EXHIBIT 10.57
EXECUTED ORIGINAL
XXXXXXX XXXXX
XXXXXX XXXXX
00000 XXXXXXXX, XXX,
a California limited liability company,
as Landlord,
and
MAGNETEK, INC.,
a Delaware corporation,
as Tenant.
TABLE OF CONTENTS
PAGE
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ARTICLE 1 REAL PROPERTY, BUILDING AND PREMISES..................................................................4
ARTICLE 2 LEASE TERM............................................................................................5
ARTICLE 3 BASE RENT.............................................................................................5
ARTICLE 4 ADDITIONAL RENT.......................................................................................5
ARTICLE 5 USE OF PREMISES......................................................................................12
ARTICLE 6 SERVICES AND UTILITIES...............................................................................13
ARTICLE 7 REPAIRS..............................................................................................15
ARTICLE 8 ADDITIONS AND ALTERATIONS............................................................................15
ARTICLE 9 COVENANT AGAINST LIENS...............................................................................17
ARTICLE 10 INSURANCE...........................................................................................18
ARTICLE 11 DAMAGE AND DESTRUCTION..............................................................................20
ARTICLE 12 NONWAIVER...........................................................................................22
ARTICLE 13 CONDEMNATION........................................................................................23
ARTICLE 14 ASSIGNMENT AND SUBLETTING...........................................................................23
ARTICLE 15 SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES....................................................28
ARTICLE 16 HOLDING OVER........................................................................................28
ARTICLE 17 ESTOPPEL CERTIFICATES...............................................................................29
ARTICLE 18 SUBORDINATION.......................................................................................29
ARTICLE 19 DEFAULTS; REMEDIES..................................................................................30
ARTICLE 20 ATTORNEYS' FEES.....................................................................................32
ARTICLE 21 SECURITY DEPOSIT....................................................................................32
ARTICLE 22 INTENTIONALLY OMITTED...............................................................................33
ARTICLE 23 SIGNS...............................................................................................33
ARTICLE 24 COMPLIANCE WITH LAW.................................................................................34
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ARTICLE 25 LATE CHARGES........................................................................................34
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT..................................................................................35
ARTICLE 27 ENTRY BY LANDLORD...................................................................................35
ARTICLE 28 TENANT PARKING......................................................................................36
ARTICLE 29 MISCELLANEOUS PROVISIONS............................................................................37
EXHIBITS
A OUTLINE OF PREMISES
B RULES AND REGULATIONS
C NOTICE OF LEASE TERM DATES
D INTENTIONALLY OMITTED
E FORM OF TENANTS ESTOPPEL CERTIFICATE
F REMOVED WALL
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INDEX
PAGE(s)
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Additional Rent...................................................................................................6
Alterations......................................................................................................15
Base Rent.........................................................................................................4
Base Year.........................................................................................................6
Brokers..........................................................................................................39
Building..........................................................................................................4
Control..........................................................................................................27
Damage Termination Date..........................................................................................21
Damage Termination Notice........................................................................................21
Direct Expenses...................................................................................................6
Estimate.........................................................................................................11
Estimate Statement...............................................................................................11
Estimated Excess.................................................................................................11
Excepted Matters.................................................................................................41
Excess...........................................................................................................10
Expense Year......................................................................................................6
Force Majeure....................................................................................................39
Holidays.........................................................................................................13
Landlord..........................................................................................................1
Landlord Parties.................................................................................................18
Lease.............................................................................................................1
Lease Commencement Date...........................................................................................4
Lease Expiration Date.............................................................................................5
Lease Term........................................................................................................5
Lease Year........................................................................................................5
Net Worth........................................................................................................27
Notices..........................................................................................................39
Operating Expenses................................................................................................6
Premises..........................................................................................................4
Quoted Rent......................................................................................................24
Real Property.....................................................................................................4
Renovations......................................................................................................40
rent.............................................................................................................31
Rent..............................................................................................................6
Security Deposit.................................................................................................32
Statement........................................................................................................10
Subject Space....................................................................................................23
Summary...........................................................................................................1
Tax Expenses......................................................................................................8
Tax Expenses......................................................................................................6
Tenant............................................................................................................1
Tenant Parties...................................................................................................18
Tenant's Security System.........................................................................................15
Tenant's Share...................................................................................................10
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ARTICLE 1
REAL PROPERTY, BUILDING AND PREMISES
1.1 REAL PROPERTY, BUILDING AND PREMISES. Upon and subject to the
terms set forth in this Lease, Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the premises set forth in SECTION 6.2 of the Summary
(the "Premises"), which Premises are located in the building (the "Building")
set forth in Section 6.1 of the Summary, reserving, however, to Landlord: (i)
the sole and exclusive right to consent to the use or occupancy of the Premises
by any person other than Tenant, whether by sublease, assignment or otherwise,
and all right, title and interest in the economic value of the leasehold estate
in the Premises for the Lease Term, all as more fully set forth in ARTICLE 14 of
this Lease, (ii) all of the Building, except for the space within the inside
surfaces bounding the Premises, and except as provided below in this ARTICLE 1,
and (iii) the rights, interests and estates reserved to Landlord by provisions
of this Lease or operation of law. The outline of the Premises is set forth in
EXHIBIT A attached hereto. The rentable square footages of the Premises and the
Building are set forth in SECTION 6 of the Summary. The Building, the parking
structure servicing the Building, the land upon which the Building stands, and
the land, improvements and other buildings surrounding the Building which are
designated from time to time by Landlord as appurtenant to or servicing the
Building, are herein sometimes collectively referred to herein as the "Real
Property." Tenant acknowledges that Landlord has made no representation or
warranty regarding the condition of the Real Property except as specifically set
forth in this Lease. Upon the full execution and delivery of this Lease by
Landlord and Tenant, Landlord shall deliver the Premises and "Base Building," as
that term is defined below, to Tenant, and Tenant shall accept the Premises and
Base Building from Landlord in their presently existing, "as-is" condition. The
"Base Building" shall consist of those portions of the Premises which were in
existence prior to the construction of the tenant improvements in the Premises
for the prior tenant of the Premises. Upon delivery of the Premises to Tenant,
Tenant shall have the right to occupy the Premises for purposes of completing
Tenant's improvements in the Premises, including installing cabling,
communications and computer equipment and furniture systems and certain
additional improvements as set forth in Section 8.1 of this Lease, prior to the
"Lease Commencement Date" as defined in ARTICLE 2, subject to all the terms and
conditions of this Lease, other than Tenant's obligation to pay "Base Rent", as
that term is defined in Article 3 below, and "Tenant's Share" of "Direct
Expenses", as those terms are defined in Article 4, below, as though the Lease
Commencement Date had occurred. Tenant is hereby granted the right to the
nonexclusive use of the common corridors and hallways, stairwells, elevators,
restrooms and other public or common areas located on the Real Property;
provided, however, that the manner in which such public and common areas are
maintained and operated shall be at the sole discretion of Landlord and the use
thereof shall be subject to the rules, regulations and restrictions attached
hereto as EXHIBIT B (the "Rules and Regulations"). Landlord reserves the right
to make alterations or additions to or to change the location of elements of the
Real Property and the common areas thereof.
1.2 VERIFICATION OF RENTABLE AND USABLE SQUARE FEET OF PREMISES AND
BUILDING. For purposes of this Lease, "rentable square feet" and "usable square
feet" of the Premises shall be deemed to be as set forth in SECTION 6.2 of the
Summary and the rentable square feet of the Building shall be deemed to be as
set forth in SECTION 6.3 of the Summary.
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ARTICLE 2
LEASE TERM
The terms and provisions of this Lease shall be effective as of the
date of this Lease. The term of this Lease (the "Lease Term") shall be as set
forth in SECTION 7.1 of the Summary and shall commence on the date (the "Lease
Commencement Date") set forth in SECTION 7.2 of the Summary, and shall terminate
on the date (the "Lease Expiration Date") set forth in SECTION 7.3 of the
Summary, unless this Lease is sooner terminated as hereinafter provided. For
purposes of this Lease, the term "Lease Year" shall mean each consecutive twelve
(12) month period during the Lease Term; provided, however, that the first Lease
Year shall commence on the Lease Commencement Date and end on the last day of
the eleventh month thereafter and the second and each succeeding Lease Year
shall commence on the first day of the next calendar month; and further provided
that the last Lease Year shall end on the Lease Expiration Date. At any time
during the Lease Term, Landlord may deliver to Tenant a notice in the form as
set forth in EXHIBIT C, attached hereto, which Tenant shall execute and return
to Landlord within five (5) days of receipt thereof.
ARTICLE 3
BASE RENT
Tenant shall pay, without notice or demand, to Landlord at a lockbox
designated by Landlord, or at such other place as Landlord may from time to time
designate in writing, in the form of a check (which is drawn upon a bank which
is located in the State of California) or currency which, at the time of
payment, is legal tender for private or public debts in the United States of
America, base rent ("Base Rent") as set forth in SECTION 8 of the Summary,
payable in equal monthly installments as set forth in SECTION 8 of the Summary
in advance on or before the first day of each and every calendar month during
the Lease Term, without any setoff or deduction whatsoever. The Base Rent for
the first full calendar month of the Lease Term, shall be paid at the time of
Tenant's execution of this Lease. If any "Rent," as that term is defined in
SECTION 4.1, below, payment date (including the Lease Commencement Date) falls
on a day of a calendar month other than the first day of such calendar month or
if any Rent payment is for a period which is shorter than one calendar month
such as during the last month of the Lease Term, the Rent for any fractional
calendar month shall accrue on a daily basis for the period from the date such
payment is due to the end of such calendar month or to the end of the Lease Term
at a rate per day which is equal to 1/365 of the Rent. All other payments or
adjustments required to be made under the terms of this Lease that require
proration on a time basis shall be prorated on the same basis.
ARTICLE 4
ADDITIONAL RENT
4.1 ADDITIONAL RENT. In addition to paying the Base Rent specified in
ARTICLE 3 of this Lease, Tenant shall pay as additional rent "Tenant's Share" of
the annual "Direct Expenses," as those terms are defined in SECTIONS 4.2.6 AND
4.2.2 of this Lease, respectively, which are in
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excess of the amount of Direct Expenses applicable to the "Base Year," as that
term is defined in SECTION 4.2.1 of this Lease. Such additional rent, together
with any and all other amounts payable by Tenant to Landlord, as additional rent
or otherwise, pursuant to the terms of this Lease, shall be hereinafter
collectively referred to as the "Additional Rent." The Base Rent and Additional
Rent are herein collectively referred to as the "Rent." All amounts due under
this ARTICLE 4 as Additional Rent shall be payable for the same periods and in
the same manner, time and place as the Base Rent. Without limitation on other
obligations of Tenant which shall survive the expiration of the Lease Term, the
obligations of Tenant to pay the Additional Rent provided for in this ARTICLE 4
shall survive the expiration of the Lease Term.
4.2 DEFINITIONS. As used in this ARTICLE 4, the following terms shall
have the meanings hereinafter set forth:
4.2.1 "Base Year" shall mean the period set forth in SECTION 9.1
of the Summary.
4.2.2 "Direct Expenses" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.3 "Expense Year" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.4 "Operating Expenses" shall mean all expenses, costs and
amounts of every kind and nature which Landlord shall pay or incur during any
Expense Year because of or in connection with the ownership, management,
maintenance, repair, replacement, restoration or operation of the Real Property,
including, without limitation, any amounts paid or incurred for (i) the cost of
supplying all utilities, the cost of operating, maintaining, repairing,
replacing, renovating and managing the utility systems, mechanical systems,
sanitary and storm drainage systems, and escalator and elevator systems, and the
cost of supplies, tools, and equipment and maintenance and service contracts in
connection therewith; (ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting the validity or applicability of any
governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with the implementation and operation of a transportation
system management program or similar program; (iii) the cost of earthquake
insurance and other insurance carried by Landlord, in such amounts as Landlord
may reasonably determine; (iv) fees, charges and other costs, including
management fees (or amounts in lieu thereof), consulting fees (including but not
limited to any consulting fees incurred in connection with the procurement of
insurance), legal fees and accounting fees, of all persons engaged by Landlord
or otherwise reasonably incurred by Landlord in connection with the management,
operation, maintenance and repair of the Real Property; (v) the cost of parking
area repair, restoration, and maintenance, including, but not limited to,
resurfacing, repainting, restriping, and cleaning; (vi) wages, salaries and
other compensation and benefits of all persons engaged in the operation,
maintenance or security of the Real Property, and employer's Social Security
taxes, unemployment taxes or insurance, and any other taxes which may be levied
on such wages, salaries, compensation and benefits; provided, that if any
employees of Landlord provide services for more than one building of Landlord,
then a prorated portion of such employees' wages, benefits and taxes shall be
included in Operating Expenses based on the portion of their working time
devoted to the Real Property,
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and provided further, that no portion of any employee's wages, benefits, or
taxes allocable to time spent on the development or marketing of the Real
Property shall be included in Operating Expenses; (vii) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Building; (viii)
amortization (including interest on the unamortized cost at a rate equal to the
floating commercial loan rate announced from time to time by Bank of America, a
national banking association, or its successor, as its prime rate, plus 2% per
annum (the "Interest Rate")) of the cost of acquiring or the rental expense of
personal property used in the maintenance, operation and repair of the Building
and Real Property; and (ix) the cost of capital expenditures or other costs
incurred in connection with the Real Property which relate to the operation,
repair, maintenance and replacement of all existing systems, equipment,
facilities or structures which serve the Real Property in the whole or in part;
provided, however, that each such permitted capital expenditure shall be
amortized (including interest on the unamortized cost) over its useful life as
Landlord shall reasonably determine. If the Building is not fully occupied
during all or a portion of the Base Year or any Expense Year, Landlord shall
make an appropriate adjustment to the variable components of Operating Expenses
for such year as reasonably determined by Landlord employing sound accounting
principles, to determine the amount of Operating Expenses that would have been
paid had the Building been ninety-five percent (95%) occupied, and the amount so
determined shall be deemed to have been the amount of Operating Expenses for
such year. Operating Expenses for the Base Year shall include market-wide labor
rate increases due to extraordinary circumstances, including but not limited to
boycotts and strikes, and utility rate increases due to extraordinary
circumstances including, but not limited to, conservation surcharges, boycotts,
embargoes or other shortages, or amortized costs relating to capital
improvements; provided, however, that at such time as any such particular
assessments, charges, costs or fees are no longer included in Operating
Expenses, such particular assessments, charges, costs or fees shall be excluded
from the Base Year calculation of Operating Expenses. Notwithstanding the
foregoing, for purposes of this Lease, Operating Expenses shall not, however,
include (A) except as otherwise set forth above in this Section 4.2, bad-debt
expenses, depreciation, interest and amortization on mortgages, or ground lease
payments, if any; (B) real estate brokers' leasing commissions; (C) the cost of
providing any service directly to and paid directly by any tenant; (D) any costs
expressly excluded from Operating Expenses elsewhere in this Lease; (E) costs of
any items to the extent Landlord receives reimbursement from insurance proceeds
(such proceeds to be excluded from Operating Expenses in the year in which
received, except that any deductible amount under any insurance policy shall be
included within Operating Expenses) or from a third party; (F) costs of items
considered capital improvements (versus capital expenditures under item (ix),
above) and costs considered capital which are incurred with respect to equipment
which serves the Real Property in the whole or in part (other than costs with
respect to existing equipment), which capital costs shall be determined under
generally accepted accounting principles consistently applied (the "Capital
Items"), except for (1) Capital Items which are intended as a labor-saving
device or to effect other economies in the operation or maintenance of the Real
Property, or any portion thereof, to the extent of cost savings reasonably
anticipated by Landlord, or (2) Capital Items that are required under any
governmental law or regulation, and in either event such Capital Items shall be
amortized (including interest on the unamortized cost) over their useful life as
Landlord shall reasonably determine; (G) marketing costs, including leasing
commissions, attorneys' fees in connection with the negotiation and preparation
of letters, deal memos, letters of intent, leases, subleases
7
and/or assignments, space planning costs, key money, construction costs, and
other costs and expenses incurred in connection with lease, sublease and/or
assignment negotiations and transactions with present or prospective tenants or
other occupants of the Building, including attorneys' fees, settlements,
judgments, and other costs and expenditures incurred in connection with disputes
with present or prospective tenants or other occupants of the Building; (H)
costs, including permit, license and inspection costs, incurred with respect to
the installation of other tenants' or occupants' improvements made for tenants
or other occupants in the Building or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant space for tenants or
other occupants in the Building; (I) rentals and other related expenses for
leasing a heating, ventilation and air conditioning system, elevators, or other
items (except when needed in connection with normal repairs and maintenance of
the Building) which if purchased, rather than rented, would constitute a capital
improvement not included in Operating Expenses pursuant to this Lease; (J)
depreciation, amortization and interest payments, except as specifically
included in Operating Expenses pursuant to the terms of this Lease and except on
materials, tools, supplies and vendor-type equipment purchased by Landlord to
enable Landlord to supply services Landlord might otherwise contract for with a
third party, where such depreciation, amortization and interest payments would
otherwise have been included in the charge for such third party's services, all
as determined in accordance with generally accepted accounting principles,
consistently applied, and when depreciation or amortization is permitted or
required, the item shall be amortized over its reasonably anticipated useful
life; (K) expenses in connection with services or other benefits which are not
offered to Tenant or for which Tenant is charged for directly but which are
provided to another tenant or occupant of the Building, without charge; (L)
overhead and profit increment paid to Landlord or to subsidiaries or affiliates
of Landlord for goods and/or services in the Building to the extent the same
exceeds the costs of such by unaffiliated third parties on a competitive basis;
(M) Landlord's general overhead and general and administrative expenses; (N)
advertising and promotional expenditures, and costs of signs in or on the
Building identifying the owner of the Building or other tenants' signs; (O)
electric power costs or other utility costs for which any tenant directly
contracts with the local public service company (but Landlord shall have the
right to "gross up" as if the floor was vacant); (P) tax penalties incurred as a
result of Landlord's negligence, inability or unwillingness to make payments or
file returns when due; (Q) costs arising from Landlord's charitable or political
contributions; (R) costs incurred by Landlord due to the violation by Landlord
or any other tenant of the terms and conditions of any lease of space in the
Building; and (S) costs arising from the gross negligence or willful misconduct
of "Landlord Parties" (defined in Section 10.1 below).
4.2.5 "Tax Expenses" shall mean all federal, state, county, or
local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Building),
which Landlord shall pay or incur during any Expense Year (without regard to any
different fiscal year used by such governmental or municipal authority) because
of or in connection with the ownership, leasing and operation of the Real
Property. For purposes of this Lease, Tax Expenses shall be calculated as if the
tenant
8
improvements in the Building were fully constructed and the Real Property, the
Building, and all tenant improvements in the Building were fully assessed for
real estate tax purposes, and accordingly, during the portion of any Expense
Year occurring during the Base Year, Tax Expenses shall be deemed to be
increased appropriately.
4.2.5.1 Tax Expenses shall include, without limitation:
(i) Any assessment, tax, fee, levy or charge in addition
to, or in substitution, partially or totally, of any assessment, tax, fee, levy
or charge previously included within the definition of real property tax, it
being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("Proposition 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, conservation, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants, and,
in further recognition of the decrease in the level and quality of governmental
services and amenities as a result of Proposition 13, Tax Expenses shall also
include any governmental or private assessments or the Project's contribution
towards a governmental or private cost-sharing agreement for the purpose of
augmenting or improving the quality of services and amenities normally provided
by governmental agencies. It is the intention of Tenant and Landlord that all
such new and increased assessments, taxes, fees, levies, and charges and all
similar assessments, taxes, fees, levies and charges be included within the
definition of Tax Expenses for purposes of this Lease;
(ii) Any assessment, tax, fee, levy, or charge allocable
to or measured by the area of the Premises or the rent payable hereunder,
including, without limitation, any gross income tax with respect to the receipt
of such rent, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof;
(iii) Any assessment, tax, fee, levy or charge, upon this
transaction or any document to which Tenant is a party, creating or transferring
an interest or an estate in the Premises; and
(iv) Any possessory taxes charged or levied in lieu of
real estate taxes.
4.2.5.2 Any expenses incurred by Landlord in attempting to
protest, reduce or minimize Tax Expenses shall be included in Tax Expenses in
the Expense Year such expenses are paid. Tax refunds shall be credited against
Tax Expenses, and refunded to Tenant, regardless of when received, based on the
Expense Year to which the refund is applicable, provided that in no event shall
the amount to be refunded to Tenant for any such Expense Year exceed the total
amount paid by Tenant as Additional Rent under this Article 4 for such Expense
Year. All special assessments which may be paid in installments shall be paid by
Landlord in the maximum number of installments permitted by law and not included
in Operating Expenses except in the year in which the assessment is actually
paid; provided, however, that if the prevailing practice in comparable buildings
located in the vicinity of the Building is to pay such assessments on an early
basis, and Landlord pays the same on such basis, such assessments shall
9
be included in Operating Expenses in the year paid by Landlord. The amount of
Tax Expenses for the Base Year attributable to the valuation of the Real
Property, inclusive of tenant improvements, shall be known as "Base Taxes." If,
in any Expense Year subsequent to the Base Year, the amount of Tax Expenses
decreases, then for purposes of all subsequent Expense Years, including the
Expense Year in which such decrease in Tax Expenses occurs, the Base Taxes shall
be decreased by an amount equal to the decrease in Tax Expenses.
4.2.5.3 Notwithstanding anything to the contrary contained in
this SECTION 4.2.5 (except as set forth in SECTION 4.2.5.1 or levied in whole
or part in lieu of Tax Expenses), there shall be excluded from Tax Expenses
(i) all excess profits taxes, franchise taxes, gift taxes, capital stock
taxes, inheritance and succession taxes, estate taxes, federal and state
income taxes, and other taxes to the extent applicable to Landlord's general
or net income (as opposed to rents, receipts or income attributable to
operations at the Building), (ii) any items included as Operating Expenses,
and (iii) any items paid by Tenant under SECTION 4.4 of this Lease.
4.2.5.4 Tax Expenses for the Base Year shall include any increase
in Tax Expenses attributable to special assessments, charges, costs or fees, or
due to modifications or changes in governmental laws or regulations, including
but not limited to the institution of a split tax roll; provided, however, that
at such time as any such particular assessments, charges, costs, fees, or
modifications are no longer included in Tax Expenses, such particular
assessments, charges, costs, fees, or modifications shall be excluded from the
Base Year calculation of Tax Expenses.
4.2.6 "Tenant's Share" shall mean the percentage set forth in
SECTION 9.2 of the Summary. Tenant's Share was calculated by multiplying the
number of rentable square feet of the Premises by 100 and dividing the product
by the total rentable square feet in the Building. In the event either the
Premises and/or the Building is expanded or reduced, Tenant's Share shall be
appropriately adjusted, and, as to the Expense Year in which such change occurs,
Tenant's Share for such year shall be determined on the basis of the number of
days during such Expense Year that each such Tenant's Share was in effect.
4.3 CALCULATION AND PAYMENT OF ADDITIONAL RENT.
4.3.1 CALCULATION OF EXCESS. If for any Expense Year ending or
commencing within the Lease Term, Tenant's Share of Direct Expenses for such
Expense Year exceeds Tenant's Share of the amount of Direct Expenses applicable
to the Base Year, then Tenant shall pay to Landlord, in the manner set forth in
SECTION 4.3.2, below, and as Additional Rent, an amount equal to the excess (the
"Excess").
4.3.2 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY TENANT.
Landlord shall endeavor to give to Tenant, on or before the first day of April
following the end of each Expense Year, a statement (the "Statement") which
shall state the Direct Expenses incurred or accrued for such preceding Expense
Year, and which shall indicate the amount, if any, of any Excess. Upon receipt
of the Statement for each Expense Year ending during the Lease Term, if an
Excess is present, Tenant shall pay, with its next installment of Base Rent due,
the full amount of the Excess for such Expense Year, less the amounts, if any,
paid during such Expense Year as
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"Estimated Excess," as that term is defined in SECTION 4.3.3, below. The failure
of Landlord to timely furnish the Statement for any Expense Year shall not
prejudice Landlord from enforcing its rights under this ARTICLE 4. Even though
the Lease Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant's Share of the Direct Expenses for the Expense
Year in which this Lease terminates, taking into consideration that the Lease
Expiration Date may have occurred prior to the final day of the applicable
Expense Year, if an Excess is present, Tenant shall immediately pay to Landlord
an amount as calculated pursuant to the provisions of SECTION 4.3.1 of this
Lease, and if Tenant has paid more as Estimated Excess than the actual Excess,
Landlord shall, within thirty (30) days after the date of the Statement, deliver
a check payable to Tenant in the amount of the overpayment. The provisions of
this SECTION 4.3.2 shall survive the expiration or earlier termination of the
Lease Term.
4.3.3 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition,
Landlord shall give Tenant a yearly expense estimate statement (the "Estimate
Statement") which shall set forth Landlord's reasonable estimate (the
"Estimate") of what the total amount of Direct Expenses for the then-current
Expense Year shall be and the estimated excess (the "Estimated Excess") as
calculated by comparing Direct Expenses, which shall be based upon the Estimate,
to the amount of Direct Expenses applicable to the Base Year, which Estimate
Statement may be revised and reissued by Landlord from time to time. The failure
of Landlord to timely furnish the Estimate Statement for any Expense Year shall
not preclude Landlord from enforcing its rights to collect any Estimated Excess
under this ARTICLE 4. If pursuant to the Estimate Statement (or a revision
thereof) an Estimated Excess is calculated for the then-current Expense Year,
Tenant shall pay, with its next installment of Base Rent due, a fraction of the
Estimated Excess (or the increase in the Estimated Excess if pursuant to a
revised Estimated Statement) for the then-current Expense Year (reduced by any
amounts paid pursuant to the last sentence of this SECTION 4.3.3). Such fraction
shall have as its numerator the number of months which have elapsed in such
current Expense Year to the month of such payment, both months inclusive, and
shall have twelve (12) as its denominator. Until a new Estimate Statement is
furnished, Tenant shall pay monthly, with the monthly Base Rent installments, an
amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in
the previous Estimate Statement delivered by Landlord to Tenant.
4.4 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
Tenant shall reimburse Landlord, as Additional Rent, upon demand for any and all
taxes required to be paid by Landlord (except to the extent included in Tax
Expenses by Landlord), excluding state, local and federal personal or corporate
income taxes measured by the net income of Landlord from all sources and estate
and inheritance taxes, whether or not now customary or within the contemplation
of the parties hereto, when:
4.4.1 Said taxes are measured by or reasonably attributable to
the cost or value of Tenant's equipment, furniture, fixtures and other
personal property located in the Premises, or by the cost or value of any
leasehold improvements made in or to the Premises by or for Tenant, to the
extent the cost or value of such leasehold improvements exceeds the cost or
value of a building standard build-out as determined by Landlord regardless
of whether title to such improvements shall be vested in Tenant or Landlord;
4.4.2 Said taxes are assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the
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Premises, any portion of the Real Property or the parking facility used by
Tenant in connection with this Lease; or
4.4.3 Said taxes are assessed upon this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises.
4.5 LANDLORD'S BOOKS AND RECORDS. Within ninety (90) days after
receipt of a Statement by Tenant, if Tenant disputes the amount of Additional
Rent set forth in the Statement, a reputable certified public accountant
(which accountant is a member of a reputable independent nationally
recognized accounting firm and has had previous experience in reviewing
financial operating records of landlords of office buildings; provided that
such accountant is not retained by Tenant on a contingency fee basis),
designated and paid for by Tenant, may, after reasonable notice to Landlord
and at reasonable times, inspect Landlord's records with respect to the
Statement at Landlord's offices, provided that Tenant is not then in default
under this Lease and Tenant has paid all amounts required to be paid under
the applicable Estimate Statement and Statement, as the case may be. In
connection with such inspection, Tenant and Tenant's agents must agree in
advance to follow Landlord's reasonable rules and procedures regarding
inspections of Landlord's records, and shall execute a commercially
reasonable confidentiality agreement regarding such inspection. Tenant's
failure to dispute the amount of Additional Rent set forth in any Statement
within ninety (90) days of Tenant's receipt of such Statement shall be deemed
to be Tenant's approval of such Statement and Tenant, thereafter, waives the
right or ability to dispute the amounts set forth in such Statement. If after
such inspection, Tenant still disputes such Additional Rent, a determination
as to the proper amount shall be made, at Tenant's expense, by an independent
certified public accountant (the "Accountant") selected by Landlord and
subject to Tenant's reasonable approval; provided that if such determination
by the Accountant proves that Direct Expenses were overstated by more than
seven percent (7%), then the cost of the Accountant and the cost of such
determination shall be paid for by Landlord. Landlord shall be required to
maintain records of all Direct Expenses set forth in each Statement delivered
to Tenant for two (2) years following Landlord's delivery of the applicable
Statement. In no event shall this Section 4.5 be deemed to allow any review
of any of Landlord's records by any subtenant of Tenant. Tenant agrees that
this SECTION 4.5 shall be the sole method to be used by Tenant to dispute the
amount of any Direct Expenses payable or not payable by Tenant pursuant to
the terms of this Lease, and Tenant hereby waives any other rights at law or
in equity relating thereto.
ARTICLE 5
USE OF PREMISES
Tenant shall use the Premises solely for the "Permitted Use," as that
term is defined in Section 13 of the Summary, and Tenant shall not use or permit
the Premises to be used for any other purpose or purposes whatsoever without the
prior written consent of Landlord, which may be withheld in Landlord's sole
discretion, and shall not allow occupancy density of use of the Premises which
is greater than the average density of the other tenants of the Building. Tenant
further covenants and agrees that it shall not use, or suffer or permit any
person or persons to use, the Premises or any part thereof for any use or
purpose contrary to the Rules and Regulations, or in violation of the laws of
the United States of America, the State of California, or the
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ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the
Building. Tenant shall faithfully observe and comply with the Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of such Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Building. Tenant shall comply
with all recorded covenants, conditions, and restrictions now or hereafter
affecting the Real Property. Tenant shall not use or allow another person or
entity to use any part of the Premises for the storage, use, treatment,
manufacture or sale of hazardous materials or substances as defined pursuant to
any applicable federal, state or local governmental or quasi-governmental law,
code, ordinance, rule, or regulation. Landlord acknowledges, however, that
Tenant will maintain products in the Premises which are incidental to the
operation of its offices, such as photocopy supplies, secretarial supplies and
limited janitorial supplies, which products contain chemicals which are
categorized as hazardous materials. Landlord agrees that the use of such
products in the Premises in compliance with all applicable laws and in the
manner in which such products are designed to be used shall not be a violation
by Tenant of this ARTICLE 5.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Landlord shall provide the following
services on all days during the Lease Term, unless otherwise stated below.
6.1.1 Subject to all governmental rules, regulations and
guidelines applicable thereto, Landlord shall provide heating and air
conditioning when necessary for normal comfort for normal office use in the
Premises, from Monday through Friday, during the period from 8:00 a.m. to 6:00
p.m., and on Saturdays during the period from 9:00 a.m. to 1:00 p.m., except for
Sundays and New Year's Day, President's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, the day after Thanksgiving Day, Christmas Day and
any other nationally and locally recognized holidays (collectively, the
"Holidays").
6.1.2 Landlord shall provide adequate electrical wiring,
facilities and power for normal general office use as determined by Landlord;
provided, however, that electrical usage, to the extent the same exceeds four
(4) xxxxx connected load per usable square foot of the Premises per hour during
Building standard business hours, shall be deemed excess consumption and shall
be subject to the terms of SECTION 6.2, below. Tenant shall bear the cost of
replacement of non-Building standard lamps, starters and ballasts for lighting
fixtures within the Premises.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Landlord shall provide janitorial services Monday through
Friday except the date of observation of the Holidays, in and about the
Premises.
6.1.5 Landlord shall provide nonexclusive automatic elevator
service at all times.
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6.2 OVERSTANDARD TENANT USE. Tenant shall not, without Landlord's
prior written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
building standard lights in the Premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Landlord pursuant to the terms of SECTION
6.1 of this Lease. If such consent is given, Landlord shall have the right to
install supplementary air conditioning units or other facilities in the
Premises, including supplementary or additional metering devices, and the cost
thereof, including the cost of installation, operation and maintenance,
increased wear and tear on existing equipment and other similar charges, shall
be paid by Tenant to Landlord upon billing by Landlord. If Tenant uses water,
electricity, heat or air conditioning in excess of that supplied by Landlord
pursuant to SECTION 6.1 of this Lease, Tenant shall pay to Landlord, upon
billing, the cost of such excess consumption, the cost of the installation,
operation, and maintenance of equipment which is installed in order to supply
such excess consumption, and the cost of the increased wear and tear on existing
equipment caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, on demand, including the cost of such
additional metering devices. If Tenant desires to use heat, ventilation or air
conditioning during hours other than those for which Landlord is obligated to
supply such utilities pursuant to the terms of SECTION 6.1 of this Lease, Tenant
shall give Landlord such prior notice, as Landlord shall from time to time
establish as appropriate, of Tenant's desired use and Landlord shall supply such
utilities to Tenant at such hourly cost to Tenant as Landlord shall from time to
time establish. If Tenant uses an independent HVAC system which is not part of
the Building-standard HVAC system, then Tenant shall pay Landlord the charge
therefor established by Landlord from time to time, including the cost of
increased wear and tear on the existing equipment. Amounts payable by Tenant to
Landlord for such use of additional utilities shall be deemed Additional Rent
hereunder and shall be billed on a monthly basis.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent or otherwise, for failure to furnish or
delay in furnishing any service (including telephone and telecommunication
services), or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building after
reasonable effort to do so, by any accident or casualty whatsoever, by act or
default of Tenant or other parties, or by any other cause beyond Landlord's
reasonable control; and such failures or delays or diminution shall never be
deemed to constitute an eviction or disturbance of Tenant's use and possession
of the Premises or relieve Tenant from paying Rent or performing any of its
obligations under this Lease. Furthermore, Landlord shall not be liable under
any circumstances for a loss of, or injury to, property or for injury to, or
interference with, Tenant's business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the services or utilities as set forth in this ARTICLE
6. Landlord may comply with voluntary controls or guidelines promulgated by any
governmental entity relating to the use or conservation of energy, water, gas,
light or electricity or the reduction of automobile or other emissions without
creating any liability of Landlord to Tenant under this Lease, provided that the
Premises are not thereby rendered untenantable.
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6.4 TENANT'S SECURITY SYSTEM. Tenant may, at its own expense, install
its own security system ("Tenant's Security System") in the Premises; provided,
however, that Tenant shall coordinate the installation and operation of Tenant's
Security System with Landlord to assure that Tenant's Security System is
compatible with Landlord's security system and the Building systems and to the
extent that Tenant's Security System is not compatible with Landlord's security
system and the Building systems, Tenant shall not be entitled to install or
operate it. Tenant shall be solely responsible, at Tenant's sole cost and
expense, for the monitoring, operation and removal of Tenant's Security System.
ARTICLE 7
REPAIRS
Landlord shall repair and maintain the structural portions of the
Building, including the basic plumbing, heating, ventilating, air-conditioning
and electrical systems installed or furnished by Landlord and not located within
the Premises, unless such maintenance and repairs are caused in part or in whole
by the act, neglect, fault or omission of any duty by Tenant or the "Tenant
Parties," as that term is defined in SECTION 10.1, below, in which event Tenant
shall pay to Landlord, as Additional Rent, the reasonable cost of such
maintenance and repairs. Tenant shall, at Tenant's own expense, pursuant to the
terms of this Lease, including without limitation ARTICLE 8 hereof, keep the
Premises, including all improvements, fixtures and furnishings therein, in good
order, repair and condition at all times during the Lease Term. In addition,
Tenant shall, at Tenant's own expense but under the supervision and subject to
the prior approval of Landlord, and within any reasonable period of time
specified by Landlord, pursuant to the terms of this Lease, including without
limitation ARTICLE 8 hereof, promptly and adequately repair all damage to the
Premises and replace or repair all damaged or broken fixtures and appurtenances;
provided however, that, at Landlord's option, or if Tenant fails to make such
repairs, Landlord may, but need not, make such repairs and replacements, and
Tenant shall pay Landlord the cost thereof, including a percentage of the cost
thereof (to be uniformly established for the Building) sufficient to reimburse
Landlord for all overhead, general conditions, fees and other costs or expenses
arising from Landlord's involvement with such repairs and replacements forthwith
upon being billed for same. Landlord may, but shall not be required to, enter
the Premises at all reasonable times to make such repairs, alterations,
improvements and additions to the Premises or to the Building or to any
equipment located in the Building as Landlord shall desire or deem necessary or
as Landlord may be required to do by governmental or quasi-governmental
authority or court order or decree. Tenant hereby waives and releases its right
to make repairs at Landlord's expense under Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute, or ordinance now or
hereafter in effect.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "Alterations") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof (except
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with respect to Alterations to be made at the commencement of this Lease), and
which consent shall not be unreasonably withheld by Landlord. The construction
of the initial improvements to the Premises shall also be governed by the terms
of this ARTICLE 8. Notwithstanding anything in the foregoing to the contrary,
with respect to the initial improvements to the Premises, subject to the
remaining provisions of this Article 8, Landlord hereby consents to Tenant's
removal, at Tenant's sole cost and expense, of an existing wall dividing two (2)
rooms within the Premises, as shown on Exhibit F attached hereto, and Tenant
shall not be required to restore such wall upon the expiration or earlier
termination of this Lease. In addition, Tenant shall be permitted to recarpet
the Premises and to repaint the walls of the Premises, provided, however,
Landlord shall reimburse Tenant for the cost of repainting the Premises in an
amount not to exceed $7,500.00, upon Tenant's delivery to Landlord of (i)
invoices marked as having been paid for work performed and materials delivered
in connection with such work, and (ii) properly executed unconditional
mechanic's lien releases in compliance with both California Civil Code Section
3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4).
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to all Alterations or repairs of the Premises or about the Premises,
such requirements as Landlord in its sole discretion may deem desirable,
including, but not limited to, the requirement that upon Landlord's request,
Tenant shall, at Tenant's expense, remove such Alterations upon the expiration
or any early termination of the Lease Term, and/or the requirement that Tenant
utilize for such purposes only contractors, materials, mechanics and materialmen
selected by Landlord. Tenant shall construct such Alterations and perform such
repairs in conformance with any and all applicable rules and regulations of any
federal, state, county or municipal code or ordinance and pursuant to a valid
building permit, issued by the City of Los Angeles, in conformance with
Landlord's construction rules and regulations. All work with respect to any
Alterations must be done in a good and workmanlike manner and diligently
prosecuted to completion to the end that the Premises shall at all times be a
complete unit except during the period of work. In performing the work of any
such Alterations, Tenant shall have the work performed in such manner as not to
obstruct access to the Building or the common areas for any other tenant of the
Building, and as not to obstruct the business of Landlord or other tenants in
the Building, or interfere with the labor force working in the Building. Upon
completion of any Alterations, Tenant agrees to cause a timely Notice of
Completion to be recorded in the office of the Recorder of the County of Los
Angeles in accordance with the terms of Section 3093 of the Civil Code of the
State of California or any successor statute, and Tenant shall deliver to the
Building management office a reproducible copy of the "as built" drawings of the
Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. In the event Tenant orders any
Alterations or repair work directly from Landlord or from a contractor selected
by Landlord, the charges for such work shall be deemed Additional Rent under
this Lease, payable upon billing therefor, either periodically during
construction or upon the substantial completion of such work, at Landlord's
option. Upon completion of any work not ordered directly from Landlord, Tenant
shall deliver to Landlord evidence of payment, contractors' affidavits and full
and final waivers of all liens for labor, services or materials. In addition,
Tenant shall pay to Landlord an amount equal to ten percent (10%) of the cost of
any such work to compensate Landlord for all overhead, general conditions, fees
and other costs and expenses arising from Landlord's involvement with such work.
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8.4 CONSTRUCTION INSURANCE. In the event that Tenant makes any
Alterations, Tenant agrees to carry "Builder's All Risk" insurance in an amount
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may require, it being understood and agreed that all
of such Alterations shall be insured by Tenant pursuant to ARTICLE 10 of this
Lease immediately upon completion thereof. In addition, Landlord may, in its
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien-free completion of such Alterations and naming Landlord as a
co-obligee.
8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures
and/or equipment which may be installed or placed in or about the Premises, and
all signs installed in, on or about the Premises, from time to time, shall be at
the sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any Alterations, improvements, fixtures and/or equipment
which Tenant can substantiate to Landlord have not been paid for with any tenant
improvement allowance funds provided to Tenant by Landlord, provided Tenant
repairs any damage to the Premises and Building caused by such removal.
Furthermore, if Landlord, as a condition to Landlord's consent to any
Alteration, requires that Tenant remove any Alteration upon the expiration or
early termination of the Lease Term, Landlord may, by written notice to Tenant
prior to the end of the Lease Term, or given upon any earlier termination of
this Lease, require Tenant at Tenant's expense to remove such Alterations and to
repair any damage to the Premises and Building caused by such removal. If Tenant
fails to complete such removal and/or to repair any damage caused by the removal
of any Alterations, Landlord may do so and may charge the cost thereof to
Tenant. Notwithstanding anything in the foregoing to the contrary, Tenant shall
not be required to remove any improvements or alterations existing in the
Premises as of the date of delivery of the Premises by Landlord to Tenant.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant has no authority or power to cause or permit any lien or
encumbrance of any kind whatsoever, whether created by act of Tenant, operation
of law or otherwise, to attach to or be placed upon the Real Property, Building
or Premises, and any and all liens and encumbrances created by Tenant shall
attach to Tenant's interest only. Landlord shall have the right at all times to
post and keep posted on the Premises any notice which it deems necessary for
protection from such liens. Tenant covenants and agrees not to suffer or permit
any lien of mechanics or materialmen or others to be placed against the Real
Property, the Building or the Premises with respect to work or services claimed
to have been performed for or materials claimed to have been furnished to Tenant
or the Premises, and, in case of any such lien attaching or notice of any lien,
Tenant covenants and agrees to cause it to be immediately released and removed
of record. Notwithstanding anything to the contrary set forth in this Lease, in
the event that such lien is not released and removed on or before the date
occurring five (5) days after notice of such lien is delivered by Landlord to
Tenant, Landlord, at its sole option, may immediately take all action necessary
to release and remove such lien, without any duty to investigate the validity
thereof, and all sums, costs and expenses, including reasonable attorneys' fees
and costs, incurred by Landlord in connection with such lien shall be deemed
Additional Rent under this Lease and shall immediately be due and payable by
Tenant.
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ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. To the extent not prohibited by law,
Landlord, its partners, trustees, ancillary trustees and their respective
officers, directors, shareholders, beneficiaries, agents, servants, employees,
and independent contractors (collectively, the "Landlord Parties") shall not be
liable for any damage either to person or property or resulting from the loss of
use thereof, which damage is sustained by Tenant or by other persons claiming
through Tenant. Tenant shall indemnify, defend, protect, and hold harmless
Landlord Parties from any and all loss, cost, damage, expense and liability
(including without limitation court costs and reasonable attorneys' fees)
incurred in connection with or arising from any cause in, on or about the
Premises or from the negligence or willful misconduct of Tenant or of any person
claiming by, through or under Tenant, its partners, and their respective
officers, agents, servants, employees, and independent contractors
(collectively, the "Tenant Parties"), in, on or about the Real Property, during
the Lease Term, provided that the terms of the foregoing indemnity shall not
apply to the gross negligence or wilful misconduct of Landlord or the Landlord
Parties. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of an event covered by the foregoing
indemnity, Tenant shall pay to Landlord its costs and expenses incurred in such
suit, including without limitation, its actual professional fees such as
appraisers', accountants' and attorneys' fees. The provisions of this SECTION
10.1 shall survive the expiration or sooner termination of this Lease with
respect to any claims or liability occurring prior to such expiration or
termination.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
The coverage and amounts of insurance carried by Landlord in connection with the
Building shall at a minimum be comparable to the coverage and amounts of
insurance which are carried by reasonably prudent landlords of comparable
buildings located in the vicinity of the Building. Upon inquiry by Tenant, from
time to time, Landlord shall inform Tenant of such coverage carried by Landlord.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for any insurance policies
carried by Landlord, then Tenant shall reimburse Landlord for any such increase.
Tenant, at Tenant's expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following
coverages in the following amounts.
10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the Premises,
including a Commercial General Liability endorsement covering the insuring
provisions of this Lease and the performance by Tenant of the indemnity
agreements set forth in SECTION 10.1 of this Lease, for limits of liability not
less than: (i) Bodily Injury and Property Damage Liability - $2,000,000 each
occurrence and $2,000,000 annual aggregate, and (ii) Personal Injury Liability -
$2,000,000 each occurrence and $2,000,000 annual aggregate.
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10.3.2 Physical Damage Insurance covering (i) all office
furniture, trade fixtures, office equipment, merchandise and all other items of
Tenant's property on the Premises installed by, for, or at the expense of
Tenant, and (ii) all improvements, alterations and additions to the Premises.
Such insurance shall be written on an "all risks" of physical loss or damage
basis, for the full replacement cost value new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include a vandalism and malicious
mischief endorsement, sprinkler leakage coverage and earthquake sprinkler
leakage coverage.
10.3.3 Loss-of-income and extra-expense insurance in such
amounts as will reimburse Tenant for direct or indirect loss of earnings
attributable to all perils commonly insured against by prudent tenants or
attributable to prevention of access to the Premises or to the Building as a
result of such perils.
10.3.4 Worker's Compensation and Employers' Liability or other
similar insurance pursuant to all applicable state and local statutes and
regulations.
10.3.5 FORM OF POLICIES. The minimum limits of policies of
insurance required of Tenant under this Lease shall in no event limit the
liability of Tenant under this Lease. Such insurance shall (i) name Landlord,
and any other party it so specifies, as an additional insured; (ii) specifically
cover the liability assumed by Tenant under this Lease, including, but not
limited to, Tenant's obligations under SECTION 10.1 of this Lease; (iii) be
issued by an insurance company having a rating of not less than A-:XII in Best's
Insurance Guide or which is otherwise acceptable to Landlord and licensed to do
business in the State of California; (iv) be primary insurance as to all claims
thereunder and provide that any insurance carried by Landlord is excess and is
non-contributing with any insurance requirement of Tenant; (v) provide that said
insurance shall not be canceled or coverage changed unless thirty (30) days'
prior written notice shall have been given to Landlord and any mortgagee of
Landlord; and (vi) contain a cross-liability endorsement or severability of
interest clause acceptable to Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease Commencement
Date and at least thirty (30) days before the expiration dates thereof.
10.4 SUBROGATION. Landlord and Tenant agree to have their respective
insurance companies issuing property damage insurance waive any rights of
subrogation that such companies may have against Landlord or Tenant, as the case
may be, so long as the insurance carried by Landlord and Tenant, respectively,
is not invalidated thereby. As long as such waivers of subrogation are contained
in their respective insurance policies, Landlord and Tenant hereby waive any
right that either may have against the other on account of any loss or damage to
their respective property to the extent such loss or damage is insurable under
policies of insurance for fire and all risk coverage, theft, or other similar
insurance. If either party fails to carry the amounts and types of insurance
required to be carried by it pursuant to this Article 10, in addition to any
remedies the other party may have under this Lease, such failure shall be deemed
to be a covenant and agreement by such party to self-insure with respect to the
type and amount of insurance which such party so failed to carry, with full
waiver of subrogation with respect thereto.
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10.5 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
ARTICLE 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord, but in no event shall such increased
amounts of insurance or such other reasonable types of insurance be in excess of
that required by landlords of comparable buildings located in the vicinity of
the Building. Notwithstanding anything to the contrary contained in this Lease,
in the event of any termination of this Lease pursuant to ARTICLE 11 or ARTICLE
13 below, Tenant shall assign and deliver to Landlord (or to any party
designated by Landlord) all insurance proceeds payable to Tenant under Tenant's
insurance required under SECTION 10.3 of this Lease.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any common areas of the Building serving or
providing access to the Premises shall be damaged by fire or other casualty,
Landlord shall promptly and diligently, subject to reasonable delays for
insurance adjustment or other matters beyond Landlord's reasonable control, and
subject to all other terms of this ARTICLE 11, restore the base, shell, and core
of the Premises and such common areas. Such restoration shall be to
substantially the same condition of the base, shell, and core of the Premises
and common areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or any other modifications to the common areas deemed desirable by
Landlord, provided access to the Premises and any common restrooms serving the
Premises shall not be materially impaired. Notwithstanding any other provision
of this Lease, upon the occurrence of any damage to the Premises, Tenant shall
assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant's insurance required under SECTION 10.3
of this Lease, and Landlord shall repair any injury or damage to the Tenant
Improvements installed in the Premises and shall return such Tenant Improvements
to their original condition; provided that if the cost of such repair by
Landlord exceeds the amount of insurance proceeds received by Landlord from
Tenant's insurance carrier, as assigned by Tenant, the cost of such repairs
shall be paid by Tenant to Landlord prior to Landlord's repair of the damage. In
connection with such repairs and replacements, Tenant shall, prior to the
commencement of construction, submit to Landlord, for Landlord's review and
approval, all plans, specifications and working drawings relating thereto, and
Landlord shall select the contractors to perform such improvement work. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or its
visitors, or injury to Tenant's business resulting in any way from such damage
or the repair thereof; provided however, that if such fire or other casualty
shall have damaged the Premises or common areas necessary to Tenant's occupancy,
and if such damage is not the result of the negligence or wilful misconduct of
Tenant or Tenant's employees, contractors, licensees, or invitees, Landlord
shall allow Tenant a proportionate abatement of Rent, during the time and to the
extent the Premises are unfit for occupancy for the purposes permitted under
this Lease, and not occupied by Tenant as a result thereof; provided, further,
if the Premises is damaged such that the remaining portion thereof is not
sufficient to
20
allow Tenant to conduct its business operations from such remaining portion and
Tenant does not conduct its business operations therefrom, and if such damage is
not the result of the negligence or wilful misconduct of Tenant or any of the
Tenant Parties, Landlord shall allow Tenant a total abatement of Rent during the
time and to the extent the Premises are unfit for occupancy for the purposes
permitted under this Lease, and not occupied by Tenant as a result of the
subject damage.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of SECTION
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises and/or Building and instead terminate this Lease by notifying Tenant in
writing of such termination within sixty (60) days after the date of Landlord's
discovery of the damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Premises, but Landlord may so elect only if the
Building shall be damaged by fire or other casualty or cause, whether or not the
Premises are affected, and one or more of the following conditions is present:
(i) repairs cannot reasonably be completed within ninety (90) days of the date
of Landlord's discovery of the damage (when such repairs are made without the
payment of overtime or other premiums); (ii) the holder of any mortgage on the
Building or ground lessor with respect to the Real Property shall require that
the insurance proceeds or any portion thereof be used to retire the mortgage
debt, or shall terminate the ground lease, as the case may be; or (iii) the
damage is not fully covered, except for deductible amounts, by Landlord's
insurance policies; provided, however, that if Landlord does not elect to
terminate this Lease pursuant to Landlord's termination right as provided above,
and the repairs cannot, in the reasonable opinion of Landlord, be completed
within one (1) year after being commenced, Tenant may elect, no earlier than
sixty (60) days after the date of Landlord's discovery of the damage and not
later than ninety (90) days after the date that Landlord advises Tenant in
writing that the repairs cannot be completed within such one (1) year period, to
terminate this Lease by written notice to Landlord effective as of the date
specified in the notice, which date shall not be less than thirty (30) days nor
more than sixty (60) days after the date such notice is given by Tenant.
Furthermore, if neither Landlord nor Tenant have terminated this Lease, and the
repairs are not actually completed within such one (1) year period, Tenant shall
have the right to terminate this Lease during the first five (5) business days
of each calendar month following the end of such period until such time as the
repairs are complete, by notice to Landlord (the "Damage Termination Notice"),
effective as of a date set forth in the Damage Termination Notice (the "Damage
Termination Date"), which Damage Termination Date shall not be less than ten
(10) business days following the end of each such month. Notwithstanding the
foregoing, if Tenant delivers a Damage Termination Notice to Landlord, then
Landlord shall have the right to suspend the occurrence of the Damage
Termination Date for a period ending thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord's receipt of the Damage
Termination Notice, a certificate of Landlord's contractor responsible for the
repair of the damage certifying that it is such contractor's good faith judgment
that the repairs shall be substantially completed within thirty (30) days after
the Damage Termination Date. If repairs shall be substantially completed prior
to the expiration of such thirty-day period, then the Damage Termination Notice
shall be of no force or effect, but if the repairs shall not be substantially
completed within such thirty-day period, then this Lease shall terminate upon
the expiration of such thirty-day period and any Rent paid with respect to the
period after the Damage Termination Date specified in Tenant's Damage
Termination Notice shall be refunded to Tenant. At any time, from time to time,
after the date occurring sixty (60) days after the date
21
Landlord notifies Tenant of Landlord's discovery of the damage, Tenant may
request that Landlord inform Tenant of Landlord's reasonable opinion of the date
of completion of the repairs and Landlord shall respond to such request within
five (5) business days.
11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this ARTICLE 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or any other portion of the Real Property, and any
statute or regulation of the State of California, including, without limitation,
Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any
rights or obligations concerning damage or destruction in the absence of an
express agreement between the parties, and any other statute or regulation, now
or hereafter in effect, shall have no application to this Lease or any damage or
destruction to all or any part of the Premises, the Building or any other
portion of the Real Property.
11.4 DAMAGE NEAR END OF TERM. In the event that Landlord discovers
that the Premises or the Building is destroyed or damaged to any substantial
extent during the last eighteen (18) months of the Lease Term and, in the
reasonable opinion of Landlord, the damage or destruction to the Premises or
Building cannot be repaired by the date which is six (6) months prior to the
Lease Expiration Date, then notwithstanding anything contained in this ARTICLE
11, either Landlord or Tenant shall have the option to terminate this Lease by
giving written notice to the other party of the exercise of such option, within
thirty (30) days after Landlord's discovery of such damage or destruction in the
case of an election by Landlord to terminate, or within thirty (30) days after
Landlord's notice to Tenant of such discovery in the case of an election by
Tenant to terminate, in which event this Lease shall cease and terminate as of
the date of such notice, Tenant shall pay the Base Rent and Additional Rent,
properly apportioned up to such date of damage, and both parties hereto shall
thereafter be freed and discharged of all further obligations hereunder, except
as provided for in provisions of this Lease which by their terms survive the
expiration or earlier termination of the Lease Term.
ARTICLE 12
NONWAIVER
No waiver of any provision of this Lease shall be implied by any
failure of Landlord to enforce any remedy on account of the violation of such
provision, even if such violation shall continue or be repeated subsequently,
any waiver by Landlord of any provision of this Lease may only be in writing,
and no express waiver shall affect any provision other than the one specified in
such waiver and that one only for the time and in the manner specifically
stated. No receipt of monies by Landlord from Tenant after the termination of
this Lease shall in any way alter the length of the Lease Term or of Tenant's
right of possession hereunder or after the giving of any notice shall reinstate,
continue or extend the Lease Term or affect any notice given Tenant prior to the
receipt of such monies, it being agreed that after the service of notice or the
commencement of a suit or after final judgment for possession of the Premises,
Landlord may receive and collect any Rent due, and the payment of said Rent
shall not waive or affect said notice, suit or judgment. No payment by Tenant or
receipt or acceptance by Landlord of a lesser amount than the correct Rent due
shall be deemed to be other than a payment on account, nor shall any endorsement
or statement on any check or any letter accompanying any check or
22
payment be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance, treat
such partial payment as a default or pursue any other remedy provided in this
Lease or at law.
ARTICLE 13
CONDEMNATION
If ten percent (10%) or more of the Premises or Building shall be taken
by power of eminent domain or condemned by any competent authority for any
public or quasi-public use or purpose, or if Landlord shall grant a deed or
other instrument in lieu of such taking by eminent domain or condemnation,
Landlord shall have the option to terminate this Lease upon ninety (90) days'
notice, provided such notice is given no later than one hundred eighty (180)
days after the date of such taking, condemnation, or deed. If more than
twenty-five percent (25%) of the rentable square feet of the Premises is taken,
or if access to the Premises is substantially impaired, Tenant shall have the
option to terminate this Lease upon ninety (90) days' notice, provided such
notice is given no later than one hundred eighty (180) days after the date of
such taking. Landlord shall be entitled to receive the entire award or payment
in connection therewith, except that Tenant shall have the right to file any
separate claim available to Tenant for any taking of Tenant's personal property
and fixtures belonging to Tenant and removable by Tenant upon expiration of the
Lease Term pursuant to the terms of this Lease, and for moving expenses, so long
as such claim does not diminish the award available to Landlord, its ground
lessor with respect to the Real Property or its mortgagee, and such claim is
payable separately to Tenant. All Rent shall be apportioned as of the date of
such termination, or the date of such taking, whichever shall first occur. If
any part of the Premises shall be taken, and this Lease shall not be so
terminated, the Rent shall be proportionately abated. Tenant hereby waives any
and all rights it might otherwise have pursuant to Section 1265.130 of the
California Code of Civil Procedure.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment or other such foregoing transfer of this Lease or any interest
hereunder by operation of law, sublet the Premises or any part thereof, or
permit the use of the Premises by any persons other than Tenant and its
employees (all of the foregoing are hereinafter sometimes referred to
collectively as "Transfers" and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a "Transferee"). If
Tenant shall desire Landlord's consent to any Transfer, Tenant shall notify
Landlord in writing, which notice (the "Transfer Notice") shall include (i) the
proposed effective date of the Transfer, which shall not be less than forty-five
(45) days nor more than one hundred eighty (180) days after the date of delivery
of the Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the "Subject Space"), (iii) all of the terms of the proposed
Transfer and the consideration therefor, including a calculation of the
"Transfer Premium," as that term is defined in SECTION 14.3, below, in
connection with such Transfer, the name and
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address of the proposed Transferee, and a copy of all existing and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, (iv) current financial statements of the
proposed Transferee certified by an officer, partner or owner thereof, and any
other information required by Landlord, which will enable Landlord to determine
the financial responsibility, character, and reputation of the proposed
Transferee, nature of such Transferee's business and proposed use of the Subject
Space, (v) an executed estoppel certificate from Tenant in the form attached
hereto as EXHIBIT E, and (vi) such other information as Landlord may reasonably
require. Any Transfer made without Landlord's prior written consent shall, at
Landlord's option, be null, void and of no effect, and shall, at Landlord's
option, constitute a default by Tenant under SECTION 19.1.7 of this Lease.
Whether or not Landlord shall grant consent, Tenant shall pay Landlord's review
and processing fees, as well as any reasonable legal fees incurred by Landlord,
within thirty (30) days after written request by Landlord.
14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. The parties hereby agree that it shall
be deemed to be reasonable under this Lease and under any applicable law for
Landlord to withhold consent to any proposed Transfer where one or more of the
following apply, without limitation as to other reasonable grounds for
withholding consent:
14.2.1 The Transferee is of a character or reputation or engaged
in a business which is not consistent with the quality of the Building;
14.2.2 The Transferee is either a governmental agency or
instrumentality thereof (i) which is that of a foreign country, (ii) which is of
a character or reputation, is engaged in a business, or is of, or is associated
with, a political orientation or faction, which is inconsistent with the quality
of the Building, or which would otherwise reasonably offend a landlord of a
comparable building located in the vicinity of the Building, (iii) which is
capable of exercising the power of eminent domain or condemnation, or (iv) which
would significantly increase the human traffic in the Premises or Building;
14.2.3 The Transferee's intended use of the Premises is
inconsistent with the Permitted Use;
14.2.4 The Transfer occurs during the period from the Lease
Commencement Date until the earlier of (i) the fourth anniversary of the Lease
Commencement Date or (ii) the date at least ninety-five percent (95%) of the
rentable square feet of the Building is leased, and the rent charged by Tenant
to such Transferee during the term of such Transfer (the "Transferee's Rent"),
calculated using a present value analysis, is less than ninety-five percent
(95%) of the rent being quoted by Landlord at the time of such Transfer for
comparable space in the Building for a comparable term (the "Quoted Rent"),
calculated using a present value analysis;
14.2.5 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities involved under
the Lease on the date consent is requested;
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14.2.6 The proposed Transfer would cause Landlord to be in
violation of another lease or agreement to which Landlord is a party, or would
give an occupant of the Building a right to cancel its lease;
14.2.7 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right); or
14.2.8 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Building at the
time of the request for consent, (ii) is negotiating with Landlord to lease
space in the Building at such time, or (iii) has negotiated with Landlord during
the twelve (12) month period immediately preceding the Transfer Notice.
In the event Landlord withholds or conditions its consent and Tenant
believes that Landlord did so contrary to the terms of this Lease, Tenant may
prosecute an action for declaratory relief to determine if Landlord properly
withheld or conditioned its consent, but Tenant waives and discharges any claims
it may have against Landlord for damages arising from Landlord's withholding or
conditioning its consent. In any such action, each party shall bear its own
attorneys' fees. Tenant shall indemnify, defend and hold harmless Landlord from
any and all liability, losses, claims, damages, costs, expenses, causes of
action and proceedings brought by any third party or parties (including without
limitation Tenant's proposed subtenant or assignee) who claim they were damaged
by Landlord's wrongful withholding or conditioning of Landlord's consent. If
Landlord consents to any Transfer pursuant to the terms of this SECTION 14.2
(and does not exercise any recapture rights Landlord may have under SECTION 14.4
of this Lease), Tenant may within six (6) months after Landlord's consent, but
not later than the expiration of said six-month period, enter into such Transfer
of the Premises or portion thereof, upon substantially the same terms and
conditions as are set forth in the Transfer Notice furnished by Tenant to
Landlord pursuant to SECTION 14.1 of this Lease, provided that if there are any
changes in the terms and conditions from those specified in the Transfer Notice
(i) such that Landlord would initially have been entitled to refuse its consent
to such Transfer under this SECTION 14.2, or (ii) which would cause the proposed
Transfer to be more favorable to the Transferee than the terms set forth in
Tenant's original Transfer Notice, Tenant shall again submit the Transfer to
Landlord for its approval and other action under this Article 14 (including
Landlord's right of recapture, if any, under SECTION 14.4 of this Lease).
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under SECTION 14.2 or otherwise has breached or acted unreasonably
under this ARTICLE 14, their sole remedies shall be a suit for contract damages
(other than damages for injury to, or interference with, Tenant's business
including, without limitation, loss of profits, however occurring) or
declaratory judgment and an injunction for the relief sought, and Tenant hereby
waives all other remedies, including, without limitation, any right at law or
equity to terminate this Lease, on its own behalf and, to the extent permitted
under all applicable laws, on behalf of the proposed Transferee.
14.3 TRANSFER PREMIUM. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord fifty percent (50%) of any "Transfer Premium," as that term is
defined in this SECTION 14.3, received by Tenant from
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such Transferee. "Transfer Premium" shall mean all rent, additional rent or
other consideration payable by such Transferee in excess of the Rent and
Additional Rent payable by Tenant under this Lease, on a per rentable square
foot basis if less than all of the Premises is transferred, after deducting the
reasonable expenses incurred by Tenant for (i) any changes, alterations and
improvements to the Premises in connection with the Transfer, (ii) any brokerage
commissions in connection with the Transfer, and (iii) any costs to buy-out or
takeover the previous lease of a Transferee. "Transfer Premium" shall also
include, but not be limited to, key money and bonus money paid by Transferee to
Tenant in connection with such Transfer, and any payment in excess of fair
market value for services rendered by Tenant to Transferee or for assets,
fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee
in connection with such Transfer. In the calculations of the Rent (as it relates
to the Transfer Premium calculated under this SECTION 14.3), and the
Transferee's Rent and Quoted Rent under SECTION 14.2 of this Lease, the Rent
paid during each annual period for the Subject Space, and the Transferee's Rent
and the Quoted Rent, shall be computed after adjusting such rent to the actual
effective rent to be paid, taking into consideration any and all leasehold
concessions granted in connection therewith, including, but not limited to, any
rent credit and tenant improvement allowance. For purposes of calculating any
such effective rent, all such concessions shall be amortized on a straight-line
basis over the relevant term.
14.4 LANDLORD'S OPTION AS TO SUBJECT SPACE. Notwithstanding anything
to the contrary contained in this ARTICLE 14, Landlord shall have the option, by
giving written notice to Tenant within thirty (30) days after receipt of any
Transfer Notice, to (i) recapture the Subject Space, or (ii) take an assignment
or sublease of the Subject Space from Tenant. Such recapture, or sublease or
assignment notice shall cancel and terminate this Lease, or create a sublease or
assignment, as the case may be, with respect to the Subject Space as of the date
stated in the Transfer Notice as the effective date of the proposed Transfer
until the last day of the term of the Transfer as set forth in the Transfer
Notice. In the event of a recapture by Landlord, if this Lease shall be canceled
with respect to less than the entire Premises, the Rent reserved herein shall be
prorated on the basis of the number of rentable square feet retained by Tenant
in proportion to the number of rentable square feet contained in the Premises,
and this Lease as so amended shall continue thereafter in full force and effect,
and upon request of either party, the parties shall execute written confirmation
of the same. If Landlord declines, or fails to elect in a timely manner to
recapture, sublease or take an assignment of the Subject Space under this
SECTION 14.4, then, provided Landlord has consented to the proposed Transfer,
Tenant shall be entitled to proceed to transfer the Subject Space to the
proposed Transferee, subject to provisions of the last paragraph of SECTION 14.2
of this Lease.
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from liability
26
under this Lease. Landlord or its authorized representatives shall have the
right at all reasonable times to audit the books, records and papers of Tenant
relating to any Transfer, and shall have the right to make copies thereof. If
the Transfer Premium respecting any Transfer shall be found understated, Tenant
shall, within thirty (30) days after demand, pay the deficiency and Landlord's
costs of such audit, and if understated by more than ten percent (10%), Landlord
shall have the right to cancel this Lease upon thirty (30) days' notice to
Tenant.
14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term
"Transfer" shall also include (i) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of twenty-five percent
(25%) or more of the partners, or transfer of twenty-five percent or more of
partnership interests, within a twelve (12) month period, or the dissolution of
the partnership without immediate reconstitution thereof, and (ii) if Tenant is
a closely held corporation (i.e., whose stock is not publicly held and not
traded through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant, the sale or other transfer of
more than an aggregate of twenty-five percent (25%) of the voting shares of
Tenant (other than to immediate family members by reason of gift or death),
within a twelve (12) month period, or (C) the sale, mortgage, hypothecation or
pledge of more than an aggregate of twenty-five percent (25%) of the value of
the unencumbered assets of Tenant within a twelve (12) month period.
14.7 NON-TRANSFERS. Notwithstanding anything to the contrary contained
in this Lease, neither (i) an assignment to a transferee of all or substantially
all of the assets of Tenant, (ii) an assignment of the Premises to a transferee
which is the resulting entity of a merger or consolidation of Tenant with
another entity, nor (iii) an assignment or subletting of all or a portion of the
Premises to an affiliate of Tenant (an entity which is controlled by, controls,
or is under common control with, Tenant), shall be deemed a Transfer under
Article 14 of this Lease, provided that Tenant notifies Landlord of any such
assignment or sublease and promptly supplies Landlord with any documents or
information reasonably requested by Landlord regarding such transfer or
transferee as set forth in items (i) through (iii) above, that such assignment
or sublease is not a subterfuge by Tenant to avoid its obligations under this
Lease, and that such transferee or affiliate shall have a net worth (not
including goodwill as an asset) computed in accordance with generally accepted
accounting principles (the "Net Worth") at least equal to the greater of (A) the
Net Worth of Tenant immediately prior to such assignment or sublease, or (B) the
Net Worth on the date of this Lease of the original named Tenant. "Control," as
used in this SECTION 14.7, shall mean the ownership, directly or indirectly, of
at least fifty-one percent (51%) of the voting securities of, or possession of
the right to vote, in the ordinary direction of its affairs, of at least
fifty-one percent (51%) of the voting interest in, any person or entity.
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ARTICLE 15
SURRENDER OF PREMISES;
REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in a writing signed by Landlord. The
delivery of keys to the Premises to Landlord or any agent or employee of
Landlord shall not constitute a surrender of the Premises or effect a
termination of this Lease, whether or not the keys are thereafter retained by
Landlord, and notwithstanding such delivery Tenant shall be entitled to the
return of such keys at any reasonable time upon request until this Lease shall
have been terminated. The voluntary or other surrender of this Lease by Tenant,
whether accepted by Landlord or not, or a mutual termination hereof, shall not
work a merger, and at the option of Landlord shall operate as an assignment to
Landlord of all subleases or subtenancies affecting the Premises.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. All articles of personal
property and all business and trade fixtures, machinery and equipment, furniture
and movable partitions owned by Tenant or installed by Tenant at its expense in
the Premises, which items are not a part of the tenant improvements installed in
the Premises, shall remain the property of Tenant, and may be removed by Tenant
at any time during the Lease Term as long as Tenant is not in default under this
Lease with any applicable cure period having expired. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this ARTICLE 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, free-standing cabinet work,
and other articles of personal property owned by Tenant or installed or placed
by Tenant at its expense in the Premises, and such similar articles of any other
persons claiming under Tenant, as Landlord may, in its sole discretion, require
to be removed, and Tenant shall repair at its own expense all damage to the
Premises and Building resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term hereof,
with or without the express or implied consent of Landlord, such tenancy shall
be from month-to-month only, and shall not constitute a renewal hereof or an
extension for any further term, and in such case Rent shall be payable at a
monthly rate equal to 150%, with respect to the first two (2) months of such
holdover, and 200%, thereafter, of the Rent applicable during the last rental
period of the Lease Term under this Lease. Such month-to-month tenancy shall be
subject to every other term, covenant and agreement contained herein. Nothing
contained in this ARTICLE 16 shall be construed as consent by Landlord to any
holding over by Tenant, and Landlord expressly
28
reserves the right to require Tenant to surrender possession of the Premises to
Landlord as provided in this Lease upon the expiration or other termination of
this Lease. The provisions of this ARTICLE 16 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at law. Tenant acknowledges that if Tenant holds over without Landlord's
consent, such holding over may compromise or otherwise affect Landlord's ability
to enter into new leases with prospective tenants regarding the Premises.
Therefore, if Tenant fails to surrender the Premises upon the termination or
expiration of this Lease, in addition to any other liabilities to Landlord
accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord
harmless from all loss, costs (including reasonable attorneys' fees) and
liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by any succeeding tenant founded
upon such failure to surrender, and any losses suffered by Landlord, including
lost profits, resulting from such failure to surrender.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) days following a request in writing by Landlord, Tenant
shall execute and deliver to Landlord an estoppel certificate, which, as
submitted by Landlord, shall be substantially in the form of EXHIBIT E, attached
hereto, (or such other form as may be required by any prospective mortgagee or
purchaser of the Building, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee or purchasers. Tenant shall execute and deliver whatever
other instruments may be reasonably required for such purposes. At any time
during the Lease Term, Landlord may require Tenant to provide Landlord with a
current financial statement and financial statements of the two (2) years prior
to the current financial statement year. Such statements shall be prepared in
accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant. Failure of Tenant to timely execute and deliver such estoppel
certificate or other instruments shall constitute an acceptance of the Premises
and an acknowledgment by Tenant that statements included in the estoppel
certificate are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease is subject and subordinate to all present and future ground
or underlying leases of the Real Property and to the lien of any mortgages or
trust deeds, now or hereafter in force against the Real Property and the
Building, if any, and to all renewals, extensions, modifications, consolidations
and replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages or trust deeds, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. In consideration
of, and as a condition precedent to, Tenant's agreement to permit its interest
pursuant to this Lease to be subordinated to any particular future ground or
underlying lease of the Building or the Real Property or to the lien of any
first mortgage or trust deed, hereafter enforced against the Building or the
Real Property and to any
29
renewals, extensions, modifications, consolidations and replacements thereof,
Landlord shall deliver to Tenant a commercially reasonable non-disturbance
agreement executed by the landlord under such ground lease or underlying lease
or the holder of such mortgage or trust deed. Tenant covenants and agrees in the
event any proceedings are brought for the foreclosure of any such mortgage, to
attorn, without any deductions or set-offs whatsoever, to the purchaser upon any
such foreclosure sale if so requested to do so by such purchaser, and to
recognize such purchaser as the lessor under this Lease. Tenant shall, within
ten (10) days of request by Landlord, execute such further instruments or
assurances as Landlord may reasonably deem necessary to evidence or confirm the
subordination or superiority of this Lease to any such mortgages, trust deeds,
ground leases or underlying leases. Tenant waives the provisions of any current
or future statute, rule or law which may give or purport to give Tenant any
right or election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 DEFAULTS. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, within five (5)
business days of notice that the same is due, which notice shall be in lieu of
any notice required under California Code of Civil Procedure Section 1161 or any
similar or successor law; or
19.1.2 Except with respect to the provisions of Articles 17 and
18 of this Lease, any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided 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 or any similar or successor law; and provided
further that if the nature of such default is such that the same cannot
reasonably be cured within a thirty (30) day period, Tenant shall not be deemed
to be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to rectify and cure said default, as soon as
possible; or
19.1.3 Any failure by Tenant to observe or perform any
provision, covenant or condition of ARTICLES 17 and 18 of this Lease to be
observed or performed by Tenant where such failure continues for three (3) days
after written notice thereof 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 or any similar or
successor law; or
19.1.4 To the extent permitted by law, a general assignment by
Tenant or any guarantor of the Lease for the benefit of creditors, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or
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the appointment of a trustee or receiver to take possession of all or
substantially all of the assets of Tenant or any guarantor, unless possession is
restored to Tenant or such guarantor within thirty (30) days, or any execution
or other judicially authorized seizure of all or substantially all of Tenant's
assets located upon the Premises or of Tenant's interest in this Lease, unless
such seizure is discharged within thirty (30) days.
19.2 REMEDIES UPON DEFAULT. Upon the occurrence of a default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of award of any unpaid
rent which has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iii) The worth at the time of award of the amount
by which the unpaid rent for the balance of the Lease Term after the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(iv) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
its obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom, specifically including but not limited to,
brokerage commissions and advertising expenses incurred, expenses of remodeling
the Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and
(v) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this SECTION 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in PARAGRAPHS
19.2.1(i) AND (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in ARTICLE 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in PARAGRAPH 19.2.1(iii) above, the "worth at the time of award" shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
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19.2.2 Landlord shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover Rent as it becomes due, if lessee has the
right to sublet or assign, subject only to reasonable limitations). Accordingly,
if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.
19.3 SUBLEASES OF TENANT. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant, as set forth in this ARTICLE 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of a
default by Tenant, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether in the cure of
the default in question or otherwise, be paid in the form of cash, money order,
cashier's or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.
19.5 EFFORTS TO RELET. For the purposes of this ARTICLE 19, Tenant's
right to possession shall not be deemed to have been terminated by efforts of
Landlord to relet the Premises, by its acts of maintenance or preservation with
respect to the Premises, or by appointment of a receiver to protect Landlord's
interests hereunder. The foregoing enumeration is not exhaustive, but merely
illustrative of acts which may be performed by Landlord without terminating
Tenant's right to possession.
ARTICLE 20
ATTORNEYS' FEES
If either party commences litigation against the other for the specific
performance of this Lease, for damages for the breach hereof or otherwise for
enforcement of any remedy hereunder, the parties hereto agree to and hereby do
waive any right to a trial by jury and, in the event of any such commencement of
litigation, the prevailing party shall be entitled to recover from the other
party such costs and reasonable attorneys' fees as may have been incurred.
ARTICLE 21
SECURITY DEPOSIT
Concurrent with Tenant's execution of this Lease, Tenant shall deposit
with Landlord a security deposit (the "Security Deposit") in the amount set
forth in SECTION 10 of the Summary.
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The Security Deposit shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants, and conditions of this Lease
to be kept and performed by Tenant during the Lease Term. If Tenant defaults
with respect to any provisions of this Lease, including, but not limited to, the
provisions relating to the payment of Rent, Landlord may, but shall not be
required to, use, apply or retain all or any part of the Security Deposit for
the payment of any Rent or any other sum in default, or for the payment of any
amount that Landlord may spend or become obligated to spend by reason of
Tenant's default, or to compensate Landlord for any other loss or damage that
Landlord may suffer by reason of Tenant's default. If any portion of the
Security Deposit is so used or applied, Tenant shall, within five (5) days after
written demand therefor, deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount, and Tenant's failure to do
so shall be a default under this Lease. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the Security
Deposit, or any balance thereof, shall be returned to Tenant, or, at Landlord's
option, to the last assignee of Tenant's interest hereunder, within sixty (60)
days following the expiration of the Lease Term. Tenant shall not be entitled to
any interest on the Security Deposit. Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code, and all other provisions of law,
now or hereafter in force, which provide that Landlord may claim from a security
deposit only those sums reasonably necessary to remedy defaults in the payment
of rent, to repair damage caused by Tenant or to clean the Premises, it being
agreed that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any other loss or damage, foreseeable or unforeseeable,
caused by the act or omission of Tenant or any officer, employee, agent or
invitee of Tenant.
ARTICLE 22
INTENTIONALLY OMITTED
ARTICLE 23
SIGNS
23.1 FULL FLOOR TENANTS. Subject to Landlord's prior written approval,
in its sole discretion, and provided all signs are in keeping with the quality,
design and style of the Building, Tenant, if the Premises comprise an entire
floor of the Building, at its sole cost and expense, may install identification
signage anywhere in the Premises including in the elevator lobby of the
Premises, provided that such signs must not be visible from the exterior of the
Building.
23.2 MULTI-TENANT FLOOR TENANTS. If Tenant occupies less than the
entire floor on which the Premises is located, Tenant's identifying signage
shall be provided by Landlord, at Tenant's cost, and such signage shall be
comparable to that used by Landlord for other similar floors in the Building and
shall comply with Landlord's Building standard signage program.
23.3 BUILDING DIRECTORIES. Tenant shall be entitled to signage on the
Building directory located in the main Building lobby in an amount equal to one
(1) line per 1,000 rentable square
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feet in the Premises. Tenant shall further be entitled to signage on the
Building directory located in the Real Property parking facility in an amount
equal to one (1) line. Tenant shall only be permitted to include its name and
the names of its principal employees upon the Building directory in the main
Building lobby, and shall only be permitted to include its name upon the
Building directory in the Real Property parking facility. Landlord shall install
on the Building directories, at Tenant's sole cost and expense, all such names
initially requested by Tenant and any modification to such names requested by
Tenant subsequent to the initial installation of the same.
23.4 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
individually approved by Landlord may be removed without notice by Landlord at
the sole expense of Tenant. Tenant may not install any signs on the exterior or
roof of the Building or the common areas of the Building or the Real Property.
Any signs, window coverings, or blinds (even if the same are located behind the
Landlord approved window coverings for the Building), or other items visible
from the exterior of the Premises or Building are subject to the prior written
approval of Landlord, in its sole discretion.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated. Should any standard or regulation now or
hereafter be imposed on Landlord or Tenant by a state, federal or local
governmental body charged with the establishment, regulation and enforcement of
occupational, health or safety standards for employers, employees, landlords or
tenants, then Tenant agrees, at its sole cost and expense, to comply promptly
with such standards or regulations. Tenant shall be responsible, at its sole
cost and expense, to make all alterations to the Premises as are required to
comply with the governmental rules, regulations, requirements or standards
described in this ARTICLE 24. The judgment of any court of competent
jurisdiction or the admission of Tenant in any judicial action, regardless of
whether Landlord is a party thereto, that Tenant has violated any of said
governmental measures, shall be conclusive of that fact as between Landlord and
Tenant.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not
be received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of the overdue amount, plus any attorneys' fees incurred by
Landlord by reason of Tenant's failure to pay Rent and/or other charges when due
hereunder. The late charge shall be deemed Additional Rent and the right to
require it shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any
34
manner. In addition to the late charge described above, any Rent or other
amounts owing hereunder which are not paid on or before the date they are due
shall thereafter bear interest until paid at a rate per annum equal to eighteen
percent (18%) per annum (the "Interest Rate"), provided that in no case shall
such rate be higher than the highest rate permitted by applicable law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 LANDLORD'S CURE. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent. If Tenant shall fail to
perform any of its obligations under this Lease, within a reasonable time after
such performance is required by the terms of this Lease, Landlord may, but shall
not be obligated to, after reasonable prior notice to Tenant, make any such
payment or perform any such act on Tenant's part without waiving its right based
upon any default of Tenant and without releasing Tenant from any obligations
hereunder.
26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15)
days after delivery by Landlord to Tenant of statements therefor: (i) sums equal
to expenditures reasonably made and obligations incurred by Landlord in
connection with the remedying by Landlord of Tenant's defaults pursuant to the
provisions of SECTION 26.1; (ii) sums equal to all losses, costs, liabilities,
damages and expenses referred to in ARTICLE 10 of this Lease; and (iii) sums
equal to all expenditures made and obligations incurred by Landlord in
collecting or attempting to collect the Rent or in enforcing or attempting to
enforce any rights of Landlord under this Lease or pursuant to law, including,
without limitation, all legal fees and other amounts so expended. Tenant's
obligations under this SECTION 26.2 shall survive the expiration or sooner
termination of the Lease Term.
ARTICLE 27
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to the Tenant to enter the Premises to (i) inspect them; (ii) show the
Premises to prospective purchasers, mortgagees or ground or underlying lessors,
or, during the last twelve (12) months of the Lease Term, prospective tenants;
(iii) post notices of nonresponsibility; or (iv) alter, improve or repair the
Premises or the Building if necessary to comply with current building codes or
other applicable laws, or for structural alterations, repairs or improvements to
the Building. Notwithstanding anything to the contrary contained in this ARTICLE
27, Landlord may enter the Premises at any time to (A) perform services required
of Landlord; (B) take possession due to any breach of this Lease in the manner
provided herein; and (C) perform any covenants of Tenant which Tenant fails to
perform. Landlord may make any such entries without the abatement of Rent and
may take such steps as required to accomplish the stated purposes; provided,
however, that any such entry shall be accomplished as expeditiously as
reasonably possible and in a manner so as to cause as little interference to
Tenant as reasonably possible. Tenant hereby waives any claims for damages or
for any injuries or inconvenience to or
35
interference with Tenant's business, lost profits, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby. For each
of the above purposes, Landlord shall at all times have a key with which to
unlock all the doors in the Premises, excluding Tenant's vaults, safes and
special security areas designated in advance by Tenant. In an emergency,
Landlord shall have the right to use any means that Landlord may deem proper to
open the doors in and to the Premises. Any entry into the Premises by Landlord
in the manner hereinbefore described shall not be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises.
ARTICLE 28
TENANT PARKING
Subject to the following terms, Tenant shall have the right to rent
from Landlord parking passes on a monthly basis throughout the Lease Term in the
amount set forth in SECTION 11 of the Summary. The number of parking passes set
forth in SECTION 11 of the Summary shall be allocated as follows: three (3) VIP
valet passes and ten (10) unreserved passes, provided that one (1) of the
unreserved passes may be used for a reserved pass. Notwithstanding anything to
the contrary in the foregoing, Tenant may change the number of parking passes
rented pursuant to this Article 28 upon at least thirty (30) days prior written
notice to Landlord, provided that (i) in no event shall Tenant be entitled to
rent more than the number of parking passes set forth in SECTION 11 of the
Summary; (ii) Tenant shall obligated, throughout the Lease Term, to rent a
minimum of seven (7) parking passes (at least three (3) of which shall be VIP
valet passes and the remainder of which shall be unreserved passes (subject to
Tenant's right to rent one (1) unreserved pass as a reserved pass)); and (iii)
in the event that Tenant does not elect, prior to the Lease Commencement Date,
to rent one (1) reserved parking pass, or does so elect prior to the Lease
Commencement Date and thereafter elects not to continue to rent such reserved
parking pass, as hereinabove provided, Tenant shall not have the right
thereafter to rent any reserved parking passes. Tenant shall pay to Landlord for
automobile parking passes on a monthly basis the prevailing rate charged for
parking passes at the location of such passes. In addition, Tenant shall be
responsible for any taxes imposed by any governmental authority in connection
with the renting of such parking passes by Tenant or the use of the parking
facility by Tenant. Tenant's continued right to use the parking passes is
conditioned upon Tenant abiding by all rules and regulations which are
prescribed from time to time for the orderly operation and use of the parking
facility where the passes are located and upon Tenant's cooperation in seeing
that Tenant's employees and visitors also comply with such rules and
regulations. Landlord specifically reserves the right to change the location,
size, configuration, design, layout and all other aspects of the parking
facility in question, including the discontinuance of the valet parking system,
at any time and Tenant acknowledges and agrees that Landlord may, without
incurring any liability to Tenant and without any abatement of Rent under this
Lease, from time to time, close-off or restrict access to the parking facility
in question for purposes of permitting or facilitating any such construction,
alteration or improvements. Landlord may totally or partially delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall have all the rights of control delegated by Landlord. The parking
passes rented by Tenant pursuant to this ARTICLE 28 are provided to Tenant
solely for use by Tenant's own personnel (not including Tenant's invitees and
guests) and such passes may not be transferred, assigned, subleased or otherwise
alienated by Tenant without Landlord's prior approval.
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ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 BINDING EFFECT. Each of the provisions of this Lease shall extend
to and shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective successors or assigns,
provided this clause shall not permit any assignment by Tenant contrary to the
provisions of ARTICLE 14 of this Lease.
29.2 NO AIR RIGHTS. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Building, the same shall
be without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
29.3 MODIFICATION OF LEASE. Should any current or prospective
mortgagee or ground lessor for the Building require a modification or
modifications of this Lease, which modification or modifications will not cause
an increased cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, then and in
such event, Tenant agrees that this Lease may be so modified and agrees to
execute whatever documents are required therefor and deliver the same to
Landlord within ten (10) days following the request therefor. Should Landlord or
any such prospective mortgagee or ground lessor require execution of a short
form of Lease for recording, containing, among other customary provisions, the
names of the parties, a description of the Premises and the Lease Term, Tenant
agrees to execute such short form of Lease and to deliver the same to Landlord
within ten (10) days following the request therefor.
29.4 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that
Landlord has the right to transfer all or any portion of its interest in the
Real Property and Building and in this Lease, and Tenant agrees that in the
event of any such transfer and a transfer of the Security Deposit, Landlord
shall automatically be released from all liability under this Lease and Tenant
agrees to look solely to such transferee for the performance of Landlord's
obligations hereunder after the date of transfer. Tenant further acknowledges
that Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.
29.5 PROHIBITION AGAINST RECORDING. Except as provided in SECTION 29.3
of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant, and the recording thereof in violation of
this provision shall make this Lease null and void at Landlord's election.
29.6 CAPTIONS. The captions of Articles and Sections are for
convenience only and shall not be deemed to limit, construe, affect or alter the
meaning of such Articles and Sections.
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29.7 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of Rent nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
29.8 TIME OF ESSENCE. Time is of the essence of this Lease and each
of its provisions.
29.9 PARTIAL INVALIDITY. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.10 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord Parties hereunder
(including any successor landlord) and any recourse by Tenant against Landlord
shall be limited solely and exclusively to the lesser of (a) the interest of
Landlord in the Real Property and the Building or (b) the equity interest
Landlord would have in and to the Real Property and Building if the Real
Property and the Building were encumbered by debt in an amount equal to eighty
percent (80%) of the value of the Real Property and the Building, and neither
Landlord, nor any of its constituent partners, shall have any personal liability
therefor, and Tenant hereby expressly waives and releases such personal
liability on behalf of itself and all persons claiming by, through or under
Tenant.
29.11 ENTIRE AGREEMENT. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease, the
exhibits and schedules attached hereto, and any side letter or separate
agreement executed by Landlord and Tenant in connection with this Lease and
dated of even date herewith contain all of the terms, covenants, conditions,
warranties and agreements of the parties relating in any manner to the rental,
use and occupancy of the Premises, shall be considered to be the only agreement
between the parties hereto and their representatives and agents, and none of the
terms, covenants, conditions or provisions of this Lease can be modified,
deleted or added to except in writing signed by the parties hereto.
29.12 RIGHT TO LEASE. Landlord reserves the absolute right to effect
such other tenancies in the Building as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building.
Tenant does not rely on the fact, nor does Landlord represent, that any specific
tenant or type or number of tenants shall, during the Lease Term, occupy any
space in the Building.
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29.13 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform (collectively, the "Force Majeure"),
except with respect to the obligations imposed with regard to Rent and other
charges to be paid by Tenant pursuant to this Lease, and except as to Tenant's
obligations under ARTICLES 5 AND 24 of this Lease notwithstanding anything to
the contrary contained in this Lease, shall excuse the performance of such party
for a period equal to any such prevention, delay or stoppage and, therefore, if
this Lease specifies a time period for performance of an obligation of either
party, that time period shall be extended by the period of any delay in such
party's performance caused by a Force Majeure.
29.14 NOTICES. All notices, demands, statements, approvals or
communications (collectively, "Notices") given or required to be given by either
party to the other hereunder shall be in writing, shall be sent by United States
certified or registered mail, postage prepaid, return receipt requested, or
delivered personally (i) to Tenant at the appropriate address set forth in
SECTION 5 of the Summary, or to such other place as Tenant may from time to time
designate in a Notice to Landlord; or (ii) to Landlord at the addresses set
forth in SECTION 3 of the Summary, or to such other firm or to such other place
as Landlord may from time to time designate in a Notice to Tenant. Any Notice
will be deemed given on the date it is mailed as provided in this SECTION 29.14
or upon the date personal delivery is made or attempted to be made. If Tenant is
notified of the identity and address of Landlord's mortgagee or ground or
underlying lessor, Tenant shall give to such mortgagee or ground or underlying
lessor written notice of any default by Landlord under the terms of this Lease
by registered or certified mail, and such mortgagee or ground or underlying
lessor shall be given a reasonable opportunity to cure such default prior to
Tenant's exercising any remedy available to Tenant.
29.15 JOINT AND SEVERAL. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.16 AUTHORITY. If Tenant is a corporation or partnership, Tenant
hereby represents and warrants that Tenant is a duly formed and existing entity
qualified to do business in California, that Tenant has full right and authority
to execute and deliver this Lease, and that each person signing on behalf of
Tenant is authorized to do so.
29.17 GOVERNING LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California.
29.18 SUBMISSION OF LEASE. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or an
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
29.19 BROKERS. Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, excepting only the real estate brokers or
agents specified in SECTION 12 of the Summary (the "Brokers"), and that they
know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. Landlord shall pay the brokerage commissions owing
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to the Brokers in connection with the transaction contemplated by this Lease
pursuant to the terms of a separate written agreement between Landlord and the
Brokers. Each party agrees to indemnify and defend the other party against and
hold the other party harmless from any and all claims, demands, losses,
liabilities, lawsuits, judgments, and costs and expenses (including without
limitation reasonable attorneys' fees) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of the indemnifying
party's dealings with any real estate broker or agent other than the Brokers.
The terms of this SECTION 29.19 shall survive the expiration or earlier
termination of the Lease Term.
29.20 INDEPENDENT COVENANTS. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord's expense or to any setoff of the Rent or other amounts
owing hereunder against Landlord; provided, however, that the foregoing shall in
no way impair the right of Tenant to commence a separate action against Landlord
for any violation by Landlord of the provisions hereof so long as notice is
first given to Landlord and any holder of a mortgage or deed of trust covering
the Building, Real Property or any portion thereof, of whose address Tenant has
theretofore been notified, and an opportunity is granted to Landlord and such
holder to correct such violations as provided above.
29.21 BUILDING NAME AND SIGNAGE. Landlord shall have the right at any
time to change the name of the Building and to install, affix and maintain any
and all signs on the exterior and on the interior of the Building as Landlord
may, in Landlord's sole discretion, desire. Tenant shall not use the name of the
Building or use pictures or illustrations of the Building in advertising or
other publicity, without the prior written consent of Landlord.
29.22 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all
present or future programs intended to manage parking, transportation or traffic
in and around the Building, and in connection therewith, Tenant shall take
responsible action for the transportation planning and management of all
employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities.
29.23 SUCCESSORS. Except as otherwise expressly provided herein, the
obligations of this Lease shall bind and benefit the successors and assigns of
the parties hereto; provided, however, that no assignment, sublease or other
transfer in violation of the provisions, of ARTICLE 14 shall operate to vest any
rights in any putative assignee, subtenant or transferee of Tenant.
29.24 LANDLORD RENOVATIONS. It is specifically understood and agreed
that Landlord has no obligation and has made no promises to alter, remodel,
improve, renovate, repair or decorate the Premises, Building, or any part
thereof and that no representations respecting the condition of the Premises or
the Building have been made by Landlord to Tenant except as specifically set
forth herein. However, Tenant acknowledges that Landlord may during the Lease
Term renovate, improve, alter, or modify (collectively, the "Renovations") the
Building, Premises, and/or Real Property, including without limitation the
parking structure, common areas, systems and equipment, roof, and structural
portions of the same; provided, however, that such
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Renovations shall not substantially interfere with Tenant's ability to access
the Premises. Tenant hereby agrees that such Renovations and Landlord's actions
in connection with such Renovations shall in no way constitute a constructive
eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall
have no responsibility or for any reason be liable to Tenant for any direct or
indirect injury to or interference with Tenant's business arising from the
Renovations, nor shall Tenant be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises or of
Tenant's personal property or improvements resulting from the Renovations or
Landlord's actions in connection with such Renovations, or for any inconvenience
or annoyance occasioned by such Renovations or Landlord's actions in connection
with such Renovations.
29.25 GOOD FAITH. Except for (i) matters for which there is a standard
of consent or discretion specifically set forth in this Lease, (ii) matters
which could have an adverse effect on the Building's heating, ventilation and
air-conditioning system, plumbing system, electrical system, or life safety
systems, or which could affect the exterior appearance of the Building, or (iii)
matters covered by ARTICLES 3, 4, 10 OR 19 of this Lease (collectively, the
"Excepted Matters"), any time the consent of Landlord or Tenant is required
under this Lease, such consent shall not be unreasonably withheld or delayed,
and, except with regard to the Excepted Matters, whenever this Lease grants
Landlord or Tenant the right to take action, exercise discretion, establish
rules and regulations or make an allocation or other determination, Landlord and
Tenant shall act reasonably and in good faith.
29.26 NO DISCRIMINATION. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the conditions
that there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, creed, sex, religion, marital
status, ancestry or national origin in the leasing, subleasing, transferring,
use, or enjoyment of the Premises, nor shall Tenant itself, or any person
claiming under or through Tenant, establish or permit such practice or practices
of discrimination or segregation with reference to the selection, location,
number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees
in the Premises.
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IN WITNESS WHEREOF, Landlord and Tenant have caused their duly
authorized representatives to execute this Lease as of the day and date first
above written.
"Landlord" 10900 WILSHIRE, LLC,
a California limited liability company
By: SLR Investments, Inc., a Delaware corporation
Its: Managing Member
By:___________________________________________
Its:____________________________________
"Tenant" MAGNETEK, INC.,
a Delaware corporation
By: ______________________________________________
Its:____________________________________
By:___________________________________________
Its:____________________________________
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