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OFFICE BUILDING LEASE
BETWEEN
KILROY REALTY, L.P.,
a Delaware limited partnership
LANDLORD
AND
THE RYLAND GROUP, INC.,
a Maryland corporation
TENANT
<PAGE> 19
TABLE OF CONTENTS
-----------------
1. BASIC LEASE TERMS..........................................1
2. PREMISES AND COMMON AREAS..................................2
3. TERM.......................................................3
4. POSSESSION.................................................5
5. RENT.......................................................6
6. OPERATING EXPENSES.........................................6
7. DELETED....................................................8
8. USE........................................................8
9. NOTICES....................................................9
10. BROKERS....................................................9
11. SURRENDER; HOLDING OVER....................................9
12. TAXES ON TENANT'S PROPERTY................................10
13. ALTERATIONS...............................................10
14. REPAIRS...................................................12
15. LIENS.....................................................13
16. ENTRY BY LANDLORD.........................................13
17. UTILITIES AND SERVICES....................................14
18. ASSUMPTION OF RISK AND INDEMNIFICATION....................14
19. INSURANCE.................................................15
20. DAMAGE OR DESTRUCTION.....................................17
21. EMINENT DOMAIN............................................18
22. DEFAULTS AND REMEDIES.....................................19
23. LANDLORD'S DEFAULT. .....................................22
24. ASSIGNMENT AND SUBLETTING.................................22
25. SUBORDINATION.............................................24
26. ESTOPPEL CERTIFICATE......................................25
27. INTENTIONALLY OMITTED.....................................25
28. RULES AND REGULATIONS.....................................25
29. MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND
LESSORS...................................................25
30. DEFINITION OF LANDLORD....................................26
31. WAIVER....................................................26
(i)
<PAGE> 20
32. PARKING...................................................26
33. FORCE MAJEURE.............................................27
34. SIGNS.....................................................28
35. LIMITATION ON LIABILITY...................................28
36. FINANCIAL STATEMENTS......................................28
37. QUIET ENJOYMENT...........................................29
38. MISCELLANEOUS.............................................29
39. EXECUTION OF LEASE........................................30
ADDENDUM
EXHIBITS:
A-I Site Plan
A-II Outline of Floor Plan of Premises
B Rentable Square Feet and Usable Square Feet
C Work Letter Agreement
Schedule 1 Description of Base Building
Schedule 2 Work Schedule
D Notice of Lease Term Dates and Tenant's Percentage
E Definition of Operating Expenses
F Standards for Utilities and Services
G Estoppel Certificate
H Rules and Regulations
(ii)
<PAGE> 21
OFFICE BUILDING LEASE
This OFFICE BUILDING LEASE ("Lease") is entered into as of the _______ day of
December, 1999 by and between Kilroy Realty, L.P., a Delaware limited
partnership ("Landlord"), and The Ryland Group, Inc., a Maryland corporation
("Tenant").
1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have
the following definitions and meanings:
(a) Landlord: Kilroy Realty, L.P., a Delaware limited partnership.
(b) Landlord's Address (For Notices):
2250 East Imperial Highway, Suite 1200
El Segundo, California 90245
Attention: Chief Legal Officer
or such other place as Landlord may from time to time designate by notice to
Tenant.
(c) Tenant: The Ryland Group, Inc., a Maryland corporation.
(d) Tenant's Address (For Notices): Ryland Mortgage, 6300 Canoga Avenue,
14th Floor, Woodland Hills, California 91367, Attention: Bob Cunnion or such
other place as Tenant may from time to time designate by notice to Landlord.
(e) Development: The parcel(s) of real property located within and
consisting of a portion of Calabasas Park Centre, located in the City of
Calabasas (the "City"), County of Los Angeles (the "County"), State of
California ("State"), as shown on the site plan attached hereto as
Exhibit "A-I".
(f) Building: The four (4) story westernmost office building located within the
Development, which Building contains approximately One Hundred Thousand
(100,000) Rentable Square Feet (subject to adjustment as provided in Exhibit
"B"), with the street address of 24025 Park Sorrento, Calabasas, California.
(g) Premises: Collectively, those certain premises known as Suite 400 consisting
of approximately 25,324 Rentable Square Feet and 24,702 Usable Square Feet and
Suite 100 consisting of approximately 7,622 Rentable Square Feet and 6,686
Usable Square Feet as generally shown on the floor plans attached hereto as
Exhibit "A-II".
(h) Tenant's Percentage: Tenant's percentage of the Building on an aggregate
Rentable Square Foot basis, initially is thirty-two and 95/100ths percent
(32.95%), subject to final determination as provided in Exhibit "B" and Exhibit
"D".
(i) Original Term: Six (6) years and four (4) months, subject to Tenant's
right to extend the Term pursuant to the provisions of Paragraph 3 hereof.
(j) (i) Estimated Commencement Date: July 1, 2000
(ii) Estimated Expiration Date: October 31, 2006.
(k) Commencement Date: The date on which the Term of this Lease will
commence as determined in accordance with the provisions of Exhibit "C" and
as stated on Exhibit "D".
(l) Initial Monthly Base Rent: Two Dollars and Fifty Cents ($2.50) times the
Rentable Square Feet contained within the Premises, subject to adjustment as
provided in subparagraph 1(m) below and as otherwise provided in this Lease,
including the Addendum hereto.
(m) Adjustment to Monthly Base Rent: Intentionally omitted.
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(n) Operating Expense Allowance: Operating Expense Allowance means Tenant's
Percentage of Operating Expenses as described in Paragraph 6 below which
Landlord has included in Monthly Base Rent, which, for purposes of this
Lease, will be an amount equal to the Operating Expenses incurred for
calendar year 2000 (the "Base Year").
(o) Security Deposit: None
(p) Tenant Improvements: All tenant improvements installed or to be installed by
Landlord or Tenant within the Premises to prepare the Premises for occupancy
pursuant to the terms of the Work Letter Agreement attached hereto as Exhibit
"C".
(q) Tenant Improvement Allowance: Thirty-Five Dollars ($35) per Usable
Square Foot of the Premises, to be applied as provided in the Work Letter
Agreement attached hereto as Exhibit "C".
(r) Permitted Use: General office uses and no other use without the express
written consent of Landlord, which consent Landlord may withhold in its sole
and absolute discretion.
(s) Parking: Tenant may use a number of parking permits equal to three (3)
permits per each one thousand (1,000) Usable Square Feet within the Premises
during the Original Term, at no cost to Tenant, subject to the terms and
conditions of Paragraph 32 below and the Rules and Regulations regarding parking
contained in Exhibit "H". One-third (1/3) of Tenant's parking permits shall be
for Tenant's use in the parking space locations as depicted on Exhibit "A-I"
attached hereto; all other parking permits shall be unreserved parking permits.
(t) Broker(s): CB Richard Ellis, representing Landlord
Travers Realty, representing Tenant
(u) Guarantor(s): Intentionally omitted.
(v) Interest Rate: shall mean the greater of ten percent (10%) per annum or two
percent (2%) in excess of the prime lending or reference rate of Wells Fargo
Bank N.A. or any successor bank in effect on the twenty-fifth (25th) day of the
calendar month immediately prior to the event giving rise to the Interest Rate
imposition; provided, however, the Interest Rate will in no event exceed the
maximum interest rate permitted to be charged by applicable law.
(w) Exhibits: "A" through "H", inclusive, which Exhibits are attached to this
Lease and incorporated herein by this reference. As provided in Paragraph 3
below, a completed version of Exhibit "D" will be delivered to Tenant after
Landlord delivers possession of the Premises to Tenant.
(x) Addendum Paragraphs:
1 through 3, inclusive, which Addendum Paragraphs are attached to this Lease and
incorporated herein by this reference.
This Paragraph 1 represents a summary of the basic terms and definitions of this
Lease. In the event of any inconsistency between the terms contained in this
Paragraph 1 and any specific provision of this Lease, the terms of the more
specific provision shall prevail.
2. PREMISES AND COMMON AREAS.
(a) Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises as improved or to be improved with the Tenant Improvements
described in the Work Letter Agreement, a copy of which is attached hereto as
Exhibit "C".
(b) Mutual Covenants. Landlord and Tenant agree that the letting and hiring of
the Premises is upon and subject to the terms, covenants and conditions
contained in this Lease and each party covenants as a material part of the
consideration for this Lease to keep and perform their respective obligations
under this Lease.
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<PAGE> 23
(c) Tenant's Use of Common Areas. During the Term of this Lease, Tenant shall
have the nonexclusive right to use in common with Landlord and all persons,
firms and corporations conducting business in the Development and their
respective customers, guests, licensees, invitees, subtenants, employees and
agents (collectively, "Development Occupants"), subject to the terms of this
Lease, the Rules and Regulations referenced in Paragraph 28 below and all
covenants, conditions and restrictions now or hereafter affecting the
Development, the following common areas of the Building and/or the Development
(collectively, the "Common Areas"):
(i) The Building's common entrances, hallways, lobbies, public restrooms on
multi-tenant floors, elevators, stairways and accessways, loading docks, ramps,
drives and platforms and any passageways and serviceways thereto, and the common
pipes, conduits, wires and appurtenant equipment within the Building which serve
the Premises (collectively, "Building Common Areas"); and
(ii) The parking facilities of the Development which serve the Building (subject
to the provisions of Exhibit "H"), loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways, landscaped areas, plaza
areas, fountains and similar areas and facilities situated within the
Development and appurtenant to the Building which are not reserved for the
exclusive use of any Development Occupants (collectively, "Development Common
Areas").
(d) Landlord's Reservation of Rights. Provided Tenant's use of and access to the
Premises and parking to be provided to Tenant under this Lease is not interfered
with in an unreasonable manner, Landlord reserves for itself and for all other
owner(s) and operator(s) of the Development Common Areas and the balance of the
Development, the right from time to time to: (i) install, use, maintain, repair,
replace and relocate pipes, ducts, conduits, wires and appurtenant meters and
equipment above the ceiling surfaces, below the floor surfaces, within the walls
and in the central core areas of the Building; (ii) make changes to the design
and layout of the Development, including, without limitation, changes to
buildings, driveways, entrances, loading and unloading areas, direction of
traffic, landscaped areas and walkways, and, subject to the parking provisions
contained in Paragraph 32 and Exhibit "H", parking permits and parking areas;
and (iii) use or close temporarily the Building Common Areas, the Development
Common Areas and/or other portions of the Development while engaged in making
improvements, repairs or alterations to the Building, the Development, or any
portion thereof.
3. TERM.
(a) Original Term. The term of this Lease ("Original Term") will be for the
period designated in subparagraph 1(i), commencing on the Commencement Date, and
ending on the last day of the month in which the expiration of such period
occurs, including any extensions of the Term pursuant to any provision of this
Lease or written agreement of the parties. Notwithstanding the foregoing, if the
Commencement Date falls on any day other than the first day of a calendar month
then the Term of this Lease will be measured from the first day of the month
following the month in which the Commencement Date occurs. Each consecutive
twelve (12) month period of the Term of this Lease, commencing on the
Commencement Date, will be referred to herein as a "Lease Year". Landlord's
Notice of Lease Term Dates and Tenant's Percentage ("Notice"), in the form of
Exhibit "D" attached hereto, will set forth the Commencement Date, the date upon
which the Term of this Lease shall end, the Rentable Square Feet within the
Premises and the Building, and Tenant's Percentage and will be delivered to
Tenant after Landlord delivers possession of the Premises to Tenant. The Notice
will be binding upon Tenant unless Tenant objects to the Notice in writing
within five (5) days of Tenant's receipt of the Notice.
(b) Extension. Subject to the terms of this Paragraph 3, Landlord hereby grants
to Tenant one (1) option ("Extension Option") to extend the original Term as to
the entire Premises only for an additional period of five (5) years ("Option
Term"), on the same terms, covenants and conditions as provided for in the Lease
for the original Term, except that the economic Lease terms during the Option
Term shall be as set forth in this Paragraph 3.
(c) Rent for Option Term. Monthly Base Rent at the beginning of the Option Term
shall be adjusted to equal the "fair market" determined based on the parameters
described in subparagraph 3(e) below; provided, however, in no event shall the
Monthly Base Rent be decreased after such adjustment to an amount less than the
Monthly Base Rent payable in the month immediately preceding the Option Term.
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<PAGE> 24
(d) Exercise of Option. The Extension Option must be exercised, if at all, by
written notice ("Extension Notice") delivered by Tenant to Landlord no later
than the date which is four hundred twenty-five (425) days prior to the
expiration of the original Term.
(e) Determination of Monthly Base Rent. The "fair market" determination as
described in this Paragraph 3 shall mean the annual amount per square foot,
projected during the Option Term (including any applicable rent increases during
the Option Term), that a willing, comparable, renewal tenant (excluding sublease
and assignment transactions), would pay and that a willing, comparable landlord
would accept for comparable space in a comparable Class "A" building located in
the City of Calabasas or Warner Center (the "Comparison Market Area").
Comparable space shall consist of such space of comparable quality and
improvements as are located within the Building, taking into account the age,
quality, layout of the Premises, the parking rights available to Tenant and
Tenant's Authorized Users, and also taking into account items that professional
real estate brokers customarily consider, such as who is paying for taxes and
insurance, rental rates, availability, tenant size and other factors typically
considered by Landlord or lessors of similar facilities, and shall include
consideration given to tenant improvement allowance, free rent or other
concessions but only to the extent such concessions are generally available to
renewal tenants in the Comparison Market Area.
(f) Tenant Review Period and Election to Cancel Exercise of Extension Option.
Within thirty (30) days following Tenant's due and timely exercise of the
Extension Option as provided herein, Landlord shall provide Tenant with written
notice of Landlord's good faith determination of fair market for the Premises
for the applicable Option Term determined by taking into account the matters
described in subparagraph 3(e) above. Within sixty (60) days ("Negotiation
Period") after receipt of Landlord's notice of the fair market determination,
Landlord and Tenant shall meet in a good faith effort to agree upon the fair
market for the Premises for the Option Term but without any obligation to so
agree. If Landlord and Tenant fail to reach agreement on such fair market
determination prior to the expiration of the Negotiation Period (the "Outside
Agreement Date"), then Tenant, within five (5) days of the expiration of the
Negotiation Period, may cancel and nullify the Extension Option by delivering
written notice of such election to Landlord. In the event of Tenant's failure to
so elect to cancel and nullify the Extension Option within such five (5) day
period, Landlord and Tenant shall submit their respective good faith
determinations of fair market for the Premises for the relevant period of time
to appraisal in accordance with the provisions below.
(g) Appointment of Appraisers. Landlord and Tenant shall each appoint one (1)
independent, unaffiliated appraiser who is by profession a licensed real estate
broker who has been active over the five (5) year period ending on the date of
such appointment in the leasing of office space located in the Comparison Market
Area. Each such appraiser shall be appointed within fifteen (15) days after the
Outside Agreement Date. If the two (2) appraisers so appointed do not within
fifteen (15) days of the date of the appointment of the last appointed appraiser
agree upon whether Landlord's or Tenant's last submitted (on the Outside
Agreement Date) fair market determination, then said appraisers within five (5)
days thereafter shall agree upon and appoint a third appraiser who shall be
qualified under the same criteria for qualification of the initial two (2)
appraisers.
(h) Third Appraiser. The third appraiser shall determine whether the parties
shall use Landlord's or Tenant's last submitted (on the Outside Agreement Date)
fair market determination, and shall notify Landlord and Tenant thereof. The
determination of the third appraiser shall be limited solely to the issue of
whether Landlord's or Tenant's last submitted (on the Outside Agreement Date)
fair market determination is the closest to the actual fair market for such area
as solely determined by the third appraiser, taking into account the
requirements specified above. The decision of the third appraiser shall be final
and binding upon Landlord and Tenant.
(i) Failure to Appoint Appraiser. If either Landlord or Tenant fails to appoint
an appraiser within the time period specified in subparagraph 3(g) hereinabove,
the appraiser appointed by one of them shall, within fifteen (15) days following
the date on which the party failing to appoint an appraiser could have last
appointed such appraiser, reach a decision based upon the procedures set forth
above (i.e., by selecting either Landlord's or Tenant's last submitted [on the
Outside Agreement Date] fair market determination) and shall notify Landlord and
Tenant thereof, and such appraiser's decision shall be final and binding upon
Landlord and Tenant.
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<PAGE> 25
(j) Failure to Appoint Third Appraiser. If the two (2) appraisers selected by
Landlord and Tenant fail to agree upon and timely appoint a third appraiser,
both appraisers shall be dismissed and the matter to be decided shall be
forthwith submitted to arbitration under the provisions of the American
Arbitration Association based upon the procedures set forth above (i.e., by
selecting either Landlord's or Tenant's last submitted [on the Outside Agreement
Date] fair market determination).
(k) Delay In Determination of Fair Market Rent. If the process described in this
Paragraph 3 has not resulted in a selection of Landlord's or Tenant's fair
market determinations by the commencement of the applicable Option Term, then
the average of the fair market determinations estimated by Landlord or Tenant
shall be used until a final decision has been reached by the appropriate
appraiser, with an appropriate rental credit and other adjustments for any
overpayments of Base Rent or other amounts if the appropriate appraiser selects
Tenant's estimate of fair market.
(l) Cost of Appraisers. The cost of each party's appraiser shall be the
responsibility of the party selecting such appraiser, and the cost of the third
appraiser (and, if necessary, arbitration) shall be shared by Landlord and
Tenant equally.
(m) Deleted.
(n) Deleted.
(o) Effect of Default. Tenant shall have no right to exercise the Extension
Option, notwithstanding any provision of the grant of the Extension Option to
the contrary, and Tenant's exercise of the Extension Option may be nullified by
Landlord and deemed of no further force or effect, if (i) Tenant shall be in
default of any monetary obligation or material non-monetary obligation under the
terms of this Lease as of Tenant's exercise of the Extension Option in question
or at any time after the exercise of such Option and prior to the commencement
of the Option Term, or (ii) Landlord has given Tenant two (2) or more notices of
default, whether or not such defaults are subsequently cured, during any twelve
(12) consecutive month period of the Lease.
4. POSSESSION.
(a) Delivery of Possession. Landlord agrees to deliver possession of the
Premises to Tenant in accordance with the terms of the Work Letter Agreement
attached hereto as Exhibit "C". Notwithstanding the foregoing, Landlord will not
be obligated to deliver possession of the Premises to Tenant (but Tenant will be
liable for rent if Landlord can otherwise deliver the Premises to Tenant) until
Landlord has received from Tenant all of the following: (i) a copy of this Lease
fully executed by Tenant and the guaranty of Tenant's obligations under this
Lease, if any, executed by the Guarantor(s); (ii) the first installment of
Monthly Base Rent; (iii) executed copies of policies of insurance or
certificates thereof as required under Paragraph 19 of this Lease; (iv) copies
of all governmental permits and authorizations, if any, required in connection
with Tenant's operation of its business within the Premises; and (v) if Tenant
is a corporation or partnership, such evidence of due formation, valid existence
and authority as Landlord may reasonably require, which may include, without
limitation, a certificate of good standing, certificate of secretary, articles
of incorporation, statement of partnership, or other similar documentation.
(b) Condition of Premises. Prior to the Commencement Date and in accordance with
the Work Letter Agreement attached hereto as Exhibit "C", Landlord and Tenant
will jointly conduct a walk-through inspection of the Premises and will jointly
prepare a punch-list ("Punch-List") of items required to be installed by
Landlord under the Work Letter Agreement which require finishing or correction.
The Punch-List will not include any items of damage to the Premises caused by
Tenant's move-in or early entry, if permitted, which damage will be corrected or
repaired by Landlord, at Tenant's expense or, at Landlord's election, by Tenant,
at Tenant's expense. Other than the items specified in the Punch-List, by taking
possession of the Premises, Tenant will be deemed to have accepted the Premises
in its condition on the date of delivery of possession and to have acknowledged
that the Tenant Improvements have been installed as required by the Work Letter
Agreement and that there are no additional items needing work or repair.
Landlord will cause all items in the Punch-List to be repaired or corrected
within thirty (30) days following the preparation of the Punch-List or as soon
as practicable after the preparation of the Punch-List. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises, the Building, the Development or any
portions thereof or with respect to the suitability of same for the conduct of
Tenant's business and Tenant further acknowledges that Landlord will have no
obligation to construct or complete any additional buildings or improvements
within the Development.
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(c) Representations By Landlord. Landlord hereby represents and warrants as
follows: (i) the Building, as of the Commencement Date shall comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date; provided,
however, this warranty shall not apply to any Tenant Improvements which Tenant
shall cause to be installed within the Premises; and (ii) Landlord has not
caused any Hazardous Materials to be brought upon, stored, used, handled,
generated, released or disposed of on, in, under or about the Premises, the
Building and/or the Common Areas. In the event Tenant does not provide Landlord
with a written notice of a non-compliance with the representations and
warranties set forth in this subparagraph 4(c) within six (6) months of the
Commencement Date, Landlord's representations and warranties set forth in this
subparagraph 4(c) shall be deemed to have no further force or effect.
5. RENT.
(a) Monthly Base Rent. Tenant agrees to pay Landlord the Monthly Base Rent for
the Premises (subject to adjustment as hereinafter provided) in advance on the
first day of each calendar month during the Term without prior notice or demand,
except that Tenant agrees to pay the Monthly Base Rent for the first month of
the Term directly to Landlord concurrently with Tenant's delivery of the
executed Lease to Landlord. If the Term of this Lease commences or ends on a day
other than the first day of a calendar month, then the rent for such period will
be prorated in the proportion that the number of days this Lease is in effect
during such period bears to the number of days in such month. All rent must be
paid to Landlord, without any deduction or offset, in lawful money of the United
States of America, at the address designated by Landlord or to such other person
or at such other place as Landlord may from time to time designate in writing.
Monthly Base Rent will be adjusted during the Term of this Lease as provided in
subparagraph l(m).
(b) Additional Rent. All amounts and charges to be paid by Tenant hereunder,
including, without limitation, payments for Operating Expenses, insurance,
repairs and parking, will be considered additional rent for purposes of this
Lease, and the word "rent" as used in this Lease will include all such
additional rent unless the context specifically or clearly implies that only
Monthly Base Rent is intended.
(c) Late Payments. Late payments of Monthly Base Rent and/or any item of
additional rent will be subject to interest and a late charge as provided in
subparagraph 22(f) below.
6. OPERATING EXPENSES.
(a) Operating Expenses. In addition to Monthly Base Rent, commencing on the
first anniversary of the Commencement Date and continuing throughout the Term of
this Lease, Tenant agrees to pay Landlord as additional rent in accordance with
the terms of this Paragraph 6, Tenant's Percentage of Operating Expenses as
defined in Exhibit "E" attached hereto to the extent Tenant's Percentage of
Operating Expenses exceeds Tenant's Operating Expense Allowance.
(b) Estimate Statement. Prior to the Commencement Date and on or about March 1st
of each subsequent calendar year during the Term of this Lease, Landlord will
endeavor to deliver to Tenant a statement ("Estimate Statement") wherein
Landlord will estimate both the Operating Expenses and Tenant's Percentage of
Operating Expenses for the then current calendar year. If the estimate of
Tenant's Percentage of Operating Expenses in the Estimate Statement exceeds
Tenant's Operating Expense Allowance, Tenant agrees to pay Landlord, as
"Additional Rent", one-twelfth (1/12th) of such excess each month thereafter,
beginning with the next installment of rent due, until such time as Landlord
issues a revised Estimate Statement or the Estimate Statement for the succeeding
calendar year; except that, concurrently with the regular monthly rent payment
next due following the receipt of each such Estimate Statement, Tenant agrees to
pay Landlord an amount equal to one monthly installment of such excess (less any
applicable Operating Expenses already paid) multiplied by the number of months
from January, in the current calendar year, to the month of such rent payment
next due, all months inclusive. If at any time during the Term of this Lease,
but not more often than quarterly, Landlord reasonably determines that Tenant's
Percentage of Operating Expenses for the current calendar year will be greater
than the amount set forth in the then current Estimate Statement, Landlord may
issue a revised Estimate Statement and Tenant agrees to pay Landlord, within ten
(10) days of receipt of the revised Estimate Statement, the difference between
the amount owed by Tenant under such revised Estimate Statement and the amount
owed by Tenant under the original Estimate Statement for the portion of the then
current calendar year which has expired. Thereafter Tenant agrees to pay
Tenant's Percentage of Operating Expenses based on such revised Estimate
Statement until Tenant receives the next calendar year's Estimate Statement or a
new revised Estimate Statement for the current calendar year. In the event
Tenant's Percentage of Operating Expenses for any calendar year is less than
Tenant's Operating Expense Allowance, Tenant will not be entitled to a credit
against any rent, additional rent or Tenant's Percentage of future Operating
Expenses payable hereunder.
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<PAGE> 27
(c) Actual Statement. By March 1st of each calendar year during the Term of this
Lease (commencing March 1 in the calendar year following the base year for
Operating Expenses, if applicable), Landlord will also endeavor to deliver to
Tenant a statement ("Actual Statement") which states the actual Operating
Expenses for the preceding calendar year. If the Actual Statement reveals that
Tenant's Percentage of the actual Operating Expenses is more than the total
Additional Rent paid by Tenant for Operating Expenses on account of the
preceding calendar year, Tenant agrees to pay Landlord the difference in a lump
sum within ten (10) days of receipt of the Actual Statement. If the Actual
Statement reveals that Tenant's Percentage of the actual Operating Expenses is
less than the Additional Rent paid by Tenant for Operating Expenses on account
of the preceding calendar year, Landlord will credit any overpayment toward the
next monthly installment(s) of Tenant's Percentage of the Operating Expenses due
under this Lease.
(d) Miscellaneous. Any delay or failure by Landlord in delivering any Estimate
Statement or Actual Statement pursuant to this Paragraph 6 will not constitute a
waiver of its right to require an increase in rent nor will it relieve Tenant of
its obligations pursuant to this Paragraph 6, except that Tenant will not be
obligated to make any payments based on such Estimate Statement or Actual
Statement until ten (10) days after receipt of such Estimate Statement or Actual
Statement. Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant's Percentage of the actual
Operating Expenses for the year in which this Lease terminates, Tenant agrees to
promptly pay any increase due over the estimated expenses paid and, conversely,
any overpayment made in the event said expenses decrease shall promptly be
rebated by Landlord to Tenant. Such obligation will be a continuing one which
will survive the expiration or earlier termination of this Lease. Prior to the
expiration or sooner termination of the Lease Term and Landlord's acceptance of
Tenant's surrender of the Premises, Landlord will have the right to estimate the
actual Operating Expenses for the then current Lease Year and to collect from
Tenant prior to Tenant's surrender of the Premises, Tenant's Percentage of any
excess of such actual Operating Expenses over the estimated Operating Expenses
paid by Tenant in such Lease Year.
(e) Tenant's Audit Rights. Notwithstanding anything to the contrary contained in
this Lease, if Tenant reasonably disputes any amounts set forth in any Actual
Statement described above in this Paragraph 6, Tenant will have the right no
later than sixty (60) days following receipt of an Actual Statement to cause
Landlord's general ledger of accounts with respect to the immediately preceding
calendar year only to be audited by a nationally recognized firm of certified
public accountants reasonably approved by Landlord, at no cost or expense to
Landlord, by a certified public accountant mutually acceptable to Landlord and
Tenant and which has prior experience in the review of financial statements and
which shall not have provided primary accounting services to Tenant within the
last three (3) years and which shall not be retained by Tenant on a contingency
basis; provided, however, Tenant shall not have the right to perform any such
audit more than one (1) time for any calendar year during the Lease Term,
provided further, if any other tenant(s) shall have already initiated an audit
of the Operating Expenses during such calendar year, Landlord shall have the
right at its option to limit Tenant's audit to a review of such other audit(s)
and any reasonable and specific concerns Tenant may have with any such audit(s)
and Tenant shall not be entitled to reopen Landlord's general ledger of accounts
regarding Operating Expenses for such calendar year except with respect to such
reasonable and specific concerns of Tenant concerning such other audit(s). Any
audit conducted by or on behalf of Tenant shall be performed within ninety (90)
days and shall be conducted at Landlord's office during Landlord's normal
business hours and in the manner so as to minimize interference with Landlord's
business operations. Landlord shall have no obligation and Tenant shall have no
right to make photocopies of any of Landlord's ledgers, invoices or other items.
Tenant's audit shall be limited to an on-site review of Landlord's general
ledger of accounts. The amounts payable under this Paragraph 6 by Landlord to
Tenant or to Tenant to Landlord, as the case may be, will be appropriately
adjusted on the basis of such audit. If such audit discloses an overstatement of
Operating Expenses in excess of five percent (5%) for such calendar year, Tenant
will receive a credit against Tenant's future Operating Expense obligations for
the reasonable costs of such audit; otherwise the cost of such audit including
Landlord's costs incurred in complying with such audit shall be borne by Tenant.
Tenant agrees to keep, and to cause in its account and employee to keep, all
information revealed by any audit of Landlord's books and records strictly
confidential and not to disclose any such information or permit any such
information to be disclosed to anyone other than Landlord, unless compelled to
do so by a court of law.
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7. DELETED.
8. USE.
(a) Tenant's Use of the Premises. The Premises may be used for the use or uses
set forth in subparagraph 1(r) only, and Tenant will not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. Nothing in this Lease will be deemed to give Tenant any exclusive
right to such use in the Building or the Development.
(b) Compliance. At Tenant's sole cost and expense, Tenant agrees to procure,
maintain and hold available for Landlord's inspection, all governmental licenses
and permits required for the proper and lawful conduct of Tenant's business from
the Premises, if any. Tenant agrees not to use, alter or occupy the Premises or
allow the Premises to be used, altered or occupied in violation of, and Tenant,
at its sole cost and expense, agrees to use and occupy the Premises and cause
the Premises to be used and occupied in compliance with: (i) any and all laws,
statutes, zoning restrictions, ordinances, rules, regulations, orders and
rulings now or hereafter in force and any requirements of any insurer, insurance
authority or duly constituted public authority having jurisdiction over the
Premises, the Building or the Development now or hereafter in force, (ii) the
requirements of the Board of Fire Underwriters and any other similar body, (iii)
the Certificate of Occupancy issued for the Building. Tenant shall not use or
permit the Premises to be used for any purpose which would cause a violation of
any recorded covenants, conditions and restrictions and similar regulatory
agreements, if any, which affect the use, occupation or alteration of the
Premises, the Building and/or the Development. Tenant agrees to comply with the
Rules and Regulations referenced in Paragraph 28 below. Tenant agrees not to do
or permit anything to be done in or about the Premises which will in any manner
obstruct or interfere with the rights of other tenants or occupants of the
Development, or injure or unreasonably annoy them, or use or allow the Premises
to be used for any unlawful or unreasonably objectionable purpose. Tenant agrees
not to cause, maintain or permit any nuisance or waste in, on, under or about
the Premises or elsewhere within the Development. Notwithstanding anything
contained in this Lease to the contrary, all transferable development rights
related in any way to the Development are and will remain vested in Landlord,
and Tenant hereby waives any rights thereto.
(c) Hazardous Materials. Except for ordinary and general office supplies
typically used in the ordinary course of business within office buildings, such
as copier toner, liquid paper, glue, ink and common household cleaning materials
(some or all of which may constitute "Hazardous Materials" as defined in this
Lease), Tenant agrees not to cause or permit any Hazardous Materials to be
brought upon, stored, used, handled, generated, released or disposed of on, in,
under or about the Premises, the Building, the Common Areas or any other portion
of the Development by Tenant, its agents, employees, subtenants, assignees,
licensees, contractors or invitees (collectively, "Tenant's Parties"), without
the prior written consent of Landlord, which consent Landlord may withhold in
its sole and absolute discretion. Upon the expiration or earlier termination of
this Lease, Tenant agrees to promptly remove from the Premises, the Building and
the Development, at its sole cost and expense, any and all Hazardous Materials,
including any equipment or systems containing Hazardous Materials which are
installed, brought upon, stored, used, generated or released upon, in, under or
about the Premises, the Building and/or the Development or any portion thereof
by Tenant or any of Tenant's Parties. To the fullest extent permitted by law,
Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord
and Landlord's partners, officers, directors, employees, agents, successors and
assigns (collectively, "Landlord Indemnified Parties") from and against any and
all claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs (including, without limitation, clean-up,
removal, remediation and restoration costs, sums paid in settlement of claims,
attorneys' fees, consultant fees and expert fees and court costs) which arise or
result from the presence of Hazardous Materials on, in, under or about the
Premises, the Building or any other portion of the Development and which are
caused or permitted by Tenant or any of Tenant's Parties. Tenant agrees to
promptly notify Landlord of any release of Hazardous Materials at the Premises,
the Building or any other portion of the Development which Tenant becomes aware
of during the Term of this Lease, whether caused by Tenant or any other persons
or entities. In the event of any release of Hazardous Materials caused or
permitted by Tenant or any of Tenant's Parties, Landlord shall have the right,
but not the obligation, to cause Tenant to immediately take all steps Landlord
deems necessary or appropriate to remediate such release and prevent any similar
future release to the satisfaction of Landlord and Landlord's mortgagee(s). As
used in this Lease, the term "Hazardous Materials" shall mean and include any
hazardous or toxic materials, substances or wastes as now or hereafter
designated under any law, statute, ordinance, rule, regulation, order or ruling
of any agency of the State, the United States Government or any local
governmental authority, including, without limitation, asbestos, petroleum,
petroleum hydrocarbons and petroleum based products, urea formaldehyde foam
insulation, polychlorinated biphenyls ("PCBs"), and freon and other
chlorofluorocarbons. The provisions of this subparagraph 8(c) will survive the
expiration or earlier termination of this Lease.
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<PAGE> 29
9. NOTICES. Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery (including delivery by overnight
courier or an express mailing service) or by mail, if sent by registered or
certified mail. Notices to Tenant shall be sufficient if delivered to Tenant at
the address designated in subparagraph 1(d) and notices to Landlord shall be
sufficient if delivered to Landlord at the address designated in subparagraph
1(b). Either party may specify a different address for notice purposes by
written notice to the other, except that the Landlord may in any event use the
Premises as Tenant's address for notice purposes.
10. BROKERS. The parties acknowledge that the broker(s) who negotiated this
Lease are stated in subparagraph 1(t). Each party represents and warrants to the
other, that, to its knowledge, no other broker, agent or finder (a) negotiated
or was instrumental in negotiating or consummating this Lease on its behalf, and
(b) is or might be entitled to a commission or compensation in connection with
this Lease. Landlord and Tenant each agree to promptly indemnify, protect,
defend and hold harmless the other from and against any and all claims, damages,
judgments, suits, causes of action, losses, liabilities, penalties, fines,
expenses and costs (including attorneys' fees and court costs) resulting from
any breach by the indemnifying party of the foregoing representation, including,
without limitation, any claims that may be asserted by any broker, agent or
finder undisclosed by the indemnifying party. The foregoing mutual indemnity
shall survive the expiration or earlier termination of this Lease.
11. SURRENDER; HOLDING OVER.
(a) Surrender. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not constitute a merger, and shall, at the
option of Landlord, operate as an assignment to Landlord of any or all subleases
or subtenancies. Upon the expiration or earlier termination of this Lease,
Tenant agrees to peaceably surrender the Premises to Landlord broom clean and in
a state of first-class order, repair and condition, ordinary wear and tear and
casualty damage (if this Lease is terminated as a result thereof pursuant to
Paragraph 20) excepted, with all of Tenant's personal property and Alterations
(as defined in Paragraph 13) removed from the Premises to the extent required
under Paragraph 13 and all damage caused by such removal repaired as required by
Paragraph 13. Prior to the date Tenant is to actually surrender the Premises to
Landlord, Tenant agrees to give Landlord reasonable prior notice of the exact
date Tenant will surrender the Premises so that Landlord and Tenant can schedule
a walk-through of the Premises to review the condition of the Premises and
identify the Alterations and personal property which are to remain upon the
Premises and which items Tenant is to remove, as well as any repairs Tenant is
to make upon surrender of the Premises. The delivery of keys to any employee of
Landlord or to Landlord's agent or any employee thereof alone will not be
sufficient to constitute a termination of this Lease or a surrender of the
Premises.
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<PAGE> 30
(b) Holding Over. Tenant will not be permitted to hold over possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, which consent Landlord may withhold in its
sole and absolute discretion. If Tenant holds over after the expiration or
earlier termination of the Term, Landlord may, at its option, treat Tenant as a
tenant at sufferance only, and such continued occupancy by Tenant shall be
subject to all of the terms, covenants and conditions of this Lease, so far as
applicable, except that the Monthly Base Rent for any such holdover period shall
be equal to the greater of (i) one hundred twenty-five percent (125%) of the
Monthly Base Rent in effect under this Lease immediately prior to such holdover,
or (ii) the then currently scheduled rental rate for comparable space in the
Building, in either event prorated on a daily basis. Acceptance by Landlord of
rent after such expiration or earlier termination will not result in a renewal
of this Lease. The foregoing provisions of this Paragraph 11 are in addition to
and do not affect Landlord's right of re-entry or any rights of Landlord under
this Lease or as otherwise provided by law. If Tenant fails to surrender the
Premises upon the expiration of this Lease in accordance with the terms of this
Paragraph 11 despite demand to do so by Landlord, Tenant agrees to promptly
indemnify, protect, defend and hold Landlord harmless from all claims, damages,
judgments, suits, causes of action, losses, liabilities, penalties, fines,
expenses and costs (including attorneys' fees and costs), including, without
limitation, costs and expenses incurred by Landlord in returning the Premises to
the condition in which Tenant was to surrender it and claims made by any
succeeding tenant founded on or resulting from Tenant's failure to surrender the
Premises. The provisions of this subparagraph 11(b) will survive the expiration
or earlier termination of this Lease.
12. TAXES ON TENANT'S PROPERTY. Tenant agrees to pay before delinquency, all
taxes and assessments (real and personal) levied against (a) any personal
property or trade fixtures placed by Tenant in or about the Premises (including
any increase in the assessed value of the Premises based upon the value of any
such personal property or trade fixtures); and (b) any Tenant Improvements or
Alterations in the Premises (whether installed and/or paid for by Landlord or
Tenant) to the extent such items are assessed at a valuation higher than the
valuation at which tenant improvements conforming to Landlord's building
standard tenant improvements are assessed. If any such taxes or assessments are
levied against Landlord or Landlord's property, Landlord may, after written
notice to Tenant (and under proper protest if requested by Tenant) pay such
taxes and assessments, in which event Tenant agrees to reimburse Landlord all
amounts paid by Landlord within ten (10) business days after demand by Landlord;
provided, however, Tenant, at its sole cost and expense, will have the right,
with Landlord's cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of any such taxes and assessments so paid
under protest.
13. ALTERATIONS. After installation of the initial Tenant Improvements for the
Premises pursuant to Exhibit "C", Tenant may, at its sole cost and expense, make
alterations, additions, improvements and decorations to the Premises
(collectively, "Alterations") subject to and upon the following terms and
conditions:
(a) Prohibited Alterations. Tenant may not make any Alterations which: (i)
affect any area outside the Premises; (ii) affect the Building's structure,
equipment, services or systems, or the proper functioning thereof, or Landlord's
access thereto; (iii) affect the outside appearance, character or use of the
Building or the Building Common Areas; (iv) in the reasonable opinion of
Landlord, lessen the value of the Building; or (v) will violate or require a
change in any occupancy certificate applicable to the Premises.
(b) Landlord's Approval. Before proceeding with any Alterations which are not
prohibited in subparagraph 13(a) above, Tenant must first obtain Landlord's
written approval of the plans, specifications and working drawings for such
Alterations, which approval Landlord will not unreasonably withhold or delay;
provided, however, Landlord's prior approval will not be required for any such
Alterations which are not prohibited by subparagraph 13(a) above and which cost
less than Fifty Thousand Dollars ($50,000.00) in the aggregate in any calendar
year as long as (i) Tenant delivers to Landlord notice and a copy of any final
plans, specifications and working drawings for any such Alterations at least ten
(10) days prior to commencement of the work thereof, and (ii) the other
conditions of this Paragraph 13 are satisfied, excluding any bonding
requirements, but including, without limitation, conforming to Landlord's rules,
regulations and insurance requirements which govern contractors. Landlord's
approval of plans, specifications and/or working drawings for Alterations will
not create any responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with applicable permits, laws,
rules and regulations of governmental agencies or authorities. In approving any
Alterations, Landlord reserves the right to require Tenant to provide Landlord
with additional reasonable security for the removal of such Alterations by
Tenant as may be required by this Lease. Landlord reserves the right to post
Notices of Non-Responsibility with respect to any Alterations performed by
Tenant.
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(c) Contractors. Alterations may be made or installed only by contractors and
subcontractors which have been approved by Landlord, which approval Landlord
will not unreasonably withhold or delay; provided, however, Landlord reserves
the right to require that Landlord's contractor for the Building be given the
opportunity to bid for any Alteration work. Before proceeding with any
Alterations, Tenant agrees to provide Landlord with ten (10) days prior written
notice and Tenant's contractors must obtain and maintain, on behalf of Tenant
and at Tenant's sole cost and expense: (i) all necessary governmental permits
and approvals for the commencement and completion of such Alterations; and (ii)
if requested by Landlord, a completion and lien indemnity bond, or other surety,
reasonably satisfactory to Landlord for such Alterations. Throughout the
performance of any Alterations, Tenant agrees to obtain, or cause its
contractors to obtain, workers compensation insurance and general liability
insurance in compliance with the provisions of Paragraph 19 of this Lease.
(d) Manner of Performance. All Alterations must be performed: (i) in accordance
with the approved plans, specifications and working drawings; (ii) in a
lien-free and first-class and workmanlike manner; (iii) in compliance with all
applicable permits, laws, statutes, ordinances, rules, regulations, orders and
rulings now or hereafter in effect and imposed by any governmental agencies and
authorities which assert jurisdiction; (iv) in such a manner so as not to
interfere with the occupancy of any other tenant in the Building, nor impose any
additional expense upon nor delay Landlord in the maintenance and operation of
the Building; and (v) at such times, in such manner, and subject to such rules
and regulations as Landlord may from time to time reasonably designate.
(e) Ownership. The Tenant Improvements, including, without limitation, all
affixed sinks, dishwashers, microwave ovens and other fixtures, and all
Alterations will become the property of Landlord and will remain upon and be
surrendered with the Premises at the end of the Term of this Lease; provided,
however, Landlord may, by written notice delivered to Tenant concurrently with
Landlord's approval of the final working drawings for any Alterations, identify
those Alterations which Landlord will require Tenant to remove at the end of the
Term of this Lease. Landlord may also require Tenant to remove Alterations which
Landlord did not have the opportunity to approve as provided in this Paragraph
13. If Landlord requires Tenant to remove any Alterations, Tenant, at its sole
cost and expense, agrees to remove the identified Alterations on or before the
expiration or earlier termination of this Lease and repair any damage to the
Premises caused by such removal (or, at Landlord's option, Tenant agrees to pay
to Landlord all of Landlord's costs of such removal and repair).
(f) Plan Review. Tenant agrees to pay Landlord, as additional rent, the
reasonable costs of professional services and costs for general conditions of
Landlord's third party consultants if utilized by Landlord (but not Landlord's
"in-house" personnel) for review of all plans, specifications and working
drawings for any Alterations, within ten (10) business days after Tenant's
receipt of invoices either from Landlord or such consultants. In addition,
Tenant agrees to pay Landlord, within ten (10) business days after completion of
any Alterations, a fee to cover Landlord's costs of supervising and
administering the installation of any non-structural Alterations, in the amount
of three percent (3%) of the cost of such Alterations, but in no event less than
Two Hundred Fifty Dollars ($250.00).
(g) Personal Property. All articles of personal property owned by Tenant or
installed by Tenant at its expense in the Premises (including Tenant's business
and trade fixtures, furniture, movable partitions and equipment [such as
telephones, copy machines, computer terminals, refrigerators and facsimile
machines]) will be and remain the property of Tenant, and must be removed by
Tenant from the Premises, at Tenant's sole cost and expense, on or before the
expiration or earlier termination of this Lease. Tenant agrees to repair any
damage caused by such removal at its cost on or before the expiration or earlier
termination of this Lease.
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<PAGE> 32
(h) Removal of Alterations. If Tenant fails to remove by the expiration or
earlier termination of this Lease all of its personal property, or any
Alterations identified by Landlord for removal, Landlord may, at its option,
treat such failure as a hold-over pursuant to subparagraph 11(b) above, and/or
Landlord may (without liability to Tenant for loss thereof) treat such personal
property and/or Alterations as abandoned and, at Tenant's sole cost and expense,
and in addition to Landlord's other rights and remedies under this Lease, at law
or in equity: (a remove and store such items; and/or (b) upon ten (10) days
prior notice to Tenant, sell, discard or otherwise dispose of all or any such
items at private or public sale for such price as Landlord may obtain or by
other commercially reasonable means. Tenant shall be liable for all costs of
disposition of Tenant's abandoned property and Landlord shall have no liability
to Tenant with respect to any such abandoned property. Landlord agrees to apply
the proceeds of any sale of any such property to any amounts due to Landlord
under this Lease from Tenant (including Landlord's attorneys' fees and other
costs incurred in the removal, storage and/or sale of such items), with any
remainder to be paid to Tenant.
14. REPAIRS.
(a) Landlord's Obligations. Landlord agrees to repair and maintain the
structural portions of the Building and the plumbing, heating, ventilating, air
conditioning, elevator and electrical systems installed or furnished by
Landlord, unless such maintenance and repairs are (i) attributable to items
installed in Tenant's Premises which are above standard interior improvements
(such as, for example, custom lighting, special HVAC and/or electrical panels or
systems, kitchen or restroom facilities and appliances constructed or installed
within Tenant's Premises) or (ii) caused in part or in whole by the act, neglect
or omission of any duty by Tenant, its agents, servants, employees or invitees,
in which case Tenant will pay to Landlord, as additional rent, the reasonable
cost of such maintenance and repairs. Landlord will not be liable for any
failure to make any such repairs or to perform any maintenance unless such
failure shall persist for an unreasonable time after written notice of the need
of such repairs or maintenance is given to Landlord by Tenant. Except as
provided in Paragraph 20, Tenant will not be entitled to any abatement of rent
and Landlord will not have any liability by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building or the Premises
or in or to fixtures, appurtenances and equipment therein. Tenant waives the
right to make repairs at Landlord's expense under any law, statute, ordinance,
rule, regulation, order or ruling (including, without limitation, to the extent
the Premises are located in California, the provisions of California Civil Code
Sections 1941 and 1942 and any successor statutes or laws of a similar nature).
(b) Tenant's Obligations. Tenant agrees to keep, maintain and preserve the
Premises in first class condition and repair and, when and if needed, at
Tenant's sole cost and expense, to make all repairs to the Premises and every
part thereof. Any such maintenance and repairs will be performed by Landlord's
contractor, or at Landlord's option, by such contractor or contractors as Tenant
may choose from an approved list to be submitted by Landlord. Tenant agrees to
pay all costs and expenses incurred in such maintenance and repair within seven
(7) days after billing by Landlord or such contractor or contractors. Tenant
agrees to cause any mechanics' liens or other liens arising as a result of work
performed by Tenant or at Tenant's direction to be eliminated as provided in
Paragraph 15 below. Except as provided in subparagraph 14(a) above, Landlord has
no obligation to alter, remodel, improve, repair, decorate or paint the Premises
or any part thereof.
(c) Tenant's Failure to Repair. If Tenant refuses or neglects to repair and
maintain the Premises properly as required hereunder to the reasonable
satisfaction of Landlord, Landlord, at any time following thirty (30) days from
the date on which Landlord makes a written demand on Tenant to effect such
repair and maintenance, may enter upon the Premises and make such repairs and/or
maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as
additional rent, Landlord's costs for making such repairs plus an amount not to
exceed ten percent (10%) of such costs for overhead, within thirty (30) days of
receipt from Landlord of a written itemized bill therefor. Any amounts not
reimbursed by Tenant within such thirty (30) day period will bear interest at
the Interest Rate until paid by Tenant.
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<PAGE> 33
(d) Landlord Repairs/Default. Notwithstanding anything to the contrary contained
in Paragraph 14(a) regarding repairs or Landlord's default, if Tenant provides
written notice to Landlord of an event or circumstance relative to the Premises
which requires the action of Landlord with respect to repair and/or maintenance,
and Landlord fails to provide such action within a reasonable period of time,
given the circumstances, after the receipt of such written notice, but in no
event earlier than thirty (30) days after receipt of such written notice, unless
Landlord is specifically required to act in less than thirty (30) days pursuant
to a specific provision of this Lease or because of an emergency by any
provision hereof, then Tenant may proceed to take the required action upon
delivery of an additional written notice to Landlord specifying Tenant is taking
such required action, including the date of such action to be taken, the cost of
such action, and the projected completion date, and if such action was required
under the terms of this Lease to be taken by Landlord, then Tenant shall be
entitled to prompt reimbursement by Landlord of Tenant's reasonable, actual,
documented costs and expenses in taking such action plus interest thereon at the
Interest Rate. In the event Tenant takes such action, and such work in the
Premises will affect the Building's life safety system, heating, ventilating and
air conditioning systems and elevator systems, or the structural integrity of
the Building, Tenant shall use only those contractors used by Landlord in the
Building for work on such systems or other contractors approved by Landlord.
Further, if Landlord does not deliver a detailed written objection to Tenant
within thirty (30) days after receipt of an invoice by Tenant of its costs of
taking action which Tenant claims should have been taken by Landlord, and if
such invoice from Tenant sets forth a reasonably particularized breakdown of its
costs and expenses in connection with taking such action on behalf of Landlord,
then Tenant shall be entitled to deduct from rental payable by Tenant under this
Lease, the amount set forth in such invoice. If, however, Landlord delivers to
Tenant within thirty (30) days after receipt of Tenant's invoice, a written
objection to the payment of such invoice, setting forth with reasonable
particularity Landlord's reasons for its claim that such action did not have to
be taken by Landlord pursuant to the terms of this Lease, then Tenant shall not
be entitled to such deduction from rental, but as Tenant's sole remedy, Tenant
may proceed to claim a default by Landlord or, if elected by either Landlord or
Tenant, the matter shall proceed to resolution by the selection of an arbitrator
to resolve the dispute, which arbitrator shall be selected and qualified
pursuant to the rules of the American Arbitration Association, and whose costs
shall be paid for by the losing party, unless it is not clear that there is a
"losing party," in which event the costs of arbitration shall be shared equally.
Judgment on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.
15. LIENS. Tenant agrees not to permit any mechanic's, materialmen's or other
liens to be filed against all or any part of the Development, the Building or
the Premises, nor against Tenant's leasehold interest in the Premises, by reason
of or in connection with any repairs, alterations, improvements or other work
contracted for or undertaken by Tenant or any other act or omission of Tenant or
Tenant's agents, employees, contractors, licensees or invitees. At Landlord's
request, Tenant agrees to provide Landlord with enforceable, conditional and
final lien releases (or other evidence reasonably requested by Landlord to
demonstrate protection from liens) from all persons furnishing labor and/or
materials at the Premises. Landlord will have the right at all reasonable times
to post on the Premises and record any notices of non-responsibility which it
deems necessary for protection from such liens. If any such liens are filed,
Tenant will, at its sole cost, promptly cause such liens to be released of
record or bonded so that it no longer affects title to the Development, the
Building or the Premises. If Tenant fails to cause any such liens to be so
released or bonded within ten (10) days after filing thereof, such failure will
be deemed a material breach by Tenant under this Lease without the benefit of
any additional notice or cure period described in Paragraph 22 below, and
Landlord may, without waiving its rights and remedies based on such breach, and
without releasing Tenant from any of its obligations, cause such liens to be
released by any means it shall deem proper, including payment in satisfaction of
the claims giving rise to such liens. Tenant agrees to pay to Landlord within
ten (10) days after receipt of invoice from Landlord, any sum paid by Landlord
to remove such liens, together with interest at the Interest Rate from the date
of such payment by Landlord.
16. ENTRY BY LANDLORD. Landlord and its employees and agents will at all times
have the right to enter the Premises to inspect the same, to supply janitorial
service and any other service to be provided by Landlord to Tenant hereunder, to
show the Premises to prospective purchasers or tenants, to post notices of
nonresponsibility, and/or to repair the Premises as permitted or required by
this Lease. In exercising such entry rights, Landlord will endeavor to minimize,
as reasonably practicable, the interference with Tenant's business, and will
provide Tenant with reasonable advance notice of any such entry (except in
emergency situations). Landlord may, in order to carry out such purposes, erect
scaffolding and other necessary structures where reasonably required by the
character of the work to be performed. Landlord will at all times have and
retain a key with which to unlock all doors in the Premises, excluding Tenant's
vaults and safes. Landlord will have the right to use any and all means which
Landlord may reasonably deem proper to open said doors in an emergency in order
to obtain entry to the Premises. Any entry to the Premises obtained by Landlord
by any of said means, or otherwise, will not be construed or deemed to be a
forcible or unlawful entry into the Premises, or an eviction of Tenant from the
Premises. Landlord will not be liable to Tenant for any damages or losses for
any entry by Landlord.
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17. UTILITIES AND SERVICES. Throughout the Term of the Lease so long as the
Premises are occupied, Landlord agrees to furnish or cause to be furnished to
the Premises the utilities and services described in the Standards for Utilities
and Services attached hereto as Exhibit "F", subject to the conditions and in
accordance with the standards set forth therein. Landlord may require Tenant
from time to time to provide Landlord with a list of Tenant's employees and/or
agents which are authorized by Tenant to subscribe on behalf of Tenant for any
additional services which may be provided by Landlord. Any such additional
services will be provided to Tenant at Tenant's cost. Landlord will not be
liable to Tenant for any failure to furnish any of the foregoing utilities and
services if such failure is caused by all or any of the following: (i) accident,
breakage or repairs; (ii) strikes, lockouts or other labor disturbance or labor
dispute of any character; (iii) governmental regulation, moratorium or other
governmental action or inaction; (iv) inability despite the exercise of
reasonable diligence to obtain electricity, water or fuel; or (v) any other
cause beyond Landlord's reasonable control. In addition, in the event of any
stoppage or interruption of services or utilities, Tenant shall not be entitled
to any abatement or reduction of rent (except as expressly provided in
subparagraphs 20(f) or 21(b) if such failure results from a damage or taking
described therein), no eviction of Tenant will result from such failure and
Tenant will not be relieved from the performance of any covenant or agreement in
this Lease because of such failure. In the event of any failure, stoppage or
interruption thereof, Landlord agrees to diligently attempt to resume service
promptly. If Tenant requires or utilizes more water or electrical power than is
considered reasonable or normal by Landlord, Landlord may at its option require
Tenant to pay, as additional rent, the cost, as fairly determined by Landlord,
incurred by such extraordinary usage and/or Landlord may install separate
meter(s) for the Premises, at Tenant's sole expense, and Tenant agrees
thereafter to pay all charges of the utility providing service and Landlord will
make an appropriate adjustment to Tenant's Operating Expenses calculation to
account for the fact Tenant is directly paying such metered charges, provided
Tenant will remain obligated to pay its proportionate share of Operating
Expenses subject to such adjustment. Notwithstanding the provisions of this
Paragraph 17, if for more than three (3) consecutive business days following
written notice to Landlord, there is no elevator service to the Premises, or no
HVAC or electricity to the Premises, or such an interruption of other essential
utilities and building services, such as fire protection or water, so that any
portion of the Premises cannot be used by Tenant, in Tenant's judgment
reasonably exercised, then Tenant's rent shall thereafter be abated until the
Premises are again usable by Tenant in proportion to the extent to which
Tenant's use of the Premises is interfered with; provided, however, that if
Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant's purposes,
as for example, bringing in portable air-conditioning equipment, then there
shall not be any abatement of rent. This provision shall not apply in case of
damage to, or destruction of, the Premises, which shall be governed by a
separate provision of this Lease.
18. ASSUMPTION OF RISK AND INDEMNIFICATION.
(a) Assumption of Risk. Tenant, as a material part of the consideration to
Landlord, hereby agrees that neither Landlord nor any Landlord Indemnified
Parties (as defined in subparagraph 8(c) above) will be liable to Tenant for,
and Tenant expressly assumes the risk of and waives any and all claims it may
have against Landlord or any Landlord Indemnified Parties with respect to, (i)
any and all damage to property or injury to persons in, upon or about the
Premises, the Building or the Development resulting from any act or omission
(except for the grossly negligent or intentionally wrongful act or omission) of
Landlord, (ii) any such damage caused by other tenants or persons in or about
the Building or the Development, or caused by quasi-public work, (iii) any
damage to property entrusted to employees of the Building, (iv) any loss of or
damage to property by theft or otherwise, or (v) any injury or damage to persons
or property resulting from any casualty, explosion, falling plaster or other
masonry or glass, steam, gas, electricity, water or rain which may leak from any
part of the Building or any other portion of the Development or from the pipes,
appliances or plumbing works therein or from the roof, street or subsurface or
from any other place, or resulting from dampness. Notwithstanding anything to
the contrary contained in this Lease, neither Landlord nor any Landlord
Indemnified Parties will be liable for consequential damages arising out of any
loss of the use of the Premises or any equipment or facilities therein by Tenant
or any Tenant Parties or for interference with light or other incorporeal
hereditaments. Tenant agrees to give prompt notice to Landlord in case of fire
or accidents in the Premises or the Building, or of defects therein or in the
fixtures or equipment.
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(b) Indemnification. Except to the extent that the Indemnified Claim would be
covered by insurance coverage maintained by Landlord and would not cause an
increase to applicable premiums charged for Landlord's insurance policy(ies),
Tenant will be liable for, and agrees, to the maximum extent permissible under
applicable law, to promptly indemnify, protect, defend and hold harmless
Landlord and all Landlord Indemnified Parties, from and against, any and all
claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs, including attorneys' fees and court costs
(collectively, "Indemnified Claims"), arising or resulting from (i) any act or
omission of Tenant or any Tenant Parties (as defined in subparagraph 8(c)
above); (ii) the use of the Premises and Common Areas and conduct of Tenant's
business by Tenant or any Tenant Parties, or any other activity, work or thing
done, permitted or suffered by Tenant or any Tenant Parties, in or about the
Premises, the Building or elsewhere within the Development; and/or (iii) any
default by Tenant of any obligations on Tenant's part to be performed under the
terms of this Lease. In case any action or proceeding is brought against
Landlord or any Landlord Indemnified Parties by reason of any such Indemnified
Claims, Tenant, upon notice from Landlord, agrees to promptly defend the same at
Tenant's sole cost and expense by counsel approved in writing by Landlord, which
approval Landlord will not unreasonably withhold.
(c) Survival; No Release of Insurers. Tenant's indemnification obligations
under subparagraph 18(b) will survive the expiration or earlier termination
of this Lease. Tenant's covenants, agreements and indemnification obligation
in subparagraphs 18(a) and 18(b) above, are not intended to and will not
relieve any insurance carrier of its obligations under policies required to
be carried by Tenant pursuant to the provisions of this Lease.
19. INSURANCE.
(a) Tenant's Insurance. On or before the earlier to occur of (i) the
Commencement Date, or (ii) the date Tenant commences any work of any type in the
Premises pursuant to this Lease (which may be prior to the Commencement Date),
and continuing throughout the entire Term hereof and any other period of
occupancy, Tenant agrees to keep in full force and effect, at its sole cost and
expense, the following insurance:
(i) "All Risks" property insurance including at least the following perils: fire
and extended coverage, smoke damage, vandalism, malicious mischief, sprinkler
leakage (including earthquake sprinkler leakage). This insurance policy must be
upon all property owned by Tenant, for which Tenant is legally liable, or which
is installed at Tenant's expense, and which is located in the Building
including, without limitation, any Tenant Improvements which satisfy the
foregoing qualification and any Alterations, and all furniture, fittings,
installations, fixtures and any other personal property of Tenant, in an amount
not less than the full replacement cost thereof. If there is a dispute as to
full replacement cost, the decision of Landlord or any mortgagee of Landlord
will be presumptive.
(ii) One (1) year insurance coverage for business interruption and loss of
income and extra expense insuring the same perils described in subparagraph
19(a)(i) above, in such amounts as will reimburse Tenant for any direct or
indirect loss of earnings attributable to any such perils including prevention
of access to the Premises, Tenant's parking areas or the Building as a result of
any such perils.
(iii) Commercial General Liability Insurance or Comprehensive General Liability
Insurance (on an occurrence form) insuring bodily injury, personal injury and
property damage including the following divisions and extensions of coverage:
Premises and Operations; Owners and Contractors protective; blanket contractual
liability (including coverage for Tenant's indemnity obligations under this
Lease); products and completed operations; liquor liability (if Tenant serves
alcohol on the Premises); and fire and water damage legal liability in an amount
sufficient to cover the replacement value of the Premises, including Tenant
Improvements, that are rented under the terms of this Lease. Such insurance must
have the following minimum limits of liability: bodily injury, personal injury
and property damage - $1,000,000 each occurrence, provided that if liability
coverage is provided by a Commercial General Liability policy the general
aggregate limit shall apply separately and in total to this location only (per
location general aggregate), and provided further, such minimum limits of
liability may be adjusted from year to year to reflect increases in coverages as
recommended by Landlord's insurance carrier as being prudent and commercially
reasonable for tenants of first class office buildings comparable to the
Building, rounded to the nearest five hundred thousand dollars.
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(iv) Comprehensive Automobile Liability insuring bodily injury and property
damage arising from all owned, non-owned and hired vehicles, if any, with
minimum limits of liability of $1,000,000 per accident.
(v) Worker's Compensation as required by the laws of the State of California
with the following minimum limits of liability: Coverage A - statutory benefits;
Coverage B - $1,000,000 per accident and disease.
(vi) Any other form or forms of insurance as Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, in
amounts, and for insurance risks against which, a prudent tenant would protect
itself, but only to the extent coverage for such risks and amounts are available
in the insurance market at commercially acceptable rates. Landlord makes no
representation that the limits of liability required to be carried by Tenant
under the terms of this Lease are adequate to protect Tenant's interests and
Tenant should obtain such additional insurance or increased liability limits as
Tenant deems appropriate.
(b) Supplemental Tenant Insurance Requirements.
(i) All policies must be in a form reasonably satisfactory to Landlord and
issued by an insurer admitted to do business in the State of California.
(ii) All policies must be issued by insurers with a policyholder rating of "A"
and a financial rating of "X" in the most recent version of Best's Key Rating
Guide.
(iii) All policies must contain a requirement to notify Landlord (and Landlord's
property manager and any mortgagees or ground lessors of Landlord who are named
as additional insureds, if any) in writing not less than thirty (30) days prior
to any material change, reduction in coverage, cancellation or other termination
thereof. Tenant agrees to deliver to Landlord, as soon as practicable after
placing the required insurance, but in any event within the time frame specified
in subparagraph 19(a) above, certificate(s) of insurance and/or if required by
Landlord, certified copies of each policy evidencing the existence of such
insurance and Tenant's compliance with the provisions of this Paragraph 19.
Tenant agrees to cause replacement policies or certificates to be delivered to
Landlord not less than thirty (30) days prior to the expiration of any such
policy or policies. If any such initial or replacement policies or certificates
are not furnished within the time(s) specified herein, Tenant will be deemed to
be in material default under this Lease without the benefit of any additional
notice or cure period provided in subparagraph 22(a)(ii) below, and Landlord
will have the right, but not the obligation, to procure such insurance as
Landlord deems necessary to protect Landlord's interests at Tenant's expense. If
Landlord obtains any insurance that is the responsibility of Tenant under this
Paragraph 19, Landlord agrees to deliver to Tenant a written statement setting
forth the cost of any such insurance and showing in reasonable detail the manner
in which it has been computed and Tenant agrees to promptly reimburse Landlord
for such costs as additional rent.
(iv) General Liability and Automobile Liability policies under subparagraphs
19(a)(iii) and 19(a)(iv) must name Landlord and Landlord's property manager (and
at Landlord's request, Landlord's mortgagees and ground lessors of which Tenant
has been informed in writing) as additional insureds and must also contain a
provision that the insurance afforded by such policy is primary insurance and
any insurance carried by Landlord and Landlord's property manager or Landlord's
mortgagees or ground lessors, if any, will be excess over and non-contributing
with Tenant's insurance.
(c) Tenant's Use. Tenant will not keep, use, sell or offer for sale in or upon
the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building or the Development Common Areas. If
Tenant's occupancy or business in, or on, the Premises, whether or not Landlord
has consented to the same, results in any increase in premiums for the insurance
periodically carried by Landlord with respect to the Building or the Development
Common Areas or results in the need for Landlord to maintain special or
additional insurance, Tenant agrees to pay Landlord the cost of any such
increase in premiums or special or additional coverage as additional rent within
ten (10) days after being billed therefor by Landlord. In determining whether
increased premiums are a result of Tenant's use of the Premises, a schedule
issued by the organization computing the insurance rate on the Building, the
Development Common Areas or the Tenant Improvements showing the various
components of such rate, will be conclusive evidence of the several items and
charges which make up such rate. Tenant agrees to promptly comply with all
reasonable requirements of the insurance authority or any present or future
insurer relating to the Premises.
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(d) Cancellation of Landlord's Policies. If any of Landlord's insurance policies
are cancelled or cancellation is threatened or the coverage reduced or
threatened to be reduced in any way because of the use of the Premises or any
part thereof by Tenant or any assignee or subtenant of Tenant or by anyone
Tenant permits on the Premises and, if Tenant fails to remedy the condition
giving rise to such cancellation, threatened cancellation, reduction of
coverage, threatened reduction of coverage, increase in premiums, or threatened
increase in premiums, within forty-eight (48) hours after notice thereof, Tenant
will be deemed to be in material default of this Lease and Landlord may, at its
option, either terminate this Lease or enter upon the Premises and attempt to
remedy such condition, and Tenant shall promptly pay Landlord the reasonable
costs of such remedy as additional rent. If Landlord is unable, or elects not to
remedy such condition, then Landlord will have all of the remedies provided for
in this Lease in the event of a default by Tenant.
(e) Waiver of Subrogation. Tenant's property insurance shall contain a clause
whereby the insurer waives all rights of recovery by way of subrogation against
Landlord. Tenant shall also obtain and furnish evidence to Landlord of the
waiver by Tenant's worker's compensation insurance carrier of all rights of
recovery by way of subrogation against Landlord.
20. DAMAGE OR DESTRUCTION.
(a) Partial Destruction. If the Premises or the Building are damaged by fire or
other casualty to an extent not exceeding twenty-five percent (25%) of the full
replacement cost thereof, and Landlord's contractor reasonably estimates in a
writing delivered to Landlord and Tenant that the damage thereto may be
repaired, reconstructed or restored to substantially its condition immediately
prior to such damage within one hundred eighty (180) days from the date of such
casualty, and Landlord will receive insurance proceeds sufficient to cover the
costs of such repairs, reconstruction and restoration (including proceeds from
Tenant and/or Tenant's insurance which Tenant is required to deliver to Landlord
pursuant to subparagraph 20(e) below to cover Tenant's obligation for the costs
of repair, reconstruction and restoration of any portion of the Tenant
Improvements and any Alterations for which Tenant is responsible under this
Lease), then Landlord agrees to commence and proceed diligently with the work of
repair, reconstruction and restoration and this Lease will continue in full
force and effect.
(b) Substantial Destruction. Any damage or destruction to the Premises or the
Building which Landlord is not obligated to repair pursuant to subparagraph
20(a) above will be deemed a substantial destruction. In the event of a
substantial destruction, Landlord may elect to either (i) repair, reconstruct
and restore the portion of the Building or the Premises damaged by such
casualty, in which case this Lease will continue in full force and effect,
subject to Tenant's termination right contained in subparagraph 20(d) below; or
(ii) terminate this Lease effective as of the date which is thirty (30) days
after Tenant's receipt of Landlord's election to so terminate.
(c) Notice. Under any of the conditions of subparagraphs 20(a) or 20(b) above,
Landlord agrees to give written notice to Tenant of its intention to repair or
terminate, as permitted in such paragraphs, within the earlier of thirty (30)
days after the occurrence of such casualty, or fifteen (15) days after
Landlord's receipt of the estimate from Landlord's contractor (the applicable
time period to be referred to herein as the "Notice Period").
(d) Tenant's Termination Rights. If Landlord elects to repair, reconstruct and
restore pursuant to subparagraph 20(b)(i) hereinabove, and if Landlord's
contractor estimates that as a result of such damage, Tenant cannot be given
reasonable use of and access to the Premises within two hundred seventy (270)
days after the date of such damage, then Tenant may terminate this Lease
effective upon delivery of written notice to Landlord within ten (10) days after
Landlord delivers notice to Tenant of its election to so repair, reconstruct or
restore.
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(e) Tenant's Costs and Insurance Proceeds. In the event of any damage or
destruction of all or any part of the Premises, Tenant agrees to immediately (i)
notify Landlord thereof, and (ii) deliver to Landlord all property insurance
proceeds received by Tenant with respect to any Tenant Improvements installed by
or at the cost of Tenant and any Alterations, but excluding proceeds for
Tenant's furniture, fixtures, equipment and other personal property, whether or
not this Lease is terminated as permitted in this Paragraph 20, and Tenant
hereby assigns to Landlord all rights to receive such insurance proceeds. If,
for any reason (including Tenant's failure to obtain insurance for the full
replacement cost of any Tenant Improvements installed by or at the cost of
Tenant and any Alterations from any and all casualties), Tenant fails to receive
insurance proceeds covering the full replacement cost of any Tenant Improvements
installed by or at the cost of Tenant and any Alterations which are damaged,
Tenant will be deemed to have self-insured the replacement cost of such items,
and upon any damage or destruction thereto, Tenant agrees to immediately pay to
Landlord the full replacement cost of such items, less any insurance proceeds
actually received by Landlord from Landlord's or Tenant's insurance with respect
to such items.
(f) Abatement of Rent. In the event of any damage, repair, reconstruction and/or
restoration described in this Paragraph 20, rent will be abated or reduced, as
the case may be, from the date of such casualty, in proportion to the degree to
which Tenant's use of the Premises is impaired during such period of repair
until such use is restored. Except for abatement of rent as provided
hereinabove, Tenant will not be entitled to any compensation or damages for loss
of, or interference with, Tenant's business or use or access of all or any part
of the Premises or for lost profits or any other consequential damages of any
kind or nature, which result from any such damage, repair, reconstruction or
restoration.
(g) Inability to Complete. Notwithstanding anything to the contrary contained in
this Paragraph 20, if Landlord is obligated or elects to repair, reconstruct
and/or restore the damaged portion of the Building or the Premises pursuant to
subparagraphs 20(a) or 20(b)(i) above, but is delayed from completing such
repair, reconstruction and/or restoration beyond the date which is sixty (60)
days after the date estimated by Landlord's contractor for completion thereof by
reason of any causes (other than delays caused by Tenant, its subtenants,
employees, agents or contractors or delays which are beyond the reasonable
control of Landlord as described in Paragraph 33 which delays in no event shall
exceed a total of ninety (90) days), then either Landlord or Tenant may elect to
terminate this Lease upon ten (10) days prior written notice given to the other
after the expiration of such sixty (60) day period.
(h) Damage Near End of Term. Landlord and Tenant shall each have the right to
terminate this Lease if any damage to the Premises occurs during the last twelve
(12) months of the Term of this Lease where Landlord's contractor estimates in a
writing delivered to Landlord and Tenant that the repair, reconstruction or
restoration of such damage cannot be completed within sixty (60) days after the
date of such casualty. If either party desires to terminate this Lease under
this subparagraph 20(h), it shall provide written notice to the other party of
such election within ten (10) days after receipt of Landlord's contractor's
repair estimates.
(i) Waiver of Termination Right. Landlord and Tenant agree that the foregoing
provisions of this Paragraph 20 are to govern their respective rights and
obligations in the event of any damage or destruction and supersede and are in
lieu of the provisions of any applicable law, statute, ordinance, rule,
regulation, order or ruling now or hereafter in force which provide remedies for
damage or destruction of leased premises (including, without limitation, to the
extent the Premises are located in California, the provisions of California
Civil Code Section 1932, Subsection 2, and Section 1933, Subsection 4 and any
successor statute or laws of a similar nature).
(j) Termination. Upon any termination of this Lease under any of the provisions
of this Paragraph 20, the parties will be released without further obligation to
the other from the date possession of the Premises is surrendered to Landlord
except for items which have accrued and are unpaid as of the date of termination
and matters which are to survive any termination of this Lease as provided in
this Lease.
21. EMINENT DOMAIN.
(a) Substantial Taking. If the whole of the Premises, or such part thereof as
shall substantially interfere with Tenant's use and occupancy of the Premises,
as contemplated by this Lease, is taken for any public or quasi-public purpose
by any lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or sold to prevent such taking, either party
will have the right to terminate this Lease effective as of the date possession
is required to be surrendered to such authority. Further, if more than
twenty-five percent (25%) of the parking facilities servicing the Building are
taken for public or quasi-public purposes by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, and
Landlord does not provide reasonable substitute parking within ninety (90) days
of such appropriation, Tenant shall have the right to terminate this Lease
effective as of the expiration of such ninety (90) day period.
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(b) Partial Taking; Abatement of Rent. In the event of a taking of a portion of
the Premises which does not substantially interfere with Tenant's use and
occupancy of the Premises, then, neither party will have the right to terminate
this Lease and Landlord will thereafter proceed to make a functional unit of the
remaining portion of the Premises (but only to the extent Landlord receives
proceeds therefor from the condemning authority), and rent will be abated with
respect to the part of the Premises which Tenant is deprived of on account of
such taking. Notwithstanding the immediately preceding sentence to the contrary,
if any part of the Building or the Development is taken (whether or not such
taking substantially interferes with Tenant's use of the Premises), Landlord may
terminate this Lease upon thirty (30) days prior written notice to Tenant if
Landlord also terminates the leases of the other tenants of the Building which
are leasing comparably sized space for comparable lease terms.
(c) Condemnation Award. In connection with any taking of the Premises or the
Building, Landlord will be entitled to receive the entire amount of any award
which may be made or given in such taking or condemnation, without deduction or
apportionment for any estate or interest of Tenant, it being expressly
understood and agreed by Tenant that no portion of any such award will be
allowed or paid to Tenant for any so-called bonus or excess value of this Lease,
and such bonus or excess value will be the sole property of Landlord. Tenant
agrees not to assert any claim against Landlord or the taking authority for any
compensation because of such taking (including any claim for bonus or excess
value of this Lease); provided, however, if any portion of the Premises is
taken, Tenant will have the right to recover from the condemning authority (but
not from Landlord) any compensation as may be separately awarded or recoverable
by Tenant for the taking of Tenant's furniture, fixtures, equipment and other
personal property within the Premises, for Tenant's relocation expenses, and for
any loss of goodwill or other damage to Tenant's business by reason of such
taking.
(d) Temporary Taking. In the event of taking of the Premises or any part thereof
for temporary use, (i) this Lease will remain unaffected thereby and rent will
abate for the duration of the taking in proportion to the extent Tenant's use of
the Premises is interfered with, and (ii) Landlord will be entitled to receive
such portion or portions of any award made for such use provided that if such
taking remains in force at the expiration or earlier termination of this Lease,
Tenant will then pay to Landlord a sum equal to the reasonable cost of
performing Tenant's obligations under Paragraph 11 with respect to surrender of
the Premises and upon such payment Tenant will be excused from such obligations.
For purpose of this subparagraph 21(d), a temporary taking shall be defined as a
taking for a period of ninety (90) days or less.
22. DEFAULTS AND REMEDIES.
(a) Defaults. The occurrence of any one or more of the following events will be
deemed a default by Tenant:
(i) The failure by Tenant to make any payment of rent or additional rent or any
other payment required to be made by Tenant hereunder, as and when due, where
such failure continues for a period of ten (10) days after written notice
thereof from Landlord to Tenant; provided, however, that any such notice will be
in lieu of, and not in addition to, any notice required under applicable law
(including, without limitation, to the extent the Premises are located in
California, the provisions of California Code of Civil Procedure Section 1161
regarding unlawful detainer actions or any successor statute or law of a similar
nature).
(ii) The failure by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in subparagraph 22(a)(i) or above, where such failure
continues (where no other period of time is expressly provided) for a period of
thirty (30) days after written notice thereof from Landlord to Tenant. The
provisions of any such notice will be in lieu of, and not in addition to, any
notice required under applicable law (including, without limitation, to the
extent the Premises are located in California, California Code of Civil
Procedure Section 1161 regarding unlawful detainer actions and any successor
statute or similar law). If the nature of Tenant's default is such that more
than ten (10) days are reasonably required for its cure, then Tenant will not be
deemed to be in default if Tenant, with Landlord's concurrence, commences such
cure within such ten (10) day period and thereafter diligently prosecutes such
cure to completion.
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(iii) (A) The making by Tenant of any general assignment for the benefit of
creditors; (B) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days); (C) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where possession
is not restored to Tenant within thirty (30) days; or (D) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease where such seizure
is not discharged within thirty (30) days.
(b) Landlord's Remedies; Termination. In the event of any default by Tenant, in
addition to any other remedies available to Landlord at law or in equity under
applicable law (including, without limitation, to the extent the Premises are
located in California, the remedies of Civil Code Section 1951.4 and any
successor statute or similar law), Landlord will have the immediate right and
option to terminate this Lease and all rights of Tenant hereunder. If Landlord
elects to terminate this Lease then, to the extent permitted under applicable
law, Landlord may recover from Tenant (i) The worth at the time of award of any
unpaid rent which had 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 rent 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 Term after the time of award exceeds the amount of such rent loss
that Tenant proves could be 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, results therefrom including, but not limited to:
attorneys' fees and costs; brokers' commissions; the costs of refurbishment,
alterations, renovation and repair of the Premises, and removal (including the
repair of any damage caused by such removal) and storage (or disposal) of
Tenant's personal property, equipment, fixtures, Alterations, the Tenant
Improvements and any other items which Tenant is required under this Lease to
remove but does not remove, as well as the unamortized value of any reduced rent
(amortized over the Original Term, with interest thereon at the Interest Rate),
reduced rent, free parking, reduced rate parking or other costs or economic
concessions provided, paid, granted or incurred by Landlord pursuant to this
Lease. The unamortized value of such concessions shall be determined by taking
the total value of such concessions and multiplying such value by a fraction,
the numerator of which is the number of months of the Lease Term not yet elapsed
as of the date on which the Lease is terminated, and the denominator of which is
the total number of months of the Lease Term. As used in subparagraphs 22(b)(i)
and 22(b)(ii) above, the "worth at the time of award" is computed by allowing
interest at the Interest Rate. As used in subparagraph 22(b)(iii) above, the
"worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
(c) Landlord's Remedies; Re-Entry Rights. In the event of any default by Tenant,
in addition to any other remedies available to Landlord under this Lease, at law
or in equity, Landlord will also have the right, with or without terminating
this Lease, to re-enter the Premises and remove all persons and property from
the Premises; such property may be removed and stored in a public warehouse or
elsewhere and/or disposed of at the sole cost and expense of and for the account
of Tenant in accordance with the provisions of subparagraph 13(h) of this Lease
or any other procedures permitted by applicable law. No re-entry or taking
possession of the Premises by Landlord pursuant to this subparagraph 22(c) will
be construed as an election to terminate this Lease unless a written notice of
such intention is given to Tenant or unless the termination thereof is decreed
by a court of competent jurisdiction.
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(d) Landlord's Remedies; Re-Letting. In the event of the vacation or abandonment
of the Premises by Tenant or in the event that Landlord elects to re-enter the
Premises or takes possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to
terminate this Lease, Landlord may from time to time, without terminating this
Lease, either recover all rent as it becomes due or relet the Premises or any
part thereof on terms and conditions as Landlord in its sole and absolute
discretion may deem advisable with the right to make alterations and repairs to
the Premises in connection with such reletting. If Landlord elects to relet the
Premises, then rents received by Landlord from such reletting will be applied:
first, to the payment of any indebtedness other than rent due hereunder from
Tenant to Landlord; second, to the payment of any cost of such reletting; third,
to the payment of the cost of any alterations and repairs to the Premises
incurred in connection with such reletting; fourth, to the payment of rent due
and unpaid hereunder and the residue, if any, will be held by Landlord and
applied to payment of future rent as the same may become due and payable
hereunder. Should that portion of such rents received from such reletting during
any month, which is applied to the payment of rent hereunder, be less than the
rent payable during that month by Tenant hereunder, then Tenant agrees to pay
such deficiency to Landlord immediately upon demand therefor by Landlord. Such
deficiency will be calculated and paid monthly.
(e) Landlord's Remedies; Performance for Tenant. All covenants and agreements to
be performed by Tenant under any of the terms of this Lease are to be performed
by Tenant at Tenant's sole cost and expense and without any abatement of rent.
If Tenant fails to pay any sum of money owed to any party other than Landlord,
for which it is liable under this Lease, or if Tenant fails to perform any other
act on its part to be performed hereunder, and such failure continues for ten
(10) days after notice thereof by Landlord, Landlord may, without waiving or
releasing Tenant from its obligations, but shall not be obligated to, make any
such payment or perform any such other act to be made or performed by Tenant.
Tenant agrees to reimburse Landlord upon demand for all sums so paid by Landlord
and all necessary incidental costs, together with interest thereon at the
Interest Rate, from the date of such payment by Landlord until reimbursed by
Tenant. This remedy shall be in addition to any other right or remedy of
Landlord set forth in this Paragraph 22.
(f) Late Payment. If Tenant fails to pay any installment of rent within seven
(7) days of when due or if Tenant fails to make any other payment for which
Tenant is obligated under this Lease within seven (7) days of when due, such
late amount will accrue interest at the Interest Rate and Tenant agrees to pay
Landlord as additional rent such interest on such amount from the date such
amount becomes due until such amount is paid. In addition, Tenant agrees to pay
to Landlord concurrently with such late payment amount, as additional rent, a
late charge equal to three percent (3%) of the amount due to compensate Landlord
for the extra costs Landlord will incur as a result of such late payment.
Notwithstanding the foregoing, Landlord hereby agrees to waive the late charge
applicable to the first instance in which Tenant fails to timely pay any
installment of rent or other payment for which Tenant is obligated under this
Lease during any twelve (12) month period. The parties agree that (i) it would
be impractical and extremely difficult to fix the actual damage Landlord will
suffer in the event of Tenant's late payment, (ii) such interest and late charge
represents a fair and reasonable estimate of the detriment that Landlord will
suffer by reason of late payment by Tenant, and (iii) the payment of interest
and late charges are distinct and separate in that the payment of interest is to
compensate Landlord for the use of Landlord's money by Tenant, while the payment
of late charges is to compensate Landlord for Landlord's processing,
administrative and other costs incurred by Landlord as a result of Tenant's
delinquent payments. Acceptance of any such interest and late charge will not
constitute a waiver of the Tenant's default with respect to the overdue amount,
or prevent Landlord from exercising any of the other rights and remedies
available to Landlord. If Tenant incurs a late charge more than three (3) times
in any period of twelve (12) months during the Lease Term, then, notwithstanding
that Tenant cures the late payments for which such late charges are imposed,
Landlord will have the right to require Tenant thereafter to pay all
installments of Monthly Base Rent quarterly in advance throughout the remainder
of the Lease Term.
(g) Landlord's Security Interest. Tenant hereby grants to Landlord a lien and
security interest on all property of Tenant now or hereafter placed in or upon
the Premises including, but not limited to, all fixtures, machinery, equipment,
furnishings and other articles of personal property, and all proceeds of the
sale or other disposition of such property (collectively, the "Collateral") to
secure the payment of all rent to be paid by Tenant pursuant to this Lease. Such
lien and security interest shall be in addition to any landlord's lien provided
by law. This Lease shall constitute a security agreement under the Commercial
Code of the State so that Landlord shall have and may enforce a security
interest in the Collateral. Tenant agrees to execute as debtor and deliver such
financing statement or statements and any further documents as Landlord may now
or hereafter reasonably request to protect such security interest pursuant to
such code. Landlord may also at any time file a copy of this Lease as a
financing statement. Landlord, as secured party, shall be entitled to all rights
and remedies afforded as secured party under such code, which rights and
remedies shall be in addition to Landlord's liens and rights provided by law or
by the other terms and provisions of this Lease.
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(h) Rights and Remedies Cumulative. All rights, options and remedies of Landlord
contained in this Lease will be construed and held to be cumulative, and no one
of them will be exclusive of the other, and Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law or in equity, whether or not stated in this Lease. Nothing in
this Paragraph 22 will be deemed to limit or otherwise affect Tenant's
indemnification of Landlord pursuant to any provision of this Lease.
23. LANDLORD'S DEFAULT. Landlord will not be in default in the performance of
any obligation required to be performed by Landlord under this Lease unless
Landlord fails to perform such obligation within thirty (30) days after the
receipt of written notice from Tenant specifying in detail Landlord's failure to
perform; provided however, that if the nature of Landlord's obligation is such
that more than thirty (30) days are required for performance, then Landlord will
not be deemed in default if it commences such performance within such thirty
(30) day period and thereafter diligently pursues the same to completion. Upon
any default by Landlord, Tenant may exercise any of its rights provided at law
or in equity, subject to the limitations on liability set forth in Paragraph 35
of this Lease.
24. ASSIGNMENT AND SUBLETTING.
(a) Restriction on Transfer. Except as expressly provided in this Paragraph 24,
Tenant will not, either voluntarily or by operation of law, assign or encumber
this Lease or any interest herein or sublet the Premises or any part thereof, or
permit the use or occupancy of the Premises by any party other than Tenant (any
such assignment, encumbrance, sublease or the like will sometimes be referred to
as a "Transfer"), without the prior written consent of Landlord, which consent
Landlord will not unreasonably withhold.
(b) Corporate and Partnership Transfers. For purposes of this Paragraph 24, if
Tenant is a corporation, partnership or other entity, any transfer, assignment,
encumbrance or hypothecation of twenty-five percent (25%) or more (individually
or in the aggregate) of any stock or other ownership interest in such entity,
and/or any transfer, assignment, hypothecation or encumbrance of any controlling
ownership or voting interest in such entity, will be deemed a Transfer and will
be subject to all of the restrictions and provisions contained in this Paragraph
24. Notwithstanding the foregoing, the immediately preceding sentence will not
apply to any transfers of stock of Tenant if Tenant is a publicly-held
corporation and such stock is transferred publicly over a recognized security
exchange or over-the-counter market.
(c) Permitted Controlled Transfers. Notwithstanding the provisions of this
Paragraph 24 to the contrary, Tenant may assign this Lease or sublet the
Premises or any portion thereof ("Permitted Transfer"), without Landlord's
consent and without extending any sublease termination option to Landlord, to
any parent, subsidiary or affiliate corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from a
merger or consolidation with Tenant, or to any person or entity which acquires
all the assets of Tenant's business as a going concern, provided that: (i) at
least twenty (20) days prior to such assignment or sublease, Tenant delivers to
Landlord the financial statements and other financial and background information
of the assignee or sublessee described in subparagraph 24(d) below; (ii) if an
assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease (or if a sublease, the sublessee of a portion of the Premises or Term
assumes, in full, the obligations of Tenant with respect to such portion); (iii)
the financial net worth of the assignee or sublessee as of the time of the
proposed assignment or sublease equals or exceeds that of Tenant as of the date
of execution of this Lease; (iv) Tenant remains fully liable under this Lease;
and (v) the use of the Premises under Paragraph 8 remains unchanged.
(d) Transfer Notice. If Tenant desires to effect a Transfer, then at least
thirty (30) days prior to the date when Tenant desires the Transfer to be
effective (the "Transfer Date"), Tenant agrees to give Landlord a notice (the
"Transfer Notice"), stating the name, address and business of the proposed
assignee, sublessee or other transferee (sometimes referred to hereinafter as
"Transferee"), reasonable information (including references) concerning the
character, ownership, and financial condition of the proposed Transferee, the
Transfer Date, any ownership or commercial relationship between Tenant and the
proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require. If Landlord reasonably requests additional detail, the
Transfer Notice will not be deemed to have been received until Landlord receives
such additional detail, and Landlord may withhold consent to any Transfer until
such information is provided to it.
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(e) Landlord's Options. Within fifteen (15) days of Landlord's receipt of any
Transfer Notice, and any additional information requested by Landlord concerning
the proposed Transferee's financial responsibility, Landlord will elect to do
one of the following (i) consent to the proposed Transfer; (ii) refuse such
consent, which refusal shall be on reasonable grounds including, without
limitation, those set forth in subparagraph 24(f) below; or (iii) terminate this
Lease in the event of a proposed assignment of this Lease or a subletting as to
the entire Premises for substantially all of the remaining Term, and to
recapture the Premises for reletting by Landlord.
(f) Reasonable Disapproval. Landlord and Tenant hereby acknowledge that
Landlord's disapproval of any proposed Transfer pursuant to subparagraph 24(e)
will be deemed reasonably withheld if based upon any reasonable factor,
including, without limitation, any or all of the following factors: (i) if the
Building is less than seventy percent (70%) occupied, if the net effective rent
payable by the Transferee (adjusted on a rentable square foot basis) is less
than the net effective rent then being quoted by Landlord for new leases in the
Building for comparable size space for a comparable period of time; (ii) the
proposed Transferee is a governmental entity; (iii) the portion of the Premises
to be sublet or assigned is irregular in shape with inadequate means of ingress
and egress; (iv) the use of the Premises by the Transferee (A) is not permitted
by the use provisions in Paragraph 8 hereof, (B) violates any exclusive use
granted by Landlord to another tenant in the Building, or (C) otherwise poses a
risk of increased liability to Landlord; (v) the Transfer would likely result in
a significant and inappropriate increase in the use of the parking areas or
Development Common Areas by the Transferee's employees or visitors, and/or
significantly increase the demand upon utilities and services to be provided by
Landlord to the Premises; (vi) the Transferee does not have the financial
capability to fulfill the obligations imposed by the Transfer and this Lease;
(vii) the Transferee is not in Landlord's reasonable opinion consistent with
Landlord's desired tenant mix; or (viii) the Transferee poses a business or
other economic risk which Landlord deems unacceptable.
(g) Additional Conditions. A condition to Landlord's consent to any Transfer of
this Lease will be the delivery to Landlord of a true copy of the fully executed
instrument of assignment, sublease, transfer or hypothecation, and, in the case
of an assignment, the delivery to Landlord of an agreement executed by the
Transferee in form and substance reasonably satisfactory to Landlord, whereby
the Transferee assumes and agrees to be bound by all of the terms and provisions
of this Lease and to perform all of the obligations of Tenant hereunder. As a
condition for granting its consent to any assignment or sublease, Landlord may
require that the assignee or sublessee remit directly to Landlord on a monthly
basis, all monies due to Tenant by said assignee or sublessee. As a condition to
Landlord's consent to any sublease, such sublease must provide that it is
subject and subordinate to this Lease and to all mortgages; that Landlord may
enforce the provisions of the sublease, including collection of rent; that in
the event of termination of this Lease for any reason, including without
limitation a voluntary surrender by Tenant, or in the event of any reentry or
repossession of the Premises by Landlord, Landlord may, at its option, either
(i) terminate the sublease, or (ii) take over all of the right, title and
interest of Tenant, as sublessor, under such sublease, in which case such
sublessee will attorn to Landlord, but that nevertheless Landlord will not (1)
be liable for any previous act or omission of Tenant under such sublease, (2) be
subject to any defense or offset previously accrued in favor of the sublessee
against Tenant, or (3) be bound by any previous modification of any sublease
made without Landlord's written consent, or by any previous prepayment by
sublessee of more than one month's rent.
(h) Excess Rent. If Landlord consents to any assignment of this Lease, Tenant
agrees to pay to Landlord, as additional rent, fifty percent (50%) of all sums
and other consideration payable to and for the benefit of Tenant by the assignee
on account of the assignment, as and when such sums and other consideration are
due and payable by the assignee to or for the benefit of Tenant (or, if Landlord
so requires, and without any release of Tenant's liability for the same, Tenant
agrees to instruct the assignee to pay such sums and other consideration
directly to Landlord). If for any sublease, Tenant receives rent or other
consideration, either initially or over the term of the sublease, in excess of
the rent fairly allocable to the portion of the Premises which is subleased
based on square footage, Tenant agrees to pay to Landlord as additional rent
fifty percent (50%) of the excess o