or before the Plan Approval Date, Tenant shall provide in writing to
Landlord or Landlord's architect all specifications and information
requested by Landlord for the preparation of final construction documents
and costing, including without limitation Tenant's final selection of wall
and floor finishes, complete specifications and locations (including load
and HVAC requirements) of Tenant's equipment, and details of all
"Non-Standard Improvements" (as defined below) to be installed in the
Premises (collectively, "Programming information"). Tenant's failure to
provide the Programming information by the Plan Approval Date shall
constitute a Tenant Delay for purposes of this Lease. Notwithstanding the
foregoing, however, Landlord shall advise Tenant, not later than ten (10)
days prior to the Plan Approval Date, of any required Programming
Information, and any delay by Landlord shall extend the Plan Approval Date
of a day-for-day basis. Tenant understands that final construction
documents for the Tenant Improvements shall be predicated on the
Programming Information, and accordingly that such information must be
accurate and complete.
C. Except as otherwise specified by Tenant and authorized herein, the Tenant
Improvements shall incorporate Landlord's building standards materials and
specifications ("Standards"). No deviations from the Standards may be
required by Tenant with respect to doors and frames, finish hardware, entry
graphics, the ceiling system, light fixtures and switches, mechanical
systems, life and safety systems, and/or window coverings; provided that
Landlord may, in its sole discretion, authorize in writing one or more of
such deviations. All other non-standard items ("Non-Standard Improvements")
shall be subject to the reasonable prior approval of Landlord. Landlord
shall in no event be required to approve any Non-Standard Improvement if
Landlord determines that such improvement (i) is of a lesser quality than
the corresponding Standard, (ii) fails to conform to applicable
governmental requirements, (iii) requires building services beyond the
level normally provided to other tenants, (iv) would delay construction of
the Tenant Improvements beyond the Estimated Commencement Date and Tenant
declines to accept such delay in writing as a Tenant Delay, or (v) would
have an adverse aesthetic impact from the exterior of the Premises.
34
EXHIBIT X
35
D. Upon Tenant's delivery of the complete Programming information, Landlord's
architect and engineers shall prepare and deliver to Tenant working
drawings and specifications ("Working Drawings and Specifications"), and
Landlord's contractor shall prepare a final construction cost estimate
("Final Cost Estimate") for the Tenant Improvements in conformity with the
Working Drawings and Specifications. The Working Drawings and
Specifications shall be consistent with the Preliminary Plan, Preliminary
Cost Estimate and Programming Information, and shall be provided to Tenant
within three weeks following the later of (i) the mutual execution of this
Lease and (ii) Tenant's delivery of the Programming Information. Tenant
shall have five (5) working days from the receipt thereof to approve or
disapprove the Working Drawings and Specifications and the Final Cost
Estimate. Tenant shall not unreasonably withhold or delay its approval, and
any disapproval or requested modification shall be limited to items not
contained in the approved Preliminary Plan or Preliminary Cost Estimate. In
no event shall Tenant disapprove the Final Cost Estimate if it does not
exceed the approved Preliminary Cost Estimate, such disapproval shall be
accompanied by a detailed list of revisions. Any revision requested by
Tenant and accepted by Landlord shall be incorporated into a revised set of
Working Drawings and Specifications and Final Cost Estimate, and Tenant
shall approve same in writing within five (5) business days of receipt
without further revision. Tenant's failure to comply in a timely manner
with any of the requirements of this Article II.D. shall constitute a
Tenant Delay. Without limiting the rights of Landlord for Tenant Delays as
set forth herein, in the event Tenant has not approved both the Working
Drawings and Specifications and the Final Cost Estimate within forty-five
(45) days after delivery of those documents, then Landlord may, at its
option, elect to terminate this Lease by written notice to Tenant. In the
event Landlord elects to effect such a termination, Tenant shall, within
ten (10) days following demand by Landlord, pay to Landlord any costs
incurred by Landlord in connection with the preparation or review of plans,
construction estimates, price quotations, drawings or specifications under
this Work Letter and for all costs incurred in the preparation and
execution of this Lease, including any leasing commissions.
E. In the event that Tenant requests in writing a revision in the approved
Working Drawings and Specifications ("Change"), Landlord shall advise
Tenant by written change order as soon as is practical of any increase in
the Completion Cost and/or any Tenant Delay such Change would cause. Tenant
shall approve or disapprove such change order in writing within (2) days
following its receipt from Landlord. Landlord shall have the right to
decline Tenant's request for a Change for any of the reasons set forth in
Article II.C above for Landlord's disapproval of a Non-Standard
Improvement. It is understood that Landlord shall have no obligation to
interrupt or modify the Tenant Improvement work pending Tenant's approval
of a change order.
F. Notwithstanding any provision in the Lease to the contrary, if the
prosecution of the Tenant improvement work is actually delayed because
Tenant fails to comply with any of the time periods specified in this Work
Letter, fails otherwise to approve or reasonably disapprove any submittal
within five (5) working days, fails to provide all of the Programming
Information requested by Landlord by the Plan Approval Date, fails to
approve in writing the Working Drawings and Specifications and the Final
Cost Estimate within the time provided herein, requests any Changes,
furnishes inaccurate or erroneous specifications or other information, or
otherwise delays in any manner the completion of the Tenant Improvements
(including without limitation by specifying materials that are not readily
available) or the issuance of an occupancy certificate (any of the
foregoing being referred to in this Lease as a "Tenant Delay"), then Tenant
shall bear any resulting additional construction cost or other expenses,
and the Commencement Date of this Lease shall be deemed to have occurred
for all purposes, including Tenant's obligation to pay rent, as of the date
Landlord reasonably determines that it would have been able to deliver the
Premises to Tenant but for the collective Tenant Delays. In no event,
however, shall such date be earlier than the Estimated Commencement Date
set forth in the Basic Lease Provisions. Should Landlord determine that the
Commencement Date should be advanced in accordance with the foregoing, it
shall so notify Tenant in writing. Landlord's determination shall be
conclusive unless Tenant notifies Landlord in writing, within five (5)
working days thereafter, of Tenant's election to contest same by
arbitration with the Judicial Arbitration and Mediation Service in Orange
County, California. Pending the outcome of such arbitration proceedings,
Tenant shall make timely payment of all rent due under this Lease based
upon the Commencement Date set forth in the aforesaid notice from Landlord.
G. Landlord shall permit Tenant and its agents to enter the Premises prior to
the Commencement Date of the Lease in order that Tenant may perform any
work to be performed by Tenant hereunder through its own contractors,
subject to Landlord's prior written approval, and in a manner and upon
terms and conditions and at times satisfactory to Landlord's
representative. The foregoing license to enter the Premises prior to the
Commencement Date is, however, conditioned upon Tenant's contractors and
their subcontractors and employees working in harmony and not interfering
with the work being performed by Landlord. If at any time that entry shall
cause disharmony or interfere with the work being performed by Landlord,
this license may be withdrawn by Landlord upon twenty-four (24) hours
written notice to Tenant. That license is further conditioned upon the
compliance by Tenant's contractors with all requirements imposed by
Landlord on third party contractors, including without limitation the
maintenance by Tenant and its contractors and subcontractors of workers'
compensation and public liability and property damage insurance in amounts
and with companies and on forms satisfactory to Landlord, with certificates
of such insurance being furnished to Landlord prior to proceeding with any
such entry. The entry shall be deemed to be under all of the provisions of
the Lease except as to the covenants to pay rent. Landlord shall not be
liable in any way for any injury, loss or damage which may occur to any
such work being performed by Tenant, the same being solely at Tenant's
risk. In no event shall the failure of Tenant's contractors to complete any
work in the Premises extend the Commencement Date of this Lease beyond the
date that Landlord has completed its Tenant improvement work and tendered
the Premises to Tenant.
H. Tenant hereby designates Xxx Xxxxxxxx, Telephone No. (000) 000-0000, as its
representative, agent and attorney-in-fact, for the purpose of receiving
notices, approving submittals and issuing requests for Changes, and
Landlord shall be entitled to rely upon authorizations and directives of
such person(s) as if given directly by Tenant. Tenant may amend the
designation of its construction representative(s) at any time upon delivery
of written notice to Landlord.
36
------------------------------------------------
TICON GENERAL CONTRACTORS - Construction Summary
================================================
-----------------------------------------------------------------------------------------------------------------------------------
Date: 11/21/96 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8578) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
BUILDING STANDARD OVER STANDARD TOTAL COST
Category/Description QTY U/M UNIT $ TOTAL $/USF QTY U/M UNIT $ TOTAL $/USF TOTAL $/USF
-----------------------------------------------------------------------------------------------------------------------------------
7) Window Frame With Seven Mullions 1 EA 2,735.00 2,735 0.16 2,735 0.16
8) 6' Window Frame At Projection Room 1 EA 585.00 585 0.03 585 0.03
------ ---- ------ ----
12,512 0.73 12,512 0.73
-----------------------------------------------------------------------------------------------------------------------------------
09250 - DRYWALL & INSULATION
1) Interior Partition 340 LF 20.71 7,227 0.42 7,227 0.42
2) Corridor Partition 25 LF 19.60 490 0.03 490 0.03
3) 1 Hr. Partition 78 LF 27.50 2,145 0.12 2,145 0.12
4) Modify To 1 Hr Partition 54 LF 16.50 891 0.05 891 0.05
5) Cut In Door 3 EA 65.00 195 0.01 195 0.01
6) Cut In Side Light 11 EA 42.00 482 0.03 482 0.03
7) Create Alcove At Double Entry 1 LS 710.00 710 0.04 710 0.04
Door
8) Fill In Doorway 11 EA 100.00 1,100 0.06 1,100 0.06
9) Scar Patch 52 EA 20.00 1,040 0.06 1,040 0.06
10) Wall Patching 1 LS 350.00 350 0.02 350 0.02
11) Corridor Ceiling Extension 90 SF 4.10 369 0.02 369 0.02
12) Fire Damper Framing 13 EA 55.00 715 0.04 715 0.04
13) Fire Extinguisher Framing 3 EA 35.00 105 0.01 105 0.01
14) Stocking And Scrap Out 1 LS 875.00 875 0.04 875 0.04
15) Support For Conference Room 1 LS 327.00 327 0.02 327 0.02
Glass
------ ---- ----- ---- ------ ----
15,302 0.69 1,499 0.09 16,801 0.98
-----------------------------------------------------------------------------------------------------------------------------------
09540 - ACOUSTICAL CEILING
1) Ceiling Remove & Replace 9,000 SF 0.32 2,880 0.17 2,880 0.17
2) New Tile Allowance 2,100 SF 1.25 2,625 0.15 2,625 0.15
3) Repair Grid At Wall Demo 1 LS 200.00 200 0.01 200 0.01
-----------------------------------------------------------------------------------------------------------------------------------
Page R3
37
TICON GENERAL CONTRACTORS - CONSTRUCTION SUMMARY
------------------------------------------------------------------------------------------------------------------------------------
Date: 11/21/9 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8576) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
BUILDING STANDARD OVER STANDARD TOTAL COST
Category/Description QTY U/M UNIT $ TOTAL $/USF QTY U/M UNIT $ TOTAL $/USF TOTAL $/USF
------------------------------------------------------------------------------------------------------------------------------------
4) Frame Light Fixture 123 EA 0.60 799 0.05 799 0.05
5) Rework T Bar & Tile For Entry 1 LS 225.00 225 0.01 225 0.01
Door Recess
6) T Bar & Tile At Soffit Demo 110 SF 1.87 205 0.01 205 0.01
7) Cut And Patch Grid At 1 Ht. Wall 1 LS 420.00 420 0.02 420 0.02
----- ---- ----- ----
7,355 0.43 7,355 0.43
------------------------------------------------------------------------------------------------------------------------------------
09760 - FLOOR COVERING
1) Building Standard Carpet 1,890 SY 12.25 23,152 1.36 23,152 1.35
2) Stonetex VCT Flooring 785 SF 1.65 1,282 0.07 1,262 0.07
3) Bldg. Std. Topset Base, 2 1/2" 3,824 LF 0.93 3,370 0.20 3,370 0.20
4) Labor To Patch Carpet @ 1 LS 210.00 210 0.01 210 0.01
Corridor, Material Supplied By
Owner
5) Labor To Install Owner Supplied 1 LS 90.00 90 0.01 90 0.01
Carpet At Entry Door Recess
With Base
------ ---- ------ ----
28,085 1.53 28,085 1.63
------------------------------------------------------------------------------------------------------------------------------------
09900 - PAINT & WALLCOVERING
1) Paint Walls - Flat, Same Color 22,968 SF 0.19 4,353 0.25 4,383 0.25
2) Paint Soffit - Flat, Same Color 352 LF 1.00 352 0.02 352 0.02
3) Door Finish (Building Standard) 5 EA 50.00 250 0.01 250 0.01
4) Door & Sidelight Frame - Enamel 4 EA 50.00 200 0.01 200 0.01
5) Revarnish Relocated Door Per 9 EA 35.00 315 0.02 315 0.02
Note #3
6) Remove & Prep Existing Wall 5,895 SF 1.00 5,895 0.34 5,895 0.34
Covering
7) Minor Patch And Prep 1 LS 250.00 250 0.01 250 0.01
------------------------------------------------------------------------------------------------------------------------------------
Page 84
38
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TICON GENERAL CONTRACTORS - Construction Summary
================================================
-----------------------------------------------------------------------------------------------------------------------------------
Date: 11/21/96 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8578) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
BUILDING STANDARD OVER STANDARD TOTAL COST
Category/Description QTY U/M UNIT $ TOTAL $/USF QTY U/M UNIT $ TOTAL $/USF TOTAL $/USF
-----------------------------------------------------------------------------------------------------------------------------------
8) Skin Coat For 2 1/2" Base 1 LS 250.00 250 0.01 250 0.01
9) Wallcovering Material Allowance 3,620 SF 2.50 9,050 0.53 9,050 0.53
10) Wallcovering Labor & Primer 3,620 SF 0.70 2,534 0.15 2,534 0.15
11) Corridor Wallcovering Patch At 1 LS 300.00 300 0.02 300 0.02
Double & Single Door Install
12) Remove Wallcovering At 1 LS 150.00 150 0.01 150 0.01
Corridor
13) New Wallcovering At Corridor 1 LS 650.00 650 0.04 650 0.04
With Primer
14) Painted J-Molds 2 EA 35.00 70 0.00 70 0.00
15) Wallcovering At Entry Door 1 LS 250.00 250 0.01 250 0.01
Recess
------ ---- ------ ---- ------ ----
12,975 0.75 11,904 0.69 24,879 1.45
-----------------------------------------------------------------------------------------------------------------------------------
13000 - SPECIAL CONSTRUCTION
1) 6'x6' Dalite (Board Room 1 EA 1,800.00 1,800 0.10 1,800 0.10
Projection Screen
----- ---- ----- ----
1,800 0.10 1,800 0.10
-----------------------------------------------------------------------------------------------------------------------------------
15400 - PLUMBING
1) Plumbing Per Note #17(2) 1 LS 7,980.00 7,980 0.46 7,980 0.46
And Note #17B(1)
2) Plumbing Design 1 LS 400.00 400 0.02 400 0.02
----- ---- ----- ----
8,380 0.49 8,380 0.49
-----------------------------------------------------------------------------------------------------------------------------------
15500- FIRE PROTECTION
1) Add & Relocate Sprinkler Heads 1 LS 5,994.00 5,994 0.35 5,994 0.35
----- ---- ----- ----
5,994 0.35 5,994 0.35
-----------------------------------------------------------------------------------------------------------------------------------
15800 - HVAC
1) Mechanical Engineering 1 LS 1,500.00 1,500 0.08 1,500 0.08
2) New Exterior VAV 3 EA 1,200.00 3,600 0.21 3,600 0.21
-----------------------------------------------------------------------------------------------------------------------------------
Page R5
39
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TICON GENERAL CONTRACTORS - Construction Summary
================================================
-----------------------------------------------------------------------------------------------------------------------------------
Date: 11/21/96 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8578) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
BUILDING STANDARD OVER STANDARD TOTAL COST
Category/Description QTY U/M UNIT $ TOTAL $/USF QTY U/M UNIT $ TOTAL $/USF TOTAL $/USF
-----------------------------------------------------------------------------------------------------------------------------------
3) New Interior VAV 1 EA 700.00 700 0.04 700 0.04
4) New Supply Diffuser 2 EA 250.00 250 0.03 500 0.03
5) Relocate Return Air Grille 6 EA 20.00 120 0.01 120 0.01
6) Cap & Demo 1 LS 1,200.00 1,200 0.07 1,200 0.07
7) Relocate Thermostat 11 EA 150.00 1,650 0.10 1,650 0.10
8) Rebalance 1 LS 800.00 800 0.05 800 0.05
9) Return Air Grilles 2 EA 40.00 80 0.00 80 0.00
10) Relocate Supplies 31 EA 185.00 5,735 0.33 5,735 0.33
11) Vertical Smoke Fire Dampers 5 EA 300.00 1,500 0.09 1,500 0.09
12) Main Smoke Fire Dampers 4 EA 1,100.00 4,400 0.26 4,400 0.26
13) Return Air Smoke Dampers 4 EA 600.00 2,400 0.14 2,400 0.14
------ ---- ------ ----
24,185 1.41 24,185 1.41
-----------------------------------------------------------------------------------------------------------------------------------
16000 - ELECTRICAL
1) Relocate Exit Lights 6 EA 100.00 600 0.03 600 0.03
2) Relocate Light Fixture 2 X 4 108 EA 65.00 7,020 0.41 7,020 0.41
3) Light Fixture 2 X 4 15 EA 175.00 2,625 0.15 2,625 0.15
4) Relocate Light Sensor 10 EA 35.00 350 0.02 350 0.02
5) Light Sensor 2 EA 169.00 338 0.02 338 0.02
6) Fire Damper Smoke Detector 13 EA 200.00 2,600 0.15 2,600 0.15
Connection
7) Light Switch, Sentry 3 EA 85.00 255 0.01 255 0.01
8) 2 X 2 Light Fixture 2 EA 147.00 294 0.02 294 0.02
9) Light Switch, Double 2 EA 66.00 132 0.01 132 0.01
10) Light Switch, 3-Way 10 EA 140.00 1,400 0.08 1,400 0.08
11) Exit Light 7 EA 125.00 875 0.05 875 0.05
12) Duplex Outlet, 110 V. 41 EA 44.00 1,804 0.10 1,804 0.10
13) 4 Plex Outlet 1 EA 44.00 44 0.00 1 EA 10.00 10 0.00 54 0.00
14) Dedicated Duplex Outlet 11 EA 44.00 484 0.03 1 EA 71.00 71 0.00 555 0.03
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Page R6
40
TICON GENERAL CONTRACTORS - CONSTRUCTION SUMMARY
-----------------------------------------------------------------------------------------------------------------------------------
Date: 11/21/9 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8576) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------------
BUILDING STANDARD OVER STANDARD TOTAL COST
Category/Description QTY U/M UNIT $ TOTAL $/USF QTY U/M UNIT $ TOTAL $/USF TOTAL $/USF
-----------------------------------------------------------------------------------------------------------------------------------
15) 2 Gang 3-Way Switch 10 EA 140.00 1,400 0.08 1,400 0.08
16) Insta Hot Power 3 EA 276.00 828 0.05 828 0.05
17) Garbage Disposal Power 0 3 EA 139.00 417 0.02 417 0.02
18) Cut In Boxes 13 EA 20.00 260 0.02 260 0.02
19) Telephone Stub Up 30 EA 35.00 1,050 0.08 1,050 0.06
20) Telephone Homerun 2" 120 LF 8.50 1,020 0.08 1,020 0.06
21) 1500 Watt Dimmer 2 EA 140.00 280 0.02 280 0.02
22) Wallwasher 20 EA 146.00 2,020 0.17 2,920 0.17
23) Telephone Backboard 1 EA 100.00 100 0.01 100 0.01
24) RC-700A Recp/Tele 3 EA 585.00 1,755 0.10 1,755 0.10
25) Magnetic Hold Open At Double 2 EA 180.00 380 0.02 360 0.02
Entry Door
26) Recirculating Of Lights & Power 1 LS 2,000.00 2,000 0.12 2,000 0.12
27) Permit 1 LS 400.00 400 0.02 400 0.02
28) Projection Screen Power 1 EA 145.00 145 0.01 145 0.01
29) Furnish And Install Blank Cover 14 EA 5.00 70 0.00 70 0.00
Plates
------ ---- ----- ---- ------ ----
25,051 1.48 6,658 0.40 31,907 1.85
-----------------------------------------------------------------------------------------------------------------------------------
16800 - LIFE SAFETY
1) Fire-Smoke Detectors A1 1 LS 8,110.00 8,110 0.47 8,110 0.47
HVAC Smoke Dampers
2) Life Safety Speakers 8 EA 330.00 1,850 0.12 1,980 0.12
3) Life Safety Permit 1 103.00 103 0.01 103 0.01
4) Fire Extinguisher And Cabinet 3 EA 250.00 750 0.04 750 0.04
------ ---- ------ ----
10,843 0.64 10,843 0.64
-----------------------------------------------------------------------------------------------------------------------------------
17000 - PERMITS
1) Permit Allowances 17,203 SF 0.15 2,580 0.15 2,580 0.15
------ ---- ------ ----
2,580 0.15 2,580 0.15
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Page 87
41
--------------------------------------------------------------------------------
TICON GENERAL CONTRACTORS - CONSTRUCTION SUMMARY
--------------------------------------------------------------------------------
Date: 11/21/97 Contractor: TICON GENERAL CONTRACTORS
Tenant Name: XXXXXX XXXXX (#8578) Address: 00000 XXXXXXX XXXXXX
Suite: 800
Address: 0000 XxxXXXXXX XXXXX Xxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Alternate COMPRESSION POSTS IF REQUIRED
-----------------------------------------------------------------------------------------------------------------------------------
SCOPE OF WORK LUMP SUM COST CONTR FEE A&E FEE COORD FEE TOTAL ALTERN COST
-----------------------------------------------------------------------------------------------------------------------------------
PATCH DRYWALL IN LIEU OF COVER PLATES 700
-----------------------------------------------------------------------------
TOTAL 700 63 38 $601
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Alternate NOTE #23
-----------------------------------------------------------------------------------------------------------------------------------
SCOPE OF WORK LUMP SUM COST CONTR FEE A&E FEE COORD FEE TOTAL ALTERN COST
-----------------------------------------------------------------------------------------------------------------------------------
PATCH DRYWALL IN LIEU OF COVER PLATES 280
-----------------------------------------------------------------------------
TOTAL 280 25 15 $320
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Alternate FIRELITE GLASS AT RATED OPENING
-----------------------------------------------------------------------------------------------------------------------------------
SCOPE OF WORK LUMP SUM COST CONTR FEE A&E FEE COORD FEE TOTAL ALTERN COST
-----------------------------------------------------------------------------------------------------------------------------------
INSTALL CLEAR FIRELITE GLASS IN 1 HR. RATED OPENING. 5,315
GLASS WILL NEED TO BE IN TWO PIECES WHICH WILL
REQUIRE A MUTTON.
-----------------------------------------------------------------------------
TOTAL 5,315 478 289 $6,083
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