Exhibit 10.19
LEASE
(SINGLE TENANT; NET)
THIS LEASE is made as of the 26 day of November, 2001 (the "EXECUTION
DATE"), by and between THE IRVINE COMPANY, a Delaware corporation hereafter
called "LANDLORD," and ENDOCARE, INC., a Delaware 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. Premises: The Premises are more particularly described in Section 2.1.
Address of Building: 000 Xxxxxxxxxx Xxxxx, Xxxxxx, XX
2. Project Description (if applicable): Freeway Technology Park I
3. Use of Premises: Research & development and permitted office uses,
manufacturing of medical devices and any lawful use permitted by
applicable zoning, covenants, conditions and restrictions as set forth in
Article V.
4. Estimated Commencement Date: Fifteen (15) weeks following the first to
occur of: (i) the execution of an acceptable indemnity and reimbursement
agreement by and between Landlord and Tenant for the commencement of
Working Drawings and Specifications for the "Tenant Improvement Work"
specified in the attached Work Letter, or (ii) the "Execution Date" of
this Lease.
5. Term: Sixty (60) 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 Five Thousand One Hundred Fifty-Four Dollars
($35,154.00) per month, based on $1.25 per rentable square foot.
Basic Rent is subject to adjustment as follows:
Commencing twelve (12) months following the Commencement Date, the Basic
Rent shall be Thirty Six Thousand Five Hundred Sixty Dollars ($36,560.00)
per month, based on $1.30 per rentable square foot.
Commencing twenty-four (24) months following the Commencement Date, the
Basic Rent shall be Thirty Seven Thousand Nine Hundred Sixty-Six Dollars
($37,966.00) per month, based on $1.35 per rentable square foot.
Commencing thirty-six (36) months following the Commencement Date, the
Basic Rent shall be Thirty Nine Thousand Three Hundred Seventy-Two Dollars
($39,372.00) per month, based on $1.40 per rentable square foot.
Commencing forty-eight (48) months following the Commencement Date, the
Basic Rent shall be Forty Thousand Seven Hundred Seventy-Eight Dollars
($40,778.00) per month, based on $1.45 per rentable square foot.
7. Guarantor(s): None
8. Floor Area: Approximately 28,123 rentable square feet
9. Security Deposit: $44.856.00
10. Broker(s): Xxxxxx Xxxxxx Associates, Inc.
11. Additional Insureds: Insignia/ESG, Inc.
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12. Address for Payments and Notices:
LANDLORD TENANT
THE IRVINE COMPANY ENDOCARE, INC.
c/o Insignia/ESG, Inc. 000 Xxxxxxxxxx Xxxxx
00 Xxxxxxxxx, Xxxxx 000 Xxxxxx, XX 00000
Xxxxxx, XX 00000
with a copy of notices to:
THE IRVINE COMPANY
dba Office Properties
X.X. Xxx 0000
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Senior Vice President, Operations
Office Properties
13. Tenant's Liability Insurance Requirement: $2,000,000.00
14. Vehicle Parking Spaces: Ninety (90)
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ARTICLE II. PREMISES
SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in Exhibit A (the "PREMISES"), containing
approximately the rentable square footage set forth as the "FLOOR AREA" in Item
8 of the Basic Lease Provisions. The Premises consist of all of the rentable
square footage within the building identified in Item 1 of the Basic Lease
Provisions (the Premises together with such building and the underlying real
property, are called the "BUILDING"), and is a portion of the project identified
in Item 2 of the Basic Lease Provisions and shown in Exhibit Y, if any (the
"PROJECT"). If the Project is not already completed, Landlord makes no
representation that the Project, if any, as shown on Exhibit Y, (a) will be
completed or that it will be constructed as shown on Exhibit Y without change,
or (b) to the extent the Project is constructed, it will not be changed from the
Project as shown on Exhibit Y. All references to "Floor Area" in this Lease
shall mean the rentable square footage set forth in Item 8 of the Basic Lease
Provisions. The rentable square footage set forth in Item 8 may include or have
been adjusted by various factors, including, without limitation, a load factor
for any vertical penetrations, stairwells or similar features or areas of the
Building. Tenant agrees that the Floor Area set forth in Item 8 shall be binding
on Landlord and Tenant for purposes of this Lease regardless of whether any
future or differing measurements of the Premises or the Building are consistent
or inconsistent with the Floor Area set forth in Item 8. Landlord acknowledges
and agrees that Landlord shall have no unilateral right to relocate Tenant to
different leased premises during the Term of this Lease.
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, the Building or the Project or their
respective suitability or fitness for any purpose, including without limitation
any representations or warranties regarding zoning or other land use matters,
and that neither Landlord nor any representative of Landlord has made any
representations or warranties regarding (i) what other tenants or uses may be
permitted or intended in the Building or the Project, (ii) any exclusivity of
use by Tenant with respect to its permitted use of the Premises as set forth in
Item 3 of the Basic Lease Provisions, or (iii) any construction of portions of
the Project not yet completed. Tenant further acknowledges that neither Landlord
nor any representative of Landlord has agreed to undertake any alterations or
additions or construct any improvements to the Premises except as expressly
provided in this Lease. As of the Commencement Date, Tenant shall be
conclusively deemed to have accepted the Premises and those portions of the
Building and Project in which Tenant has any rights under this Lease, which
acceptance shall mean that it is conclusively established that the Premises and
those portions of the Building and Project in which Tenant has any rights under
this Lease were in satisfactory condition and in conformity with the provisions
of this Lease, subject only to those defective or incomplete portions of the
Tenant Improvements constructed by Landlord pursuant to the Work Letter, if any,
attached hereto as Exhibit X ("WORK LETTER"), which Tenant shall have itemized
on a written punch list and delivered to Landlord within thirty (30) days after
the Commencement Date (as defined in Section 3.1). Nothing contained in this
Section shall affect the commencement of the Term or the obligation of Tenant to
pay rent, but the acceptance of the Premises described in the foregoing shall
not occur, nor shall Tenant's rental obligations commence, if there remains
uncompleted any item on the punch list which precludes or materially interferes
with Tenant's utilization of the Premises for its business operations thereon.
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. Upon not less than sixty (60) days
prior written notice to Tenant, Landlord shall have the right to change the
name, address, number or designation of the Building or Project without
liability to Tenant.
SECTION 2.4. LANDLORD'S RESPONSIBILITIES.
(a) Notwithstanding the provisions of Section 7.2 of this Lease,
Landlord shall correct, repair and/or replace, any non-compliance of the
Building exterior, the Tenant Improvements and/or the Common Areas with all
applicable building permits and codes in effect as of the Commencement Date,
including without limitation, the provisions of Title III of the Americans With
Disabilities Act ("ADA") in effect as of the Commencement Date. Said costs of
compliance shall be Landlord's sole cost and shall not be part of Project Costs.
Landlord shall correct, repair or replace any non-compliance of the Building
exterior, the Tenant Improvements and the Common Areas with any revisions or
amendments to the applicable building codes and the ADA which become effective
after the Commencement Date, provided that the amortized cost of such repairs or
replacements (amortized over the useful life thereof using a market cost of
funds reasonably determined by Landlord) shall be included as Project Costs
payable by Tenant. All other ADA compliance issues which pertain to the
Premises, including without limitation, in connection with Tenant's construction
of any alterations or other improvements in the Premises (and any resulting ADA
compliance requirements in the Common Areas if Landlord shall consent to same as
more particularly provided in Section 7.3 of this Lease) and the operation of
Tenant's business and employment practices in the Premises, shall be the
responsibility of Tenant at its sole cost and expense. The repairs, corrections
or replacements required of Landlord or of Tenant under the foregoing provisions
of this Section 2.4(a) shall be made promptly following notice of non-compliance
from any applicable governmental agency.
(b) Landlord warrants to Tenant that the heating, ventilation and air
conditioning systems serving the Premises shall be in good operating condition
on the Commencement Date, and that the Building and the Tenant Improvements
shall be free of latent defects in the construction thereof during the initial
twelve (12) months of the Term. Provided that Tenant shall notify Landlord of a
non-compliance with the foregoing warranty on or before the expiration of the
twelfth (12th) month of the Term, then Landlord shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Tenant
setting forth the nature and extent of such non-compliance, rectify same at
Landlord's cost and expense. Further, in connection with the construction of the
Tenant Improvements pursuant to the Work Letter, Landlord shall obtain customary
warranties and guaranties from the
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contractor(s) performing such work and/or the manufacturers of equipment
installed therein, but shall be under no obligation to incur additional expense
in order to obtain or extend such warranties. If Tenant is required to make
repairs to any component of the Premises or any of its systems not covered by
the Landlord's warranty, then Landlord shall, upon request by Tenant, use its
good faith efforts to pursue its rights under any such warranties for the
benefit of Tenant.
ARTICLE III. TERM
SECTION 3.1. GENERAL. The term of this Lease ("TERM") shall be for the
period shown in Item 5 of the Basic Lease Provisions. Subject to the provisions
of Section 3.2 below, the Term shall commence ("COMMENCEMENT DATE") on the
earlier of (a) the date Tenant acquires possession of or commences use of the
Premises for any purpose other than any construction permitted to be performed
by Tenant pursuant to the Work Letter, or (b) the date the Premises are tendered
to Tenant, provided that the Premises shall not be tendered to Tenant until any
approvals by relevant governmental authorities of the tenant improvements
constructed by Landlord pursuant to the Work Letter ("TENANT IMPROVEMENTS")
which are required for occupancy of the Premises have been obtained (as
evidenced by written approval thereof in accordance with the building permits
issued for the Tenant Improvements or issuance of a temporary or final
certificate of occupancy for the Premises). The date on which this Lease is
scheduled to terminate is referred to as the "EXPIRATION DATE." Prior to
Tenant's taking of possession of the Premises, the parties shall memorialize on
a form provided by Landlord the actual Commencement Date and the Expiration Date
of this Lease. Tenant's failure to execute that form shall not affect the
validity of Landlord's determination of those dates.
SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date as set forth in Item 4 of the Basic Lease Provisions
("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 tenders possession of the Premises in accordance with
Section 3.1(b) above, except that if Landlord cannot so tender possession of the
Premises on or before the Estimated Commencement Date due to any action or
inaction of Tenant (including without limitation any Tenant Delay described in
the Work Letter, if any, attached to this Lease), then the Commencement Date
shall be deemed to have occurred 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 action
or inaction, including without limitation any Tenant Delay described in the
attached Work Letter, if any.
Notwithstanding anything to the contrary contained in this Section 3.2, if
for any reason other than "Tenant Delays" (as defined in the Work Letter
attached hereto), or other matters beyond Landlord's reasonable control, the
actual Commencement Date has not occurred by the date that is one hundred twenty
(120) days following the Estimated Commencement Date, then Tenant may, by
written notice to Landlord given at any time thereafter but prior to the actual
occurrence of the Commencement Date, elect to terminate this Lease.
Notwithstanding the foregoing, if at any time during the construction period,
Landlord reasonably believes that the Commencement Date will not occur on or
before one hundred twenty (120) days following the Estimated Commencement Date,
Landlord may notify Tenant in writing of such fact and of a new outside date on
or before which the Commencement Date will occur, and Tenant must elect within
ten (10) days of receipt of such notice to either terminate this Lease or waive
its right to terminate this Lease provided the Commencement Date occurs on or
prior to the new outside date established by Landlord in such notice to Tenant.
Tenant's failure to elect to terminate this Lease within such ten (10) day
period shall be deemed Tenant's waiver of its right to terminate this Lease as
provided in this paragraph as to the previous outside date, but not as to the
new outside date established by said notice.
SECTION 3.3. RIGHT TO EXTEND THIS LEASE. Provided that no Event of
Default has occurred 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, then Tenant may extend the Term of this Lease for one (1) period of sixty
(60) months. Tenant shall exercise its right to extend the Term by and only by
delivering to Landlord, not less than nine (9) months or more than twelve (12)
months prior to the expiration date of the Term, Tenant's irrevocable written
notice of its commitment to extend (the "COMMITMENT NOTICE"). The Basic Rent
payable under the Lease during any extension of the Term shall be determined as
provided in the following provisions.
If Landlord and Tenant have not by then been able to agree upon the Basic
Rent for the extension of the Term, then within one hundred twenty (120) and
ninety (90) days prior to the expiration date of the Term, Landlord shall notify
Tenant in writing of the Basic Rent that would reflect the prevailing market
rental rate for a 60-month renewal of comparable space in properties of like
product types and management in the Irvine Spectrum with appropriate adjustment
for location and quality of the property (together with any increases thereof
during the extension period) as of the commencement of the extension period
("LANDLORD'S DETERMINATION"). Should Tenant disagree with the Landlord's
Determination, then Tenant shall, not later than twenty (20) days thereafter,
notify Landlord in writing of Tenant's determination of those rental terms
("TENANT'S DETERMINATION"). In no event, however, shall Landlord's Determination
or Tenant's Determination be less than the Basic Rent payable by Tenant during
the final month of the initial Term. Within ten (10) days following delivery of
the Tenant's Determination, the parties shall attempt to agree on an appraiser
to determine the fair market rental. If the parties are unable to agree in that
time, then each party shall designate an appraiser within ten (10) days
thereafter. Should either party fail to so designate an appraiser within that
time, then the appraiser designated by the other party shall determine the fair
market rental. Should each of the parties timely designate an appraiser, then
the two appraisers so designated shall appoint a third appraiser who shall,
acting alone, determine the fair market rental for the Premises. Any appraiser
designated hereunder shall have an MAI certification with not less than five (5)
years experience in the valuation of commercial industrial buildings in the
vicinity of the Irvine Spectrum.
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Within thirty (30) days following the selection of the appraiser and such
appraiser's receipt of the Landlord's Determination and the Tenant's
Determination, the appraiser shall determine whether the rental rate determined
by Landlord or by Tenant more accurately reflects the fair market rental rate
for the 60-month renewal of the Lease for the Premises, as reasonably
extrapolated to the commencement of the extension period. Accordingly, either
the Landlord's Determination or the Tenant's Determination shall be selected by
the appraiser as the fair market rental rate for the extension period. In making
such determination, the appraiser shall not attribute any factor for market
tenant improvement allowances or brokerage commissions in making its
determination of the fair market rental rate. At any time before the decision of
the appraiser is rendered, either party may, by written notice to the other
party, accept the rental terms submitted by the other party, in which event such
terms shall be deemed adopted as the agreed fair market rental. The fees of the
appraiser(s) shall be borne entirely by the party whose determination of the
fair market rental rate was not accepted by the appraiser.
Within twenty (20) days after the determination of the fair market rental,
Landlord shall prepare an appropriate amendment to this Lease for the extension
period, and Tenant shall execute and return same to Landlord within twenty (20)
days. Should the fair market rental not be established by the commencement of
the extension period, then Tenant shall continue paying rent at the rate in
effect during the last month of the initial Term, and a lump sum adjustment
shall be made promptly upon the determination of such new rental.
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. Tenant shall have no other right to extend the Term beyond the single
sixty (60) month extension period created by this paragraph. 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.
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, the rental amount for the
Premises shown in Item 6 of the Basic Lease Provisions (the "BASIC RENT"),
including subsequent adjustments, if any. Any rental adjustment to Basic Rent
shown in Item 6 shall be deemed to occur on the specified monthly anniversary of
the Commencement Date, whether or not the Commencement 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 for the payment of Basic Rent. 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 and one (1)
month's estimated Tenant's Share of Operating Expenses (as defined in Section
4.2) shall be delivered to Landlord concurrently with Tenant's execution of this
Lease and shall be applied against the Basic Rent and Operating Expenses first
due hereunder.
SECTION 4.2. OPERATING EXPENSES.
(a) Tenant shall pay to Landlord, as additional rent, Tenant's Share of
all Operating Expenses, as defined in Section 4.2(f), incurred by Landlord in
the operation of the Building and the Project. The term "TENANT'S SHARE" means
one hundred percent (100%) of any Operating Expenses determined by Landlord to
benefit or relate substantially to the Building rather than the entire Project,
plus that portion of any Operating Expenses determined by multiplying the cost
of such item by a fraction, the numerator of which is the Floor Area and the
denominator of which is the total rentable square footage, as determined from
time to time by Landlord, of (i) all of the buildings in the Project, as
determined by Landlord, for expenses determined by Landlord to benefit or relate
substantially to the entire Project rather than any specific building or (ii)
all or some of the buildings within the Project as well as all or a portion of
other property owned by Landlord and/or its affiliates, for expenses which
benefit or relate to such buildings within the Project and such other real
property. In the event that Landlord determines in its sole and absolute
discretion that any premises within any building within the Project or any
portion of a building or project within a larger area incurs a non-proportional
benefit from any expense, or is the non-proportional cause of any such expense,
Landlord may, allocate a greater percentage of such Operating Expense to such
premises, building or project, as applicable. The full amount of any management
fee payable by Landlord for the management of Tenant's Premises that is
calculated as a percentage of the rent payable by Tenant shall be paid in full
by Tenant as additional rent. Notwithstanding anything to the contrary contained
in this Section 4.2(a), commencing with the Expense Recovery Period ended June
30, 2003 and for each Expense Recovery Period thereafter during the Term: (A)
Tenant's Share of all Operating Expenses except for Property Taxes, insurance
and utility costs (the "CONTROLLABLE OPERATING EXPENSES"), shall not exceed one
hundred ten percent (110%) of Tenant's Share of the Controllable Operating
Expenses for the immediately preceding Expense Recovery Period, and (B) Tenant's
Share of "capitalized" investments and/or replacements included in Operating
Expenses, except for those "capital" expenditures described in Section 5.1
and/or "capital" costs resulting from Tenant's particular use of the Premises,
shall not exceed one hundred eight percent (108%) of Tenant's Share of such
capitalized investments and/or replacements for the immediately preceding
Expense Recovery Period.
(b) Prior to the start of each full Expense Recovery Period (as defined
in this Section 4.2), Landlord shall give Tenant a written estimate of the
amount of Tenant's Share of Operating Expenses for the applicable Expense
Recovery Period. Failure to provide such estimate shall not relieve Tenant from
its obligation to pay Tenant's Share of Operating Expenses or estimated amounts
thereof, if and when Landlord provides such estimate or final payment amount.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in
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advance concurrently with payments of 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 monthly the estimated Tenant's Share of
Operating Expenses in effect during the prior Expense Recovery Period; provided
that when the new estimate is delivered to Tenant, Tenant shall, at the next
monthly payment date, pay any accrued estimated Tenant's Share of Operating
Expenses based upon the new estimate. For purposes hereof, "EXPENSE RECOVERY
PERIOD" shall mean every twelve month period during the Term (or portion thereof
for the first and last lease years) commencing July 1 and ending June 30,
provided that Landlord shall have the right to change the date on which an
Expense Recovery Period commences in which event appropriate reasonable
adjustments shall be made to Tenant's Share of Operating Expenses so that the
amount payable by Tenant shall not materially vary as a result of such change.
(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 Tenant's Share of Operating Expenses
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 of Tenant's Share of Operating Expenses, if any, to the
actual Tenant's Share of Operating Expenses as shown by the annual statement.
Any delay or failure by Landlord in delivering any statement hereunder shall not
constitute a waiver of Landlord's right to require Tenant to pay Tenant's Share
of Operating Expenses pursuant hereto. Any amount due Tenant shall be credited
against installments next coming due under this Section 4.2, and any deficiency
shall be paid by Tenant together with the next installment. Should Tenant fail
to object in writing to Landlord's determination of Tenant's Share of Operating
Expenses, or fail to give written notice of its intent to audit Landlord's
Operating Expenses pursuant to the provisions of the next succeeding paragraph,
within sixty (60) days following delivery of Landlord's expense statement,
Landlord's determination of Tenant's Share of Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on the
parties for all purposes and any future claims to the contrary shall be barred.
Provided no Event of Default has occurred, Tenant shall have the
right to cause a certified public accountant, engaged on a non-contingency fee
basis, to audit Operating Expenses by inspecting Landlord's general ledger of
expenses not more than once during any Expense Recovery Period. However, to the
extent that insurance premiums or any other component of Operating Expenses is
determined by Landlord on the basis of an internal allocation of costs utilizing
information Landlord in good xxxxx xxxxx proprietary, such expense component
shall not be subject to audit so long as it does not exceed the amount per
square foot typically imposed by landlords of other first class business parks
in Orange County, California. Tenant shall give notice to Landlord of Tenant's
intent to audit within sixty (60) days after Tenant's receipt of Landlord's
expense statement which sets forth Tenant's Share of 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
such accounts 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 the event of a dispute between Landlord and Tenant regarding such
audit, such dispute shall be submitted and resolved by binding arbitration
pursuant to Section 22.7 below. 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 forfeit its right to any
reconciliation or cost reimbursement payment from Landlord due to said audit
(and any such payment theretofore made by Landlord shall be promptly returned by
Tenant), and Tenant shall have no further audit rights under this Lease.
Notwithstanding the foregoing, Tenant shall have no right of audit with respect
to any Expense Recovery Period unless the total Operating Expenses per square
foot for such Expense Recovery Period, as set forth in Landlord's annual expense
reconciliation, exceed the total Operating Expenses per square foot during the
initial Expense Recovery Period during the Term, as increased by the percentage
change in the United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for all Urban Consumers, Los Angeles -- Riverside -- Orange
County Area Average, all items (1982-84 = 100) (the "Index"), which change in
the Index shall be measured by comparing the Index published for January of the
initial Expense Recovery Period during the Term with the Index published for
January of the applicable Expense Recovery Period.
(d) Even though this Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant's Share of Operating
Expenses for the Expense Recovery Period in which this Lease terminates, Tenant
shall within thirty (30) days of written notice pay the entire increase over the
estimated Tenant's Share of Operating Expenses already paid. Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
thirty (30) days after such final determination..
(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 Tenant's Share of
Operating Expenses for the year, then the estimate of Tenant's Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to Tenant's Share of the increase. If
Landlord gives Tenant written notice of the amount or estimated amount of the
increase, the month in which the increase will or has become effective, then
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of the estimated Tenant's Share of Operating Expenses as provided in Section
4.2(b), commencing with the month following Tenant's receipt of Landlord's
notice. In addition, Tenant shall pay upon written request any such increases
which were incurred prior to the Tenant commencing to pay such monthly increase.
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(f) The term "OPERATING EXPENSES" shall mean and include all Project
Costs, as defined in subsection (g), and Property Taxes, as defined in
subsection (h).
(g) The term "PROJECT COSTS" shall include all expenses of operation,
repair and maintenance of the Building and the Project, including without
limitation 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 and deductibles and/or reasonable premium
and deductible equivalents should Landlord elect to self-insure all or any
portion of any risk that Landlord is authorized to insure hereunder; license,
permit, and inspection fees; heat; light; power; air conditioning; supplies;
materials; equipment; tools; the cost of any environmental, insurance, tax or
other consultant utilized by Landlord in connection with the Building and/or
Project; establishment of reasonable reserves for replacements and/or repairs;
costs incurred in connection with compliance with any laws or changes in laws
applicable to the Building or the Project; the cost of any capital investments
or replacements (other than tenant improvements for specific tenants) amortized
over the useful life of such capital investments or replacements (using a
"market" cost of funds interest factor, not to exceed Landlord's lender's per
annum "prime" rate plus two percent [2%] ) with such amortized amount includable
in Project Costs for each such year of useful life during the Term; costs
associated with the maintenance of an air conditioning, heating and ventilation
service agreement, and maintenance of an intrabuilding network cable service
agreement for any intrabuilding network cable telecommunications lines within
the Project, and any other installation, maintenance, repair and replacement
costs associated with such lines; capital costs associated with a requirement
related to demands on utilities by Project tenants, including without limitation
the cost to obtain additional phone connections; 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 a reasonable overhead/management
fee for the professional operation of the Project. It is understood and agreed
that Project Costs may include competitive charges for direct services provided
by any subsidiary, division or affiliate of Landlord. Project Costs shall not
include costs and expenses related to Hazardous Materials for which Tenant is
not responsible as expressly provided in Section 5.3 of this Lease.
(h) The term "PROPERTY TAXES" as used herein shall include any form of
federal, state, county or local government or municipal taxes, fees, charges or
other impositions of every kind (whether general, special, ordinary or
extraordinary) related to the ownership, leasing or operation of the Premises,
Building or Project, including without limitation, 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, 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, (iii) all assessments and
fees for public improvements, services, and facilities and impacts thereon,
including without limitation arising out of any Community Facilities Districts,
"Xxxxx Xxxx" districts, similar assessment districts, and any traffic impact
mitigation assessments or fees; (iv) 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 (v) taxes based on the
receipt of rent (including gross receipts or sales taxes applicable to the
receipt of rent), and (vi) costs and expenses incurred in contesting the amount
or validity of any Property Tax by appropriate proceedings. Notwithstanding the
foregoing, general net income or franchise taxes imposed against Landlord shall
be excluded.
SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of all of Tenant's obligations under this Lease (the
"SECURITY DEPOSIT"). 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. Subject to the last sentence of this Section,
the Security Deposit shall be understood and agreed to be the property of
Landlord upon Landlord's receipt thereof, and may be utilized by Landlord in its
sole and absolute discretion towards the payment of all expenses by Landlord for
which Tenant would be required to reimburse Landlord under this Lease, including
without limitation brokerage commissions and Tenant Improvement costs. Upon any
Event of Default by Tenant (as defined in Section 14.1), Landlord may, in its
sole and absolute discretion, retain, use or apply the whole or any part of the
Security Deposit to pay any sum which Tenant is obligated to pay under this
Lease, sums that Landlord may expend or be required to expend by reason of the
Event of Default by Tenant or any loss or damage that Landlord may suffer by
reason of the Event of Default or costs incurred by Landlord in connection with
the repair or restoration of the Premises pursuant to Section 15.3 of this Lease
upon expiration or earlier termination of this Lease. In no event shall Landlord
be obligated to apply the Security Deposit upon an Event of Default and
Landlord's rights and remedies resulting from an Event of Default, including
without limitation, Tenant's failure to pay Basic Rent, Tenant's Share of
Operating Expenses or any other amount due to Landlord pursuant to this Lease,
shall not be diminished or altered in any respect due to the fact that Landlord
is holding the Security Deposit. If any portion of the Security Deposit is
applied by Landlord as permitted by this Section, 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 original amount. If Tenant
fully performs its obligations under this Lease, the Security Deposit shall be
returned to Tenant (or, at Landlord's option, to the last assignee of Tenant's
interest in this Lease) within thirty (30) days after the expiration of the
Term, provided that Tenant agrees that Landlord may retain the Security Deposit
to the extent and until such time as all amounts due from Tenant in accordance
with this Lease have been determined and paid in full and Tenant agrees that
Tenant shall have no claim against Landlord for Landlord's retaining such
Security Deposit to the extent provided in this Section.
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, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
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Tenant from all relevant and required governmental agencies and authorities. 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, at its expense, shall procure,
maintain and make available for Landlord's inspection throughout the Term, all
governmental approvals, licenses and permits required for the proper and lawful
conduct of Tenant's permitted use of the Premises. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way interfere
with the rights of other occupants of 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 perform any
work or conduct any business whatsoever in the Project other than inside the
Premises. 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. Tenant shall comply at its expense with
all present and future laws, ordinances, restrictions, regulations, orders,
rules 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 requirements, whether or not Tenant's compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall comply at its expense with all existing covenants,
conditions, easements or restrictions now affecting or encumbering the Building
and/or Project, including without limitation the payment by Tenant of any
periodic or special dues or assessments charged against the Premises or Tenant
which may be allocated to the Premises or Tenant in accordance with the
provisions thereof. Tenant shall also comply at its expense with any future
amendments or modifications to such existing covenants, conditions, easements or
reservations, and with any future covenants, conditions, easements or
restrictions hereafter affecting or encumbering the Building and/or the Project,
provided same do not materially impair Tenant's use and enjoyment of the
Premises. Tenant shall promptly upon demand reimburse Landlord for any
additional insurance premium charged by reason of Tenant's failure to comply
with the provisions of this Section, and shall indemnify Landlord from any
liability and/or expense resulting from Tenant's noncompliance. Notwithstanding
anything to the contrary contained in this Section 5.1, in the event Tenant's
obligation for compliance with all future and present laws, ordinances,
restrictions, regulations, orders, rules and requirements of all governmental
authorities, and with all present and future covenants, conditions, easements or
restrictions now or hereafter affecting or encumbering the Building and/or the
Project, results in a "capital" improvement on Tenant's part (or Tenant's being
obligated to reimburse Landlord for a "capital" improvement), Tenant shall only
be responsible for the amortized cost of such "capital" improvement (amortized
using a "market" cost of funds interest factor not to exceed Landlord's lender's
per annum "prime" rate pus two percent [2%] ) over the useful life of said
improvement during the Term, except in the event such obligation for such
capital improvement is required due to Tenant's particular use of the Premises
(in which case Tenants shall be fully responsible for the entire cost and
installation of each "capital" investment.
SECTION 5.2. SIGNS. Provided Tenant continues to occupy the entire
Premises, Tenant shall have the non-exclusive right to one (1) exterior sign on
the Building in a location designated by Landlord, subject to Landlord's right
of prior approval that such exterior signage is in compliance with the Signage
Criteria (defined below). Except as provided in the foregoing or as otherwise
approved in writing by Landlord, in its sole and absolute discretion, Tenant
shall have no right to maintain signs in any location in, on or about the
Premises, the Building or the Project and shall not place or erect any signs
that are visible from the exterior of the Building. The size, design, graphics,
material, style, color and other physical aspects of any permitted sign shall be
subject to Landlord's written determination, as determined solely by Landlord,
prior to installation, that signage is in compliance with any covenants,
conditions or restrictions encumbering the Premises and Landlord's signage
program for the Project, as in effect from time to time and approved by the City
in which the Premises are located ("SIGNAGE CRITERIA"). Prior to placing or
erecting any such signs, Tenant shall obtain and deliver to Landlord a copy of
any applicable municipal or other governmental permits and approvals and comply
with any applicable insurance requirements for such signage. Tenant shall be
responsible for the cost of any permitted sign, including the fabrication,
installation, maintenance and removal thereof and the cost of any permits
therefor. If Tenant fails to maintain its sign in good condition, or if Tenant
fails to remove same upon termination of this Lease and repair and restore any
damage caused by the sign or its removal, Landlord may do so at Tenant's
expense. Landlord shall have the right to temporarily remove any signs in
connection with any repairs or maintenance in or upon the Building. The term
"sign" as used in this Section shall include all signs, designs, monuments,
displays, advertising materials, logos, banners, projected images, pennants,
decals, pictures, notices, lettering, numerals or graphics.
SECTION 5.3. HAZARDOUS MATERIALS.
(a) For purposes of this Lease, the term "HAZARDOUS MATERIALS" includes
(i) any "hazardous material" as defined in Section 25501(o) of the California
Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or
asbestos, (iii) any toxic or hazardous materials, substances, wastes or
materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result in
liability to any person or entity as result of such person's possession, use,
release or distribution of such substance or matter under any statutory or
common law theory.
(b) Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written consent of Landlord, which consent may be
given or withheld in Landlord's sole and absolute discretion. Notwithstanding
the foregoing, Tenant shall have the right, without obtaining prior written
consent of Landlord: (A) to utilize within the Premises a reasonable quantity of
standard office products that may contain Hazardous Materials (such as photocopy
toner, "White Out", and the like), provided however, that (i) Tenant shall
maintain such products in their original retail packaging, shall follow all
instructions on such packaging with respect to the storage, use and disposal of
such products, and shall otherwise comply with all applicable laws with respect
to such products, and (ii) all of the other terms and provisions of this Section
5.3 shall apply with respect to Tenant's storage, use and disposal of all such
products, and (B) to utilize within the Premises those Hazardous Materials in
kind and content listed on the Environmental Questionnaire
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delivered to Landlord prior to the execution of this Lease, provided that Tenant
shall comply with all applicable laws with respect to such Hazardous Materials
and all of the other terms and provisions of this Section 5.3 shall apply with
respect to Tenant's storage, use and disposal of such Hazardous Materials.
Landlord may, in its sole and absolute discretion, place such conditions as
Landlord deems appropriate with respect to Tenant's use of any such Hazardous
Materials, and may further require that Tenant demonstrate that any such
Hazardous Materials are necessary or useful to Tenant's business and will be
generated, stored, used and disposed of in a manner that complies with all
applicable laws and regulations pertaining thereto and with good business
practices. Tenant understands that Landlord may utilize an environmental
consultant to assist in determining conditions of approval in connection with
the storage, generation, release, disposal or use of Hazardous Materials by
Tenant on or about the Premises, and/or to conduct periodic inspections of the
storage, generation, use, release and/or disposal of such Hazardous Materials by
Tenant on and from the Premises, and Tenant agrees that any costs incurred by
Landlord in connection therewith shall be reimbursed by Tenant to Landlord as
additional rent hereunder upon demand; however, Tenant shall have no obligation
to reimburse Landlord for any costs incurred in connection with any
environmental consultant retained by Landlord pursuant to this Section unless
such costs are covered by Tenant's indemnity obligations contained in this
Section 5.3.
(c) Prior to the execution of this Lease, Tenant shall complete, execute
and deliver to Landlord an Environmental Questionnaire and Disclosure Statement
(the "ENVIRONMENTAL QUESTIONNAIRE") in the form of Exhibit B attached hereto.
The completed Environmental Questionnaire shall be deemed incorporated into this
Lease for all purposes, and Landlord shall be entitled to rely fully on the
information contained therein. On each anniversary of the Commencement Date
until the expiration or sooner termination of this Lease, Tenant shall disclose
to Landlord in writing the names and amounts of all Hazardous Materials which
were stored, generated, used, released and/or disposed of on, under or about the
Premises for the twelve-month period prior thereto, and which Tenant desires to
store, generate, use, release and/or dispose of on, under or about the Premises
for the succeeding twelve-month period. In addition, to the extent Tenant is
permitted to utilize Hazardous Materials upon the Premises, Tenant shall
promptly provide Landlord with complete and legible copies of all the following
environmental documents relating thereto: reports filed pursuant to any
self-reporting requirements; permit applications, permits, monitoring reports,
emergency response or action plans, workplace exposure and community exposure
warnings or notices and all other reports, disclosures, plans or documents (even
those which may be characterized as confidential) relating to water discharges,
air pollution, waste generation or disposal, and underground storage tanks for
Hazardous Materials; orders, reports, notices, listings and correspondence (even
those which may be considered confidential) of or concerning the release,
investigation of, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant's use, handling, storage,
release and/or disposal of Hazardous Materials.
(d) Landlord and its agents shall have the right, but not the
obligation, to inspect, sample and/or monitor the Premises and/or the soil or
groundwater thereunder at any time to determine whether Tenant is complying with
the terms of this Section 5.3, and in connection therewith Tenant shall provide
Landlord with full access to all facilities, records and personnel related
thereto. If Tenant is not in compliance with any of the provisions of this
Section 5.3, or in the event of a release of any Hazardous Material on, under or
about the Premises caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees, Landlord and its agents shall have the
right, but not the obligation, without limitation upon any of Landlord's other
rights and remedies under this Lease, to immediately enter upon the Premises
without notice and to discharge Tenant's obligations under this Section 5.3 at
Tenant's expense, including without limitation the taking of emergency or
long-term remedial action. Landlord and its agents shall endeavor to minimize
interference with Tenant's business in connection therewith, but shall not be
liable for any such interference. In addition, Landlord, at Tenant's expense,
shall have the right, but not the obligation, to join and participate in any
legal proceedings or actions initiated in connection with any claims arising out
of the storage, generation, use, release and/or disposal by Tenant or its
agents, employees, contractors, licensees or invitees of Hazardous Materials on,
under, from or about the Premises.
(e) If the presence of any Hazardous Materials on, under, from or about
the Premises or the Project caused or permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises or the Project, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises and the Project and any other affected real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not, without Landlord's prior
written consent, which consent may be given or withheld in Landlord's sole and
absolute discretion, take any remedial action in response to the presence of any
Hazardous Materials on, from, under or about the Premises or the Project or any
other affected real or personal property owned by Landlord or enter into any
similar agreement, consent, decree or other compromise with any governmental
agency with respect to any Hazardous Materials claims; provided however,
Landlord's prior written consent shall not be necessary in the event that the
presence of Hazardous Materials on, under or about the Premises or the Project
or any other affected real or personal property owned by Landlord (i) imposes an
immediate threat to the health, safety or welfare of any individual and (ii) is
of such a nature that an immediate remedial response is necessary and it is not
possible to obtain Landlord's consent before taking such action. To the fullest
extent permitted by law, Tenant shall indemnify, hold harmless, protect and
defend (with attorneys acceptable to Landlord) Landlord and any successors to
all or any portion of Landlord's interest in the Premises and the Project and
any other real or personal property owned by Landlord from and against any and
all liabilities, losses, damages, diminution in value, judgments, fines,
demands, claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
use, generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
9
Premises, the Building or the Project and any other real or personal property
owned by Landlord caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees. Such indemnity obligation shall specifically
include, without limitation, the cost of any required or necessary repair,
restoration, cleanup or detoxification of the Premises, the Building and the
Project and any other real or personal property owned by Landlord, the
preparation of any closure or other required plans, whether or not such action
is required or necessary during the Term or after the expiration of this Lease
and any loss of rental due to the inability to lease the Premises or any portion
of the Building or Project as a result of such Hazardous Material or remediation
thereof. If it is at any time discovered that Tenant or its agents, employees,
contractors, licensees or invitees may have caused or permitted the release of a
Hazardous Material on, under, from or about the Premises, the Building or the
Project or any other real or personal property owned by Landlord, Tenant shall,
at Landlord's request, immediately prepare and submit to Landlord a
comprehensive plan, subject to Landlord's approval, specifying the actions to be
taken by Tenant to return the Premises, the Building or the Project or any other
real or personal property owned by Landlord to the condition existing prior to
the introduction of such Hazardous Materials. Upon Landlord's approval of such
cleanup plan, Tenant shall, at its expense, and without limitation of any rights
and remedies of Landlord under this Lease or at law or in equity, immediately
implement such plan and proceed to cleanup such Hazardous Materials in
accordance with all applicable laws and as required by such plan and this Lease.
The provisions of this Section 5.3(e) shall expressly survive the expiration or
sooner termination of this Lease.
(f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
certain facts relating to Hazardous Materials at the Project known by Landlord
to exist as of the date of this Lease, as more particularly described in Exhibit
C attached hereto. Tenant shall have no liability or responsibility with respect
to the Hazardous Materials facts described in Exhibit C, nor with respect to any
Hazardous Materials which Tenant proves were neither released on the Premises
during the Term nor caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees. Notwithstanding the preceding two sentences,
Tenant agrees to notify its agents, employees, contractors, licensees, and
invitees of any exposure or potential exposure to Hazardous Materials at the
Premises that Landlord brings to Tenant's attention. Tenant hereby acknowledges
that this disclosure satisfies any obligation of Landlord to Tenant pursuant to
California Health & Safety Code Section 25359.7, or any amendment or substitute
thereto or any other disclosure obligations of Landlord. Landlord shall take
responsibility, at its sole cost and expense, for any governmentally-ordered
clean-up, remediation, removal, disposal, neutralization or other treatment of
Hazardous Materials conditions described in this Section 5.3(f). The foregoing
obligation on the part of Landlord shall include the reasonable costs
(including, without limitation, reasonable attorney's fees) of defending Tenant
(with attorneys reasonably acceptable to Tenant) from and against any legal
action or proceeding instituted by any governmental agency in connection with
such clean-up, remediation, removal, disposal, neutralization or other treatment
of such conditions, provided that Tenant promptly tenders such defense to
Landlord.
(g) In the event of any foreclosure of a mortgage or deed of trust
encumbering the Building and/or the Project, the obligations on the part of
Landlord contained in Section 5.3(f) above shall be personal to Landlord and
shall not be binding on nor inure against any lender acquiring the Building
and/or the Project by foreclosure of its mortgage or deed of trust or deed in
lieu of foreclosure, or any successor in interest to such lender.
ARTICLE VI. COMMON AREAS; SERVICES
SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, telecommunications
service, refuse pickup, janitorial service, interior landscape maintenance and
all other utilities, materials and services furnished directly to Tenant or the
Premises or used by Tenant in, on or about the Premises during the Term,
together with any taxes thereon. If any utilities or services are not separately
metered or assessed to Tenant, Landlord shall make a reasonable determination of
Tenant's proportionate share of the cost of such utilities and services,
including without limitation, after-hours HVAC usage, and Tenant shall pay such
amount to Landlord, as an item of additional rent, within ten (10) days after
receipt of Landlord's statement or invoice therefor. Alternatively, Landlord may
elect to include such cost in the definition of Project Costs in which event
Tenant shall pay Tenant's proportionate share of such costs in the manner set
forth in Section 4.2. Landlord shall not be liable for damages or otherwise for
any failure or interruption of any utility or other service furnished to the
Premises, and no such failure or interruption shall be deemed an eviction or
entitle Tenant to terminate this Lease or withhold or xxxxx any rent due
hereunder. Landlord shall at all reasonable times have free access to the
Building and Premises to install, maintain, repair, replace or remove all
electrical and mechanical installations of Landlord. Tenant acknowledges that
the costs incurred by Landlord related to providing above-standard utilities to
Tenant, including, without limitation, telephone lines, may be charged to
Tenant.
Notwithstanding the foregoing, if as a result of the direct actions of
Landlord, its employees, contractors or authorized agents, for more than three
(3) consecutive business days following written notice to Landlord there is no
HVAC or electricity services to all or a portion of the Premises, or such an
interruption of other essential utilities and building services, such as fire
protection or water, so that all or a portion of the Premises cannot be used by
Tenant, then Tenant's Basic Rent (or an equitable portion of such Basic Rent to
the extent that less than all of the Premises are affected) shall thereafter be
abated until the Premises are again usable by Tenant; provided, however, that if
Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant's purposes,
as for example, bringing in portable air-conditioning equipment, then there
shall not be an abatement of Basic Rent. The foregoing provisions shall be
Tenant's sole recourse and remedy in the event of such an interruption of
services, and shall not apply in case of the actions of parties other than
Landlord, its employees, contractors or authorized agents, or in the case of
damage to, or destruction of, the Premises (which shall be governed by the
provisions of Article XI of the Lease). Any disputes concerning the foregoing
provisions shall be submitted to and resolved by JAMS arbitration pursuant to
Section 22.7 of this Lease.
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SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Project. The term "COMMON
AREAS" shall mean all areas which are not held for exclusive use by persons
entitled to occupy space, and all other appurtenant areas and improvements
within the Project 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 electrical rooms and roof access entries, 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 operate and maintain
the Common Areas in the manner Landlord may determine to be appropriate in a
manner consistent with first-class business properties in the Irvine Spectrum.
All costs incurred by Landlord for the maintenance and operation of the Common
Areas shall be included in Project Costs except to the extent any particular
cost incurred is related to or associated with a specific tenant and can be
charged to such tenant of the Project. Landlord shall at all times during the
Term have exclusive control of the Common Areas, and may restrain or permit 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 or use of Premises, including without limitation,
planters and furniture. 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 reason deemed sufficient
by Landlord, without liability to Landlord.
SECTION 6.4. PARKING. Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 14 of the Basic Lease Provisions, which spaces
shall be unreserved and unassigned, on those portions of the Common Areas
designated by Landlord for parking. Tenant shall not use more parking spaces
than such number. All parking spaces shall be used only for parking of vehicles
no larger than full size passenger automobiles, sports utility vehicles or
pickup trucks. Tenant shall not permit or allow any vehicles that belong to or
are controlled by Tenant or Tenant's employees, suppliers, shippers, customers
or invitees to be loaded, unloaded or parked in areas other than those
designated by Landlord for such activities. If Tenant permits or allows any of
the prohibited activities described above, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that Landlord may
have, to remove or tow away the vehicle involved and charge the costs to Tenant.
Parking within the Common Areas shall be limited to striped parking stalls, and
no parking shall be permitted in any driveways, access ways or in any area which
would prohibit or impede the free flow of traffic within the Common Areas. There
shall be no parking of any vehicles for longer than a forty-eight (48) hour
period unless otherwise authorized by Landlord, and vehicles which have been
abandoned or parked in violation of the terms hereof may be towed away at the
owner's expense. Nothing contained in this Lease shall be deemed to create
liability upon Landlord 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, unless ultimately determined to be
caused by the sole active negligence or willful misconduct of Landlord. Landlord
shall have the right to establish, and from time to time amend, and to enforce
against all users all reasonable rules and regulations (including the
designation of areas for employee parking) that Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of parking
within the Common Areas. Landlord shall have the right to construct, maintain
and operate lighting facilities within the parking areas; to change the area,
level, location and arrangement of the parking areas and improvements therein;
to restrict parking by tenants, their officers, agents and employees to employee
parking areas; after the expiration of the initial 60-month Term of this Lease,
to enforce parking charges (by operation of meters or otherwise); and to do and
perform such other acts in and to the parking areas and improvements therein as,
in the use of good business judgment, Landlord shall determine to be advisable.
Any person using the parking area shall observe all directional signs and arrows
and any posted speed limits. In no event shall Tenant interfere with the use and
enjoyment of the parking area by other tenants of the Project or their employees
or invitees. Parking areas shall be used only for parking vehicles. Washing,
waxing, cleaning or servicing of vehicles, or the storage of vehicles for longer
than 48-hours, is prohibited unless otherwise authorized by Landlord. Tenant
shall be liable for any damage to the parking areas caused by Tenant or Tenant's
employees, suppliers, shippers, customers or invitees, including without
limitation damage from excess oil leakage. Tenant shall have no right to install
any fixtures, equipment or personal property in the parking areas.
SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Project, or to the attendant
fixtures, equipment and Common Areas. Landlord may at any time relocate or
remove any of the various buildings, parking areas, and other Common Areas, and
may add buildings and areas to the Project from time to time. No change shall
entitle Tenant to any abatement of rent or other claim against Landlord,
provided that the change does not: (i) materially impair access to and from the
Premises from the parking areas, (ii) reduce the number or size of Tenant's
parking spaces granted under this Lease, or (iii) otherwise unreasonably
interfere with Tenant's access to and use of the Premises, the parking areas and
the Common Areas adjacent to the Building in any material manner without
Tenant's prior written consent, which shall not be unreasonably withheld.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Subject to the provisions of
Section 2.4 of this Lease, Tenant at its sole expense shall maintain and make
all repairs and replacements necessary to keep the Premises and the Building 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,
including without limitation all interior and exterior glass, windows, doors,
door closures, hardware, fixtures, electrical, plumbing, fire extinguisher
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equipment and other equipment. Any damage or deterioration of the Premises shall
not be deemed ordinary wear and tear if the same could have been prevented by
good maintenance practices by Tenant. As part of its maintenance obligations
hereunder, Tenant shall, at Landlord's request, provide Landlord with copies of
all maintenance schedules, reports and notices prepared by, for or on behalf of
Tenant. All repairs and replacements shall be at least equal in quality to the
original work, shall be made only by a licensed 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 perform any repair and maintenance
of the electrical and mechanical systems and any air conditioning, ventilating
or heating equipment serving the Premises and include the cost thereof as part
of Tenant's Share of Operating Expenses. If Tenant fails to properly maintain
and/or repair the Premises or the Building as herein provided following
Landlord's notice and the expiration of the applicable cure period (or earlier
if Landlord determines that such work must be performed prior to such time in
order to avoid damage to the Premises or Building or other detriment), then
Landlord may elect, but shall have no obligation, to perform any repair or
maintenance required hereunder on behalf of Tenant and at Tenant's expense, and
Tenant shall reimburse Landlord upon demand for all reasonable costs incurred
upon submission of an invoice.
SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. 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 and shall maintain in good repair the roof, foundations, footings, the
exterior surfaces of the exterior walls of the Building (excluding exterior
glass), 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. Tenant further understands that Landlord shall not be
required to make any repairs to the roof, foundations, footings, the exterior
surfaces of the exterior walls of the Building (excluding exterior glass), or
structural, electrical or mechanical systems unless and until Tenant has
notified Landlord in writing of the need for such repair and Landlord shall have
a reasonable period of time thereafter (under the circumstances of the repair
and its impact on Tenant's business operations) to commence and complete said
repair, if warranted. Except as expressly provided in Section 2.4 of this Lease,
all costs of any maintenance, repairs and replacement on the part of Landlord
provided hereunder shall be considered part of Project Costs. Tenant further
agrees that if Tenant fails to report any such need for repair in writing within
sixty (60) days of its discovery by Tenant, Tenant shall be responsible for any
costs and expenses and other damages related to such repair which are in excess
of those which would have resulted had such need for repair been reported to
Landlord within such sixty (60) day period.
SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section,
Tenant shall make no alterations, additions, fixtures or improvements
("ALTERATIONS") to the Premises or the Building without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant may make Alterations to the Premises
costing less than Twenty-Five Thousand Dollars ($25,000.00) during each calendar
year of the Term without Landlord's consent, provided, however, that any
Alterations which change the basic floor plan of the Premises, which change the
structural, electrical or mechanical systems of the Premises, or which require a
governmental permit as a prerequisite to the construction thereof, shall require
Landlord's prior written consent, which shall not be unreasonably withheld.
Notwithstanding anything to the contrary contained in either of the foregoing
sentences, however, no Alterations shall: (i) affect the exterior of the
Building or outside areas (or be visible from adjoining sites), or (ii) affect
or penetrate any of the structural portions of the Building, including but not
limited to the roof, or (iii) require any change to the basic floor plan of the
Premises or any change to any structural or mechanical systems of the Premises,
or (iv) fail to comply with any applicable governmental requirements, or (v)
result in the Premises requiring building services beyond the level normally
provided to other tenants, or (vi) interfere in any manner with the proper
functioning of, or Landlord's access to, any mechanical, electrical, plumbing or
HVAC systems, facilities or equipment located in or serving the Building, or
(vii) diminish the value of the Premises including, without limitation, using
lesser quality materials than those existing in the Premises, or (viii) alter or
replace Standard Improvements. Further, in the event that any Alteration would
result in a change from Landlord's building standard materials and
specifications for the Project ("STANDARD IMPROVEMENTS"), Tenant shall be
responsible for the cost of replacing such non-standard improvement
("NON-STANDARD IMPROVEMENT") with the applicable Standard Improvement
("REPLACEMENTS"), which Replacements shall be completed prior to the Expiration
Date or earlier termination of this Lease. Landlord may impose any condition to
its consent, including but not limited to a requirement that the installation
and/or removal of all Alterations and Replacements be covered by a lien and
completion bond satisfactory to Landlord in its sole and absolute discretion and
requirements as to the manner and time of performance of such work. Landlord
shall in all events, whether or not Landlord's consent is required, have the
right to approve the contractor performing the installation and removal of
Alterations and Replacements and Tenant shall not permit any contractor not
approved by Landlord to perform any work on the Premises or on the Building.
Tenant shall obtain all required permits for the installation and removal of
Alterations and Replacements and shall perform the installation and removal of
Alterations and Replacements in compliance with all applicable laws, regulations
and ordinances, including without limitation the Americans with Disabilities
Act, all covenants, conditions and restrictions affecting the Project, and the
Rules and Regulations as described in Article XVII. Tenant understands and
agrees that Landlord shall be entitled to a supervision fee in the amount of
five percent (5%) of the cost of such Alterations either requiring a permit from
the City of Irvine or affecting any mechanical, electrical, plumbing or HVAC
systems, facilities or equipment located in
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or serving the Building. Under no circumstances shall Tenant make any
Alterations or Replacements which incorporate any Hazardous Materials, including
without limitation asbestos-containing construction materials into the Premises,
the Building or the Common Area. If any governmental entity requires, as a
condition to any proposed Alterations by Tenant, that improvements be made to
the Common Areas, and if Landlord consents to such improvements to the Common
Areas (which consent may be withheld in the sole and absolute discretion of
Landlord), then Tenant shall, at Tenant's sole expense, make such required
improvements to the Common Areas in such manner, utilizing such materials, and
with such contractors, architects and engineers as Landlord may require in its
sole and absolute discretion. Any request for Landlord's consent to any proposed
Alterations 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 made or affixed to the
Premises, the Building or to the Common Area (excluding moveable trade fixtures
and furniture), including without limitation all Tenant Improvements constructed
pursuant to the Work Letter (except as otherwise provided in the Work Letter),
shall become the property of Landlord and shall be surrendered with the Premises
at the end of the Term; except that Landlord may, as provided in the next
succeeding paragraph of this Section 7.3, require Tenant to remove by the
Expiration Date or sooner termination date of this Lease, all or any of the
Alterations installed either by Tenant or by Landlord at Tenant's request,
including without limitation all Tenant Improvements constructed pursuant to the
Work Letter (except as otherwise provided in the Work Letter), and to repair any
damage to the Premises, the Building or the Common Area arising from that
removal and restore the Premises to their condition prior to making such
Alterations.
As of the Expiration Date or sooner termination date of this Lease,
Landlord shall have the right to require Tenant to remove any of the components
of the initial Tenant Improvements Work constructed pursuant to the Work Letter
attached hereto, and any subsequent Alterations, and to replace same with the
applicable Replacements, whether or not Landlord's consent was required
therefore. Notwithstanding the foregoing: (i) Landlord shall advise Tenant of
its election to require Tenant to remove and replace the components of the
initial Tenant Improvements Work, if at all, at the time of Landlord's approval
thereof pursuant to the provisions of the Work Letter; and (ii) if at the time
of requesting Landlord's consent to any subsequent Alterations to the Premises,
Tenant shall request in writing whether or not Landlord shall require the
removal thereof as of the Expiration Date or earlier termination of this Lease,
then Landlord's right to require Tenant to so remove and replace such Alteration
shall be exercised, if at all, at the time of Landlord's consent thereto.
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 (but
in no event later than five (5) business days following such request) 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,
including Landlord's attorneys' fees, and any consequential or other damages
incurred by Landlord arising out of such lien, shall be reimbursed by Tenant
upon 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 or Common Area and shall again notify Landlord that
construction has commenced, such notice to be given on the actual date on which
construction commences, so that Landlord may post and maintain notices of
nonresponsibility on the Premises or Common Area, as applicable, which notices
Landlord shall have the right to post and which Tenant agrees it shall not
disturb. Tenant shall also provide Landlord notice in writing within ten (10)
days following the date on which such work is substantially completed.
SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times,
upon written or oral notice (except in emergencies, when no notice shall be
required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to have access to install, repair,
maintain, replace or remove all electrical and mechanical installations of
Landlord and to protect the interests of Landlord in the Premises, and to 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 Event of 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 have the right, if desired,
to 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
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, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and, if required by Landlord, against all Non
Standard Improvements to the Premises (as defined in Section 7.3) made by
Landlord or Tenant, and against any Alterations (as defined in Section 7.3) made
to the Premises or the Building by or on behalf of Tenant. If requested by
Landlord, Tenant shall cause its personal property, Non-Standard Improvements
and Alterations to be assessed and billed separately from the real property of
which the Premises form a part. If any taxes required to be paid by Tenant on
Tenant's personal property, Non-Standard Improvements and/or Alterations 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, Non-Standard Improvements and/or
Alterations and if Landlord pays the taxes based upon the increased assessment,
Landlord shall have the right to require that Tenant pay to Landlord the taxes
so levied against Landlord or the proportion of the taxes resulting from the
increase in the
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assessment. In calculating what portion of any tax xxxx which is assessed
against Landlord separately, or Landlord and Tenant jointly, is attributable to
Tenant's Non-Standard Improvements, Alterations and personal property,
Landlord's reasonable determination shall be conclusive.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1. RIGHTS OF PARTIES.
(a) Notwithstanding any provision of this Lease to the contrary, and
except as to transfers expressly permitted without Landlord's consent pursuant
to Section 9.4, 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 the Premises, 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(b). No assignment (whether voluntary, involuntary or by operation of
law) and no subletting shall be valid or effective without Landlord's prior
written consent and, at Landlord's election, any such assignment or subletting
shall be void and of no force and effect and any such attempted assignment or
subletting shall constitute an Event of Default of this Lease. Landlord shall
not be deemed to have given its consent to any assignment or subletting by any
course of action other than written consent. 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(b) 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 desires to transfer an interest in this Lease or the
Premises, 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 transferee's business to be carried on in the
Premises; (iii) the terms and provisions of any proposed sublease, assignment or
other transfer, including a copy of the proposed assignment, sublease or
transfer form; (iv) evidence that the proposed assignee, subtenant or transferee
will comply with the requirements of Exhibit D hereto; (v) a completed
Environmental Questionnaire from the proposed assignee, subtenant or transferee;
(vi) any other information requested by Landlord and reasonably related to the
transfer and (vii) the fee described in Section 9.1(e). Except as provided in
Section 9.1 (c), Landlord shall not unreasonably withhold its consent, provided
that the parties agree that it shall be reasonable for Landlord to withhold its
consent if: (1) the use of the Premises will not be consistent with the
provisions of this Lease; or (2) a proposed assignee has not demonstrated to the
reasonable satisfaction of Landlord that it is financially responsible or has
failed to submit to Landlord all reasonable information as requested by Landlord
concerning the proposed assignee, including, but not limited to, a certified
balance sheet of the proposed assignee as of a date within ninety (90) days of
the request for Landlord's consent, statements of income or profit and loss of
the proposed assignee for the two-year period preceding the request for
Landlord's consent, and/or a certification signed by the proposed assignee that
it has not been evicted or been in arrears in rent at any other leased premises
for the 3-year period preceding the request for Landlord's consent. Tenant's
exterior signage rights are personal to Tenant and may not be assigned or
transferred to any assignee of this Lease or subtenant of the Premises.
Notwithstanding the foregoing, Landlord shall not unreasonably withhold its
consent to a transfer of such signage rights in connection with Tenant's
assignment of this Lease, provided that Landlord shall have the right of prior
approval that such signage continues to comply with the Sign Criteria and the
other requirements of Section 5.2 of this Lease, and provided further that any
name and/or graphics on such signage do not materially devalue the Project as
determined by Landlord in its sole and absolute discretion.
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 9.1. Landlord shall approve or disapprove any requested transfer within
thirty (30) days following receipt of Tenant's written request, the information
set forth above, and the fee set forth below.
(c) Notwithstanding the provisions of Section 9.1(b) above, in lieu of
consenting to a proposed assignment or subletting, Landlord may elect, within
the thirty (30) day period permitted for Landlord to approve or disapprove a
requested transfer, to (i) sublease the Premises (or the portion proposed to be
subleased), or take an assignment of Tenant's interest in this Lease, upon
substantially 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
thirty (30) days' following written notice by Landlord of its election to so
sublease or terminate. Landlord may thereafter, at its option, assign, sublet or
re-let any space so sublet, obtained by assignment or obtained by termination to
any third party, including without limitation the proposed transferee of Tenant.
In the event of any termination of this Lease pursuant to this Section 9.1(c),
Tenant shall be released from further obligation under this Lease as to the
portion of the Premises so terminated as of the effective date of any such
termination, except as to such obligations which, by the express terms of this
Lease, shall survive any such termination.
(d) In the event that Landlord approves the requested assignment or
subletting, Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic
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Rent payable by Tenant hereunder, or in the case of a sublease of a portion of
the Premises, in excess of the Basic Rent reasonably allocable to such portion
as determined by Landlord, plus (ii) Tenant's direct out-of-pocket costs which
Tenant certifies to Landlord have been paid to provide occupancy related
services to such assignee or subtenant of a nature commonly provided by
landlords of similar space, shall be the property of Landlord and such amounts
shall be payable directly to Landlord by the assignee or subtenant or, at
Landlord's option, by Tenant within ten (10) days of Tenant's receipt thereof.
Landlord shall have the right to review or audit the books and records of
Tenant, or have such books and records reviewed or audited by an outside
accountant, to confirm any such direct out-of-pocket costs. In the event that
such direct out-of-pocket costs claimed by Tenant are overstated by more than
five percent (5%), Tenant shall reimburse Landlord for any of Landlord's costs
related to such review or audit. At Landlord's request, a written agreement
shall be entered into by and among Tenant, Landlord and the proposed assignee or
subtenant confirming the requirements of this Section 9.1(d).
(e) Tenant shall pay to Landlord a fee equal to the greater of (i)
Landlord's actual costs related to such assignment, subletting or other transfer
or (ii) Five Hundred Dollars ($500.00), to process any request by Tenant for an
assignment, subletting or other transfer under this Lease. Tenant shall pay
Landlord the sum of Five Hundred Dollars ($500.00) concurrently with Tenant's
request for consent to any assignment, subletting or other transfer, and
Landlord shall have no obligation to consider such request unless accompanied by
such payment. Tenant shall pay Landlord upon demand any costs in excess of such
payment to the extent Landlord's actual costs related to such request exceeds
$500.00. Such fee is hereby acknowledged as a reasonable amount to reimburse
Landlord for its costs of review and evaluation of a proposed transfer.
SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant 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 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. No assignment or
subletting shall be effective or binding on Landlord unless documentation in
form and substance satisfactory to Landlord in its reasonable discretion
evidencing the transfer, and in the case of an assignment, the assignee's
assumption of the obligations of Tenant under this Lease, 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 or
as a consent to any subsequent transfer.
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 deemed included in each sublease:
(a) Each and every provision contained in this Lease (other than with
respect to the payment of rent hereunder) is incorporated by reference into and
made a part of such sublease, with "LANDLORD" hereunder meaning the sublandlord
therein and "TENANT" hereunder meaning the subtenant therein.
(b) 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 there is an Event of
Default by Tenant, 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 Event of 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.
(c) In the event of the termination of this Lease for any reason,
including without limitation as the result of an Event of Default by Tenant or
by the mutual agreement of Landlord and Tenant, 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. In the event Landlord does
not elect to take over Tenant's interest in a sublease in the event of any such
termination of this Lease, such sublease shall terminate concurrently with the
termination of this Lease and such subtenant shall have no further rights under
such sublease and Landlord shall have no obligations to such subtenant.
SECTION 9.4. CERTAIN TRANSFERS. The following shall be deemed to
constitute an assignment of this Lease; (a) the sale of all or substantially all
of Tenant's assets (other than bulk sales in the ordinary course of business),
(b) if Tenant is a corporation, an unincorporated association, a limited
liability company or a partnership, the transfer, assignment or hypothecation of
any stock or interest in such corporation, association, limited liability
company or partnership in the aggregate of fifteen percent (15%) (except for
publicly traded shares of stock constituting a transfer of fifteen percent (15%)
or more in the aggregate, so long as no change in the controlling
15
interest of Tenant occurs as a result thereof), or (c) any other direct or
indirect change of control of Tenant, including, without limitation, change of
control of Tenant's parent company or a merger by Tenant or its parent company.
Notwithstanding the foregoing, Landlord's consent shall not be required for the
assignment of this Lease as a result of a merger by Tenant with or into another
entity or a reorganization of Tenant, so long as (i) the net worth of the
successor or reorganized entity after such merger is at least equal to the
greater of the net worth of Tenant as of the execution of this Lease by Landlord
or the net worth of Tenant immediately prior to the date of such merger or
reorganization, evidence of which, satisfactory to Landlord, shall be presented
to Landlord prior to such merger or reorganization, (ii) Tenant shall provide to
Landlord, prior to such merger or reorganization, written notice of such merger
or reorganization and such assignment documentation and other information as
Landlord may require in connection therewith, and (iii) all of the other terms
and requirements Section 9.2 and 9.3 shall apply with respect to such
assignment.
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 shall provide 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" or similar property
insurance, subject to standard exclusions (such as, but not limited to,
earthquake and flood exclusions), covering the full replacement cost of the
Building including all Tenant Improvements constructed pursuant to the Work
Letter within the Premises (the "ALL-RISK POLICY"). In addition, Landlord may,
at its election, obtain insurance for such other risks as Landlord or its
mortgages may from time to time deem appropriate, including without limitation,
coverage for earthquake, flood, and commercial general liability. Landlord shall
not be required to carry insurance of any kind on Tenant's Alterations or on
Tenant's other property, including, leasehold improvements, trade fixtures,
furnishings, equipment, plate glass, signs and all other items of personal
property, and shall not be obligated to repair or replace that property should
damage occur. All proceeds of insurance maintained by Landlord upon the Building
and/or Project shall be the property of Landlord, whether or not Landlord is
obligated to or elects to make any repairs. At Landlord's option, Landlord may
self-insure all or any portion of the risks for which Landlord elects or is
required to provide insurance hereunder.
SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by law,
Tenant shall defend, indemnify, protect, save and hold harmless Landlord, its
agents, and any and all affiliates of Landlord, including, without limitation,
any corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, liabilities,
reasonable 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, including, without limitation, the use by Tenant, its agents, employees,
invitees or licensees of any recreational facilities within 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, invitees or licensees
in or about the Premises, the Building or the Common Areas, or from any Event of
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, visitors, patrons, guests, 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. The provisions
of this Section shall expressly survive the expiration or sooner termination of
this Lease. Tenant's obligations under this Section shall not apply in the event
that the claim, liability, cost or expense is caused solely by the active
negligence or willful misconduct of Landlord, or by property or equipment which
is both installed and actively maintained by Landlord.
SECTION 10.4. LANDLORD'S NONLIABILITY. Except to the extent of the active
negligence of willful misconduct of Landlord, its employees or authorized
agents, Landlord shall not be liable to Tenant, its employees, agents and
invitees, and Tenant hereby waives all claims against Landlord for loss of or
damage to any property or personal injury, or any other loss, cost, damage,
injury or liability whatsoever resulting from 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. Notwithstanding any
provision of this Lease to the contrary, including, without limitation, the
negligence or willful misconduct of Landlord, its employees or authorized
agents, Landlord shall in no event be liable to Tenant, its employees, agents,
and invitees, and Tenant hereby waives all claims against Landlord, for loss or
interruption of Tenant's business or income (including, without limitation, any
consequential damages and lost profit or opportunity costs), or any other loss,
cost, damage, injury or liability resulting from Acts of God (except with
respect to restoration obligations pursuant to Article XI below), acts of civil
disobedience or insurrection, acts or omissions (criminal or otherwise) of any
third parties, including without limitation, any other tenants within the
Project or their agents, employees, contractors, guests or invitees. Landlord
shall have no liability (including without limitation consequential damages and
lost profit or opportunity costs) and, except as provided in Sections 11.1 and
12.1 below, there shall be no abatement of rent, by reason of any injury to or
interference 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. 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.
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SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other and the other's agents on
account of loss and damage occasioned to the property of such waiving party to
the extent only that such loss or damage is required to be insured against, or,
if not required, is actually insured against, under any property insurance
policies contemplated by this Article X; provided however, that (i) the
foregoing waiver shall not apply to the extent of Tenant's obligations to pay
deductibles under any such policies and this Lease and (ii) to the extent Tenant
fails to maintain the insurance required to be maintained by Tenant pursuant to
this Lease, Landlord shall not be deemed to have waived any right of recovery
against Tenant. By this waiver it is the intent of the parties that neither
Landlord nor Tenant shall be liable to any insurance company (by way of
subrogation or otherwise) insuring the other party for any loss or damage
insured against under any property insurance policies contemplated by this
Lease, even though such loss or damage might be occasioned by the negligence of
such party, its agents, employees, contractors, guests or invitees.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1. RESTORATION.
(a) If the Premises or the Building or a part thereof are materially
damaged by any fire, flood, earthquake or other casualty, Landlord shall have
the right to terminate this Lease upon written notice to Tenant if: (i) Landlord
reasonably determines that proceeds necessary to pay the full cost of repair is
not available from Landlord's insurance, including without limitation earthquake
insurance, plus such additional amounts Tenant elects, at its option, to
contribute, excluding however the deductible (for which Tenant shall be
responsible for Tenant's Share); (ii) Landlord reasonably determines that the
Premises cannot, with reasonable diligence, be fully repaired by Landlord (or
cannot be safely repaired because of the presence of hazardous factors,
including without limitation Hazardous Materials, earthquake faults, and other
similar dangers) within two hundred seventy (270) days after the date of the
damage; (iii) an uncured Event of Default by Tenant has occurred; or (iv) the
material damage occurs during the final twelve (12) months of the Term. Landlord
shall notify Tenant in writing ("LANDLORD'S NOTICE") within sixty (60) days
after the damage occurs as to (A) whether Landlord is terminating this Lease as
a result of such material damage and (B) if Landlord is not terminating this
Lease, the number of days within which Landlord has estimated that the Premises,
with reasonable diligence, are likely to be fully repaired. In the event
Landlord elects to terminate this Lease, this Lease shall terminate as of the
date specified for termination by Landlord's Notice (which termination date
shall in no event be later than sixty (60) days following the date of the
damage, or, if no such date is specified, such termination shall be the date of
Landlord's Notice).
(b) If Landlord has the right to terminate this Lease pursuant to
Section 11.1(a) and does not elect to so terminate this Lease, and provided that
at the time of Landlord's Notice neither an Event of Default exists nor has
Landlord delivered Tenant a notice of any failure by Tenant to fulfill an
obligation under this Lease which, unless cured by Tenant within the applicable
grace period, would constitute an Event of Default, then within ten (10) days
following delivery of Landlord's Notice pursuant to Section 11.1(a), Tenant may
elect to terminate this Lease by written notice to Landlord, but only if (i)
Landlord's Notice specifies that Landlord has determined that the Premises
cannot be repaired, with reasonable diligence, within two hundred seventy (270)
days after the date of damage or (ii) the casualty has occurred within the final
twelve (12) months of the Term and such material damage has a materially adverse
impact on Tenant's continued use of the Premises. If Tenant fails to provide
such termination notice within such ten (10) day period, Tenant shall be deemed
to have waived any termination right under this Section 1l.1(b) or any other
applicable law.
(c) In the event that neither Landlord nor Tenant terminates this Lease
pursuant to this Section 11.1 as a result of material damage to the Building or
Premises resulting from a casualty, Landlord shall repair all material damage to
the Premises or the Building as soon as reasonably possible and this Lease shall
continue in effect for the remainder of the Term. Subject to any provision to
the contrary in the Work Letter, such repair by Landlord shall include repair of
material damage to the Tenant Improvements constructed pursuant to the Work
Letter, so long as insurance proceeds from insurance required to be carried by
Tenant are made available to Landlord. Landlord shall have the right, but not
the obligation, to repair or replace any other leasehold improvements made by
Tenant or any Alterations (as defined in Section 7.3) constructed by Tenant. If
Landlord elects to repair or replace such leasehold improvements and/or
Alterations, all insurance proceeds available for such repair or replacement
shall be made available to Landlord. Landlord shall have no liability to Tenant
in the event that the Premises or the Building has not been fully repaired
within the time period specified by Landlord in Landlord's Notice to Tenant as
described in Section 11.1(a). Notwithstanding the foregoing, the repair of
damage to the Premises to the extent such damage is not material shall be
governed by Sections 7.1 and 7.2.
(d) Commencing on the date of such material damage to the Building, and
ending on the sooner of the date the damage is repaired or the date this Lease
is terminated, 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, as
determined by Landlord, but only to the extent that any business interruption
insurance proceeds are received by Landlord therefor from Tenant's insurance
described in Exhibit D.
(e) Landlord shall not be required to repair or replace any improvements
or fixtures that Tenant is obligated to repair or replace pursuant to Section
7.1 or any other provision of this Lease and Tenant shall continue to be
obligated to so repair or replace any such improvements or fixtures,
notwithstanding any provisions to the contrary in this Article XI. In addition,
in the event the damage or destruction to the Premises or Building are due in
substantial part to the fault or neglect of Tenant or its employees, subtenants,
invitees or representatives, notwithstanding the provisions of Section 10.5, the
costs of such repairs or replacement to the Premises or Building shall be borne
by Tenant to the extent that insurance proceeds sufficient to complete such
repair or replacement are
17
not made available to Landlord and in addition, Tenant shall not be entitled to
terminate this Lease as a result, notwithstanding the provisions of Section
11.1(b).
(f) Tenant shall fully cooperate with Landlord in removing Tenant's
personal property and any debris from the Premises to facilitate all inspections
of the Premises and the making of any repairs. Notwithstanding anything to the
contrary contained in this Lease, if Landlord in good faith believes there is a
risk of injury to persons or damage to property from entry into the Building or
Premises following any damage or destruction thereto, Landlord may restrict
entry into the Building or the Premises by Tenant, its employees, agents and
contractors in a non-discriminatory manner, without being deemed to have
violated Tenant's rights of quiet enjoyment to, or made an unlawful detainer of,
or evicted Tenant from, the Premises. Upon request, Landlord shall consult with
Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers,
and necessary inventory, subject however to all indemnities and waivers of
liability from Tenant to Landlord contained in this Lease and any additional
indemnities and waivers of liability which Landlord may require.
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 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,
whether or not including a portion of the Premises, is taken or sold in lieu of
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 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 or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. 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 thirty (30)
days.
SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking
of the parking area such that Landlord can no longer provide sufficient parking
to comply with this Lease, Landlord may substitute reasonably equivalent parking
in a location reasonably close to the Building; provided that if Landlord fails
to make that substitution within thirty (30) days following the taking and if
the taking materially impairs Tenant's use and enjoyment of the Premises, Tenant
may, at its option, terminate this Lease by written notice to Landlord. If this
Lease is not so terminated by Tenant, there shall be no abatement of rent and
this Lease shall continue in effect.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
SECTION 13.1. SUBORDINATION. At the option of Landlord or any lender of
Landlord's that obtains a security interest in the Building, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no Event of Default exists under this Lease, Tenant's
possession and quiet enjoyment of the Premises shall not be disturbed and this
Lease shall not terminate in the event of termination of any such ground or
underlying lease, or the foreclosure of any such mortgage or deed of trust, to
which this Lease has been subordinated pursuant to this Section. Tenant shall
execute and deliver any documents or agreements requested by Landlord or such
lessor or lender which provide Tenant with the non-disturbance protections set
forth in this Section. In the event of a termination or foreclosure, Tenant
shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall
execute any instrument reasonably required by Landlord's successor for that
purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be required from time to time to subordinate the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust (provided that such instruments include
the nondisturbance and attornment provisions set forth above), or, if requested
by Landlord, to subordinate, in whole or in part, any ground or underlying lease
or the lien of any mortgage or deed of trust to this Lease. Tenant agrees that
any purchaser at a foreclosure sale or lender taking title under a deed-in-lieu
of foreclosure shall not be responsible for any act or omission of a prior
landlord, shall not be subject to any offsets or defenses Tenant may have
against a prior landlord, and shall not be liable for the return of the security
deposit to the extent it is not actually received by such purchaser or bound by
any rent paid for more than the current month in which the foreclosure occurred.
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SECTION 13.2. ESTOPPEL CERTIFICATE.
(a) 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 (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 or any purchaser or
encumbrancer 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.
(b) Notwithstanding any other rights and remedies of Landlord, Tenant's
failure to deliver any estoppel statement within the provided time 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
Events of Default in Landlord's performance, and (iii) not more than one month's
rental has been paid in advance.
SECTION 13.3. FINANCIALS.
(a) Tenant shall deliver to Landlord, prior to the execution of this
Lease and thereafter at any time upon not less than five (5) days prior written
notice from Landlord (but not more frequently than once in any single calendar
year during the Term), Tenant's current tax returns and financial statements,
certified true, accurate and complete by the chief financial officer of Tenant,
including a balance sheet and profit and loss statement for the most recent
prior year, or, in the event Tenant is a publicly traded corporation on a
nationally recognized stock exchange, Tenant's current financial reports filed
with the Securities and Exchange Commission (collectively, the "STATEMENTS"),
which Statements shall accurately and completely reflect the financial condition
of Tenant. Landlord agrees that it will keep the Statements confidential, except
that Landlord shall have the right to deliver the same to any proposed purchaser
of the Building or Project, and to any encumbrancer of all or any portion of the
Building or Project.
(b) Tenant acknowledges that Landlord is relying on the Statements in
its determination to enter into this Lease, and Tenant represents to Landlord,
which representation shall be deemed made on the date of this Lease and again on
the Commencement Date, that no material change in the financial condition of
Tenant, as reflected in the Statements, has occurred since the date Tenant
delivered the Statements to Landlord. The Statements are represented and
warranted by Tenant to be correct and to accurately and fully reflect Tenant's
true financial condition as of the date of submission by any Statements to
Landlord.
ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES
SECTION 14.1. TENANT'S DEFAULTS. In addition to any other breaches of this
Lease which are defined as Events of Default in this Lease, the occurrence of
any one or more of the following events shall constitute an Event of Default by
Tenant:
(a) The failure by Tenant to make any payment of Basic 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 purposes of these Events of
Default and remedies provisions, the term "ADDITIONAL RENT" shall be deemed to
include all amounts of any type whatsoever other than Basic Rent to be paid by
Tenant pursuant to the terms of this Lease.
(b) The assignment, sublease, encumbrance or other transfer of this
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 when consent is required by this Lease.
(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 of Tenant to timely and fully provide any subordination
agreement, estoppel certificate or financial statements in accordance with the
requirements of Article XIII.
(e) The abandonment of the Premises by Tenant.
(f) The failure or inability by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in this Section 14.1, where the
failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant or such shorter period as is specified in any other provision
of this Lease; 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 its cure, then
Tenant shall not be deemed to have committed an Event of Default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.
(g) (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
19
case of a petition filed against Tenant, the same is dismissed within thirty
(30) 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; (v) Tenant's convening of a meeting of its creditors for the purpose of
effecting a moratorium upon or composition of its debts or (vi) the failure of
Tenant to pay its material obligations to creditors as and when they become due
and payable, other than as a result of a good faith dispute by Tenant as to the
amount due to such creditors. Landlord shall not be deemed to have knowledge of
any event described in this Section 14.1(g) 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 Section
14.1(g) is contrary to applicable law, the provision shall be of no force or
effect.
SECTION 14.2. LANDLORD'S REMEDIES.
(a) If an Event of Default by Tenant occurs, 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 Basic 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 Basic Rent and additional rent which would have been earned after
termination until the time of award exceeds the amount of such loss that Tenant
proves could have been reasonably avoided;
(3) The worth at the time of award of the amount by which
the unpaid Basic Rent and additional rent for the balance of the Term after the
time of award exceeds the amount of such loss that Tenant proves could be
reasonably avoided;
(4) 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 Event of Default, including, but not limited to,
the cost of recovering possession of the Premises, refurbishment of the
Premises, marketing costs, commissions and other reasonable and necessary
expenses of reletting, including necessary repair, the unamortized portion of
any tenant improvements and brokerage commissions funded by Landlord in
connection with this Lease, 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. 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 the Event
of 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
Sections 14.2(a)(i) (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 Section 14.2(a)(i)(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
interests 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 Section 14.2(a)(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) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any Event of Default by Tenant unless and until the Event of
Default is cured by Tenant, it being understood and agreed that the performance
by Landlord of its obligations under this Lease are expressly conditioned upon
Tenant's full and timely performance of its obligations under this Lease. 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.
(c) 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 breach or Event
of Default by Tenant. The acceptance by Landlord of rent shall not be a (i)
waiver of any preceding breach or Event of 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 Event of
Default at the time of acceptance of rent, or (ii) a waiver of Landlord's right
to exercise any remedy available to Landlord by virtue of the breach or Event of
Default. The acceptance of any payment from a debtor in
20
possession, a trustee, a receiver or any other person acting on behalf of Tenant
or Tenant's estate shall not waive or cure a breach or Event of 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. 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
this Lease or a surrender of the Premises.
(d) Any agreement for free or abated rent or other charges, or for the
giving or paying by Landlord to or for Tenant of any cash or other bonus,
inducement or consideration for Tenant's entering into this Lease ("INDUCEMENT
PROVISIONS") shall be deemed conditioned upon Tenant's full and faithful
performance of the terms, covenants and conditions of this Lease. Upon an Event
of Default under this Lease by Tenant, any such Inducement Provisions shall
automatically be deemed deleted from this Lease and of no further force or
effect and the amount of any rent reduction or abatement or other bonus or
consideration already given by Landlord or received by Tenant as an Inducement
shall be immediately due and payable by Tenant to Landlord, notwithstanding any
subsequent cure of said Event of Default by Tenant. The acceptance by Landlord
of rent or the cure of the Event of Default which initiated the operation of
this Section 14.1 shall not be deemed a waiver by Landlord of the provisions of
this Section 14.2(d).
SECTION 14.3. LATE PAYMENTS.
(a) Any payment due to Landlord under this Lease, including without
limitation Basic Rent, Tenant's Share of Operating Expenses or any other payment
due to Landlord under this Lease, that is not received by Landlord within ten
(10) days following the date due shall bear interest at the maximum rate
permitted by law from the date due until fully paid. The payment of interest
shall not cure any breach or Event of Default by Tenant under this Lease. In
addition, Tenant acknowledges that the late payment by Tenant to Landlord of
Basic Rent and Tenant's Share of Operating Expenses 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 Basic Rent or
Tenant's Share of Operating Expenses due from Tenant shall not be received by
Landlord or Landlord's designee within ten (10) days following the date due,
then Tenant shall pay to Landlord, in addition to the interest provided above, a
late charge, which the Tenant agrees is reasonable, in a sum equal to the
greater of five percent (5%) of the amount overdue or Two Hundred Fifty Dollars
($250.00) for each delinquent payment. Acceptance of a late charge by Landlord
shall not constitute a waiver of Tenant's breach or Event of 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 installment of Basic Rent and/or the payment
of Tenant's Share of Operating Expenses within any twelve (12) month period that
is not paid within ten (10) days following the date due, Landlord shall have the
option (i) to require that beginning with the first payment of Basic Rent next
due, Basic Rent and the Tenant's Share of Operating Expenses 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. If any check for any payment to Landlord
hereunder is returned by the bank for any reason, such payment shall not be
deemed to have been received by Landlord and Tenant shall be responsible for any
applicable late charge, interest payment and the charge to Landlord by its bank
for such returned check. Nothing in this Section shall be construed to compel
Landlord to accept Basic Rent, Tenant's Share of Operating Expenses or any other
payment from Tenant if there exists an Event of Default unless such payment
fully cures any and all such Event of Default. Any acceptance of any such
payment shall not be deemed to waive any other right of Landlord under this
Lease. Any payment by Tenant to Landlord may be applied by Landlord, in its sole
and absolute discretion, in any order determined by Landlord to any amounts then
due to Landlord.
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, other than rent payable to Landlord, 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 and Tenant
hereby grants Landlord the right to enter onto the Premises in order to carry
out such performance. 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 nor shall Landlord be responsible to Tenant for any damage caused to Tenant
as the result of such performance by Landlord. Tenant shall, within thirty (30)
days of invoicing from Landlord, reimburse Landlord for all sums paid by
Landlord and all necessary incidental costs, together with interest at the
maximum rate permitted by law (not to exceed ten percent (10%) per annum) 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, and Tenant shall
have no rights to take any action against Landlord, unless and until Landlord
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
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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 Landlord's default
under this Lease, Tenant's sole remedies shall be to seek damages or specific
performance from Landlord, provided that any damages shall be limited to
Tenant's actual out-of-pocket expenses and shall in no event include any
consequential damages, lost profits or opportunity costs.
SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any Event of Default by Tenant under this Lease or
holding over of possession by Tenant after the expiration or earlier termination
of this Lease, or any action related to a filing for bankruptcy or
reorganization by Tenant, including without limitation all reasonable costs,
expenses and actual accountants, appraisers, attorneys and other professional
fees, and any collection agency or other collection charges, shall be due and
payable to Landlord on demand, and shall bear interest at the rate of ten
percent (10%) per annum. 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, and all other costs. The
prevailing party for the purpose of this Section shall be determined by the
trier of the facts.
SECTION 14.7. WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH ACKNOWLEDGES
THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT
TO ITS RIGHTS 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 OF THE PREMISES, AND/OR ANY
CLAIM OF INJURY OR DAMAGE. FURTHERMORE, THIS WAIVER AND RELEASE OF ALL RIGHTS TO
A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER PROVISION,
COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.
SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do
not constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall be
satisfied only from the interest of Landlord in the Project and out of the rent
or other income from such property receivable by Landlord or out of
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title or interest in the Project and no action for
any deficiency may be sought or obtained by Tenant.
SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand
or right of any kind by Tenant which is based upon or arises in connection with
this Lease, including without limitation any arising under a tort or contract
cause of action, shall be barred unless Tenant commences an action thereon
within twelve (12) months after the date that Tenant knows (or reasonably should
have known) of the act, omission, event or default upon which the claim, demand
or right arises, has occurred.
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. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; such holding over with the prior written consent of Landlord
shall constitute a month-to-month tenancy commencing on the first (1st) day
following the termination of this Lease and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other. In either of such events, possession shall be subject to all of
the terms of this Lease, except that the monthly Basic Rent shall be the greater
of one hundred fifty percent (150%) of the Basic Rent for the month immediately
preceding the date of termination for the initial month of holdover, and one
hundred seventy-five percent (175%) of the Basic Rent for the month immediately
preceding the date of termination for each month of holdover thereafter, or (b)
the then currently scheduled Basic Rent for comparable space in the Project. 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 Landlord's right of re-entry or any other
rights of Landlord under this Lease or at law.
SECTION 15.2. MERGER ON 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, in which case Tenant shall be relieved of its
obligations under this Lease accruing from and after the effective date of
assignment of such subleases to Landlord.
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SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the
provisions of 7.3 of this Lease, 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, and shall, without expense to
Landlord, remove or cause to be removed from the Premises 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 (not
including nails, nail holes or screws for shelving) 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 Tenant
fails to remove Tenant's personal property from the Premises upon the expiration
of the Term, Landlord may remove, store, dispose of and/or retain such personal
property, at Landlord's option, in accordance with then applicable laws, all at
the expense of Tenant. 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 deemed to be rent under
this Lease and shall be paid, without deduction or offset, in lawful money of
the United States to Landlord at its address set forth in Item 12 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
Basic Rent and the Tenant's Share of Operating Costs pursuant to Sections 4.1
and 4.2, all payments shall be due and payable within ten (10) 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 in person
or by courier or overnight delivery service to the other party, or may be
deposited in the United States mail, duly registered or certified, postage
prepaid, return receipt requested, and addressed to the other party at the
address set forth in Item 12 of the Basic Lease Provisions, or if to Tenant, at
that address or, from and after the Commencement Date, at the Premises (whether
or not Tenant has departed from, abandoned or vacated the Premises). 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 seventy-two (72) hours after
mailing. 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 observe faithfully and comply strictly 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 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 by any other
tenant or such tenant's agents, employees, contractors, guests or invitees. 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 breach of 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. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord 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 Tenant in connection with
the negotiation of this Lease. The foregoing agreement shall survive the
termination of this Lease. If Tenant fails to take possession of the Premises or
if this Lease otherwise terminates prior to the Expiration Date as the result of
failure of performance by Tenant, Landlord shall be entitled to recover from
Tenant the unamortized portion of any brokerage commission funded by Landlord in
addition to any other damages to which Landlord may be entitled.
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 further obligations on the
part of Landlord, and the transferor shall be relieved of any obligation to pay
any funds in which Tenant has an interest to the extent that such funds have
been turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law . No beneficiary of a deed of trust
to which this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or beneficiary under 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.
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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.
SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever arising out of or in any
way connected to this Lease shall be initiated in the Superior Court of the
county in which the Project is located.
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 AND CUMULATIVE REMEDIES. 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 that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.
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, other than financial inability, 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 or from the timely
performance of any other obligation under this Lease within Tenant's reasonable
control.
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 have
the right of quiet enjoyment and use of 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.
SECTION 20.13. INTERPRETATION. This Lease shall not be construed in favor
of or against either party, but shall be construed as if both parties prepared
this Lease.
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.
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SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP
AUTHORITY. If Tenant is a corporation, limited liability company or partnership,
each individual executing this Lease on behalf of the corporation, limited
liability company or partnership represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of the corporation,
limited liability company or partnership, and that this Lease is binding upon
the corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord's request, deliver a certified copy of its
board of directors' resolution, operating agreement 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 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.
SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.
SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.
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, by public filings or otherwise, the terms and conditions
of this Lease ("Confidential Information") to any third party, either directly
or indirectly, without the prior written consent of Landlord, which consent may
be given or withheld in Landlord's sole and absolute discretion. The foregoing
restriction shall not apply if either: (i) Tenant is required to disclose the
Confidential Information in response to a subpoena or other regulatory,
administrative or court order, (ii) independent legal counsel to Tenant delivers
a written opinion to Landlord that Tenant is required to disclose the
Confidential Information to, or file a copy of this Lease with, any governmental
agency or any stock exchange; provided however, that in such event, Tenant
shall, before making any such disclosure (A) provide Landlord with prompt
written notice of such required disclosure, (B) at Tenant's sole cost, take all
reasonable legally available steps to resist or narrow such requirement,
including without limitation preparing and filing a request for confidential
treatment of the Confidential Information and (C) if disclosure of the
Confidential Information is required by subpoena or other regulatory,
administrative or court order, Tenant shall provide Landlord with as much
advance notice of the possibility of such disclosure as practical so that
Landlord may attempt to stop such disclosure or obtain an order concerning such
disclosure. The form and content of a request by Tenant for confidential
treatment of the Confidential Information shall be provided to Landlord at least
five (5) business days before its submission to the applicable governmental
agency or stock exchange and is subject to the prior written approval of
Landlord. In addition, Tenant may disclose the terms of this Lease to
prospective assignees of this Lease and prospective subtenants under this Lease
with whom Tenant is actively negotiating such an assignment or sublease.
SECTION 22.2. GUARANTY. [Intentionally Deleted]
SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Project, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications do
not materially increase the obligations of Tenant or materially and adversely
affect the leasehold interest created by this Lease.
SECTION 22.4. 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 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 of 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 (which in no event shall be less than sixty (60) days),
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. Tenant agrees that each beneficiary of a deed of
trust or mortgage covering the Building is an express third party beneficiary
hereof, Tenant shall have no right or claim for the collection of any deposit
from such beneficiary or from any purchaser at a foreclosure sale unless such
beneficiary or purchaser shall have actually received and not refunded the
deposit, and Tenant shall comply with any
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written directions by any beneficiary to pay rent due hereunder directly to such
beneficiary without determining whether a default exists under such
beneficiary's deed of trust.
SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this
Lease shall be construed to be conditions as well as covenants as though the
words specifically expressing or imparting covenants and conditions were used in
each separate provision.
SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Project. Tenant assumes all
responsibility for the protection of Tenant, its employees, agents, invitees and
property from acts of third parties. Nothing herein contained shall prevent
Landlord, at its sole option, from providing security protection for the Project
or any part thereof, in which event the cost thereof shall be included within
the definition of Project Costs. Tenant shall have the right, at its sole cost
and expense, to install a security system within the Premises not visible from
the exterior thereof.
SECTION 22.7. JAMS.
(a) All claims or disputes between Landlord and Tenant arising out of,
or relating to the Lease which either party is expressly authorized by a
provision hereof to submit to arbitration, shall be decided by the
JAMS/ENDISPUTE, or its successor, in Orange, California ("JAMS"), unless the
parties mutually agree otherwise. Within ten (10) business days following
submission to JAMS, JAMS shall designate three arbitrators and each party may,
within five (5) business days thereafter, veto one of the three persons so
designated. If two different designated arbitrators have been vetoed, the third
arbitrator shall hear and decide the matter. Any arbitration pursuant to this
Section 22.7 shall be decided within thirty (30) days of submission of JAMS. The
decision of the arbitrator shall be final and binding on the parties. In no
event shall the arbitrator be empowered or authorized to award consequential or
punitive damages (including any award for lost profit or opportunity costs or
loss or interruption of business or income). All costs associated with
arbitration shall be awarded to the prevailing party as determined by the
arbitrator.
(b) Notice of the demand for arbitration by either party to the Lease
shall be filed in writing with the other party to the Lease and with JAMS and
shall be made within a reasonable time after the dispute has arisen. The award
rendered by the arbitrators shall be final, and judgment may be entered upon it
in accordance with applicable law in any court having jurisdiction thereof.
Except by written consent of the person or entity sought to be joined, no
arbitration arising out of or relating to the Lease shall include, by
consolidation, joinder or in any other manner, any person or entity not a party
to the Lease under which such arbitration is filed unless (1) such person or
entity is substantially involved in a common question of fact or law, (2) the
presence of such person or entity is required if complete relief is to be
accorded in the arbitration, or (3) the interest or responsibility of such
person or entity in the matter is not insubstantial.
(c) The agreement herein among the parties to the Lease and any other
written agreement to arbitrate referred to herein shall be specifically
enforceable under prevailing law.
SECTION 22.8. CONTINGENCY. Tenant understands and agrees that the
effectiveness of this Lease is contingent upon the mutual execution of a lease
surrender and termination agreement for the Premises by and between Landlord and
Epicor Software Corporation, a Delaware corporation , the current tenant in
possession of the Premises (the "Current Tenant").
LANDLORD: TENANT:
THE IRVINE COMPANY ENDOCARE, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxxx
---------------------------------- -----------------------------------------
Xxxxxxx X. Xxxxxxx Name (Print): Xxxxx Xxxxxxxx
President, Office Properties ----------------------------
Title (Print): VP, Human Resources
---------------------------
General Counsel Asst. Secretary
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxx
---------------------------------- ------------------------------------------
Xxxxxx X. Xxxxxxx Name: Xxxxx Xxxxxxx
Vice President, Office Properties ------------------------------------
Title: VP, Business Development
-----------------------------------
26
INDEX TO LEASE
ARTICLE I. BASIC LEASE PROVISIONS...........................................................1
ARTICLE II. PREMISES........................................................................3
SECTION 2.1. LEASED PREMISES.................................................3
SECTION 2.2. ACCEPTANCE OF PREMISES..........................................3
SECTION 2.3. BUILDING NAME AND ADDRESS.......................................3
SECTION 2.4. LANDLORD'S RESPONSIBILITIES.....................................3
ARTICLE III. TERM...........................................................................4
SECTION 3.1. GENERAL.........................................................4
SECTION 3.2. DELAY IN POSSESSION.............................................4
ARTICLE IV. RENT AND OPERATING EXPENSES.....................................................5
SECTION 4.1. BASIC RENT......................................................5
SECTION 4.2. OPERATING EXPENSES..............................................5
SECTION 4.3. SECURITY DEPOSIT................................................7
ARTICLE V. USES.............................................................................7
SECTION 5.1. USE.............................................................7
SECTION 5.2. SIGNS...........................................................8
SECTION 5.3. HAZARDOUS MATERIALS.............................................8
ARTICLE VI. COMMON AREAS; SERVICES.........................................................10
SECTION 6.1. UTILITIES AND SERVICES.........................................10
SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS......................10
SECTION 6.3. USE OF COMMON AREAS............................................11
SECTION 6.4. PARKING........................................................11
SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD..............................11
ARTICLE VII. MAINTAINING THE PREMISES......................................................11
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR................................11
SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR..............................12
SECTION 7.3. ALTERATIONS....................................................12
SECTION 7.4. MECHANIC'S LIENS...............................................13
SECTION 7.5. ENTRY AND INSPECTION...........................................13
SECTION 7.6. SPACE PLANNING AND SUBSTITUTION................................13
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY...................................13
ARTICLE IX. ASSIGNMENT AND SUBLETTING......................................................13
SECTION 9.1. RIGHTS OF PARTIES..............................................13
SECTION 9.2. EFFECT OF TRANSFER.............................................15
SECTION 9.3. SUBLEASE REQUIREMENTS..........................................15
SECTION 9.4. CERTAIN TRANSFERS..............................................15
ARTICLE X. INSURANCE AND INDEMNITY.........................................................16
SECTION 10.1. TENANT'S INSURANCE.............................................16
SECTION 10.2. LANDLORD'S INSURANCE...........................................16
SECTION 10.3. TENANT'S INDEMNITY.............................................16
SECTION 10.4. LANDLORD'S NONLIABILITY........................................16
SECTION 10.5. WAIVER OF SUBROGATION..........................................16
ARTICLE XI. DAMAGE OR DESTRUCTION..........................................................17
SECTION 11.1. RESTORATION....................................................17
SECTION 11.2. LEASE GOVERNS..................................................18
ARTICLE XII. EMINENT DOMAIN................................................................18
SECTION 12.1. TOTAL OR PARTIAL TAKING........................................18
SECTION 12.2. TEMPORARY TAKING...............................................18
SECTION 12.3. TAKING OF PARKING AREA.........................................18
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS..............................18
SECTION 13.1. SUBORDINATION..................................................18
SECTION 13.2. ESTOPPEL CERTIFICATE...........................................18
SECTION 13.3. FINANCIALS.....................................................19
ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES................................................19
SECTION 14.1. TENANT'S DEFAULTS..............................................19
SECTION 14.2. LANDLORD'S REMEDIES............................................19
SECTION 14.3. LATE PAYMENTS..................................................21
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM...................................21
i
SECTION 14.5. DEFAULT BY LANDLORD............................................21
SECTION 14.6. EXPENSES AND LEGAL FEES........................................21
SECTION 14.7. WAIVER OF JURY TRIAL...........................................21
SECTION 14.8. SATISFACTION OF JUDGMENT.......................................22
SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD.........................22
ARTICLE XV. END OF TERM....................................................................22
SECTION 15.1. HOLDING OVER...................................................22
SECTION 15.2. MERGER ON TERMINATION..........................................22
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY.....................22
ARTICLE XVI. PAYMENTS AND NOTICES..........................................................22
ARTICLE XVII. RULES AND REGULATIONS........................................................23
ARTICLE XVIII. BROKER'S COMMISSION.........................................................23
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST...............................................23
ARTICLE XX. INTERPRETATION.................................................................23
SECTION 20.1. GENDER AND NUMBER..............................................23
SECTION 20.2. HEADINGS.......................................................23
SECTION 20.3. JOINT AND SEVERAL LIABILITY....................................23
SECTION 20.4. SUCCESSORS.....................................................23
SECTION 20.5. TIME OF ESSENCE................................................23
SECTION 20.6. CONTROLLING LAW/VENUE..........................................24
SECTION 20.7. SEVERABILITY...................................................24
SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES.................................24
SECTION 20.9. INABILITY TO PERFORM...........................................24
SECTION 20.10. ENTIRE AGREEMENT...............................................24
SECTION 20.11. QUIET ENJOYMENT................................................24
SECTION 20.12. SURVIVAL.......................................................24
SECTION 20.13. INTERPRETATION.................................................24
ARTICLE XXI. EXECUTION AND RECORDING.......................................................24
SECTION 21.1. COUNTERPARTS...................................................24
SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP
AUTHORITY......................................................24
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER.........................24
SECTION 21.4. RECORDING......................................................24
SECTION 21.5. AMENDMENTS.....................................................25
SECTION 21.6. EXECUTED COPY..................................................25
SECTION 21.7. ATTACHMENTS....................................................25
ARTICLE XXII. MISCELLANEOUS................................................................25
SECTION 22.1. NONDISCLOSURE OF LEASE TERMS...................................25
SECTION 22.2. GUARANTY [INTENTIONALLY DELETED]...............................25
SECTION 22.3. CHANGES REQUESTED BY LENDER....................................25
SECTION 22.4. MORTGAGEE PROTECTION...........................................25
SECTION 22.5. COVENANTS AND CONDITIONS.......................................25
SECTION 22.6. SECURITY MEASURES..............................................25
SECTION 22.7. CONTINGENCY....................................................26
EXHIBITS
EXHIBIT A DESCRIPTION OF PREMISES
EXHIBIT B ENVIRONMENTAL QUESTIONNAIRE
EXHIBIT C LANDLORD'S DISCLOSURES
EXHIBIT D INSURANCE REQUIREMENTS
EXHIBIT E RULES AND REGULATIONS
EXHIBIT X WORK LETTER
EXHIBIT Y PROJECT SITE PLAN
ii
LEASE
(SINGLE TENANT; NET)
BETWEEN
THE IRVINE COMPANY
AND
ENDOCARE, INC.
EXHIBIT A
First Floor Plan
[Map of Premise]
Second Floor Plan
[Map of Premise]
EXHIBIT B
HAZARDOUS MATERIAL SURVEY FORM
EXHIBIT C
FORM OF LANDLORD'S DISCLOSURES
(Spectrum III)
EXHIBIT D
FORM OF TENANT'S INSURANCE
EXHIBIT E
FORM OF RULES AND REGULATIONS
EXHIBIT X
FORM OF WORK LETTER
EXHIBIT Y
PROJECT SITE PLAN
[Map of Freeway Technology Park, Lot 11]
