EXHIBIT 10.1
OFFICE LEASE
Between
GALLERIA PARK PARTNERS, LLC,
a Delaware limited liability company
as Landlord
and
SIZZLER INTERNATIONAL, INC.,
a Delaware corporation
as Tenant
Dated
July 9, 2001
OFFICE LEASE
BASIC LEASE INFORMATION
Date: July 9, 2001
Landlord: GALLERIA PARK PARTNERS, LLC,
a Delaware limited liability company
Tenant: SIZZLER INTERNATIONAL, INC.,
a Delaware corporation
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SECTION
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1.1 Premises: 15301 Ventura Boulevard, Suite 300
Garden Office Building (Building B)
Sherman Oaks, California 91403
1.4 Rentable Area of Premises: approximately 22,402 square feet
1.4 Usable Area of Premises: approximately 18,084 square feet
2.1 Term: Ten (10) Years and Three (3) Months
Anticipated Commencement Date: October 1, 2001
Anticipated Termination Date: December 31, 2011
3.1 Fixed Monthly Rent: $53,371.09
3.3 Fixed Monthly Rent Increase SEE SECTION 3.1
Date of First Increase: SEE SECTION 3.1
Frequency of Increase: SEE SECTION 3.1
3.7 Security Deposit: $73,083.89
4.1 Tenant's Share: 31.50%
4.2 Base Year for Operating Expenses: 2001
6.1 Use of Premises: Headquarters Office and Training
16.1 Tenant's Address for Notices:
Before the Commencement Date: 6101 West Centinela Avenue, Suite 200
Culver City, California 90230
After the Commencement Date: 15301 Ventura Boulevard, Suite 300
Garden Office Building (Building B)
Sherman Oaks, California 91403
Contact: Ms. Diane Hardesty
Vice President and Chief Administrative Officer
Landlord's Address for Notices: GALLERIA PARK PARTNERS, LLC
c/o Douglas, Emmett and Company
808 Wilshire Boulevard, Suite 200
Santa Monica, California 90401
20.5 Brokers: Douglas, Emmett and Company
808 Wilshire Boulevard, Suite 200
Santa Monica, California 90401 and
Grubb & Ellis Company
15260 Ventura Boulevard, Suite 1800
Sherman Oaks, California 91403
21.1 Parking Permits: Sixty-Seven (67) permits for unreserved spaces and five (5)
permits for reserved spaces
Except as noted hereinbelow, the foregoing Basic Lease Information is hereby
incorporated into and made a part of the Lease. The Section reference in the
left margin of the Basic Lease Information exists solely to indicate where such
reference initially appears in the Lease document. Except as specified
hereinbelow, each such reference in the Lease document shall incorporate the
applicable Basic Lease Information. However, in the event of any conflict
between any reference contained in the Basic Lease Information and the specific
wording of the Lease, the wording of the Lease shall control.
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OFFICE LEASE
TABLE OF CONTENTS
ARTICLE PAGE
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1 Demise of Premises....................................................... 1
2 Commencement Date and Term............................................... 3
3 Payment of Rent, Late Charge and Security Deposit........................ 4
4 Additional Rent.......................................................... 7
5 Ethics................................................................... 11
6 Use of Premises.......................................................... 11
7 Condition Upon Vacating and Removal of Personal Property................. 11
8 Utilities and Services................................................... 12
9 Tenant's Indemnification and Limitation on Landlord's Liability.......... 14
10 Compliance with Laws..................................................... 15
11 Assignment and Subletting................................................ 16
12 Maintenance, Repairs, Damage, Destruction, Renovation and/or Alteration.. 18
13 Condemnation............................................................. 22
14 Subordination............................................................ 23
15 Estoppel Certificates.................................................... 24
16 Notices.................................................................. 24
17 Default and Landlord's Option to Cure.................................... 24
18 Damages; Remedies; Re-Entry by Landlord; Etc............................. 26
19 Insurance................................................................ 27
20 Miscellaneous............................................................ 29
21 Parking.................................................................. 32
22 Concierge Services....................................................... 32
23 Option to Extend Term.................................................... 33
24 Satellite Dish........................................................... 34
25 Right of First Negotiation............................................... 35
Signatures......................................................................... 36
Exhibits
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A -- Premises Plan
B -- Tenant Work Letter
B-1 -- Construction by Tenant During Term
C -- Rules and Regulations
D -- First Amendment - Commencement Date and Term
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OFFICE LEASE
This Office Lease, dated July 9, 2001, is by and between GALLERIA PARK
PARTNERS, LLC, a Delaware limited liability company ("Landlord"), with an office
at 808 Wilshire Boulevard, Suite 200, Santa Monica, California 90401, and
SIZZLER INTERNATIONAL, INC., a Delaware corporation ("Tenant"), with an office
at 6101 West Centinela Avenue, Suite 200, Culver City, California 90030.
ARTICLE 1
DEMISE OF PREMISES
Section 1.1. Demise. Subject to the covenants and agreements contained in this
Lease, Landlord leases to Tenant and Tenant hires from Landlord, that portion of
the third (3rd) floor commonly known as Suite 300 (the "Premises"), in the
building located at 15301 Ventura Boulevard, Garden Office Building (Building
B), Sherman Oaks, California 91403 (the "Building"). The configuration of the
Premises is shown on Exhibit A, attached hereto and made a part hereof by
reference.
Tenant acknowledges that it has made its own inspection of and inquiries
regarding the Premises, which are already improved. Therefore, except for the
improvements to be completed pursuant to Exhibit B, attached hereto and made a
part hereof by reference, Tenant accepts the Premises in their "as-is"
condition, subject to those latent defects of which Tenant notifies Landlord in
writing within one (1) year of the Commencement Date. Tenant further
acknowledges that Landlord has made no representation or warranty, express or
implied, except as are contained in this Lease and its Exhibits, regarding the
condition, suitability or usability of the Premises or the Building for the
purposes intended by Tenant.
Notwithstanding any contrary provision of this Lease, it is expressly
understood and agreed that the minimum ceiling height of the Premises, as
described in Subsection 20 of Section 1.1 of Exhibit B, is a material inducement
for Tenant's entering into this Lease.
The Premises are a part of the Building described hereinabove. The Building
is part of a mixed retail/office use project known as "the Sherman Oaks
Galleria." The term "Project," as used in this Lease, shall mean (i) the
"Common Areas" (as hereinafter defined), (ii) the Building, as shown on the
Project Site Plan attached hereto as Exhibit A-1, (iii) that certain office
building designated as the "Attached Office Building" on the Project Site Plan
attached hereto as Exhibit A-1 ("Attached Office Building"), (iv) the "Retail
Building" (as hereinafter defined), (v) certain retail areas connected and/or
adjacent to the Building, the Garden Office Building, and the Attached Office
Building, (vi) the land (which is improved with landscaping, subterranean and
above ground parking facilities and other improvements) upon which each of the
foregoing items (i) through (v) above is located, and (vii) at Landlord's
discretion, below, any additional, property, areas, land, buildings or other
improvements added thereto on, adjacent to, or outside of the Project.
Tenant shall have the non-exclusive right to use in common with other
tenants in the Project, and subject to the rules and regulations set forth in
Exhibit C of this Lease, those portions of the Project which are provided, from
time to time, for use in common by Landlord, Tenant and any other tenants of the
Project (such areas, which may include, without limitation, interior and
exterior walkways, parking garages and other areas, together with such other
portions of the Project designated by Landlord, in its discretion, including
certain areas designated for the exclusive use of certain tenants, or to be
shared by Landlord and certain tenants, are collectively referred to as the
"Common Areas"). The Common Areas shall consist of the "Project Common Areas"
and the "Building Common Areas." The term "Retail Building", as used in this
Lease, shall mean such areas of retail space in the Project designated as such
by Landlord. The term "Building Common Areas", as used in this Lease, shall mean
the portions of the Common Areas relating to the Building designated as such by
Landlord. The manner in which the Common Areas are maintained and operated shall
be at the reasonable discretion of Landlord, and the use thereof shall be
subject to such rules, regulations and restrictions as Landlord may make from
time to time; provided, however, that Landlord shall at all times maintain and
operate such public and common areas in a first-class manner. Landlord reserves
the right to close temporarily, make alterations or additions to, or change the
location of elements of the Project and the Common Areas; provided, however,
that none of the foregoing shall materially interfere with Tenant's access to or
use of the Premises.
Tenant acknowledges that (i) that portion of the second (2nd) floor of the
Building beneath the Premises (the "Second Floor Space") has been leased to MTS
Incorporated, a California corporation d/b/a Tower Records - Videos - Books
("Tower") pursuant to that certain Retail Lease dated June 26, 2000 between
Landlord and Tower (the "Tower Lease"), (ii) Tower's business operations require
it to play music within the Second Floor Space, and (iii) Tenant shall not be
entitled to (x) terminate this Lease as a result of the playing of such music,
(y) any rent abatement or offset as a result thereof (except as expressly
provided otherwise in this Lease), or (z) make any claim against Landlord for
any interruption, interference, disruption of Tenant's business, or loss of
profits occasioned thereby; provided, however, that Landlord shall use
commercially reasonable efforts to minimize any disruption to Tenant's business
operations as a result of Tower's (or its assignee's or sublessee's) business
operations (including, without limitation, instituting legal proceedings against
Tower [or an assignee of Tower] to perform its obligations under the Tower Lease
pertaining to sound mitigation).
Notwithstanding any contrary provision of this Lease, Landlord represents,
warrants and covenants that any sound transmitted to the Premises shall be at or
below the level of sound transmission in comparable first-class office buildings
in the Sherman Oaks area.
Section 1.2. Tenant's Non-Exclusive Use. INTENTIONALLY OMITTED.
Section 1.3. Landlord's Reservation of Rights. Landlord specifically reserves
to itself use, control and repair of the structural portions of all perimeter
walls of the Premises, any balconies, terraces or roofs adjacent to the Premises
(including any flagpoles or other installations on said walls, balconies,
terraces or roofs) and any space in and/or adjacent to the Premises used for
shafts, stairways, pipes, conduits, ducts, mail chutes, conveyors, pneumatic
tubes, electric or other utilities, sinks, fan rooms or other Building
facilities, and the use thereof, as well as access thereto through the Premises
(provided such access and any work performed by Landlord in connection therewith
shall not materially impair or interfere with Tenant's access to or use of the
Premises). Landlord also specifically reserves to itself the following rights:
a) To designate all sources furnishing sign painting or lettering;
b) To constantly have pass keys to the Premises;
c) To grant to anyone the exclusive right to conduct any particular business or
undertaking in the Building, so long as Landlord's granting of the same does
not prohibit or materially interfere with Tenant's use of the Premises for
Tenant's Specified Use, as defined in Article 6;
d) To enter the Premises at any reasonable time with reasonable notice,
accompanied by a representative of Tenant (except for emergencies), to
inspect, repair, alter, improve, update or make additions to the Premises or
the Building; provided however, that Landlord shall not unreasonably
interfere with Tenant's access to the Premises or Tenant's business
operations therein as a result of any such entry;
e) During the last six (6) months of the Term, to exhibit the Premises to
prospective future tenants upon reasonable prior notice to Tenant,
accompanied by a representative of Tenant;
f) Subject to the provisions of Article 12, to, at any time, and from time to
time, whether at Tenant's request or pursuant to governmental requirement,
repair, alter, make additions to, improve, or decorate all or any portion of
the Real Property, Building or Premises (provided such access and any work
performed by Landlord shall not materially impair or interfere with Tenant's
access to or use of the Premises, and in connection with any such entry into
the Premises, Landlord shall be accompanied by a representative of Tenant).
In connection therewith, and without limiting the generality of the
foregoing rights, Landlord shall specifically have the right to remove,
alter, improve or rebuild all or any part of the lobby of the Building as
the same is presently or shall hereafter be constituted;
g) Landlord reserves the right to make alterations or additions to or change
the location of elements of the Real Property and any common areas
appurtenant thereto, as long as such changes do not change the nature of the
Premises to something other than a first class office building or
materially, adversely affect Tenant's use of the Premises for the Specified
Use, as set forth in Section 6 of the Basic Lease Information, or Tenant's
ingress to or egress from the Building, the Premises or the parking areas
servicing the same. Except when and where Tenant's right of access is
specifically excluded as the result of (i) an emergency, (ii) a requirement
by law, or (iii) a specific provision set forth in this Lease, Tenant shall
have the right of ingress and egress to the Premises, the Building, and the
parking areas twenty-four (24) hours per day, seven (7) days per week during
the initial Term; and/or
h) To take such other actions as may reasonably be necessary when the same are
required to preserve, protect or improve the Premises, the Building, or
Landlord's interest therein (provided such access and any work performed by
Landlord shall not materially interfere with Tenant's access to or use of
the Premises).
Section 1.4. Area. Landlord and Tenant agree that within sixty (60) days after
the Commencement Date a recalculation of the Rentable Area of the Premises shall
be made by Stevenson Systems, Inc., an independent planning firm, in accordance
with the June, 1996 standards set forth by the Building Owners and Managers
Association. Such determination shall be determinative unless patently
unreasonable. Tenant and Landlord agree to execute an amendment to the Lease,
documenting the revised usable areas as documented by Stevenson Systems.
Landlord and Tenant further agree that the Rentable Area of the Premises
shall be calculated on the basis of 1.2388 times the estimated Usable Area,
regardless of what actual common areas of the Building may be, or whether they
may be more or less than 23.88% of the total estimated Usable Area of the
Building, and is provided solely to give a general basis for comparison and
pricing of this space in relation to other spaces in the market area.
Landlord and Tenant further agree that once the Rentable Area and Usable
Area of the Premises have been determined as specified hereinabove, even if
later either party alleges that the actual Rentable Area or Usable Area of the
Premises is more or less than the figures stated herein; and whether or not such
figures are inaccurate, for all purposes of the Lease, the Rentable and Usable
figures agreed upon shall be conclusively deemed to be the Rentable Area, or
Usable Area of the Premises, as the case may be.
If the Rentable Area of the Premises is increased or decreased pursuant to
the provisions of Section 1.4 of this Lease, then the initial Fixed Monthly Rent
payable by Tenant shall be equal to the product of $2.38 multiplied by the
number of Rentable Square Feet in the Premises, and the increases in Fixed
Monthly Rent shall be appropriately increased or decreased to result in an
increase in said Fixed Monthly Rent of (i) three percent (3%) per annum,
commencing on the first (1st) calendar day of the twenty-fifth (25th) calendar
month of the Term, and (ii) four percent (4%) per annum, commencing on the first
calendar day of the seventy-third (73rd) calendar month of the Term.
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Section 1.5. Quiet Enjoyment. Contingent upon Tenant keeping, observing and
performing all of the covenants, agreements, terms, provisions and conditions of
this Lease on its part to be kept, observed and performed, Tenant shall lawfully
and quietly hold, occupy and enjoy the Premises during the Term without undue
hindrance or molestation.
Section 1.6. No Light, Air or View Easement. Any diminution or shutting off of
light, air or view by any structure which is now or may hereafter be erected on
lands adjacent to the Building shall in no way affect this Lease or impose any
liability on Landlord. Noise, dust or vibration or other ordinary incidents to
new construction of improvements on lands adjacent to the Building, whether or
not by Landlord, shall in no way affect this Lease or impose any liability on
Landlord; provided however, that if such new construction is performed by
Landlord, then Landlord shall not unreasonably interfere with Tenant's access to
the Premises or Tenant's business operations in connection therewith.
Section 1.7. Relocation. INTENTIONALLY OMITTED.
Section 1.8. Development of the Project.
a) Landlord reserves the right, in Landlord's reasonable discretion, to further
subdivide all or a portion of the Project. Tenant agrees to execute and
deliver, upon demand by Landlord and in the form requested by Landlord (at
no cost to Tenant), any additional documents needed to conform this Lease to
the circumstances resulting from such subdivision, provided that no such
documentation shall materially adversely affect Tenant's rights or
materially increase Tenant's obligations under this Lease.
b) If portions of the Project or property adjacent to the Project
(collectively, the "Other Improvements") are owned by an entity other than
Landlord, Landlord, at its option, may enter into an agreement with the
owner or owners of any or all of the Other Improvements to provide (i) for
reciprocal rights of access and/or use of the Project and the Other
Improvements, provided that the same creates no material adverse effect upon
Tenant's rights or obligations under this Lease, (ii) for the common
management, operation, maintenance, improvement and/or repair of all or any
portion of the Project and the Other Improvements, provided that the same
creates no material adverse effect upon Tenant's rights or materially
increase Tenant's obligations under this Lease, (iii) subject to the
provisions of Section 4.4, for the allocation of a portion of the Operating
Expenses to the Other Improvements and the operating expenses and taxes for
the Other Improvements to the Project, and (iv) subject to the provisions of
Section 4.4, for the use or improvement of the Other Improvements and/or the
Project in connection with the improvement, construction, and/or excavation
of the Other Improvements and/or the Project. Nothing contained herein shall
be deemed or construed to limit or otherwise affect Landlord's right to
convey all or any portion of the Project or any other of Landlord's rights
described in this Lease.
ARTICLE 2
COMMENCEMENT DATE AND TERM
Section 2.1. Commencement Date and Term. This Lease shall commence the next
business day after the date Landlord substantially completes the Tenant
Improvements contemplated under Exhibit B (the "Commencement Date"), and shall
end, unless sooner terminated as otherwise provided herein, at midnight on the
last calendar day of the calendar month which occurs ten (10) years and three
(3) months (the "Term") after the Commencement Date (the "Termination Date").
The anticipated Commencement Date is October 1 2001. Landlord and Tenant shall
promptly execute an amendment to this Lease (the "First Amendment")
substantially in the form attached hereto as Exhibit D, confirming the finalized
Commencement Date and Term as soon as they are determined. It is expressly
understood and agreed that in no event shall the Commencement Date occur prior
to October 1, 2001. The terms "Substantial Completion" and "Tenant
Improvements" are defined in Exhibit B attached hereto and made a part hereof.
Subject to any rights Tenant may have as a result of Landlord's failure to
comply with its obligations under Exhibit B, Tenant's taking possession of the
Premises or commencing Tenant's normal business operations in a substantial
portion of the Premises shall be deemed conclusive evidence that, as of the
Commencement Date:
a) Landlord has substantially completed the Tenant Improvements contemplated
hereunder, except for any minor punchlist items to be completed; and
b) the Premises are in good order and repair, except for those latent defects
of which Tenant notifies Landlord within one (1) year of the Commencement
Date.
Provided that Tenant does not delay Landlord's completion of the
Improvements that Landlord is required to complete, Tenant may take possession
of the Premises up to two (2) weeks prior to the anticipated Commencement Date,
solely for the purpose of installing Tenant's furniture, fixtures and equipment,
computer and telephone cabling. Said early possession shall be subject to Tenant
complying with all of the provisions and covenants contained herein, except that
Tenant shall not be obligated to pay Fixed Monthly Rent or Additional Rent until
the Commencement Date. If Tenant's early possession does so delay completion of
the Improvements, then such delay shall be chargeable to Tenant by extending the
anticipated Commencement Date by an equal number of days as the total number of
days Landlord was so delayed.
If for any reason Landlord is unable to deliver possession of the Premises
to Tenant on the anticipated Commencement Date, this Lease shall not be void or
voidable, nor shall Landlord be liable to Tenant for any damage resulting from
Landlord's inability to deliver such possession. However, Tenant shall not be
obligated to pay the Fixed Monthly Rent or Additional Rent that Tenant is
required to pay pursuant to Section 3.1 until such possession of the Premises
has been delivered to Tenant.
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Except for such delay in the commencement of Rent, Landlord's failure to give
possession on the anticipated Commencement Date shall in no way affect Tenant's
obligations hereunder.
Notwithstanding the foregoing, if Substantial Completion does not occur on
or before November 1, 2001 (which date shall be extended by one (1) day for each
day of delay attributable to any Tenant Delay [as such term is defined in
Section 5.2 of Exhibit B] or force majeure delay), then Tenant shall be entitled
to one (1) day of free rent for each day after November 1, 2001 (as such date
shall be extended as hereinabove described) that Substantial Completion does not
occur, which free rent period shall commence on the first (1st) day following
the expiration of the first (1st) three (3) months of the Term.
If possession of the Premises is not tendered by Landlord to Tenant within
ninety (90) days after the anticipated Commencement Date, then Tenant shall have
the right to terminate this Lease by giving written notice to Landlord, within
ten (10) days after such failure. If such notice of termination is not so given
by Tenant within said ten (10) day time period, then this Lease shall continue
in full force and effect.
If, due to Force Majeure, Landlord is unable to tender possession of the
Premises within two hundred forty (240) days after the anticipated Commencement
Date, then this Lease, and the rights and obligations of Landlord and Tenant
hereunder, shall terminate automatically, without further liability by either
party to the other, and without further documentation being required.
Section 2.2. Holding Over. If Tenant fails to deliver possession of the
Premises on the Termination Date, but holds over after the expiration or earlier
termination of this Lease without the express prior written consent of Landlord,
such tenancy shall be construed as a tenancy from month-to-month on the same
terms and conditions as are contained herein, except that the Fixed Monthly Rent
payable by Tenant during such period of holding over shall automatically
increase as of the Termination Date to an amount equal to one hundred twenty-
five percent (125%) for the first thirty (30) days and one hundred fifty percent
(150%) thereafter, of the Fixed Monthly Rent payable by Tenant for the calendar
month immediately prior to the date when Tenant commences such holding over (the
"Holdover Rent"). Such Holdover Rent shall be paid during such period as Tenant
retains possession of the Premises. However, Tenant's payment of such Holdover
Rent, and Landlord's acceptance thereof, shall not constitute a waiver by
Landlord of any of Landlord's rights or remedies with respect to such holding
over, nor shall it be deemed to be a consent by Landlord to Tenant's continued
occupancy or possession of the Premises past the time period covered Tenant's
payment of the Holdover Rent.
Furthermore, if Tenant fails to deliver possession of the Premises to
Landlord upon the expiration or earlier termination of this Lease, then, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all loss, costs
(including reasonable attorneys' fees and expenses) and liability resulting from
such failure, including without limiting the foregoing, any claims made by any
succeeding tenant arising out of Tenant's failure to so surrender, and any lost
profits to Landlord resulting therefrom.
Notwithstanding the provisions contained hereinabove regarding Tenant's
liability for a continuing holdover, Landlord agrees to use commercially
reasonable efforts to insert into any future lease of another tenant proposing
to occupy the Premises provisions similar to those contained in Section 2.1,
permitting mitigation of Tenant's damages arising out of Tenant's temporary
holdover.
ARTICLE 3
PAYMENT OF RENT, LATE CHARGE
Section 3.1. Payment of Fixed Monthly Rent and Additional Rent. "Rent" shall
mean: all payments of monies in any form whatsoever required under the terms and
provisions of this Lease, and shall consist of:
a) "Fixed Monthly Rent," which shall be payable in equal monthly installments
of $53,371.09; plus
b) Additional Rent as provided in Article 4 and elsewhere in this Lease.
Provided that this Lease is not terminated prior to the Commencement Date as
a result of Tenant's default hereunder, one hundred percent (100%) of the Fixed
Monthly Rent due for the period commencing on the Commencement Date and ending
three (3) full months thereafter (the "Rent Deferral") shall be deferred until
the end of the Term.
Further provided that this Lease is not terminated prior to the Termination
Date as a result of Tenant's default hereunder, Landlord shall fully abate and
forgive the Rent Deferral.
If this Lease is terminated as a result of Tenant's default hereunder, the
full amount so deferred, shall be immediately due and payable, as if the same
had been due if the Rent Deferral had not occurred.
Except as otherwise stated, the entire Fixed Monthly Rent shall be due and
payable, in advance, on or before the first day of each and every calendar month
until the end of the Term, pursuant to this Section 3.1.
Section 3.2. Manner of Payment. Tenant shall pay Fixed Monthly Rent and
Additional Rent immediately upon the same becoming due and payable, without
demand therefor, and without any abatement, set off or deduction whatsoever,
except as may be expressly provided in this Lease. Landlord's failure to submit
statements to Tenant stating the amount of Fixed Monthly Rent or Additional Rent
then due, including Landlord's failure to provide to Tenant a calculation of the
adjustment as required in Section 3.3 or the Escalation Statement referred to in
Article 4, shall not constitute Landlord's waiver of Tenant's requirement to pay
the Rent called for herein. Tenant's failure to pay Additional Rent as provided
herein shall constitute a material default equal to Tenant's failure to pay
Fixed Monthly Rent when due.
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Rent shall be payable in advance by the first day of each and every calendar
month throughout the Term, in lawful money of the United States of America, to
Landlord at 15303 Ventura Boulevard, Suite 1510, Sherman Oaks, California
91403, or at such other place(s) as Landlord designates in writing to Tenant.
Tenant's obligation to pay Rent shall begin on the Commencement Date and
continue throughout the Term, without abatement, setoff or deduction, except as
otherwise specified in this Lease.
Concurrent with Tenant's execution and delivery to Landlord of this Lease,
Tenant shall pay to Landlord the Fixed Monthly Rent due for the fourth month of
the Term.
Section 3.3. Fixed Monthly Rent Increase. Commencing the first calendar day of
the twenty-fifth (25th) calendar month of the Term, and continuing through the
last calendar day of the thirty-sixth (36th) calendar month of the Term, the
Fixed Monthly Rent payable by Tenant shall increase from $53,371.09 per month to
$54,972.22 per month.
Commencing the first calendar day of the thirty-seventh (37th) calendar
month of the Term, and continuing through the last calendar day of the forty-
eighth (48th) calendar month of the Term, the Fixed Monthly Rent payable by
Tenant shall increase from $54,972.22 per month to $56,621.39 per month.
Commencing the first calendar day of the forty-ninth (49th) calendar month
of the Term, and continuing through the last calendar day of the sixtieth (60th)
calendar month of the Term, the Fixed Monthly Rent payable by Tenant shall
increase from $56,621.39 per month to $58,320.03 per month.
Commencing the first calendar day of the sixty-first (61st) calendar month
of the Term, and continuing through the last calendar day of the seventy-second
(72nd) calendar month of the Term, the Fixed Monthly Rent payable by Tenant
shall increase from $58,320.03 per month to $60,069.63 per month.
Commencing the first calendar day of the seventy-third (73rd) calendar month
of the Term, and continuing through the last calendar day of the eighty-fourth
(84th) calendar month of the Term, the Fixed Monthly Rent payable by Tenant
shall increase from $60,069.63 per month to $62,472.42 per month.
Commencing the first calendar day of the eighty-fifth (85th) calendar month
of the Term, and continuing through the last calendar day of the ninety-sixth
(96th) calendar month of the Term, the Fixed Monthly Rent payable by Tenant
shall increase from $62,472.42 per month to $64,971.31 per month.
Commencing the first calendar day of the ninety-seventh (97th) calendar
month of the Term, and continuing through the last calendar day of the one-
hundred-eighth (108th) calendar month of the Term, the Fixed Monthly Rent
payable by Tenant shall increase from $64,971.31 per month to $67,570.17 per
month.
Commencing the first calendar day of the one-hundred-ninth (109th) calendar
month of the Term, and continuing through the last calendar day of the one-
hundred-twentieth (120th) calendar month of the Term, the Fixed Monthly Rent
payable by Tenant shall increase from $67,570.17 per month to $70,272.97 per
month.
Commencing the first calendar day of the one-hundred-twenty-first (121st)
calendar month of the Term, and continuing throughout the remainder of the
initial Term, the Fixed Monthly Rent payable by Tenant shall increase from
$70,272.97 per month to $73,083.89 per month.
Landlord and Tenant shall, in the First Amendment, confirm the actual dates
upon which the changes in Fixed Monthly Rent specified above shall occur.
Section 3.4. Tenant's Payment of Certain Taxes. Tenant shall, concurrent with
Tenant's next scheduled payment of Fixed Monthly Rent, reimburse Landlord, as
Additional Rent, for any and all taxes, surcharges, levies, assessments, fees
and charges payable by Landlord when:
a) assessed on, measured by, or reasonably attributable to:
i) the cost or value of Tenant's equipment, furniture, fixtures and other
personal property located in the Premises, or
ii) the cost or value of any leasehold improvements in or to the Premises in
excess of $35.00 per square foot, provided the same have been made in
connection with Tenant's execution of this Lease by or at the request of
Tenant, and without regard to whether title to or payment for such
improvements vests with Tenant or Landlord;
b) on or measured by any rent payable hereunder, including, without limitation,
any gross income tax, gross receipts tax, or excise tax levied by the City
or County of Los Angeles or any other governmental body with respect to the
receipt of such rent (computed as if such rent were the only income of
Landlord), but solely when levied by the appropriate City or County agency
in lieu of, or as an adjunct to, such business license(s), fees or taxes as
would otherwise have been payable by Tenant directly to such taxing
authority;
c) upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises
or any portion thereof; or
d) solely because Landlord and Tenant entered into this transaction or executed
any document transferring an interest in the Premises to Tenant. If it
becomes unlawful for Tenant so to reimburse Landlord, the rent payable to
Landlord under this Lease shall be revised to net Landlord the same rent
after imposition of any such tax as would have been payable to Landlord
prior to the imposition of any such tax.
Said taxes shall be due and payable whether or not now customary or within
the contemplation of Landlord and Tenant. Notwithstanding the above, in no event
shall the provisions of this Section 3.4 serve to entitle Landlord to
reimbursement from Tenant for any federal, state, county or city, estate tax,
5
gift tax, or other income tax or business license fee payable by Landlord or the
managing agent of Landlord.
Section 3.5. Certain Adjustments. If:
a) the Commencement Date occurs on other than January 1st of a calendar year,
or the Lease expires or terminates on other than December 31st of a calendar
year;
b) the size of the Premises changes as hereinabove provided;
c) or any abatement of Fixed Monthly Rent or Additional Rent occurs during a
calendar year, then
the amount payable by Tenant or reimbursable by Landlord during such year
shall be adjusted proportionately on a daily basis, and the obligation to pay
such amount shall survive the expiration or earlier termination of this Lease.
If the Commencement Date occurs on other than the first day of a calendar
month, or the Lease expires on a day other than the last day of a calendar
month, then the Fixed Monthly Rent and Additional Rent payable by Tenant shall
be appropriately apportioned on a prorata basis for the number of days remaining
in the month of the Term for which such proration is calculated.
If the amount of Fixed Monthly Rent or Additional Rent due is modified
pursuant to the terms of this Lease, such modification shall take effect the
first day of the calendar month immediately following the date such modification
would have been scheduled.
Section 3.6. Late Charge and Interest. Tenant acknowledges that late payment
by Tenant to Landlord of Fixed Monthly Rent or Additional Rent will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which are extremely difficult and impracticable to fix. Such costs include,
without limitation, processing and accounting charges and late charges that may
be imposed on Landlord by the terms of any encumbrance and note secured by any
encumbrance covering the Premises. Therefore, if any installment of Fixed
Monthly Rent or Additional Rent and other payment due from Tenant hereunder is
not received by Landlord within five (5) days after Tenant's receipt of written
notice that any such amount has not been paid, Tenant shall pay to Landlord on
demand an additional sum equal to five percent (5%) of the overdue amount as a
late charge. The parties agree that this late charge represents a fair and
reasonable settlement against the costs that Landlord will incur by reason of
Tenant's late payment. Acceptance of any late charge shall not constitute a
waiver of Tenant's default with respect to the overdue amount, or prevent
Landlord from exercising any of the other rights and remedies available to
Landlord.
Every installment of Fixed Monthly Rent and Additional Rent and any other
payment due hereunder from Tenant to Landlord which is not paid within twelve
(12) days after the same becomes due and payable shall, in addition to any Late
Charge already paid by Tenant, bear interest at the rate of ten percent (10%)
per annum from the date that the same originally became due and payable until
the date it is paid. Landlord shall bill Tenant for said interest, and Tenant
shall pay the same within five (5) days of receipt of Landlord's billing.
Section 3.7. Security Deposit. Concurrent with Tenant's execution and
tendering of this Lease to Landlord, Tenant shall deposit the sum of $73,083.89
(the "Security Deposit"), which amount Tenant shall thereafter at all times
maintain on deposit with Landlord as security for Tenant's full and faithful
observance and performance of its obligations under this Lease (expressly
including, without limitation, the payment as and when due of the Fixed Monthly
Rent, Additional Rent and any other sums or damages payable by Tenant hereunder
and the payment of any and all other damages for which Tenant shall be liable by
reason of any act or omission contrary to any of said covenants or agreements).
Landlord shall have the right to commingle the Security Deposit with its general
assets and shall not be obligated to pay Tenant interest thereon.
If at any time Tenant defaults in the performance of any of its obligations
under this Lease, after the expiration of notice and the opportunity to cure,
then, Landlord may:
a) apply as much of the Security Deposit as may be necessary to cure Tenant's
non-payment of the Fixed Monthly Rent, Additional Rent and/or other sums or
damages due from Tenant; and/or;
b) if Tenant is in default of any of the covenants or agreements of this Lease;
apply so much of the Security Deposit as may be necessary to reimburse all
expenses incurred by Landlord in curing such default; or
c) if the Security Deposit is insufficient to pay the sums specified in Section
3.7 (a) or (b), elect to apply the entire Security Deposit in partial
payment thereof, and proceed against Tenant pursuant to the provisions of
Article 17 and Article 18 herein.
If, as a result of Landlord's application of any portion or all of the
Security Deposit, the amount held by Landlord declines to less than $73,083.89,
Tenant shall, within ten (10) days after demand therefor, deposit with Landlord
additional cash sufficient to bring the then-existing balance held as the
Security Deposit to the amount specified hereinabove. Tenant's failure to
deposit said amount shall constitute a material breach of this Lease.
At the expiration or earlier termination of this Lease, Landlord shall
deduct from the Security Deposit being held on behalf of Tenant any unpaid sums,
costs, expenses or damages payable by Tenant pursuant to the provisions of this
Lease; and/or any costs required to cure Tenant's default or performance of any
other covenant or agreement of this Lease, and shall, within thirty (30) days
after the expiration or earlier termination of this Lease, return to Tenant,
without interest, all or such part of the Security Deposit as then remains on
deposit with Landlord.
6
ARTICLE 4
ADDITIONAL RENT
Section 4.1. Certain Definitions. As used in this Lease:
a) "Escalation Statement" means a statement by Landlord, setting forth the
amount payable by Tenant or by Landlord, as the case may be, for a specified
calendar year pursuant to this Article 4.
b) "Operating Expenses" means the following in a referenced calendar year,
including the Base Year as hereinafter defined, calculated assuming the
Building is at least ninety-five percent (95%) occupied: all reasonable
costs of management, operation, maintenance, and repair of the Building.
By way of illustration only, Operating Expenses shall include, but not
be limited to: management fees paid by Landlord to any third-party, which
shall not exceed those reasonable and customary in the geographic area in
which the Building is located; water and sewer charges; any and all
insurance premiums not otherwise directly payable by Tenant; license, permit
and inspection fees; air conditioning (including repair of same); heat;
light; power and other utilities; steam; labor; cleaning and janitorial
services; guard services; supplies; materials; equipment and tools.
Operating Expenses shall also include the cost or portion thereof of
those capital improvements made to the Building by Landlord during the Term:
i) to the extent that such capital improvements reduce other Operating
Expenses, when the same were made to the Building by Landlord after the
Commencement Date, or
ii) that are required under any governmental law or regulation that was not
applicable to the Building as of the Commencement Date.
Said capital improvement costs, or the allocable portion thereof (as
referred to in clauses (i) and (ii) above), shall be amortized over their
useful life pursuant to generally-accepted accounting principles, together
with interest on the unamortized balance at the rate of ten percent (10%)
per annum.
Operating Expenses shall also include all general and special real
estate taxes, increases in assessments or special assessments and any other
ad valorem taxes, rates, levies and assessments paid during a calendar year
(or portion thereof) upon or with respect to the Building and the personal
property used by Landlord to operate the Building, whether paid to any
governmental or quasi-governmental authority, and all taxes specifically
imposed in lieu of any such taxes (but excluding taxes referred to in
Section 3.4 for which Tenant or other tenants in the Building are liable)
including fees of counsel and experts, reasonably incurred by, or
reimbursable by Landlord in connection with any application for a reduction
in the assessed valuation of the Building and/or the land thereunder or for
a judicial review thereof, (collectively "Appeal Fees"), but solely to the
extent that the Appeal Fees result directly in a reduction of taxes
otherwise payable by Tenant. However, in no event shall the portion of
Operating Expenses used to calculate any billing to Tenant attributable to
real estate taxes and assessments for any expense year be less than the
billing for real estate taxes and assessments during the Base Year.
Operating Expenses shall also include, but not be limited to, the
premiums for the following insurance coverage: all-risk, structural, fire,
boiler and machinery, liability, earthquake and for replacement of tenant
improvements to a maximum of $35.00 per usable square foot, and for such
other coverage(s), and at such policy limit(s) as Landlord deems reasonably
prudent and/or are required by any lender or ground lessor, which coverage
and limits Landlord may, in Landlord's reasonable discretion, change from
time to time.
If, in any calendar year following the Base Year, as defined hereinbelow
(a "Subsequent Year"), a new expense item (e.g. earthquake insurance,
concierge services; entry card systems), is included in Operating Expenses
which was not included in the Base Year Operating Expenses, then the cost of
such new item shall be added to the Base Year Operating Expenses for
purposes of determining the Additional Rent payable under this Article 4 for
such Subsequent Year. During each Subsequent Year, the same amount shall
continue to be included in the computation of Operating Expenses for the
Base Year, resulting in each such Subsequent Year Operating Expenses only
including the increase in the cost of such new item over the Base Year, as
so adjusted. However, if in any Subsequent Year thereafter, such new item is
not included in Operating Expenses, no such addition shall be made to Base
Year Operating Expenses.
Conversely, as reasonably determined by Landlord, when an expense item
that was originally included in the Base Year Operating Expenses is, in any
Subsequent Year, no longer included in Operating Expenses, then the cost of
such item shall be deleted from the Base Year Operating Expenses for
purposes of determining the Additional Rent payable under this Article 4 for
such Subsequent Year. The same amount shall continue to be deleted from the
Base Year Operating Expenses for each Subsequent Year thereafter that the
item is not included. However, if such expense item is again included in the
Operating Expenses for any Subsequent Year, then the amount of said expense
item originally included in the Base Year Operating Expenses shall again be
added back to the Base Year Operating Expenses.
c) Exclusions to Operating Expenses. Notwithstanding anything contained in the
definition of Operating Expenses as set forth in Subsection 4.1(b) of this
Lease, Operating Expenses shall not include the following:
(i) principal payments, bad-debt expenses, depreciation, interest and
amortization on mortgages, or ground lease payments, if any;
(ii) real estate brokers' leasing commissions;
(iii) the cost of providing any service directly to and paid directly by any
tenant;
7
(iv) any costs expressly excluded from Operating Expenses elsewhere in
this Lease;
(v) costs of any items to the extent Landlord receives reimbursement
from insurance proceeds (such proceeds to be excluded from Operating
Expenses in the year in which received, except that any deductible
amount under any insurance policy shall be included within Operating
Expenses) or from a third party ;
(vi) costs of capital improvements, except those set forth in Section
4.1(b);
(vii) marketing costs, including leasing commissions, advertising and
promotional expenses, space planning costs and attorneys' fees in
connection with the negotiation and preparation of letters, deal
memos, letters of intent, leases, and subleases and/or assignments
incurred in connection with present or prospective tenants or other
occupants of the Building, including attorneys' fees and other costs
and expenditures incurred in connection with disputes with present
or prospective tenants or other occupants of the Building;
(viii) costs, including permit, license and inspection costs and any
allowances or other tenant improvement concessions, incurred or
provided with respect to the design, construction and/or
installation of other tenants' or occupants' improvements made for
tenants or other occupants in the Building or incurred in renovating
or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants in the Building (excluding,
however, such costs relating to any Common Areas or Building parking
facilities);
(ix) rentals and other related expenses incurred in leasing a heating,
ventilation and air conditioning system, elevators, or other items
(except equipment not affixed to the Building which is used in
providing janitorial or similar services to the Building and,
further excepting from this exclusion such equipment rented or
leased on a temporary basis to remedy or ameliorate an emergency
condition in the Building) which if purchased, rather than rented,
would constitute a capital improvement not included in Operating
Expenses pursuant to this Lease;
(x) depreciation, amortization and interest payments, except as
specifically included in Operating Expenses pursuant to the terms of
this Lease and, except on materials, tools, supplies and vendor-type
equipment purchased by Landlord to enable Landlord to supply
services Landlord might otherwise contract for with a third party,
where such depreciation, amortization and interest payments would
otherwise have been included in the charge for such third party's
services, all as determined in accordance with sound real estate
management principles, and when depreciation or amortization is
permitted or required, the item shall be amortized over its
reasonably anticipated useful life;
(xi) costs incurred by Landlord for alterations (including structural
additions), repairs, equipment and tools which are of a capital
nature and/or which are considered capital improvements or
replacements under sound real estate management principles, except
as specifically included in Operating Expenses pursuant to the terms
of this Lease;
(xii) expenses in connection with services or other benefits which are not
offered to Tenant or for which Tenant is charged for directly but
which are provided to another tenant or occupant of the Building,
without charge;
(xiii) overhead and profit increment paid to Landlord or to the parent
organization or to subsidiaries or affiliates of Landlord for goods
and/or services in the Building to the extent the same exceeds the
costs of such by unaffiliated third parties on a competitive basis;
(xiv) advertising and promotional expenditures, and costs of signs in or
on the Building identifying the owner of the Building or other
tenants' signs;
(xv) to the extent applicable, electric power costs or other utility
costs for which any tenant directly contracts with the local public
service company (but Landlord shall have the right to "gross up" as
if the floor was vacant);
(xvi) tax penalties incurred as a result of Landlord's negligence,
inability or unwillingness to make payments or file returns when
due;
(xvii) legal fees and costs concerning the negotiation and preparation of
this Lease or any litigation between Landlord and Tenant;
(xviii) any reserves retained by Landlord;
(xix) costs arising from Landlord's charitable or political contributions;
(xx) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Building unless
such wages and benefits are prorated to reflect time spent on
operating and managing the Building vis-a-vis time spent on matters
unrelated to operating and managing the Building; provided, that in
no event shall Operating Expenses for purposes of this Lease include
wages and/or benefits attributable to personnel above the level of
Building manager, Building engineer and/or chief operating engineer;
(xxi) except as expressly set forth otherwise in this Section 4.1(c), late
charges, penalties, liquidated damages, and interest;
(xxii) amount paid as ground rental or as rental for the Building by the
Landlord;
(xxiii) any compensation paid to clerks, attendants or other persons in
commercial concessions operated by or on behalf of the Landlord;
8
(xxiv) all items and services for which Tenant or any other tenant in the
Building is obligated to reimburse Landlord, provided that
Landlord shall use commercially reasonable efforts to collect such
reimbursable amounts, or which Landlord provides selectively to
one or more tenants (other than Tenant) without reimbursement;
(xxv) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings, fountains or other objects of
art;
(xxvi) rent for any office space occupied by Building management
personnel to the extent the size or rental rate of such office
space exceeds the size or fair market rental value of office space
occupied by management personnel of the Comparable Buildings in
the vicinity of the Building, with adjustment where appropriate
for the size of the applicable building;
(xxvii) all assessments and premiums which are not specifically charged to
Tenant because of what Tenant has done, which can be paid by
Landlord in installments, shall be paid by Landlord in the maximum
number of installments permitted by law (except to the extent
inconsistent with the general practice of landlords of other
first-class office buildings) and shall be included as Operating
Expenses in the year in which the assessment or premium
installment is actually paid;
(xxviii) in the event any facilities, services or utilities used in
connection with the Building are provided from another building
owned or operated by Landlord or vice versa, the costs incurred by
Landlord in connection therewith shall be allocated to Operating
Expenses by Landlord on a reasonably equitable basis;
(xxix) legal fees and costs, settlements, judgments or awards paid or
incurred because of disputes between Landlord and Tenant, Landlord
and other tenants or prospective occupants or prospective
tenants/occupants or providers of goods and services to the
Building;
(xxx) the costs of any flowers, gifts, balloons, etc. provided to any
prospective tenants, Tenant, other tenants, and occupants of the
Building, except to the extent such costs are customarily included
in operating expenses by landlords of comparable first-class
office buildings in the Sherman Oaks area;
(xxxi) costs for which the Landlord is reimbursed, or would have been
reimbursed if Landlord had carried the insurance Landlord is
required to carry pursuant to this Lease or would have been
reimbursed if Landlord had used commercially reasonable efforts to
collect such amounts, by any tenant or occupant of the Building or
by insurance from its carrier or any tenant's carrier;
(xxxii) tax penalties;
(xxxiii) costs reimbursed to Landlord under any warranty carried by
Landlord for the Building, which warranties Landlord shall use
commercially reasonable efforts to enforce;
(xxxiv) costs of third party non-tenant parties;
(xxxv) costs associated with the operation of the business of the
partnership or entity which constitutes the Landlord, as the same
are distinguished from the costs of operation of the Building,
including partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions
of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord's
interest in the Building, and costs incurred in connection with
any disputes between Landlord and its employees, between Landlord
and Building management, or between Landlord and other tenants or
occupants;
(xxxvi) costs arising from the negligence or willful misconduct of
Landlord or the "Indemnitees", as that term is defined in Section
9.1 of this Lease;
(xxxvii) costs of specialty clubs and services not provided or offered to
Tenant without charge;
(xxxviii) costs, including permit, license and inspection costs, incurred
with respect to the installation of other tenants' or occupants'
improvements made for tenants or other occupants in the Building
or incurred in renovating or otherwise improving, decorating,
painting or redecorating vacant space for tenants or other
occupants in the Building; and
(xxxix) any bad debt loss, rent loss or reserves for any bad debts, rent
loss, replacements or refurbishment;
(xl) rent for any management office in excess of 1,000 rentable square
feet;
(xli) the costs of earthquake insurance (subject to the provisions of
Section 4.1(b)); and
(xlii) the costs arising out of Landlord's abatement, mitigation,
remediation and/or encapsulation of any hazardous materials and/or
toxic substances as defined in any federal, state, county or local
law, when the same are located in, on or about the Building and/or
the real property underlying the Building, to the extent such
hazardous materials or toxic substances came in, on or about the
Building in violation of any then-effective federal, state, county
or local law.
d) "Tenant's Share" means 31.50%, which is derived by dividing the usable
square footage of the Premises (18,084) by the usable square footage of the
Building (57,414). If the Usable Area of the Premises is increased or deceased
pursuant to Section 1.4, then Tenant's Share shall be increased or decreased by
dividing the newly calculated Usable Area of the Premises by the Usable Area of
the Building.
9
Section 4.2. Calculation of Tenant's Share of Increases in Operating Expenses.
If, commencing with the calendar year 2002, the Operating Expenses for any
calendar year during the Term, or portion thereof, (including the last calendar
year of the Term), have increased over the Operating Expenses for the calendar
year 2001 (the "Base Year"), then within thirty (30) days after Tenant's receipt
of Landlord's computation of such increase (an "Escalation Statement"), Tenant
shall pay to Landlord, as Additional Rent, an amount equal to the product
obtained by multiplying such increase by Tenant's Share.
Landlord may, at or after the start of any calendar year subsequent to the
Base Year, notify Tenant of the amount which Landlord estimates will be Tenant's
monthly share of any such increase in Operating Expenses for such calendar year
over the Base Year and the amount thereof shall be added to the Fixed Monthly
Rent payments required to be made by Tenant in such year. If Tenant's Share of
any such increase in rent payable hereunder as shown on the Escalation Statement
is greater or less than the total amounts actually billed to and paid by Tenant
during the year covered by such statement, then within thirty (30) days
thereafter, Tenant shall pay in cash any sums owed Landlord or, if applicable,
Tenant shall either receive a credit against any Fixed Monthly Rent and/or
Additional Rent next accruing for any sum owed Tenant, or if Landlord's
Escalation Statement is rendered after the expiration or earlier termination of
this Lease and indicates that Tenant's estimated payments have exceeded the
total amount to which Tenant was obligated, then provided that Landlord is not
owed any other sum by Tenant, Landlord shall issue a cash refund to Tenant
within thirty (30) days after Landlord's completion of such Escalation
Statement.
Within one (1) year after receipt of a statement by Tenant, if Tenant
disputes the amount of Additional Rent set forth in the statement, an
independent certified public accountant (which accountant is a member of a
nationally or regionally recognized accounting firm and is not working on a
contingency fee basis), designated and paid for by Tenant, may, after reasonable
notice to Landlord and at reasonable times, inspect Landlord's records with
respect to such statement at Landlord's offices, provided that Tenant is not
then in default under this Lease beyond any applicable notice and/or grace
period and Tenant has paid all amounts required to be paid under the applicable
statement. In connection with such inspection, Tenant and Tenant's agents must
agree in advance to follow Landlord's reasonable rules and procedures regarding
inspections of Landlord's records, and shall execute a commercially reasonable
confidentiality agreement regarding such inspection. Tenant's failure to dispute
the amount of Additional Rent set forth in any Statement within one (1) year of
Tenant's receipt of such statement shall be deemed to be Tenant's approval of
such statement and Tenant, thereafter, waives the right or ability to dispute
the amounts set forth in such statement. If after such inspection, Tenant still
disputes such Additional Rent, a determination as to the proper amount shall be
made, at Tenant's expense, by an independent certified public accountant (the
"Accountant") selected by Landlord and subject to Tenant's reasonable approval;
provided that if such determination by the Accountant proves that Operating
Expenses were overstated by more than five percent (5%), then the cost of the
Accountant and the costs of such determination and the costs incurred by Tenant
in connection with its inspection shall be paid for by Landlord. Tenant hereby
acknowledges that Tenant's sole right to inspect Landlord's books and records
and to contest the amount of Operating Expenses payable by Tenant shall be as
set forth in this Section 4.2 and Tenant hereby waives any and all other rights
pursuant to applicable law to inspect such books and records and/or to contest
the amount of Operating Expenses payable by Tenant.
Notwithstanding any contrary provision of this Section 4.2, it is expressly
understood and agreed that Tenant shall not be obligated to pay any Additional
Rent pursuant to this Section 4.2 during the first twelve (12) months of the
Term.
Section 4.3. Tenant's Payment of Direct Charges as Additional Rent. Tenant
shall promptly and duly pay all costs and expenses incurred for or in connection
with any Tenant Change or Tenant Service, and discharge any mechanic's or other
lien created against the Premises, Building or the Real Property arising as a
result of or in connection with any Tenant Change or Tenant Service as
Additional Rent by paying the same, bonding or manner otherwise provided by law.
Any other cost, expense, charge, amount or sum (other than Fixed Monthly
Rent) payable by Tenant as provided in this Lease shall also be considered
Additional Rent.
Certain individual items of cost or expense may, in the reasonable and
equitable determination of Landlord, be separately charged and billed to Tenant
by Landlord, either alone or in conjunction with another party or parties, if
they are deemed in good faith by Landlord to apply solely to Tenant and/or such
other party or parties and are not otherwise normally recaptured by Landlord as
part of normal operating expenses. Insofar as is reasonable, Landlord shall
attempt to give Tenant prior notice and the opportunity to cure any circumstance
that would give rise to such separate and direct billing.
Said separate billing shall be paid as Additional Rent, regardless of
Tenant's Share. Such allocations by Landlord shall be binding on Tenant unless
patently unreasonable, and shall be payable within ten (10) days after receipt
of Landlord's billing therefor.
Section 4.4. Allocation of Operating Expenses. Tenant acknowledges that,
because the Project contains multiple buildings and both retail and office
elements, Landlord shall equitably allocate some or all of the Operating
Expenses for the Project among different portions or occupants of the Project
(the "Cost Pools"), in Landlord's reasonable discretion, based on (i) those
Project Operating Expenses which are attributable solely to the Building, and
(ii) a portion of the Operating Expenses which are attributable to the common
areas of the Project as a whole.
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ARTICLE 5
ETHICS
Section 5.1. Ethics. Landlord and Tenant agree to conduct their business or
practice in compliance with any appropriate and applicable codes of professional
or business practice.
ARTICLE 6
USE OF PREMISES
Section 6.1. Use. The Premises shall only be used as headquarters office and
training (the "Specified Use") and for no other purposes, without Landlord's
prior written consent, which consent shall be in Landlord's sole discretion.
Any proposed revision of the Specified Use by Tenant shall be for a use
consistent with those customarily found in first-class office buildings.
Reasonable grounds for Landlord withholding its consent shall include, but not
be limited to:
a) the proposed use will place a disproportionate burden on the Building
systems;
b) the proposed use is for governmental or medical purposes or for a company
whose primary business is that of conducting boiler-room type transactions
or sales;
c) the proposed use would generate excessive foot traffic to the Premises
and/or Building.
So long as Tenant is in control of the Premises, Tenant covenants and agrees
that it shall not use, suffer or permit any person(s) to use all or any portion
of the Premises for any purpose in violation of the laws of the United States of
America, the State of California, or the ordinances, regulations or requirements
of the City or County of Los Angeles, or other lawful authorities having
jurisdiction over the Building.
Tenant shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or unreasonably interfere with the rights of
other tenants or occupants of the Building or injure them. Tenant shall not use
or allow the Premises to be used for any pornographic or violent purposes, nor
shall Tenant cause, commit, maintain or permit the continuance of any nuisance
or waste in, on or about the Premises. Tenant shall not use the Premises in any
manner that in Landlord's reasonable judgment would adversely affect or
interfere with any services Landlord is required to furnish to Tenant or to any
other tenant or occupant of the Building, or that would interfere with or
obstruct the proper and economical rendition of any such service.
Section 6.2. Exclusive Use. Landlord represents that Tenant's Specified Use of
the Premises does not conflict with exclusive use provisions granted by
Landlord in other leases for the Building. Landlord further agrees that it
shall, in the future, not grant an exclusive use privilege to any other tenant
in the Building that will prevent Tenant from continuing to use the Premises for
its Specified Use.
Tenant acknowledges and agrees that it shall not engage in any of the uses
specified hereinbelow, for which Landlord has already granted exclusive rights:
None.
Provided that Tenant has received written notice of the same from Landlord,
and further provided that Landlord does not grant a future exclusive use right
that prohibits Tenant from engaging in the Specified Use, then Tenant agrees
that it shall not violate any exclusive use provision(s) granted by Landlord to
other tenants in the Building.
Section 6.3. Rules and Regulations. Tenant shall observe and comply with the
rules and regulations set forth in Exhibit C, and such other and further
reasonable and non-discriminatory rules and regulations as Landlord may make or
adopt and communicate to Tenant at any time or from time to time, when said
rules, in the reasonable judgment of Landlord, may be necessary or desirable to
ensure the first-class operation, maintenance, reputation or appearance of the
Building, so long as the same do not materially decrease Tenant's rights or
materially increase Tenant's obligations under this Lease. However, if any
conflict arises between the provisions of this Lease and any such rule or
regulation, the provisions of this Lease shall control.
Provided Landlord makes commercially reasonable efforts to seek compliance by
all occupants of the Building with the rules and regulations adopted by Landlord
(which shall be enforced in a reasonable and non-discriminatory manner),
Landlord shall not be responsible to Tenant for the failure of any other tenants
or occupants of the Building to comply with said rules and regulations.
ARTICLE 7
CONDITION UPON VACATING & REMOVAL OF PROPERTY
Section 7.1. Condition upon Vacating. At the expiration or earlier termination
of this Lease, Tenant shall:
a) terminate its occupancy of, quit and surrender to Landlord, all or such
portion of the Premises upon which this Lease has so terminated, broom-clean
and in the same condition as received except for:
i) ordinary wear and tear, or
ii) loss or damage by fire or other casualty and damage caused by Landlord;
and
b) surrender the Premises free of any and all debris and trash and any of
Tenant's personal property, furniture, fixtures and equipment that do not
otherwise become a part of the Real Property, pursuant to the provisions
contained in Section 7.2 hereinbelow; and
c) at Tenant's sole expense, forthwith and with all due diligence remove any
Tenant Change made by Tenant and restore the Premises to the condition in
which they existed prior to any such Tenant Change, reasonable wear and tear
excepted. However, Tenant shall only be obligated to remove said Tenant
Change if it was made without Landlord's approval or consent (and Landlord's
approval or consent was required pursuant to Section 12.12 with respect to
such Tenant Change) and/or if
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Landlord notified Tenant of its obligation to do so at the time Landlord
received notice of the applicable Tenant Change. If Tenant fails to complete
such removal and/or to repair any damage caused by the removal of any Tenant
Change, Landlord may do so and may charge the cost thereof to Tenant.
Section 7.2. Tenant's Property. All fixtures, equipment, improvements and
installations attached or built into the Premises at any time during the Term
shall, at the expiration or earlier termination of this Lease, be deemed the
property of Landlord; become a permanent part of the Premises and remain
therein. However, if said equipment, improvements and/or installations can be
removed without causing any structural damage to the Premises, then, provided
after such removal Tenant restores the Premises to the condition existing prior
to installation of Tenant's trade fixtures or equipment, Tenant shall be
permitted, at Tenant's sole expense, to remove said trade fixtures and
equipment.
ARTICLE 8
UTILITIES AND SERVICES
Section 8.1. Normal Building Hours / Holidays. The "Normal Business Hours" of
the Building, during which Landlord shall furnish the services specified in this
Article 8 are defined as 8:00 A.M. to 6:00 P.M., Monday through Friday, and 9:00
A.M. to 1:00 P.M. on Saturday, any one or more Holiday(s) excepted.
The "Holidays" which shall be observed by Landlord in the Building are defined
as any federally-recognized holiday and any other holiday specified herein,
which are: New Years Day, Presidents' Day, Memorial Day, the 4th of July, Labor
Day, Thanksgiving Day, the day after Thanksgiving, and Christmas Day (each
individually a "Holiday"). Tenant acknowledges that the Building shall be
closed on each and every such Holiday, and Tenant shall not be guaranteed access
to Landlord or Landlord's managing agent(s) on each such Holiday.
Section 8.2. Access to the Building and General Services. Subject to Force
Majeure and any power outage(s) which may occur in the Building when the same
are out of Landlord's reasonable control, Landlord shall furnish the following
services to the Premises twenty-four (24) hours per day, seven days per week:
a) during Normal Business Hours, bulb replacement for building standard lights;
b) access to and use of the parking facilities for persons holding valid
parking permits;
c) access to and use of the elevators and Premises;
d) use of electrical lighting on an as-needed basis within the Premises; and
e) use of a reasonable level of water for kitchen and toilet facilities in the
Premises and common area bathrooms.
Section 8.3. Janitorial Services. Landlord shall furnish the Premises with
janitorial services consistent with those provided to comparable office
buildings in the Sherman Oaks area five (5) days per business week after Normal
Business Hours, except when the Building is closed on any Holiday. Landlord
shall retain the sole discretion to choose and/or revise the janitorial company
providing said services to the Premises and/or Building.
Section 8.4. Security Services. Tenant acknowledges that Landlord currently
provides uniformed guard service to the Building on a twenty-four (24) hours per
day, seven (7) days per week basis, solely for the purposes of providing
surveillance of, information and directional assistance to persons entering the
Building.
Tenant acknowledges that such guard service shall not provide any measure of
security or safety to the Building or the Premises, and that Tenant shall take
such actions as it may deem necessary and reasonable to ensure the safety and
security of Tenant's property or person or the property or persons of Tenant's
agents, clients, contractors, directors, employees, invitees, licensees,
officers, partners or shareholders. Tenant agrees and acknowledges that, except
in the case of the gross negligence or willful misconduct of Landlord or its
directors, employees, officers, partners or shareholders, Landlord shall not be
liable to Tenant in any manner whatsoever arising out of the failure of
Landlord's guard service to secure any person or property from harm.
Tenant agrees and acknowledges that Landlord, in Landlord's sole discretion,
shall have the option, but not the obligation to add, decrease, revise the hours
of and/or change the level of services being provided by any guard company
serving the Building, so long as the level of services so provided remains
consistent with that provided in comparable office buildings in the Sherman Oaks
area. Tenant further agrees that Tenant shall not engage or hire any outside
guard or security company without Landlord's prior written consent, which shall
be in Landlord's sole discretion.
Section 8.5. Utilities. During Normal Business Hours Landlord shall furnish a
reasonable level of water, heat, ventilation and air conditioning ("HVAC"), and
a sufficient amount of electric current to provide customary business lighting
and to operate ordinary office business machines, such as a single personal
computer and ancillary printer per one hundred and twenty (120) Rentable square
feet contained in the Premises, facsimile machines, small copiers customarily
used for general office purposes, and such other equipment and office machines
as do not result in above-standard use of the existing electrical system. So
long as the same remain reasonably cost competitive, Landlord shall retain the
sole discretion to choose the utility vendor(s) to supply such services to the
Premises and the Building.
Except with the prior written consent of Landlord, which shall not be
unreasonably withheld, conditioned and/or delayed, Tenant shall not install or
use any equipment, apparatus or device in the Premises that requires the
installation of a 220 voltage circuit (except from one (1) copying machine);
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consumes more than five (5) kilowatts per hour per item; or the aggregate use of
which will in any way increase the connected load to more than 5 Watts per
square foot, or cause the amount of electricity to be furnished or supplied for
use in the Premises to more than 1.2 kWh per usable square foot, per month.
Except with the prior written consent of Landlord, Tenant shall not connect
any electrical equipment to the electrical system of the Building, except
through electrical outlets already existing in the Premises, nor shall Tenant
pierce, revise, delete or add to the electrical, plumbing, mechanical or HVAC
systems in the Premises.
Section 8.6. After Hours HVAC and/or Excess Utility Usage. If Tenant requires
HVAC service during other than Normal Business Hours ("Excess HVAC"), Tenant
shall make its request in writing at least four (4) hours before the close of
the normal business day. Otherwise, Landlord shall have no obligation to
provide Excess HVAC. Tenant's request shall be deemed conclusive evidence of
its willingness to pay the costs specified herein.
If Tenant requires electric current in excess of the amounts specified
hereinabove, water or gas in excess of that customarily furnished to the
Premises as office space ("Excess Utility Use"), Tenant shall first procure
Landlord's prior written consent to such Excess Utility Use, which Landlord may
reasonably refuse.
In lieu of Landlord's refusal, Landlord may cause a meter or sub-meter to be
installed to measure the amount of water, gas and/or electric current consumed
by Tenant in the Premises. The cost of any such meter(s), and the installation,
maintenance, and repair thereof, shall be paid by Tenant as Additional Rent.
After completing installation of said meter(s), and/or if Tenant requests
Excess HVAC, then Tenant shall pay, as Additional Rent, within thirty (30)
calendar days after Tenant's receipt of Landlord's billing, for the actual
amounts of all water, steam, compressed air, electric current and/or Excess HVAC
consumed beyond the normal levels Landlord is required herein to provide. Said
billing shall be calculated on the usage indicated by such meter(s), sub-
meter(s), or Tenant's written request therefor, and shall be issued by Landlord
at the rates charged for such services by the local public utility furnishing
the same, plus any additional expense reasonably incurred by Landlord in
providing said Excess Utility Use and/or in keeping account of the water, steam,
compressed air and electric current so consumed. The current charge for Excess
HVAC is $60.00 per hour, which shall be increased only if and to the extent that
Landlord's out-of-pocket costs of providing Excess HVAC are increased.
Section 8.7. Changes affecting HVAC. Tenant shall also pay as Additional Rent
for any additional costs Landlord incurs to repair any failure of the HVAC
equipment and systems to perform their function when said failure arises out of
or in connection with any change in, or alterations to, the arrangement of
partitioning in the Premises by or at the request of Tenant, or from Tenant's
failure to keep all HVAC vents within the Premises free of obstruction.
Section 8.8. Damaged or Defective Systems. Tenant shall give prompt written
notice to Landlord of any alleged damage to, or defective condition in any part
or appurtenance of the Building's sanitary, electrical, HVAC or other systems
serving, located in, or passing through, the Premises. Provided that the repair
or remedy of said damage or defective condition is within the reasonable control
of Landlord, it shall be remedied by Landlord with reasonable diligence;
provided however, that in the event of (i) an emergency, or (ii) the imminent
material interference with Tenant's business operations in the Premises,
Landlord shall endeavor to effect such repairs or remedies as soon as
commercially practicable. Otherwise, Landlord shall make such commercially
reasonable efforts as may be available to Landlord to effect such remedy or
repair.
Except as expressly provided otherwise in this Lease, Tenant shall not be
entitled to claim any damages arising from any such damage or defective
condition nor shall Tenant be entitled to claim any eviction by reason of any
such damage or defective condition.
Furthermore, if such damage or defective condition was caused by, or is
attributed to, a Tenant Change or the unreasonable or improper use of such
system(s) by Tenant or its employees, licensees or invitees:
a) the cost of the remedy thereof shall be paid by Tenant as Additional Rent
pursuant to the provisions of Section 4.3;
b) in no event shall Tenant be entitled to any abatement of rent (except as
expressly provided otherwise in Section 8.9); and
c) Tenant shall be estopped from making any claim for damages arising out of
Landlord's repair thereof.
Section 8.9. Limitation on Landlord's Liability for Failure to Provide
Utilities and/or Services. Except and to the extent of Landlord's negligence or
willful misconduct or the negligence or willful misconduct of Landlord's agents,
contractors, directors, employees, licensees, officers, partners or
shareholders, Tenant hereby releases Landlord from any liability for damages, by
abatement of rent or otherwise, for any failure or delay in furnishing any of
the services or utilities specified in this Article 8 (including, but not
limited to telephone and telecommunication services), or for any diminution in
the quality or quantity thereof, except as expressly provided otherwise in this
Lease.
Tenant's release of Landlord's liability shall be applicable when such
failure, delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
Landlord's inability to secure electricity, gas, water or other fuel at the
Building after Landlord's reasonable effort to do so, by accident or casualty
whatsoever, by act or default of Tenant or parties other than Landlord, or by
any other cause beyond Landlord's reasonable control. Such failures, delays or
diminution shall never be deemed to constitute a constructive eviction or
13
disturbance of Tenant's use and possession of the Premises, or serve to relieve
Tenant from paying Rent or performing any of its obligations under the Lease,
except as expressly provided otherwise in this Lease.
Furthermore, Landlord shall not be liable under any circumstances for a loss
of, injury to, or interference with, Tenant's business, including, without
limitation, any loss of profits occurring or arising through or in connection
with or incidental to Landlord's failure to furnish any of the services or
utilities required by this Article 8.
Notwithstanding the foregoing, if Tenant is prevented from using and does not
use, the Premises or any portion thereof, as a result of (i) the failure of
services or utilities required under this Lease, (ii) Landlord's failure to make
repairs as required under this Lease, (iii) Landlord's exercise of its rights
under Section 12.11 below, or (iv) any other entry into (or repair of) the
Premises by Landlord not required in connection with an emergency, or (v) the
breach of the representation pertaining to sound transmission described in the
last paragraph of Section 1.1 of this Lease (an "Abatement Event"), then Tenant
shall give Landlord Notice of such Abatement Event and if such Abatement Event
continues for five (5) consecutive business days after Landlord's receipt of any
such Notice (the "Eligibility Period"), and such failure is in no way
attributable to, or caused by, the negligent or willful misconduct of Tenant,
then the Fixed Monthly Rent, Additional Rent and all other amounts payable by
Tenant under this Lease shall be abated or reduced, as the case may be, after
expiration of the Eligibility Period for such time that Tenant continues to be
so prevented from using, and does not use, the Premises, or a portion thereof,
in the proportion that the rentable area of the portion of the Premises that
Tenant is prevented from using, and does not use ("Unusable Area"), bears to the
total rentable area of the Premises; provided, however, in the event that Tenant
is prevented from using, and does not use, the Unusable Area for a period of
time in excess of the Eligibility Period and the remaining portion of the
Premises is not sufficient to allow Tenant to effectively conduct its business
therein and if Tenant does not conduct its business from such remaining portion,
then for such time after expiration of the Eligibility Period during which
Tenant is so prevented from effectively conducting its business therein, then
the Fixed Monthly Rent, Additional Rent, and all other amounts payable by Tenant
under this Lease shall be abated for such time as Tenant continues to be so
prevented from using, and does not use, the Premises. If, however, Tenant
reoccupies any portion of the Premises during such period, the Rent allocable to
such reoccupied portion, based on the proportion that the rentable area of such
reoccupied portion of the Premises bears to the total rentable area of the
Premises, shall be payable by Tenant from the date Tenant reoccupies such
portion of the Premises. Except as expressly provided otherwise in this Lease,
such right to abate Fixed Monthly Rent and Additional Rent shall be Tenant's
sole and exclusive remedy at law or in equity for an Abatement Event.
Section 8.10. Tenant Provided Services. Tenant shall make no contract or
employ any labor in connection with the maintenance, cleaning or other servicing
of the physical structures of the Premises (collectively and individually a
"Tenant Service") without the prior consent of Landlord, which consent shall not
be unreasonably withheld. Tenant shall not permit the use of any labor,
material or equipment in the performance of any Tenant Service if the use
thereof, in Landlord's reasonable judgment, would violate the provisions of any
agreement between Landlord and any union providing work, labor or services in or
about the Premises, Building and/or create labor disharmony in the Building.
ARTICLE 9
TENANT'S INDEMNIFICATION AND LIMITATION ON LANDLORD'S LIABILITY
Section 9.1. Tenant's Indemnification and Hold Harmless. For the purposes of
this Section 9.1, "Indemnitee(s)" shall jointly and severally refer to Landlord
and Landlord's agents, clients, contractors, directors, employees, officers,
partners, and/or shareholders.
Tenant shall indemnify and hold Indemnitees harmless from and against all
claims, suits, demands, damages, judgments, costs, interest and expenses
(including attorneys fees and costs incurred in the defense thereof) to which
any Indemnitee may be subject or suffer when the same arise out of the
negligence or willful misconduct of Tenant or the negligence or willful
misconduct of Tenant's agents, contractors, directors, employees, licensees,
officers, partners or shareholders in connection with the use of, work in,
construction to, or actions in, on, upon or about the Premises, including any
actions relating to the installation, placement, removal or financing of any
Tenant Change, improvements, fixtures and/or equipment in, on, upon or about the
Premises.
Tenant's indemnification shall extend to any and all claims and occurrences,
whether for injury to or death of any person or persons, or for damage to
property (including any loss of use thereof), or otherwise, occurring during the
Term or prior to the Commencement Date (if Tenant has been given early access to
the Premises for whatever purpose), and to all claims arising from any condition
of the Premises due to or resulting from any default by Tenant in the keeping,
observance or performance of any covenant or provision of this Lease, or from
the negligence or willful misconduct of Tenant or the negligence or willful
misconduct of Tenant's agents, contractors, directors, employees, licensees,
officers, partners or shareholders.
Section 9.2. Nullity of Tenant's Indemnification in Event of Negligence.
Notwithstanding anything to the contrary contained in this Lease, Tenant's
indemnification shall not extend to the negligence or willful misconduct of
Landlord or the negligence or willful misconduct of Landlord's agents,
contractors, directors, employees, officers, partners or shareholders, nor to
such events and occurrences for which Landlord otherwise carries insurance
coverage.
Section 9.3. Tenant's Waiver of Liability. Provided that any injury or damage
suffered by Tenant or Tenant's agents, clients, contractors, directors,
employees, invitees, officers, partners, and/or shareholders did not arise out
of the negligence or willful misconduct of Landlord or the negligence or
14
willful misconduct of Landlord's agents, contractors, employees, officers,
partners or shareholders, Tenant shall make no claim against Landlord and
Landlord shall not be liable or responsible in any way for, and Tenant hereby
waives all claims against Landlord with respect to or arising out of injury or
damage to any person or property in or about the Premises by or from any cause
whatsoever under the reasonable control or management of Tenant.
Section 9.4. Limitation of Landlord's Liability. Tenant expressly agrees that,
notwithstanding anything in this Lease and/or any applicable law to the
contrary, the liability of Landlord and Landlord's agents, contractors,
directors, employees, licensees, officers, partners or shareholders, including
any successor in interest thereto (collectively and individually the "Landlord
Parties"), and any recourse by Tenant against Landlord or the Landlord Parties
shall be limited solely and exclusively to an amount which is equal to the
interest of Landlord in the Building (including rents, profits, and insurance or
condemnation proceeds).
Tenant specifically agrees that neither Landlord nor any of the Landlord
Parties shall have any personal liability therefor. Further, Tenant hereby
expressly waives and releases such personal liability on behalf of itself and
all persons claiming by, through or under Tenant.
Section 9.5. Transfer of Landlord's Liability. Tenant expressly agrees that,
to the extent that any transferee assumes the obligations of Landlord hereunder,
and provided Landlord has either transferred the complete Security Deposit held
pursuant to this Lease or refunded the same to Tenant as of the date of such
transfer, then the covenants and agreements on the part of Landlord to be
performed under this Lease which arise and/or accrue after the date of such
transfer shall not be binding upon Landlord herein named from and after the date
of transfer of its interest in the Building.
Section 9.6. Landlord's Indemnification. Landlord shall indemnify, and hold
Tenant, its agents, directors, employees, officers and partners harmless from
and against, any and all claims, causes of action, liabilities, losses,
reasonable costs and expenses, including reasonable attorney's fees and court
costs, arising from or in connection with:
a) any activity occurring, or condition existing, at or in the Building when
such activity or condition is under the reasonable control of Landlord
except when the same is caused in whole or in part by the negligence or
willful misconduct of Tenant or Tenant's employees, agents, licensee,
invitees, or contractors, or by Tenant's breach or default in the
performance of any obligation under this Lease; or
b) any activity occurring, or condition existing in the Premises when and to
the extent caused by the negligence or willful misconduct of Landlord or
Landlord's employees, agents or contractors.
ARTICLE 10
COMPLIANCE WITH LAWS
Section 10.1. Tenant's Compliance with Laws. Tenant shall not use, permit to
be used, or permit anything to be done in or about all or any portion of the
Premises which will in any way violate any laws, statutes, ordinances, rules,
orders or regulations duly issued by any governmental authority having
jurisdiction over the Premises, or by the Board of Fire Underwriters (or any
successor thereto) (collectively "Codes").
Section 10.2. Tenant to Comply at Sole Expense. Tenant shall, at its sole
expense, promptly remedy any violation of such Codes, provided, however, that
nothing contained in this Article 10 shall require Tenant to make any structural
changes or capital improvements to the Premises, unless such changes are
required due to either Tenant or Tenant's agents, clients, contractors,
directors, employees, invitees, licensees, officers, partners or shareholders
use of the Premises for purposes other than general office purposes consistent
with a Class A office building.
Section 10.3. Conclusive Evidence of Violation. The judgment of any court of
competent jurisdiction; Tenant's admission; or the admission of any one or more
of Tenant's agents, contractors, directors, employees, officers, partners or
shareholders in any action against Tenant, whether or not Landlord is a party
thereto, that Tenant has so violated any one or more Codes shall be conclusive
evidence of such violation as between Landlord and Tenant.
Section 10.4. Landlord's Operation of Building. Landlord shall operate, lease,
manage and maintain the Building, common areas, parking facilities and Real
Property at all times during the Term in a first-class manner.
Section 10.5. Landlord's Compliance with Law. Landlord represents that to the
best of Landlord's knowledge, without any independent inquiry, Landlord is
unaware of any non-compliance with any law, regulation or code affecting the
Premises or the Building. If Landlord is cited for any such non-compliance,
and:
a) Landlord chooses to not dispute such citation (or loses any such dispute
thereof); and
b) The existence of such condition materially affects Tenant's reasonable
occupancy and beneficial use of the Premises,
then Landlord shall commence to cure said non-compliance at Landlord's expense
if such non-compliance is due to a condition that existed prior to the
Commencement Date, and as a part of Operating Expenses of the Building if such
non-compliance is due to a condition that arises after the Commencement Date.
15
ARTICLE 11
ASSIGNMENT AND SUBLETTING
Section 11.1. Permission Required for Assignment or Sublet. Unless Landlord's
prior written consent has been given, which consent shall not be unreasonably
withheld, conditioned and/or delayed, this Lease shall not, nor shall any
interest herein, be assignable as to the interest of Tenant by operation of law;
nor shall Tenant:
a) assign, mortgage, pledge, encumber or otherwise transfer this Lease, the
Term and estate hereby granted or any interest hereunder;
b) permit the Premises or any part thereof to be utilized by anyone other than
Tenant and its trainees (whether as by a concessionaire, franchisee,
licensee, permittee or otherwise); or
c) except as hereinafter provided, sublet the Premises or any part thereof
(collectively with the items contained in this Section 11.1, a "Transfer").
Any assignment, mortgage, pledge, encumbrance, transfer or sublease without
Landlord's prior written consent shall be voidable, and, in Landlord's sole
election, shall constitute a material default under this Lease.
Section 11.2. Affiliated Companies/Restructuring of Business Organization. Any
contrary provision of this Article 11 notwithstanding, the assignment or
subletting by Tenant of all or any portion of this Lease or the Premises to (i)
a parent or subsidiary of Tenant, (ii) any person or entity which controls, is
controlled by or under common control with Tenant, (iii) any entity which
purchases all or substantially all of the assets of Tenant, or (iv) any entity
into which Tenant is merged or consolidated (all such persons or entities
described in (i), (ii), (iii) and (iv) being sometimes hereinafter referred to
as "Affiliates") shall not be deemed a Transfer under this Article 11 and thus
shall not be subject to Landlord's prior consent, and Landlord shall not be
entitled to any Net Rental Profit resulting therefrom, provided that:
a) any such Affiliate was not formed as a subterfuge to avoid the obligations
of this Article 11;
b) Tenant gives Landlord at least three (3) days' prior notice of any such
assignment or sublease to an Affiliate;
c) the successor of Tenant and Tenant have as of the effective date of any such
assignment or sublease a tangible net worth, in the aggregate, computed in
accordance with generally accepted accounting principles (but excluding good
will as an asset), which is sufficient to meet the then-remaining
obligations of Tenant under this Lease;
d) any such assignment or sublease shall be subject and subordinate to all of
the terms and provisions of this Lease, and such assignee or sublessee shall
assume, in a written document reasonably satisfactory to Landlord and
delivered to Landlord upon or prior to the effective date of such assignment
or sublease, all the obligations of Tenant under this Lease with respect to
that portion of the Premises which is the subject of such Transfer (other
than the amount of Fixed Monthly Rent payable by Tenant with respect to a
sublease); and
e) Tenant and any guarantor shall remain fully liable for all obligations to be
performed by Tenant under this Lease.
Section 11.3. Request to Assign or Sublease. If at any time during the Term,
Tenant wishes to assign this Lease or any interest therein, or to sublet all or
any portion of the Premises, then at least thirty (30) days prior to the date
when Tenant desires the assignment or sublease to be effective, Tenant shall
give written notice to Landlord setting forth the name, address, and business of
the proposed assignee or sublessee, business and personal credit applications
completed on Landlord's standard application forms, and information (including
references and such financial documentation as Landlord shall reasonably
prescribe) concerning the character and financial condition of the proposed
assignee or sublessee, the effective date of the assignment or sublease, and all
the material terms and conditions of the proposed assignment, and with reference
solely to a sublease: a detailed description of the space proposed to be sublet,
together with any rights of the proposed sublessee to use Tenant's improvements
and/or ancillary services with the Premises.
Section 11.4. Landlord's Consent. Landlord shall have twenty (20) days after
Tenant's notice of assignment and/or sublease is received with the financial
information reasonably requested by Landlord to advise Tenant of Landlord's
consent to or disapproval of such proposed assignment or sublease, which consent
shall not be unreasonably withheld, conditioned and/or delayed. Any disapproval
by Landlord shall contain Landlord's detailed reasons for such disapproval.
Tenant acknowledges that Landlord's consent shall be based upon the criteria
listed in Sections 11.4 (a) through (e) below, and subject to Landlord's right
to unilaterally disapprove of any proposed assignment and/or sublease, based on
the existence of any condition contained within Section 11.5 hereinbelow. If
Landlord provides its consent or fails to provide its disapproval within the
time period specified, Tenant shall be free to complete the assignment and/or
sublet such space to the party contained in Tenant's notice, subject to the
following conditions:
a) The assignment and/or sublease shall be on the same terms as were set forth
in the notice given to Landlord;
b) The assignment and/or sublease shall be documented in a written format that
is reasonably acceptable to Landlord, which form shall specifically include
the assignee's and/or sublessee's acknowledgement and acceptance of the
obligation contained in this Lease, in so far as applicable;
16
c) The assignment and/or sublease shall not be valid, nor shall the assignee or
sublessee take possession of the Premises, or subleased portion thereof,
until an executed duplicate original of such sublease and/or assignment has
been delivered to Landlord;
d) Tenant shall pay monthly to Landlord fifty percent (50%) of the "Net Rental
Profit" per square foot received by Tenant. Such Net Rental Profit shall be
payable to Landlord as Additional Rental under this Lease without affecting
or reducing any other obligation of Tenant hereunder.
In the event of a sublease, Net Rental Profit shall be calculated by
subtracting the Fixed Monthly Rent and Additional Rent paid to Landlord by
Tenant, as well as Tenant's reasonable costs of subletting such space (such as
rent abatement, fair market leasing commissions, reasonable marketing expenses,
new leasehold improvements, and reasonable attorney fees and expenses, as well
as any economic consideration received by Tenant arising out of the sale of
Tenant's business, or because Tenant provides ancillary business services to the
sublessee, such as reception or secretarial services, or office furnishings or
equipment), from the total rent per square foot that Tenant is paid by any
sublessee.
In the event of an assignment, Net Rental Profit shall be calculated by
subtracting the Fixed Monthly Rent and Additional Rent paid to Landlord by
Tenant, as well as Tenant's reasonable costs in connection with such assignment
(such as rent abatement, fair market leasing commissions, reasonable marketing
expenses, new leasehold improvements, and reasonable attorney fees and expenses,
as well as any economic consideration received by Tenant arising out of the sale
of the Tenant's business, or because Tenant provided ancillary business services
to the assignee, such as reception or secretarial services, or office
furnishings or equipment), from the total consideration that Tenant is paid by
any assignee.
Tenant shall deliver to Landlord a statement within thirty (30) days after
the end of each calendar year and/or within thirty (30) days after the
expiration or earlier termination of the Term of this Lease in which any
sublease of the Premises has occurred, specifying for each such sublease:
i) the date of its execution and delivery, the number of square feet of the
Rentable Area demised thereby and the Term thereof, and
ii) a computation in reasonable detail showing:
1) the amounts (if any) paid and payable by Tenant to Landlord pursuant to
this Section 11.4 with respect to such sublease for the period covered
by such statement, and
2) the amounts (if any) paid and payable by Tenant to Landlord pursuant to
this Section 11.4 with respect to any payments received from a
sublessee during such period but which relate to an earlier period.
Section 11.5. Reasonable Grounds for Denial of Assignment and/or Sublease.
Landlord and Tenant agree that, in addition to such other reasonable grounds as
Landlord may assert for withholding its consent, it shall be reasonable under
this Lease and any applicable law for Landlord to withhold its consent to any
proposed Transfer, where any one or more of the following conditions exists:
a) The proposed sublessee or assignee (a "Transferee") is, in Landlord's
reasonable judgment, of a character or reputation which is not consistent
with those businesses customarily found in a Class A office building;
b) The Transferee is engaged in a business or intends to use all or any portion
of the Premises for purposes which are not consistent with those generally
found in the Building or other Class A office buildings in the vicinity of
the Building, provided, however, that in no event shall Landlord be permitted
to decline Tenant's request for a Transfer solely on the basis of said
Transferee's intent to change the Specified Use from that of Tenant, unless
such proposed change shall violate any Exclusive Use provision already
granted by Landlord;
c) The Transferee is either a governmental agency or instrumentality thereof;
d) The Transfer will result in more than a reasonable and safe number of
occupants within the Premises;
e) The Transferee is not a party of reasonable financial worth and/or financial
stability in light of the responsibilities involved under the sublease, if a
sublessee, or the Lease, if an assignee, on the date consent is requested, or
has demonstrated a prior history of credit instability or unworthiness;
f) The Transfer will cause Landlord to be in violation of another lease or
agreement to which Landlord is a party, or would give another occupant of the
Building a right to cancel its lease;
g) Either the proposed Transferee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed Transferee:
i) is a tenant in the Building at the time Tenant requests approval of the
proposed Transfer, and Landlord can make space available in the Building
which is comparable in size to the portion of the Premises Tenant
proposes to transfer, or
ii) is engaged in on-going negotiations with Landlord to lease space in the
Building at the time Tenant requests approval of the proposed Transfer,
and Landlord can make space available in the Building which is comparable
in size to the portion of the Premises Tenant proposes to transfer;
h) The Transferee intends to use all or a portion of the Premises for medical
procedures or for a primary business which is as a boiler-room type sales or
marketing organization.
If Landlord withholds or conditions its consent and Tenant believes that
Landlord did so contrary to the terms of this Lease, Tenant may, as its sole
remedy, prosecute an action for declaratory relief to
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determine if Landlord properly withheld or conditioned its consent, and Tenant
hereby waives all other remedies, including without limitation those set forth
in California Civil Code Section 1995.310.
Section 11.6. Landlord's Option as to Subject Space. INTENTIONALLY OMITTED.
Section 11.7. Tenant's Continued Obligation. Any consent by Landlord to an
assignment of this Lease and/or sublease of the Premises shall not release
Tenant from any of Tenant's obligations hereunder or be deemed to be a consent
by Landlord to any subsequent hypothecation, assignment, subletting, occupation
or use by another person, and Tenant shall remain liable to pay the Rent and/or
perform all other obligations to be performed by Tenant hereunder. Landlord's
acceptance of Rent or Additional Rent from any other person shall not be deemed
to be a waiver by Landlord of any provision of this Lease. Landlord's consent
to one assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting.
If any assignee or sublessee of Tenant or any successor of Tenant defaults in
the performance of any of the provisions of this Lease, whether or not Landlord
has collected Rent directly from said assignee or sublessee, Landlord may
proceed directly against Tenant without the necessity of exhausting remedies
against such assignee, sublessee or other successor-in-interest.
Provided that in no event shall any further assignment, sublease, amendment or
modification to this Lease serve to either increase Tenant's liability or expand
Tenant's duties or obligations hereunder, or relieve Tenant of its liability
under this Lease, then Landlord may consent to subsequent assignments or
subletting of this Lease or amendments or modifications to this Lease with any
assignee, without notifying Tenant or any successor of Tenant, and without
obtaining their consent thereto.
Section 11.8. Tenant To Pay Landlord's Costs. If Tenant assigns or sublets the
Premises or requests the consent of Landlord to any assignment, subletting or
other modification of this Lease, or if Tenant requests the consent of Landlord
for any act that Tenant proposes to do, whether or not Landlord shall grant
consent thereto, then Tenant shall, concurrent with Tenant's submission of any
written request therefor, pay Landlord's reasonable costs for review of Tenant's
documentation, credit check and processing fees, as well as any reasonable legal
fees incurred by Landlord in connection therewith (which shall not exceed $1,500
in the aggregate).
Section 11.9. Successors and Assigns. Subject to the provisions contained
herein, the covenants and agreements contained in this Lease shall bind and
inure to the benefit of Landlord and Tenant, their respective successors and
assigns and all persons claiming by, through or under them.
ARTICLE 12
MAINTENANCE, REPAIRS, DAMAGE, DESTRUCTION, RENOVATION AND/OR
ALTERATION
Section 12.1. Tenant's Obligation to Maintain. Tenant shall, at Tenant's sole
expense, maintain the Premises in good order and repair ordinary wear and tear,
damage by casualty and by acts of Landlord and its agents excepted, and shall
also keep clean any portion of the Premises which Landlord is not obligated to
clean. Such obligation shall include the clean-out; repair and/or replacement
of Tenant's garbage disposal(s), Instant-Heat or other hot water producing
equipment, if any, and the cleaning and removal of any dishes and/or food prior
to the same becoming unsanitary. If Tenant becomes obligated to repair anything
within the Premises, Tenant shall advise Landlord's managing agent of such need.
Further, Tenant shall pay the cost of any injury, damage or breakage in, upon
or to the Premises created by Tenant's gross negligence or willful misconduct or
the gross negligence or willful misconduct of Tenant's agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders.
Subject to Tenant's obligation for reimbursement to Landlord, as specified
herein, Landlord shall make all repairs to the Premises and the exterior walls,
foundation and roof of the Building, the structural portions of the floors of
the Building, the systems and equipment of the Building and the Tenant
Improvements installed in the Premises. However, if such repairs, maintenance
or cleaning are required due to Tenant's gross negligence or willful misconduct
or the gross negligence or willful misconduct of Tenant's agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders, then, Tenant shall, within ten (10) days after receipt of
Landlord's billing therefor, reimburse Landlord, as Additional Rent, for any
expense of such repairs, cleaning and/or maintenance in excess of any insurance
proceeds available for reimbursement thereof, including for any deductible
anticipated in connection therewith. If Tenant provides notice to Landlord of
an event or circumstance that requires the action of Landlord with respect to
the repairs or maintenance to the Premises or base building systems serving the
Premises, and Landlord fails to provide such action as required by the terms of
this Lease within a commercially reasonable time, then Tenant may take the
required action if:
(a) Tenant delivers to Landlord an additional written notice advising
Landlord that Tenant intends to take the required action if Landlord does
not begin the required repair or maintenance within ten (10) days (or
such shorter time period as may be commercially reasonable, in the event
of an emergency) after the written notice; and
(b) Landlord fails to begin the required work within this ten-day (10-day)
period (or such shorter time period as may be commercially reasonable, in
the event of an emergency).
If such action was required under the terms of this Lease to be taken by
Landlord, Tenant shall be entitled to prompt reimbursement by Landlord of
Tenant's reasonable costs and expenses in taking such action. Landlord's
obligation to reimburse Tenant shall survive expiration or earlier termination
of this Lease. If any action taken by Tenant will affect any portion of the
base building systems, structural integrity of the Building or exterior
appearance of the Building, Tenant shall use only the contractor
18
used by Landlord in the Building for such work, unless that contractor is
unwilling or unable to perform the work, in which event Tenant may use the
services of another qualified contractor that normally and regularly performs
similar work in comparable first-class office buildings. Tenant shall take no
action pertaining to or affecting any portion of the base building systems that
will adversely affect the enjoyment, possession, or other rights of any other
tenant in the Building.
If, within thirty (30) days after receipt of Tenant's written demand for
payment of Tenant's costs incurred in taking such action on Landlord's behalf
(including a reasonably particularized statement), Landlord has not paid the
invoice or delivered to Tenant a detailed written objection to it, Tenant may
deduct from Rent payable by Tenant under this Lease the amount set forth in the
invoice. Tenant shall not be entitled to this deduction from Rent, however, if,
within thirty (30) days after receipt of Tenant's invoice, Landlord in good
faith delivers to Tenant a written objection to its payment, setting forth with
reasonable particularity Landlord's reasons for its claim that Landlord did not
have to take this action under the terms of this Lease or that the charges are
excessive (in which case Landlord shall pay the amount it contends would not
have been excessive). If Landlord and Tenant are unable to resolve this
disagreement, Tenant's sole remedy shall be to institute legal proceedings
against Landlord to collect the amount set forth in Tenant's invoice.
Except as expressly provided otherwise in this Section 12.1, Tenant hereby
waives all right to make repairs at Landlord's expense under the provisions of
Section 1932(1), 1941 and 1942 of the Civil Code of California.
Section 12.2. Repair Period Notice. Tenant shall give prompt notice to
Landlord of Tenant's actual knowledge of any damage or destruction to all or any
part of the Premises or Building resulting from or arising out of any fire,
earthquake, or other identifiable event of a sudden, unexpected or unusual
nature (individually or collectively a "Casualty"). The time periods specified
in this Section 12.2. shall commence after Landlord receives said written notice
from Tenant of the occurrence of a Casualty (or Landlord otherwise becomes aware
of such casualty). After receipt of Tenant's written notice that a Casualty has
occurred (or Landlord's awareness of such casualty), Landlord shall, within the
later of:
a) sixty (60) days after the date on which Landlord determines the full extent
of the damage caused by the Casualty; or
b) thirty (30) days after Landlord has determined the extent of the insurance
proceeds available to effectuate repairs, but
c) notwithstanding a) and b), in no event more than ninety (90) days after the
Casualty,
provide written notice to Tenant indicating the anticipated time period for
repairing the Casualty (the "Repair Period Notice"). The Repair Period Notice
shall also state, if applicable, Landlord's election either to repair the
Premises, or to terminate this Lease, pursuant to the provisions of Section
12.3, and if Landlord elects to terminate this Lease, Landlord shall provide
Tenant with a minimum period of ninety (90) days within which to fully vacate
the Premises.
Section 12.3. Landlord's Option to Terminate or Repair. Notwithstanding
anything to the contrary contained herein, Landlord shall have the option, but
not the obligation to elect not to rebuild or restore the Premises and/or the
Building if one or more of the following conditions is present:
a) repairs to the Premises cannot reasonably be completed within two hundred
seventy (270) days after the date of the Casualty (when such repairs are made
without the payment of overtime or other premiums);
b) repairs required cannot be made pursuant to the then-existing laws or
regulations affecting the Premises or Building, or the Building cannot be
restored except in a substantially different structural or architectural form
than existed before the Casualty;
c) the holder of any mortgage on the Building or ground or underlying lessor
with respect to the Real Property and/or the Building shall require that a
material portion of the insurance proceeds be used to retire the mortgage
debt, so that the balance of insurance proceeds remaining available to
Landlord for completion of repairs shall be insufficient to repair said
damage or destruction;
d) the holder of any mortgage on the Building or ground or underlying lessor
with respect to the Real Property and/or the Building shall terminate the
mortgage, ground or underlying lease, as the case may be;
e) provided Landlord has carried the coverage Landlord is required to obtain
under Section 19.1 of this Lease, the damage is not fully covered, except for
deductible amounts, by Landlord's insurance policies;
f) more than thirty-three and one-third percent (33 1/3%) of the Building is
damaged or destroyed, whether or not the Premises is affected, provided that
Landlord elects to terminate all other leases in the Building.
If Landlord elects not to complete repairs to the Building or Premises,
pursuant to this Section 12.3, Landlord's election to terminate this Lease shall
be stated in the Repair Period Notice, in which event this Lease shall cease and
terminate as of the date contained in Landlord's Repair Period Notice.
If one hundred percent of the Building is damaged or destroyed, as certified
by an independent building inspector, this Lease shall automatically terminate
after Tenant's receipt of written notice of such termination from Landlord, and
without action beyond the giving of such notice being required by either
Landlord or Tenant.
Upon any termination of this Lease pursuant to this Section 12.3, Tenant shall
pay its prorata share of Fixed Monthly Rent and Additional Rent, properly
apportioned up to the date of such termination, reduced by any abatement of Rent
to which Tenant is entitled under Section 12.5; after which both
19
Landlord and Tenant shall thereafter be freed and discharged of all further
obligations under the Lease, except for those obligations which by their
provisions specifically survive the expiration or earlier termination of the
Term.
Section 12.4. Tenant's Option to Terminate. If
a) the Repair Period Notice provided by Landlord indicates that the anticipated
period for repairing the Casualty exceeds two hundred seventy (270) days
after the Casualty (the "Repair Period"), or
b) the Casualty to the Premises occurs during the last twelve (12) months of
the Term; then
Tenant shall have the option, but not the obligation, to terminate this Lease
by providing written notice ("Tenant's Termination Notice") to Landlord within
thirty (30) days after receiving the Repair Period Notice in the case of 12.4
(a); or within thirty (30) days after the Casualty, in the case of Section 12.4
(b). Furthermore, if:
c) Landlord does not complete the repairs required hereinabove within the
Repair Period, and
d) Landlord has not completed the repairs thereafter on or before thirty (30)
days after the expiration of the Repair Period,
then Tenant shall also have the option, but not the obligation, to terminate
this Lease by giving Landlord written notice of its intention to so terminate,
which notice shall be given not more than forty-five (45) days after expiration
of the Repair Period.
Tenant's failure to provide Landlord with Tenant's Termination Notice within
the time periods specified hereinabove shall be deemed conclusive evidence that
Tenant has waived its option to terminate this Lease.
Section 12.5. Temporary Space and/or Rent Abatement During Repairs or
Renovation. During the Repair Period or during any such period that Landlord
completes Work (as defined hereinbelow) or Renovations (as defined in Section
12.11 hereinbelow), if available, and if requested by Tenant, Landlord shall
make available to Tenant other space in the Building which, in Tenant's
reasonable opinion, is suitable for the temporary conduct of Tenant's business.
However, if such temporary space is smaller than the Premises, Tenant shall pay
Fixed Monthly Rent and Additional Rent for the temporary space based upon the
calculated rate per Rentable square foot payable hereunder for the Premises,
times the number of Rentable square feet available for Tenant's use in the
temporary space; provided, however, that Tenant shall be entitled to abate rent
for the Premises for that period of time subsequent to the Casualty and prior to
Tenant's move in to the temporary space.
If no temporary space is available that is reasonably satisfactory to Tenant,
and any part of the Premises is rendered untenantable by reason of such
Casualty, Work or Renovation, then to the extent that all or said portion of the
usable area of the Premises is so rendered untenantable by reason of such
Casualty, Work or Renovation, Tenant shall be provided with a proportionate
abatement of Fixed Monthly Rent and Additional Rent. Said proportional
abatement shall be based on the Usable Square Footage of the Premises that
cannot and is not actually used by Tenant, divided by the total Usable square
feet contained in the Premises. That proportional abatement, if any, shall be
provided during the period beginning on the later of:
a) the date of the Casualty; or
b) the actual date on which Tenant ceases to conduct Tenant's normal business
operations in all or any portion of the Premises, and
shall end on the first Monday after Landlord achieves substantial completion and
notifies Tenant that Landlord has achieved substantial completion of restoration
of the Premises to the extent that the same are usable for Tenant's business
operations. Tenant's acceptance of said abatement of Rent shall be deemed
conclusive evidence of Tenant's waiver of any further claim or right of future
claim for any loss or damage asserted by Tenant arising out of the Casualty
Repair, Work or Renovation, as the case may be, except with respect to any claim
based upon the gross negligence or willful misconduct of Landlord, or Landlord's
agents, employees or contractors.
Section 12.6. Tenant's Waiver of Consequential Damages. Subject to Section
12.4, the provisions contained in Section 12.5 are Tenant's sole remedy arising
out of any Casualty. Landlord shall not be liable to Tenant or any other person
or entity for any direct, indirect, or consequential damage (including but not
limited to lost profits of Tenant or loss of or interference with Tenant's
business), unless caused by the gross negligence or willful misconduct of
Landlord or the gross negligence or willful misconduct of Landlord's agents,
contractors, directors, employees, licensees, officers, partners or
shareholders, due to, arising out of, or as a result of the Casualty (including
but not limited to the termination of the Lease in connection with the
Casualty).
Section 12.7. Repair Of The Premises When Casualty Not Caused By Tenant. If
the cost of repair of any Casualty is covered under one or more of the insurance
policies Landlord is required herein to provide, then Landlord shall restore the
base core and shell of the Premises to its condition prior to the Casualty and
repair and/or replace the Improvements previously installed in the Premises so
long as Landlord receives sufficient insurance proceeds therefor (excluding
deductibles). Tenant shall have the option to either, at Tenant's sole expense,
complete the balance of repairs needed to restore the Improvements contained in
the Premises to their condition prior to the Casualty or to continue Tenant's
normal business operations in the Premises in the condition to which Landlord
has so restored the Improvements.
If Landlord has elected to complete repairs to the Premises, and has not
elected to terminate this Lease, as specified in Section 12.3, then Landlord
shall complete such repairs within the Repair Period, in a manner, and at times,
which do not unreasonably interfere with Tenant's use of that portion of the
Premises remaining unaffected by the Casualty. Provided Landlord has elected to
make the repairs
20
required hereunder, and Tenant has not otherwise elected to terminate this Lease
pursuant to the terms of this Article 12, this Lease shall not be void or
voidable during the Repair Period, nor shall Landlord be deemed to have
constructively evicted Tenant thereby.
Section 12.8. Waiver. Tenant hereby waives the provisions of California Civil
Code Sections 1932(2) and 1933(4) and the provisions of any successor or other
law of like import.
Section 12.9. Repair of the Building. Except as specified hereinabove, unless
Landlord terminates this Lease as permitted hereinabove, Landlord shall repair
the Building, parking structure or other supporting structures and facilities
within two hundred and twenty-five (225) days after Landlord becomes aware of
such damage and/or destruction.
Section 12.10. Government-Required Repairs. If, during the Term, additional
inspections other than those standard annual or biannual inspections to which
the Building may generally be subject; testing, repairs and/or reconstruction
(collectively the "Work") are required by any governmental authority, or if,
upon the recommendation of its engineers, Landlord independently elects to
undertake all or any portion of the Work prior to being required to do so by
such governmental authority, Landlord shall give notice thereof to Tenant and
shall not unreasonably interfere with Tenant's use of the Premises while
completing the Work. Tenant shall cooperate fully with Landlord in connection
with the Work and, upon the prior written request of Landlord, shall make the
Premises available for completion of the Work. Tenant agrees that Landlord
shall allocate all costs associated with completion of the Work to the
Building's Operating Expenses (to the extent not excluded therefrom), when
permitted to under the provisions of Section 4.1 of this Lease.
If Landlord elects to undertake the Work during the Term, then Tenant shall be
entitled to an abatement of rent, pursuant to the provisions of Section 12.5
hereinabove, and Landlord shall be completely responsible for repair of any
damage to the Premises and all costs associated with the removal, moving and/or
storage of Tenant's furniture, artwork, office equipment and files. Landlord
will restore any and all areas damaged by completion of the Work to their
previous quality and pay all clean-up costs. Landlord further agrees that it
shall use commercially reasonable efforts to see that all construction, such as
coring or power nailing that could be disruptive to Tenant's normal business
operations shall, in so far as is reasonably possible, be performed between the
hours of 7:00 p.m. to 7:00 a.m. Monday through Friday; after 1:00 p.m. on
Saturdays and/or at any time on Sundays.
Except and to the extent of Landlord's negligence and/or willful misconduct or
the negligence and/or willful misconduct of Landlord's agents, contractors,
directors, employees, officers, partners, and/or shareholders, Tenant shall not
have the right to terminate this Lease as a result of Landlord undertaking the
Work, nor shall Tenant or any third party claiming under Tenant be entitled to
make any claim against Landlord for any interruption, interference or disruption
of Tenant's business or loss of profits therefrom as a result of the Work, and
Tenant hereby releases Landlord from any claim which Tenant may have against
Landlord arising from or relating to, directly or indirectly, the performance of
the Work by Landlord.
Section 12.11. Optional Landlord Renovation. It is specifically understood and
agreed that Landlord has no obligation and has made no promises to alter,
remodel, improve, renovate or decorate the Premises, Building, or any part
thereof and that, except as set forth herein, no representations respecting the
condition of the Premises or the Building have been made by Landlord to Tenant.
However, at any time and from time to time during the Term, Landlord may
elect, in Landlord's sole discretion, to otherwise renovate, improve, alter or
modify elements of the Real Property, the Building and/or the Premises
(collectively, "Renovations") including without limitation, the parking
facilities, common areas, systems, equipment, roof, and structural portions of
the same, which Renovations may include, without limitation:
a) modifying the common areas and tenant spaces to comply with applicable laws
and regulations, including regulations relating to the physically disabled,
seismic conditions and building safety and security, and
b) installing new carpeting, lighting and wall covering in the Building common
areas.
In connection with such Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in or about the Building, limit or
eliminate access to portions of the Building, common areas or parking facilities
serving the Building, or perform other work in or about the Building, which work
may create noise, dust or debris that remains in the Building.
Landlord shall have the right to access through the Premises as well as the
right to take into and upon and through all or any part of the Premises, or any
other part of the Building, all materials that may reasonably be required to
make such repairs, alterations, decorating, additions or improvements pursuant
to the provisions of this Section 12.11. So long as Tenant shall maintain
reasonable access to the Premises, the Building and the parking facilities,
Landlord shall also have the right, in the course of the Renovations, to close
entrances, doors, corridors, elevators, or other building facilities, or
temporarily to abate the operation of such facilities.
So long as Tenant's ability to conduct its business from the Premises is not
materially impaired, and Tenant is provided reasonable access to the Premises
and the parking facilities, Tenant shall permit all of the Renovations to be
done, and except and to the extent of Landlord's negligence or willful
misconduct or the negligence or willful misconduct of Landlord's contractors,
directors, employees, officers, partners or shareholders, without claiming
Landlord is guilty of the constructive eviction or disturbance of Tenant's use
and possession.
Landlord shall not be liable to Tenant in any manner (except as expressly
provided otherwise in this Lease), whether for abatement of any Rent or other
charge, reimbursement of any expense, injury, loss or damage to Tenant's
property, business, or any person claiming by or under Tenant, by reason of
21
interference with the business of Tenant or inconvenience or annoyance to Tenant
or the customers of Tenant resulting from any Renovations done in or about the
Premises or the Building or to any adjacent or nearby building, land, street or
alley. However, Landlord agrees that the Renovations shall be scheduled insofar
as is commercially reasonable to permit Tenant to continue its normal business
operations, with advance notice thereof, and in such commercially reasonable
manner so as to minimize Tenant's inconvenience.
Section 12.12. Optional Tenant Changes During the Term. After completion of
the initial Improvements contemplated hereunder, if any, Tenant shall make no
alteration, change, addition, removal, demolition, improvement, repair or
replacement in, on, upon, to or about the Premises, or at any time to any
portion of the Building (collectively or individually a "Tenant Change"),
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,
Tenant shall have the right, without Landlord's consent but upon ten (10) days
prior notice to Landlord, to make strictly cosmetic, non-structural additions
and alterations ("Cosmetic Alterations") to the Premises that do not (i) involve
the expenditure of more than $50,000 in the aggregate in any twelve (12) month
period during the Term, (ii) affect the exterior appearance of the Building, or
(iii) affect the Building systems or the Building structure. Except as
otherwise specified in Article 7, any Tenant Change shall, at the termination of
this Lease, become a part of the Building and belong to Landlord, pursuant and
subject to the provisions of Section 7.2. Any application for Landlord's
consent to a Tenant Change, and the completion thereof, shall be in conformance
with the provisions of Exhibit B-1, attached hereto and made a part hereof by
reference.
Tenant shall not knowingly permit Tenant's agents, clients, contractors,
directors, employees, invitees, licensees, officers, partners or shareholders to
deface the walls, floors and/or ceilings of the Premises, nor mark, drive nails,
screws or drill holes into, paint, or in any way mar any surface in the
Building. Notwithstanding the above, Tenant is hereby permitted to install such
pictures, certificates, licenses, artwork, bulletin boards and similar items as
are normally used in Tenant's business, so long as such installation is
carefully attached to the walls by Tenant in a manner reasonably prescribed by
Landlord.
If Tenant desires, as a part of any Tenant Change, to make any revisions
whatsoever to the electrical, HVAC, mechanical, plumbing, or structural systems
of the Building or Premises, such revisions must be completed by subcontractors
specified by Landlord and in the manner and location(s) reasonably prescribed by
Landlord. If Tenant desires to install any telephone outlets, the same shall be
installed in the manner and location(s) reasonably prescribed by Landlord.
If Landlord consents to any requested Tenant Change, Tenant shall give
Landlord a minimum of fifteen (15) days written notice prior to commencement
thereof. Landlord reserves the option, but not the obligation, to enter upon
the Premises for the purpose of posting and maintaining such notices on the
Premises as may be reasonably necessary to protect Landlord against mechanic's
liens, material man's liens or other liens, and/or for posting any other notices
that may be proper and necessary in connection with Tenant's completion of the
Tenant Change.
If any alterations, additions or improvements made by Tenant result in
Landlord being required to make any alterations to other portions of the
Building in order to comply with any applicable statutes, ordinances or
regulations (e.g., "handicap ordinances") then Tenant shall reimburse Landlord
upon demand for all costs and expenses incurred by Landlord in making such
alterations.
Section 12.13. Express Agreement. The provisions of this Lease, including
those contained in this Article 12, constitute an express agreement between
Landlord and Tenant that applies in the event of any Casualty to the Premises,
Building or Real Property. Tenant, therefore, fully waives the provisions of
any statute or regulations, including California Civil Code Sections 1932(2) and
1933(4), and any other law or statute which purports to govern the rights or
obligations of Landlord and Tenant concerning a Casualty in the absence of
express agreement. Tenant and Landlord expressly agree and accept that any
successor or other law of like import shall have no application hereunder.
ARTICLE 13
CONDEMNATION
Section 13.1. Condemnation of the Premises. If more than twenty five percent
(25%) of the Premises is lawfully condemned or taken in any manner for any
public or quasi-public use, or if any portion of the Building is condemned or
taken in such a manner that Tenant is reasonably prevented from obtaining access
to the Building or the Premises, this Lease may, within ten (10) business days
of such taking, be terminated at the option of either Landlord or Tenant by one
party giving the other thirty (30) days written notice of its intent to do so.
If either Landlord or Tenant provide the other party written notice of
termination, the Term and estate hereby granted shall forthwith cease and
terminate as of the earlier of the date of vesting of title in such condemnation
or taking or the date of taking of possession by the condemning authority.
If less than twenty-five percent (25%) of the Premises is so condemned or
taken, then the term and estate hereby granted with respect to such part shall
forthwith cease and terminate as of the earlier of the date of vesting of title
in such condemnation or taking or the date of taking of possession by the
condemning authority, and the Fixed Monthly Rent payable hereunder (and
Additional Rent payable pursuant to Articles 3 or 4) shall be abated on a
prorated basis, by dividing the total number of Usable square feet so taken by
the total number of Usable square feet contained in the Premises, then
multiplying said percentage on a monthly basis, continuing from the date of such
vesting of title to the date specified in this Lease for the expiration of the
Term hereof; provided, however, that if the portion of the Premises so condemned
or taken renders the balance of the Premises effectively unusable for the
22
purposes contemplated under Section 6.1 (as reasonably determined by Landlord),
then Tenant shall have the right to terminate this Lease upon ten (10) days
written notice to Landlord.
Section 13.2. Condemnation of the Building. If less than twenty-five percent
(25%) of the Building is so condemned or taken, then Landlord shall, to the
extent of the proceeds of the condemnation payable to Landlord and with
reasonable diligence, restore the remaining portion of the Building as nearly as
practicable to its condition prior to such condemnation or taking; except that,
if such proceeds constitute less than ninety percent (90%) of Landlord's
estimate of the cost of rebuilding or restoration, then Landlord may terminate
this Lease on thirty (30) days prior written notice to Tenant.
If more than twenty-five percent (25%) of the Building is so condemned or
taken, but the Premises are unaffected thereby, then Landlord shall have the
option but not the obligation, which election shall be in Landlord's sole
discretion, to terminate this Lease, effective the earlier of the date of
vesting of title in such condemnation or the date Landlord delivers actual
possession of the Building and Premises to the condemning authority, which
election by Landlord shall be provided to Tenant in writing.
Section 13.3. Award. If any condemnation or taking of all or a part of the
Building takes place, Tenant shall be entitled to join in any action claiming
compensation therefore, and Landlord shall be entitled to receive that portion
of the award made for the value of the Building, Premises, leasehold
improvements made or reimbursed by Landlord, or bonus value of the Lease, and
Tenant shall only be entitled to receive any award made for the value of the
estate vested by this Lease in Tenant, including Tenant's proximate damages to
Tenant's business and reasonable relocation expenses. Nothing shall preclude
Tenant from intervening in any such condemnation proceeding to claim or receive
from the condemning authority any compensation to which Tenant may otherwise
lawfully be entitled in such case in respect of Tenant's property or for moving
to a new location.
Section 13.4. Condemnation for a Limited Period. Notwithstanding the
provisions of Section 13.1, 13.2 or 13.3, except during the final twelve (12)
months of the Term, if all or any portion of the Premises are condemned or taken
for governmental occupancy for a limited period (i.e. - anticipated to be no
longer than sixty (60) days), then this Lease shall not terminate; there shall
be no abatement of Fixed Monthly Rent or Additional Rent payable hereunder; and
Tenant shall be entitled to receive the entire award therefor (whether paid as
damages, rent or otherwise).
If, during the final twelve (12) months of the Term, all or any portion of the
Premises are condemned or taken for governmental occupancy for a limited period
anticipated to be in excess of sixty (60) days, or for a period extended after
the expiration of the initial Term, Tenant shall have the option, but not the
obligation, to terminate this Lease, in which case, Landlord shall be entitled
to such part of such award as shall be properly allocable to the cost of
restoration of the Premises, and the balance of such award shall be apportioned
between Landlord and Tenant as of the date of such termination.
If the termination of such governmental occupancy is prior to expiration of
this Lease, and Tenant has not elected to terminate this Lease, Tenant shall,
upon receipt thereof and to the extent an award has been made, restore the
Premises as nearly as possible to the condition in which they were prior to the
condemnation or taking.
ARTICLE 14
SUBORDINATION
Section 14.1. Subordination. Subject to Tenant's receipt of an appropriate
non-disturbance agreement(s) as set forth below, this Lease shall be subject and
subordinate to all present and future ground or underlying leases of the
Building and to the lien of any mortgage, trust deed or other encumbrances now
or hereafter in force against the Building or any part thereof, if any, and to
all renewals, extensions, modifications, consolidations and replacements
thereof, and to all advances made or hereafter to be made upon the security of
such mortgages or trust deeds, unless the holders of such mortgages, trust deeds
or other encumbrances, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Landlord's
delivery to Tenant of commercially reasonable non-disturbance agreement(s) (the
"Nondisturbance Agreement") in favor of Tenant from any ground lessors, mortgage
holders or lien holders of Landlord who come into existence following the date
hereof but prior to the expiration of the Lease Term shall be in consideration
of, and a condition precedent to, Tenant's agreement to be bound by the
provisions of this Article 14. Subject to Tenant's receipt of the non-
disturbance agreement(s) described above, Tenant covenants and agrees in the
event any proceedings are brought for the foreclosure of any such mortgage or
deed in lieu thereof (or if any ground lease is terminated), to attorn to the
lienholder or purchaser or any successors thereto upon any such foreclosure sale
or deed in lieu thereof (or to the ground lessor) to recognize such purchaser or
lienholder or ground lessor as the lessor under this Lease, provided such
lienholder or purchaser or ground lessor shall agree to accept this Lease and
not disturb Tenant's occupancy, so long as Tenant is not in default of this
Lease. Landlord's interest herein may be assigned as security at any time to
any lienholder. Tenant shall, within ten (10) business days of request by
Landlord, execute such further instruments or assurances as Landlord may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases in accordance with the provisions of this Article 14. Subject
to Tenant's receipt of the Nondisturbance Agreement described herein, Tenant
waives the provisions of any current or future rule or applicable law which may
give or purport to give Tenant any right or election to terminate or otherwise
adversely affect this Lease and the obligations of the Tenant hereunder in the
event of any foreclosure proceeding or sale.
Notwithstanding any contrary provision of this Section 14.1, Landlord shall
use commercially reasonable efforts to obtain and deliver to Tenant, with ninety
(90) days after the mutual execution and delivery of this Lease, a Non-
Disturbance Agreement from PNC, the holder of the existing deed of trust
23
affecting the Project, on their then-standard form (the "PNC SNDA"). If Tenant
does not receive the PNC SNDA on or before the expiration of such ninety (90)
day period, then Tenant shall have the right to terminate this Lease by written
notice to Landlord given within five (5) days thereafter. If Tenant does not so
timely deliver such notice of termination, then this Lease shall remain in full
force and effect. Landlord hereby represents that there are no other existing
deeds of trust or ground leases affecting the Project.
Section 14.2. Modification of Lease. If any current or prospective mortgagee
or ground lessor for the Building requires a modification or modifications of
this Lease, which modification or modifications will not cause an increased cost
or expense to Tenant or in any other way materially and adversely change the
rights and obligations of Tenant hereunder, then in such event, Tenant agrees
that this Lease may be so modified. Tenant agrees to execute and deliver to
Landlord within ten (10) calendar days following the request therefor whatever
documents are required to effectuate said modification. Should Landlord or any
such current or prospective mortgagee or ground lessor require execution of a
short form of Lease for recording, containing, among other customary provisions,
the names of the parties, a description of the Premises and the Term, Tenant
agrees to execute and deliver to Landlord such short form of Lease within ten
(10) calendar days following the request therefor.
ARTICLE 15
ESTOPPEL CERTIFICATES
Section 15.1. Estoppel Certificates. Tenant shall, within ten (10) business
days after receipt of Landlord's written request therefor, execute, acknowledge
and deliver to Landlord an Estoppel Certificate, which may be conclusively
relied upon by any prospective purchaser, mortgagee or beneficiary under any
deed of trust covering the Building or any part thereof. Said Estoppel
Certificate shall certify the following:
a) that this Lease is unmodified and in full force and effect (or, if there
have been modifications, that this Lease is in full force and effect, as
modified, and stating the date and nature of each modification);
b) the date, if any, to which rental and other sums payable hereunder have been
paid;
c) that no notice has been received by Tenant of any default which has not
been cured, except as to defaults specified in the certificate;
d) that Landlord is not in default under this Lease or, if so, specifying such
default; and
e) such other factual matters as may be reasonably requested by Landlord.
Tenant's failure to deliver the Estoppel Certificate within three (3) days
after Tenant's receipt of the second (2nd) written request therefor, shall
constitute a material default under the Lease, and Landlord shall have the
option, but not the obligation, to enforce the remedies contained in Article 18.
Landlord shall, within fifteen (15) business days after receipt of Tenant's
written request therefor, provide to Tenant an estoppel certificate signed by
Landlord, containing the same type of information as set forth above, with such
changes as are reasonably necessary to reflect that the estoppel certificate is
being granted and signed by Landlord to Tenant, rather than from Tenant to
Landlord.
ARTICLE 16
NOTICES
Section 16.1. Notices. Any notice, consent, approval, agreement,
certification, request, bill, demand, statement, acceptance or other
communication hereunder (a "notice") shall be in writing and shall be considered
duly given or furnished when:
a) delivered personally or by messenger or overnight delivery service, with
signature evidencing such delivery;
b) upon the date of delivery, after being mailed in a postpaid envelope, sent
certified mail, return receipt requested, when addressed to Landlord as set
forth in the Basic Lease Information and to Tenant at the Premises and any
other address for Tenant specified in the Basic Lease Information; or to such
other address or addressee as either party may designate by a written notice
given pursuant hereto; or
c) upon confirmation of good transmission if sent via facsimile machine to such
phone number as shall have been provided in writing by Landlord or Tenant,
one to the other.
If Tenant fails to provide another valid address, other than the Premises,
upon which service to Tenant can be perfected, then Tenant hereby appoints as
its agent to receive the service of all dispossessory or distraint proceedings
and notices thereunder the person in charge of or occupying the Premises at the
time, and if no person shall be in charge of or occupy the same, then such
service may be made by attaching the same to the main entrance of the Premises.
ARTICLE 17
DEFAULT AND LANDLORD'S OPTION TO CURE
Section 17.1. Tenant's Default. For the purposes of this Section 17.1, if the
term "Tenant", as used in this Lease, refers to more than one person, then, such
term shall be deemed to include all of such persons or any one of them; if any
of the obligations of Tenant under this Lease are guaranteed, the term "Tenant,"
as used in Section 17.1(e) and Section 17.1(f), shall be deemed to also include
the guarantor or, if there is more than one guarantor, all or any one of them;
and if this Lease has been assigned, the term "Tenant," as used in Sections 17.1
(a) through (h), inclusive, shall be deemed to include the assignee and
assignor, jointly and severally, unless Landlord shall have, in connection with
such assignment, previously released the assignor from any further liability
under this Lease, in which event
24
the term "Tenant," as used in said subparagraphs, shall not include the assignor
that was previously released.
Tenant's continued occupancy and quiet enjoyment of the Premises and this
Lease and the covenants and estate hereby granted are subject to the limitation
that:
a) if Tenant fails to make any payment of Fixed Monthly Rent or Additional Rent
within ten (10) days of Tenant's receipt of written notice that the same has
not been paid, or
b) if Tenant defaults in the keeping, observance or performance of any covenant
or agreement including any provisions of the rules and regulations
established by Landlord (other than a default of the character referred to in
Sections 17.1 (a), (b) or (c)), and if such default continues and is not
cured by Tenant within thirty (30) days after Landlord has given to Tenant a
notice specifying the same, or, in the case of such a default which for
causes beyond Tenant's reasonable control (including occupancy of a
sublessee) cannot with due diligence be cured within such period of thirty
(30) days, if Tenant:
i) does not, promptly upon Tenant's receipt of such notice, advise Landlord
of Tenant's intention duly to institute all steps necessary to cure such
default or
ii) does not duly institute and thereafter diligently prosecute to completion
all steps (including, if appropriate, legal proceedings against a
defaulting sublessee) necessary to cure the same, or
c) if Tenant fails to deliver the Estoppel Certificate required under Article
15 hereof within three (3) days after Tenant's receipt of Landlord's second
(2nd) request therefor, or
d) if Tenant:
i) applies for or consents to the appointment of, or the taking of
possession by a receiver, custodian, trustee or liquidator of itself or
of all or a substantial part of its property;
ii) admits in writing its inability, or is generally unable, to pay its
debts as such debts become due;
iii) makes a general assignment for the benefit of its creditors;
iv) commences a voluntary case under federal bankruptcy laws (as now or
hereafter in effect);
v) files a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding up, or composition or
adjustment of debts;
vi) fails to controvert in a timely or appropriate manner, or acquiesces in
writing to, any petition filed against it in an involuntary case under
such bankruptcy laws;
vii) take any action for the purpose of effecting any of the foregoing, and
any of the foregoing are not dismissed within ninety (90) days
thereafter, or
e) if a proceeding or case is commenced, without the application or consent of
Tenant, in any court of competent jurisdiction and which is not dismissed
within ninety (90) days, seeking:
i) the liquidation, reorganization, dissolution, winding up, or composition
or readjustment of debts, of Tenant; or
ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of Tenant or of all or a substantial part of its assets; or
iii) similar relief with respect of Tenant under any law relating to
bankruptcy, insolvency, reorganization, winding up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of sixty (60) days, or an order for relief against Tenant
shall be entered in an involuntary case under such bankruptcy laws, or
f) if Tenant fails to take possession of and move into the Premises within
fifteen (15) calendar days after Landlord substantially completes the
Improvements described in Exhibit B and tenders the same in writing to
Tenant, unless Tenant acknowledges and accepts the Commencement Date as
occurring within such fifteen-day time period, and pays Rent thereon from
such Commencement Date;
then, in any or each such event, Tenant shall be deemed to have committed a
material default under this Lease.
Section 17.2. Landlord's Option to Cure Tenant's Default. If Tenant enters
into a default under this Lease (after the expiration of any applicable notice
and cure period), in lieu of Landlord's issuance of a written notice, as
specified hereinbelow, Landlord may cure the same at the sole expense of Tenant:
a) immediately and without notice in the case of emergency; if said default is
specified in Sections 17.1 (a), (b) or (c), or if such default unreasonably
interferes with the use by any other tenant of the Building; with the
efficient operation of the Building; or will result in a violation of law or
in a cancellation of any insurance policy maintained by Landlord, and
b) after the expiration of Landlord's 3-Day Notice of Intent to Cure, in the
case of any default other than those specified in Section 17.2 (a)
hereinabove.
Section 17.3. Landlord's Option to Terminate this Lease. In addition to any
other remedies Landlord may have at law or in equity, Landlord shall be entitled
to give to Tenant a written notice of intention to terminate this Lease at the
expiration of the applicable cure period after the date of the giving of such
notice, and if such notice is given by Landlord, and Tenant fails to cure the
defaults specified therein, then this Lease and the Term and estate hereby
granted (whether or not the Commencement Date has already occurred) shall
terminate upon the expiration of such applicable cure period (a "Default
Termination"), with the same effect as if the last day of such applicable period
were
25
the Termination Date, except that Tenant shall remain liable for damages as
provided hereinbelow or pursuant to law.
Section 17.4. Certain Payments. Bills for all reasonable costs and expenses
incurred by Landlord in connection with any performance by it under Section 17.2
shall be payable, as Additional Rent, pursuant to the provisions of Section 4.3.
Section 17.5. Certain Waivers. Unless Tenant has submitted documentation that
it validly disputes Landlord's billing for Fixed Monthly Rent hereunder, or is
completing an audit of Landlord's Operating Expense Statement, if Tenant is in
default in payment of Fixed Monthly Rent or Additional Rent hereunder beyond any
applicable notice and/or grace period, Tenant waives the right to designate the
items against which any payments made by Tenant are to be credited. In lieu
thereof, Landlord may apply any payments received from Tenant to the then-oldest
billing remaining unpaid on Tenant's rental account or to any other payment due
from Tenant, as Landlord sees fit.
Section 17.6. Landlord Default. Notwithstanding anything to the contrary set
forth in this Lease, Landlord shall not be in default in the performance of any
obligation required to be performed by Landlord pursuant to this Lease unless:
a) in the event such default is with respect to the payment of money, Landlord
fails to pay such unpaid amounts within five (5) business days of written
notice from Tenant that the same was not paid when due, or
b) in the event such default is other than the obligation to pay money,
Landlord fails to perform such obligation within thirty (30) days after the
receipt of notice from Tenant specifying in detail Landlord's failure to
perform; provided, however, if the nature of Landlord's obligation is such
that more than thirty (30) days are required for its performance, then
Landlord shall not be in default under this Lease if it shall commence such
performance within such thirty (30) days period and thereafter diligently
pursue the same to completion within a reasonable time period.
Upon any such default by Landlord under this Lease, Tenant may, except as
otherwise specifically provided in this Lease to the contrary, exercise any of
its rights provided at law or in equity.
ARTICLE 18
DAMAGES; REMEDIES; RE-ENTRY BY LANDLORD; ETC.
Section 18.1. Damages. If Landlord terminates this Lease, pursuant to the
provisions of Section 17.3 (a "Default Termination"), then Landlord may recover
from Tenant the total of:
a) the worth at the time of award of the unpaid Fixed Monthly Rent and
Additional Rent earned to the date of such Default Termination; and
b) the worth at the time of award of the amount by which the unpaid Fixed
Monthly Rent and Additional Rent which would have been earned after the date
of such Default Termination until the time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided; and
c) the worth at the time of award of the amount by which the unpaid Fixed
Monthly Rent and Additional Rent which would have been earned for the balance
of the Term after the time of award exceeds the amount of such rental loss
that Tenant proves could have been reasonably avoided; and
d) any other amount reasonably necessary to compensate Landlord for all of the
detriment proximately caused by Tenant's failure to observe or perform any of
its covenants and agreements under this Lease or which in the ordinary course
of events would be likely to result therefrom, including, without limitation,
the payment of the reasonable expenses incurred or paid by Landlord in re-
entering and securing possession of the Premises and in the reletting thereof
(including, without limitation, altering and preparing the Premises for new
tenants and brokers' commission); and
e) at Landlord's sole election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time under applicable
California laws.
Section 18.2. Computations: The "worth at the time of award" is computed:
a) in paragraphs (a) and (b) above, by allowing interest at the rate of ten
percent (10%) per annum (but in no event in excess of the maximum rate
permitted by law); and
b) in paragraph (c) above, 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) For purposes of computing unpaid rental which would have accrued and become
payable under this Lease, unpaid rental shall consist of the sum of:
i) the total Fixed Monthly Rent for the balance of the Term, plus
ii) a computation of Tenant's Share of Additional Rent due under the Lease
including, without limitation, Tenant's Proportionate Share of any
increase in Operating Expenses (including real estate taxes) for the
balance of the Term. For purposes of computing any increases due Landlord
hereunder, Additional Rent for the calendar year of the default and for
each future calendar year in the Term shall be assumed to be equal to the
Additional Rent for the calendar year prior to the year in which default
occurs, compounded at a rate equal to the mean average rate of inflation
for the preceding five calendar years as determined by the United States
Department of Labor, Bureau of Labor Statistics Consumer Price Index (All
Urban Consumers, all items, 1982-84 equals 100) for the metropolitan area
or region of which Los Angeles, California is a part. If such index is
discontinued or revised, the average rate of inflation shall be
determined by reference to the index designated as the successor or
substitute index by the government of the United States.
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Section 18.3. Re-Entry by Landlord.
a) If a Default Termination occurs or any default specified in Sections 17.1
(a) through (g) occurs and continues beyond the period of grace (if any)
therefor, Landlord or Landlord's authorized representatives may re-enter the
Premises and remove all persons and all property therefrom, either by
summary dispossession proceedings or by any suitable action or proceeding at
law, without being liable to indictment, prosecution or damages therefor,
and may repossess and enjoy the Premises. No re-entry or repossession of the
Premises by Landlord or its representatives under this Section 18.3 shall be
construed as an election to terminate this Lease unless a notice of such
election is given to Tenant or unless the termination thereof is decreed by
a court of competent jurisdiction. The words "re-enter", "re-entry" and "re-
entering" as used herein are not restricted to their technical legal
meanings.
b) If any default specified in Sections 17.1 (a) through (g) occurs and
continues beyond the period of grace (if any) therefor, then if Landlord
does not elect to terminate this Lease Landlord may, from time to time and
without terminating this Lease, enforce all its rights and remedies under
this Lease, including the right to recover the Fixed Monthly Rent and
Additional Rent as the same becomes payable by Tenant hereunder.
If Landlord consents thereto, Tenant may sublet the Premises or any part
thereof (which consent Landlord agrees will not be unreasonably withheld),
subject to Tenant's compliance with the requirements of Article 11 of this
Lease. So long as Landlord is exercising this remedy it will not terminate
Tenant's right to possession of the Premises, but it may engage in the acts
permitted by Section 1951.4(c) of the California Civil Code.
c) If Tenant abandons the Premises in breach of this Lease, Landlord shall have
the right to relet the Premises or any part thereof on such terms and
conditions and at such rentals as Landlord in its sole discretion may deem
advisable, with the right to make alterations and repairs in and to the
Premises necessary to reletting. If Landlord so elects to relet, then gross
rentals received by Landlord from the reletting shall be applied:
i) first, to the payment of the reasonable expenses incurred or paid by
Landlord in re-entering and securing possession of the Premises and in
the reletting thereof (including, without limitation, altering and
preparing the Premises for new tenants and brokers' commissions);
ii) second, to the payment of the Fixed Monthly Rent and Additional Rent
payable by Tenant hereunder; and
iii) third, the remainder, if any, to be retained by Landlord and applied to
the payment of future Fixed Monthly Rent and Additional Rent as the
same become due.
Should the gross rentals received by Landlord from the reletting be
insufficient to pay in full the sums stated in Section 18.3 (a) and (b)
hereinabove, Tenant shall, upon demand, pay the deficiency to Landlord.
Section 18.4. Certain Waivers. After Landlord has actually obtained possession
of the Premises pursuant to any lawful order of possession granted in a valid
court of law, Tenant thereafter waives and surrenders for Tenant, and for all
claiming under Tenant, all rights and privileges now or hereafter existing to
redeem the Premises (whether by order or judgment of any court or by any legal
process or writ); to assert Tenant's continued right to occupancy of the
Premises; or to have a continuance of this Lease for the Term hereof. Tenant
also waives the provisions of any law relating to notice and/or delay in levy of
execution in case of an eviction or dispossession for nonpayment of rent, and of
any successor or other law of like import.
Section 18.5. Cumulative Remedies. The remedies of Landlord provided for in
this Lease are cumulative and are not intended to be exclusive of any other
remedies to which Landlord may be lawfully entitled. The exercise by Landlord
of any remedy to which it is entitled shall not preclude or hinder the exercise
of any other such remedy.
ARTICLE 19
INSURANCE
Section 19.1. Landlord Obligations: Landlord agrees to at all times secure
from a company holding a Best's rating of A-7 or better and admitted to do
business in the State of California, and maintain during the entire Term of this
Lease the following coverage:
a) A Commercial General Liability policy with extended Risk endorsements and a
combined single limit of Two Million Dollars ($2,000,000).
b) An All Risk policy of standard fire and extended coverage, with vandalism
and malicious mischief endorsements, covering full replacement value of the
Building, the parking facilities, common area improvements and any and all
improvements installed in, on or upon the Premises and affixed thereto,
provided that the premium cost for coverage of the Improvements to the
Premises in excess of a total value equal to thirty-five Dollars ($35.00)
per usable square foot of the Premises shall, at the sole option of Tenant
be directly reimbursed from Tenant to Landlord, pursuant to the provisions
of Article 4 of this Lease, or be covered by Tenant's self-insurance, at
Tenant's sole risk.
Tenant acknowledges and agrees that Landlord shall have no obligation and
shall not carry insurance of any kind on Tenant's goods, furniture or
furnishings or on Tenant's Property, nor shall Landlord be obligated to repair
any damage thereto or to replace the same.
Section 19.2. Tenant Obligations. Within ten (10) days prior to the earlier of
the Commencement Date or Tenant's anticipated early possession date of the
Premises, Tenant shall secure and maintain
27
during the entire Term insurance coverage from a company holding a Best's rating
of A-7 or better, and admitted to do business in the State of California, as
follows:
a) A Commercial General Liability policy, with extended Risk endorsements and a
Combined Single Limit of Three Million Dollars ($3,000,000);
b) An All Risk policy of standard fire and extended coverage, with vandalism
and malicious mischief endorsements, covering the full replacement value of
its personal property, for losses occurring in, on, or about the Premises.
The proceeds from any such policy shall first be used by Tenant for the
replacement of the personal property so damaged or destroyed;
c) Worker's Compensation insurance in a minimum amount of $500,000, and in full
compliance with the requirements of the State of California; and
d) A policy of insurance covering Tenant's losses from interruption of Tenant's
normal business activities.
Each and every policy which Tenant is to provide hereunder shall
specifically include the liability assumed by Tenant pursuant to the provisions
of this Lease (provided that the amount of such insurance shall not serve to
limit the liability of Tenant hereunder), and shall be primary insurance for
such liability, and not excess over or contributory with any other existing or
new insurance in force for or on behalf of Landlord. Each policy shall not
eliminate cross-liability and shall contain a severability of interest clause.
Section 19.3. Compliance with Building Insurance Requirements. After Tenant
takes occupancy of the Premises, Tenant shall not violate or permit in, on or
upon the Premises the violation of any condition imposed by such standard fire
insurance policies as are normally issued for office buildings in the City or
County in which the Building is located. Tenant shall not do, suffer or permit
anything to be done, or keep, suffer or permit anything to be kept, in the
Premises which would increase the risk ratings or premium calculation factors on
the Building or property therein (collectively an "Increased Risk"), or which
would result in insurance companies of good standing refusing to insure the
Building or any property appurtenant thereto in such amounts and against such
risks as Landlord may reasonably determine from time to time are appropriate.
Notwithstanding the above, if additional insurance is available to cover
such Increased Risk, Tenant shall not be in default hereunder if:
a) Tenant authorizes Landlord in writing to obtain such additional insurance;
and
b) prepays the annual cost thereof to Landlord for such additional coverage, as
well as the additional costs, if any, of any increase in Landlord's other
insurance premiums resulting from the existence or continuance of such
Increased Risk;
Section 19.4. Additional Insureds. Tenant agrees that Landlord shall be named
as an additional insured or loss payee on the aforementioned policies of
insurance, as appropriate in the insurance industry.
Section 19.5. Waiver of Subrogation. Provided Landlord and Tenant have each
and both obtained the policies of insurance required pursuant to the provisions
of Sections 19.1 and 19.2 hereinabove, Tenant and Landlord agree that if a loss
occurs due to any of the perils for which they are required hereunder to provide
insurance, that each party shall look solely to the insurance policies covering
such loss or risk for recovery. Landlord and Tenant hereby grant to each other,
on behalf of any insurer providing insurance to either of them with respect to
the demised premises, a waiver of any right of subrogation which any such
insurer of one party may acquire against the other by virtue of payment of any
loss under such insurance.
If either Landlord or Tenant fails to provide the insurance policy or
policies required hereinabove, the waiver of subrogation contained in this
Section 19.5 shall no longer inure to the benefit of the party failing to
provide such insurance, and the party claiming against such uninsured party
shall be entitled to restitution of all damages and expenses suffered and/or
claimed, without limitation.
Section 19.6. Proof of Coverage. Upon written request from one to the other,
the parties hereto shall each provide the other a certified copy or copies of
the certificate(s) of insurance evidencing the existence of the coverage
required hereunder.
Section 19.7. Protection Against Cancellation. Upon written request, proof
must also be given by each party to the other, that each of the policies
required pursuant to this Article 19 expressly provides that the policy shall
not be canceled until the expiration of thirty (30) days' prior written notice
to the other party.
Section 19.8. Failure to Secure. If at any time during the Term, and after
expiration of three (3) business days prior written demand therefore from
Landlord, Tenant fails to:
a) Provide Landlord with access to a registered insurance broker of record that
can verify Tenant's compliance with the requirement contained in this
Article 19; or
b) provide documentation reasonably acceptable to Landlord that Tenant has
secured and maintained the insurance coverage required hereunder, then
Landlord shall have the option, but not the obligation, without further
notice or demand to obtain such insurance on behalf of or as the agent of Tenant
and in Tenant's name.
Tenant shall pay Landlord's billing for the premiums associated with such
insurance policy or policies within five (5) days after receipt of Landlord's
billing, as well as such other reasonable costs and fees arising out of such
default, together with interest on the entire amount so advanced by Landlord, at
the rate of ten percent (10%) per annum, computed from the date of such advance.
Such advances, if made by Landlord, shall be construed as and considered
Additional Rent under this Lease.
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Sections 19.9. Proceeds. Proceeds from any such policy or policies shall be
payable to both Landlord and Tenant as their respective interests may appear.
ARTICLE 20
MISCELLANEOUS
Section 20.1. Entire Agreement. This Lease, including the exhibits and
guaranty of lease, if any, annexed hereto, contains all of the agreements and
understandings relating to the leasing of the Premises and the obligations of
Landlord and Tenant in connection therewith and neither party and no agent or
representative thereof has made or is making, and neither party in executing and
delivering this Lease is relying upon, any warranties or representations, except
to the extent set forth in this Lease. All understandings and agreements
heretofore had between Landlord and Tenant relating to the leasing of the
Premises are merged in this Lease, which alone fully and completely expresses
their agreement. The Riders (if any) and Exhibits annexed to this Lease and the
Construction Agreement are hereby incorporated herein and made a part hereof.
Section 20.2. No Waiver or Modification. The failure of Landlord or Tenant to
insist in any instance upon the strict keeping, observance or performance of any
covenant or agreement contained in this Lease or to exercise any election herein
contained shall not be construed as a waiver or relinquishment for the future of
such covenant or agreement, but the same shall continue and remain in full force
and effect. No waiver or modification by either Landlord or Tenant of any
covenant or agreement contained in this Lease shall be deemed to have been made
unless the same is in writing executed by the party whose rights are being
waived or modified. No surrender of possession of any part of the Premises
shall release Tenant from any of its obligations hereunder unless accepted in
writing by Landlord. The receipt and retention by Landlord, and the payment by
Tenant, of Fixed Monthly Rent or Additional Rent with knowledge of the breach of
any covenant or agreement contained in this Lease shall not be deemed a waiver
of such breach by either Landlord or Tenant.
Section 20.3. Time of the Essence. Time is of the essence of this Lease and of
all provisions hereof, except in respect to the delivery of possession of the
Premises at the Commencement Date.
Section 20.4. Force Majeure. For the purposes of this Lease, "Force Majeure"
shall be defined as any or all prevention, delays or stoppages and/or the
inability to obtain services, labor, materials or reasonable substitutes
therefor, when such prevention, delay, stoppage or failure is due to strikes,
lockouts, labor disputes, acts of God, governmental actions, civil commotion,
fire or other casualty, and/or other causes beyond the reasonable control of the
party obligated to perform, except that Force Majeure may not be raised as a
defense for Tenant's non-performance of any obligations imposed by the Lease
with regard to the payment of Fixed Monthly Rent and/or Additional Rent.
Notwithstanding anything to the contrary contained in this Lease, Force
Majeure shall excuse the performance of such party for a period equal to any
such prevention, delay, stoppage or inability. Therefore, if this Lease
specifies a time period for performance of an obligation by either party, that
time period shall be extended by the period of any delay in such party's
performance caused by a Force Majeure.
Section 20.5. Broker. Landlord and Tenant represent to one another that each
has dealt with no broker in connection with this Lease other than Douglas,
Emmett and Company and Grubb & Ellis Company. Landlord and Tenant shall hold
one another harmless from and against any and all liability, loss, damage,
expense, claim, action, demand, suit or obligation arising out of or relating to
a breach by the indemnifying party of such representation. Landlord agrees to
pay all commissions due to the brokers listed above created by Tenant's
execution of this Lease.
Section 20.6. Governing Law. This Lease shall be governed by and construed in
accordance with the laws of the State of California.
Section 20.7. Submission of Lease. Whether or not rental deposits have been
received by Landlord from Tenant, and whether or not Landlord has delivered to
Tenant an unexecuted draft version of this Lease for Tenant's review and/or
signature, no contractual or other rights shall exist between Landlord and
Tenant with respect to the Premises, nor shall this Lease be valid and/or in
effect until this Lease has been fully executed and a duplicate original of said
fully-executed Lease has been delivered to both Landlord and Tenant.
The submission of this Lease to Tenant shall be for examination purposes
only, and does not and shall not constitute a reservation of or an option for
Tenant to lease, or otherwise create any interest by Tenant in the Premises or
any other offices or space situated in the Building. Execution of this Lease by
Tenant and its return to Landlord shall not be binding upon Landlord,
notwithstanding any time interval, until Landlord has in fact executed and
delivered a fully-executed duplicate original of this Lease to Tenant. Landlord
and Tenant agree hereby to authorize transmission of all or portions of
documents, including signature lines thereon, by facsimile machines, and further
authorize the other party to rely conclusively upon such facsimile transmissions
as if the original had been received.
Sections 20.8. Captions. The captions in this Lease are for convenience only
and shall not in any way limit or be deemed to construe or interpret the terms
and provisions hereof.
Section 20.9. Singular and Plural, Etc. The words "Landlord" and "Tenant", as
used herein, shall include the plural as well as the singular. Words used in
the masculine gender include the feminine and neuter. If there be more than one
Landlord or Tenant the obligations hereunder imposed upon Landlord and Tenant
shall be joint and several.
Section 20.10. Independent Covenants. Except where the covenants contained in
one Article of this Lease are clearly affected by or contingent upon fulfillment
by either party of another Article or paragraph of this Lease, this Lease shall
be construed as though the covenants herein between Landlord
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and Tenant are independent and not dependent and Tenant hereby expressly waives
the benefit of any statute to the contrary and agrees that if Landlord fails to
perform its obligations set forth herein, Tenant shall not be entitled to make
any repairs or perform any actions hereunder at Landlord's expense or to any
set-off of the Rent or other amounts owing hereunder against Landlord; provided,
however, that the foregoing shall in no way impair the right of Tenant to
commence a separate action against Landlord for the violation by Landlord of the
provisions hereof so long as notice is first given to Landlord and any holder of
a mortgage or deed of trust covering the Building, Real Property or any portion
thereof, of whose address Tenant has theretofore been notified, and an
opportunity is granted to Landlord and such holder to correct such violations as
provided above.
Section 20.11. Severability. If any covenant or agreement of this Lease or the
application thereof to any person or circumstance shall be held to be invalid or
unenforceable, then and in each such event the remainder of this Lease or the
application of such covenant or agreement to any other person or any other
circumstance shall not be thereby affected, and each covenant and agreement
hereof shall remain valid and enforceable to the fullest extent permitted by
law.
Section 20.12. Warranty of Authority. If Landlord or Tenant signs as a
corporation or a partnership, each of the persons executing this Lease on behalf
of Landlord or Tenant hereby covenant and warrant that each is a duly authorized
and existing entity, that each has and is qualified to do business in
California, that the persons signing on behalf of Landlord or Tenant have full
right and authority to enter into this Lease, and that each and every person
signing on behalf of either Landlord or Tenant are authorized to do so.
Section 20.13. No Representations or Warranties. Neither Landlord nor
Landlord's agents or attorneys have made any representations or warranties with
respect to the Premises, the Building or this Lease, except as expressly set
forth herein, and no rights, easements or licenses are or shall be acquired by
Tenant by implication or otherwise.
Section 20.14. No Joint Venture or Partnership. This Lease shall not be deemed
or construed to create or establish any relationship of partnership or joint
venture or similar relationship or arrangement between Landlord and Tenant
hereunder.
Section 20.15. Tenant's Obligations At Its Sole Expense. Notwithstanding the
fact that certain references in this Lease to acts required to be performed by
Tenant hereunder, or to breaches or defaults of this Lease by Tenant, omit to
state that such acts shall be performed at Tenant's sole expense, or omit to
state that such breaches or defaults by Tenant are material, unless the context
clearly implies to the contrary each and every act to be performed or obligation
to be fulfilled by Tenant pursuant to this Lease shall be performed or fulfilled
at Tenant's sole expense.
Section 20.16. Attorneys' Fees. If litigation is instituted between Landlord
and Tenant, the cause for which arises out of or in relation to this Lease, the
prevailing party in such litigation shall be entitled to receive its costs (not
limited to court costs), expenses and reasonable attorneys' fees from the non-
prevailing party as the same may be awarded by the court.
Section 20.17. Waiver of Trial by Jury. In the interest of saving time and
expense, Landlord and Tenant hereby consent to trial without a jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other or their successor-in-interest in respect to any matters
arising out of or relating to this Lease.
Section 20.18. No Merger. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Landlord terminate all or any existing subleases or subtenancies,
or may, at the option of Landlord, operate as an assignment to it of any or all
such subleases or subtenancies.
Section 20.19. Prohibition Against Recording. Except as provided in Section
14.3 of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant, and the recording thereof in violation of
this provision shall make this Lease null and void at Landlord's election.
Section 20.20. Hazardous Waste. Tenant specifically agrees that, except for
such limited quantities of office materials and supplies as are customarily used
in Tenant's normal business operations, Tenant shall not engage or permit at any
time, any operations or activities upon, or any use or occupancy of the
Premises, or any portion thereof, for the purpose of or in any way involving the
handling, manufacturing, treatment, storage, use, transportation, spillage,
leakage, dumping, discharge or disposal (whether legal or illegal, accidental or
intentional) of any hazardous substances, materials or wastes, or any wastes
regulated under any local, state or federal law.
Tenant shall, during the Term, remain in full compliance with all applicable
laws governing its use and occupancy of the Premises, including, without
limitation, the handling, manufacturing, treatment, storage, disposal,
discharge, use, and transportation of hazardous substances, materials or wastes,
and any wastes regulated under any local, state or federal law. Tenant will
remain in full compliance with the terms and conditions of all permits and
licenses issued to it by any governmental authority on account of any or all of
its activities on the Premises.
Section 20.21. Transportation Management. Tenant shall, at Tenant's sole
expense, fully comply with all present or future programs intended to manage
parking, transportation or traffic in and around the Building, when the same
have been mandated by an outside governmental authority having jurisdiction
therefor and not when required for the convenience of Landlord.
In connection therewith, Tenant shall be responsible for the transportation
planning and management for all of Tenant's employees while located at the
Premises, by working directly with Landlord, any governmental transportation
management organization or any other transportation-related committees or
entities reasonably designated by Landlord. Such programs may include, without
limitation:
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a) restrictions on the number of peak-hour vehicle trips generated by Tenant;
b) requirements for increased vehicle occupancy;
c) implementing an in-house ride-sharing program and/or appointing an employee
transportation coordinator;
d) working with employees of any Building (or area-wide) ridesharing program
manager;
e) instituting employer-sponsored incentives (financial or in-kind) to
encourage employees to ridesharing; and
f) utilizing flexible work shifts for employees.
Section 20.22. Signage. Except as expressly provided in this Section 20.22,
Tenant may not install, inscribe, paint or affix any awning, shade, sign,
advertisement or notice on or to any part of the outside or inside of the
Building, or in any portion of the Premises visible to the outside of the
Building or common areas without Landlord's prior written consent, which shall
not be unreasonably withheld, conditioned or delayed.
All signage and/or directory listings installed on behalf of Tenant
(including, without limitation, any building standard suite identification
signage provided on or about the entry door to the Premises), whether installed
in, on or upon the public corridors, doorways, Building directory and/or parking
directory (if any), or in any other location whatsoever visible outside of the
Premises, shall be installed by Landlord, at Tenant's sole expense. It is
expressly understood and agreed that Tenant shall be entitled to building
standard suite identification signage pursuant to the terms of this paragraph.
Tenant's identification on or in any common area of the Building shall be
limited to Tenant's name and suite designation, and in no event shall Tenant be
entitled to the installation of Tenant's logo in any portion of the Building or
common areas (except as hereinbelow provided). Furthermore, the size, style,
and placement of letters to be used in any of Tenant's signage shall be
determined by Landlord, in Landlord's sole discretion, in full conformance with
previously-established signage program for the Building.
Except as specified hereinbelow, Tenant shall only be entitled to two (2)
listings on the Building directory, or any parking directory ancillary thereto,
which shall only show Tenant's (or one of its Affiliates) business name and
suite designation. Tenant shall also be entitled to a maximum of twenty (20)
additional listings on said Building and/or parking directory, which listings
shall be limited solely to Tenant's officers, employees, subsidiaries,
affiliates and/or sublessees, if any. All of said listings shall be subject to
Landlord's prior written approval, which shall not be unreasonably withheld,
conditioned or delayed.
So long as Tenant (or an Affiliate) occupies fifty percent (50%) or more of
the Premises, Tenant shall have the non-exclusive right to have its name
(including its logo) displayed on one (1) strip of the monument sign to be
constructed by Landlord in front of the Building (the "Monument Sign").
Tenant's right to maintain its name on the Monument Sign shall be subject to the
following requirements for so long as Tenant maintains its strip on the Monument
Sign:
(a) All expenses in connection with the construction, installation, and
maintenance of Tenant's strip shall be paid by Tenant;
(b) The design, size, location, materials, colors, and lighting of the
Monument Sign shall be determined by Landlord in Landlord's reasonable
discretion;
(c) The design, size, location, specifications, graphics, materials, colors,
and lighting (if applicable) with respect to Tenant's name on the
Monument Sign must be consistent with Landlord's signage program as
determined by Landlord in Landlord's reasonable discretion;
(d) Tenant shall pay Landlord the sum of $500.00 per month as a monument
signage fee; and
(e) Tenant shall pay to Landlord, from time to time and within thirty (30)
days after receipt of written demand, Tenant's portion of all reasonable
out-of-pocket expenses incurred by Landlord that are attributable to the
installation, insurance, lighting (if applicable), maintenance, and
repair of the Monument Sign during the period of time that Tenant's sign
is on the Monument Sign. Tenant's portion of such expenses shall be
calculated by Landlord by dividing such expenses equally among all
tenants and occupants that have signs on the Monument Sign.
Tenant's signage rights under this Section 20.22 may be exercised only by
Tenant or an Affiliate.
On termination or expiration of the Term or on expiration of Tenant's sign
rights under this Section 20.22 (or after Tenant notifies Landlord in writing
that Tenant desires that its name be removed from the Monument Sign, Landlord
shall have the right to permanently remove Tenant's name from the Monument's
Sign. Tenant shall pay to Landlord, within thirty (30) days after demand, all
reasonable out-of-pocket expenses incurred in connection with that removal and
repair.
Section 20.23. Disclosure. Landlord and Tenant acknowledge that principals of
Landlord have a financial interest in Douglas Emmett Realty Advisors and P.L.E.
Builders.
Section 20.24. Confidentiality. Landlord and Tenant agree that the covenants
and provisions of this Lease shall not be divulged to anyone not directly
involved in the management, administration, ownership, lending against, or
subleasing of the Premises, which permitted disclosure shall include, but not be
limited to, the board members, legal counsel and/or accountants of either
Landlord or Tenant.
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ARTICLE 21
PARKING
Section 21.1. Parking. Throughout the Term, Tenant shall purchase and assign
to its employees monthly parking permits up to the maximum number of permits set
forth in Section 21.1 of the Basic Lease Information ("BLI"). Except as
otherwise permitted by Landlord's management agent in its reasonable discretion,
and based on the availability thereof, in no event shall Tenant be entitled to
purchase more than the maximum nor less than fifty (50) parking permits.
However, to the minimum limit specified hereinabove, Tenant may decrease the
total number of parking permits purchased pursuant to this Article 21 at any
time during the Term after Tenant has given Landlord at least thirty (30) days
prior written notice of such reduction. Notwithstanding anything to the
contrary contained in this Lease, if the Usable Area of the Premises is
increased or decreased pursuant to the provisions of Section 1.4, then the total
number of parking permits to which Tenant shall be entitled shall be revised to
equal four (4) permits per each 1,000 square feet of Usable Area in the
Premises.
The initial rates to be paid by Tenant for such permits shall be: $41.25 per
single unreserved permit, and $75.00 per single reserved permit per month,
including the ten percent (10%) tax currently charged by the City of Los
Angeles. Notwithstanding the foregoing, the single unreserved parking rate and
the single reserved parking rate shall not be increased during the first three
(3) years of the initial Term.
Said parking permits shall allow Tenant to park in the Building parking
facility at the prevailing monthly parking rate then in effect, which rate may
be thereafter changed from time to time, in Landlord's sole discretion.
Landlord shall retain sole discretion to designate the location of each parking
space, and whether it shall be assigned, or unassigned, unless specifically
agreed to otherwise in writing between Landlord and Tenant.
Guests and invitees of Tenant shall have the right to use, in common with
guests and invitees of other tenants of the Building, the transient parking
facilities of the Building at the then-posted parking rates and charges, or at
such other rate or rates and charges as may be agreed upon from time to time
between Landlord and Tenant in writing. Such rate(s) or charges may be changed
by Landlord from time to time in Landlord's sole discretion, and shall include,
without limitation, any and all fees or taxes relating to parking assessed to
Landlord for such parking facilities.
Tenant or Tenant's agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders continued use of said
transient, as well as monthly parking, shall be contingent upon Tenant and
Tenant's agents, clients, contractors, directors, employees, invitees,
licensees, officers, partners or shareholders continued compliance with the
reasonable and non-discriminatory rules and regulations adopted by Landlord,
which rules and regulations may change at any time or from time to time during
the Term hereof in Landlord's sole discretion.
ARTICLE 22
CONCIERGE SERVICES
Section 22.1. Provision of Services. Landlord and Tenant acknowledge and
understand that Landlord may, from time to time, make it possible for Tenant to
use or purchase a variety of personal services which may include, but not be
limited to, personal shopping, assistance with choosing or obtaining travel
reservations, accommodations and/or tickets; tickets to performances,
recommendations to eating establishments; and the like (collectively "Concierge
Services").
Tenant acknowledges that said Concierge Services are provided by Landlord
solely as an accommodation to and for the convenience of Tenant and Tenant's
agents, contractors, directors, employees, licensees, officers, partners or
shareholders, and Landlord does not make any representation, warranty or
guarantee, express or implied, as to the quality, value, accuracy, or
completeness of said Concierge Services, or whether or not Tenant shall be
satisfied with the services and/or goods so provided and/or recommended.
Landlord hereby disclaims any control over the variety or sufficiency of such
services to be provided.
Tenant acknowledges that Tenant is not required to use such Concierge Services
as a condition precedent to compliance with the Lease; that Tenant's use of such
Concierge Services is strictly voluntary, and at the sole discretion and control
of Tenant. Tenant shall independently make such financial arrangements for
payment of the services provided as Tenant deems reasonable and of value.
Section 22.2. Release by Tenant. Notwithstanding anything to the contrary
contained in the Lease, any city, county, state or federal ordinance, statute,
regulation or law, Tenant's signature hereon indicates Tenant's agreement that
solely as it relates to the purchase or use of Concierge Services by Tenant or
the agents, contractors, employees, officers, partners, and/or shareholders of
Tenant, Tenant, on behalf of itself and its agents, contractors, directors,
employees, licensees, officers, partners or shareholders, does and shall hereby
forever hold Landlord and Landlord's affiliates, agents, assigns, contractors,
directors, employees, officers, parent organization, partners, representatives,
shareholders, and subsidiaries (collectively the "Indemnitees") harmless from
and forever release, remise, discharge, acquit and relieve the Indemnitees from
and against any and all claims, demands, causes of action, obligations,
liabilities, agreements, damages, cost (including, without limitation,
reasonable attorneys' fees), loss, or liability of any kind or nature, whether
asserted, known or unknown, suspected or unsuspected, in any way connected with,
which any one or more of the Indemnitees may sustain or incur by reason of,
related to, associated with, or arising out of the provision, use or the
rendering of any such Concierge Services or the delivery of such Concierge
Services to Tenant or Tenant's agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders.
Solely as it relates to the purchase or use of Concierge Services by Tenant or
the agents, contractors, employees, officers, partners, and/or shareholders of
Tenant, Tenant hereby expressly waives all rights
32
and benefits conferred by the provisions of Section 1542 of the Civil Code of
the State of California, which reads as follows:
"A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of executing the release and
which, if known by him, must have materially affected his settlement with the
debtor."
In so doing, Tenant acknowledges that it will be unable to make any claim
against Landlord or any other Indemnitees for damages that may exist as of the
date or after the date of this release, but which Tenant does not know to exist,
and which, if known, would materially have affected Tenant's decision to execute
this document, regardless of whether Tenant's lack of knowledge, if any, is the
result of ignorance, oversight, error, negligence or other cause.
ARTICLE 23
OPTION TO EXTEND TERM
Section 23.1. Option to Extend Term. Provided Tenant is not in material default
after the expiration of notice and the opportunity to cure on the date or at any
time during the remainder of the Term after Tenant gives notice to Landlord of
Tenant's intent to exercise its rights pursuant to this Article 23, Tenant is
given the option to extend the term for one (1) additional five (5) year period
(the "Extended Term"), commencing the next calendar day after the expiration of
the Term (the "Option"). The Option shall apply only to the entirety of the
Premises, and Tenant shall have no right to exercise the Option as to only a
portion of the Premises.
Tenant's exercise of this Option is contingent upon Tenant giving written
notice to Landlord (the "Option Notice") of Tenant's election to exercise its
rights pursuant to this Option by Certified Mail, Return Receipt Requested, no
more than twelve (12) and no less than nine (9) months prior to the Termination
Date.
Section 23.2. Fixed Monthly Rent Payable. The Rent payable by Tenant during
the Extended Term ("Option Rent") shall be equal to the Fair Market Value of the
Premises as of the commencement date of the Extended Term but shall not be less
than the sum of Fixed Monthly Rent and Tenant's Share of Operating Expenses
payable by Tenant immediately before the Extended Term. The term "Fair Market
Value" shall be defined as the effective rent reasonably achievable by Landlord,
and shall include but not be limited to, all economic benefits obtainable by
Landlord, such as Fixed Monthly Rent (including periodic adjustments),
Additional Rent in the form of Operating Expense reimbursements, and any and all
other monetary or non-monetary consideration that may be given in the market
place to a non-renewal tenant, as is chargeable for a similar use of comparable
space in the geographic area of the Premises.
Said computation shall specifically be based on the Premises in its "as-is"
condition, without payment of any brokerage commission to any broker. If either
Landlord or Tenant elect to have a broker represent them during negotiations for
extension of the Term, and/or Tenant requests the installation of any further
improvements into the Premises, the cost of such improvements to be made and/or
commissions to be paid shall be amortized over the Extended Term on a straight-
line basis, with interest thereon at ten percent (10%), by appropriately
increasing the Fair Market Value previously determined.
Landlord and Tenant shall have 30 days (the "Negotiation Period") after
Landlord receives the Option Notice in which to agree on the Fair Market Value.
If Landlord and Tenant agree on the Fair Market Value during the Negotiation
Period, they shall immediately execute an amendment to the Lease extending the
Term and stating the Fair Market Value.
Section 23.3. Appraisers to Set Fixed Rent. If Landlord and Tenant are unable
to agree on the Fair Market Value during the Negotiation Period, then:
a) Within five (5) days after the expiration of the Negotiation Period, Tenant
shall have the right to void the Option Notice by hand delivery of written
notice (the "Termination Notice") to Landlord within such five (5) days
period, and the Lease shall expire on the Termination Date; or
b) If the Termination Notice is not timely delivered by Tenant, Landlord and
Tenant, each at its own cost, shall select an independent real estate
appraiser with at least ten (10) years full-time commercial appraisal
experience in the area in which the Premises are located, and shall provide
written notice to the other party of the identity and address of the
appraiser so appointed. Landlord and Tenant shall make such selection within
ten (10) days after the expiration of the Negotiation Period.
c) Within thirty (30) days of having been appointed to do so (the "Appraisal
Period"), the two (2) appraisers so appointed shall meet and set the Fair
Market Value for the Extended Term. In setting the Fair Market Value, the
appraisers shall solely consider the use of the Premises for general office
purposes.
Section 23.4. Failure by Appraisers to Set Fair Market Value. If the two (2)
appointed appraisers are unable to agree on the Fair Market Value within ten
(10) days after expiration of the Appraisal Period, they shall elect a third
appraiser of like or better qualifications, and who has not previously acted in
any capacity for either Landlord or Tenant. Landlord and Tenant shall each bear
one half of the costs of the third appraiser's fee.
Within 30 days after the selection of the third appraiser (the "Second
Appraisal Period") the Fair Market Value for the Extended Term shall be set by a
majority of the appraisers now appointed.
If a majority of the appraisers are unable to set the Fair Market Value
within the Second Appraisal Period, the three (3) appraisers shall individually
render separate appraisals of the Fair Market Value, and their three (3)
appraisals shall be added together, then divided by three (3); resulting in an
average of the appraisals, which shall be the Fair Market Value during the
Extended Term.
33
However, if the low appraisal or high appraisal varies by more than Ten
Percent (10%) from the middle appraisal, then one (1) or both shall be
disregarded. If only one (1) appraisal is disregarded, the remaining two (2)
appraisals shall be added together and their total divided by two (2), and the
resulting average shall be the Fair Market Value. If both the low and high
appraisal are disregarded, the middle appraisal shall be the Fair Market Value
for the Premises during the Extended Term. The appraisers shall immediately
notify Landlord and Tenant of the Fair Market Value so established, and Landlord
and Tenant shall immediately execute an amendment to the Lease, extending the
Term and revising the Fixed Rent payable pursuant to the Fair Market Value so
established.
Landlord or Tenant's failure to execute such amendment establishing the Fair
Market Value within fifteen (15) days after the other party's request therefor
shall constitute a material default under the Lease. and if Tenant is the party
failing to so execute, this Option shall become null and void and of no further
force or effect.
Section 23.5. No Right of Reinstatement or Further Extension. Once Tenant has
either failed to exercise its rights to extend the term pursuant to this Article
23 or failed to execute the amendment called for hereunder, it shall have no
right of reinstatement of its Option to Extend the Term, nor shall Tenant have
any right to a further or second extension of the Term beyond the period stated
in Section 23.1 hereinabove.
Section 23.6. No Assignment of Option. This Option may be exercised only by
Tenant or an Affiliate (as defined in Section 11.2), and shall be null, void and
of no further force or effect as of the date that Tenant assigns the Lease to an
unaffiliated entity and/or subleases more than forty-nine percent (49%) of the
total Rentable Area of the Premises.
ARTICLE 24
SATELLITE DISH
24.1. Landlord hereby grants Tenant the nonexclusive right, at Tenant's sole
cost and expense, and subject to the provisions of this Lease, to install one
(1) antenna pursuant to specifications to be agreed upon between Landlord and
Tenant ("Antenna"), on the roof of the Building in a location reasonably
designated by Landlord. In addition, Tenant shall have the right, subject to
the available capacity of the Building, to install such connection equipment,
such as conduits, cables, risers, feeders and materials (collectively, the
"Connecting Equipment") in the shafts, ducts, conduits, chases, utility closets
and other facilities of the Building as is reasonably necessary to connect the
Antenna to Tenant's other machinery and equipment in the Premises, subject
however, to the provisions of Section 24.2 below, and subject to the
availability of vertical riser and feeder excess capacity, as reasonably
determined by Landlord. Tenant shall also have the right of access, consistent
with Section 24.4, below, to the areas where any such Connecting Equipment is
located for the purposes of maintaining, repairing, testing and replacing the
same.
24.2. The installation of the Antenna and related Connecting Equipment (hereby
referred to together and/or separately as the "Antenna Equipment") shall be
performed in a good and workmanlike manner, and the Antenna Equipment shall be
treated for all purposes of this Lease as if the same were Tenant's property.
For the purposes of determining Tenant's obligations with respect to its use of
the roof of the Building herein provided, the portion of the roof of the
Building affected by the Antenna Equipment shall be deemed to be a portion of
the Premises; consequently, all of the provisions of this Lease with respect to
the Premises shall apply to the installation, use and maintenance of the Antenna
Equipment, including without limitation, provisions relating to compliance with
requirements as to insurance, indemnity, repairs (to the extent required by the
acts of Tenant) and maintenance (to the extent required by the acts of Tenant),
and compliance with laws. Landlord shall have no obligation with regard to the
affected portion of the roof or the Antenna Equipment except as provided in this
Section 24.
24.3. It is expressly understood that Landlord retains the right to grant third
parties the right to utilize any portion of the roof not utilized by Tenant and
to use the portion of the roof on which the Antenna Equipment is located for any
purpose whatsoever, provided in each event that Tenant shall have reasonable
access to, and Landlord shall not unduly interfere with the use of, the Antenna
Equipment.
24.4. Tenant shall install, use, maintain and repair the Antenna Equipment so
as not to damage or interfere with the operation of the Building or the
mechanical, electrical, plumbing, HVAC or communications systems of the Building
(collectively the "Systems and Equipment") or any other communications or
similar equipment located on the roof of the Building, and Tenant hereby agrees
to indemnify, defend and hold Landlord harmless from and against any and all
claims, costs, damages, expenses and liabilities (including attorney's fees)
arising out of Tenant's failure to comply with the provisions of this Section
24.4.
24.5. Except as expressly set forth in this Article 24, Landlord shall not have
any obligations with respect to the Antenna Equipment or compliance with any
requirements relating thereto nor shall Landlord be responsible for any damage
that may be caused to the Antenna Equipment, except and to the extent caused by
the negligent or willful acts of Landlord, its agents, employees or contractors.
Landlord makes no representation that the Antenna Equipment will be able to
receive or transmit communication signals without interference or disturbance
and Tenant agrees that Landlord shall not be liable to Tenant therefor, subject
to the provisions of Section 24.3.
24.6. Tenant, at Tenant's sole cost and expense, shall paint the Antenna
Equipment in such color(s) as Landlord shall reasonably determine and shall
maintain such equipment and install such fencing and other protective equipment
on or about the Antenna Equipment as Landlord may reasonably determine to be
appropriate.
24.7. Tenant shall (i) be solely responsible for any damage caused as a result
of the Antenna Equipment, except and to the extent caused by the negligent or
willful acts of Landlord, its agents,
34
employees or contractors, (ii) promptly pay any tax, license or permit fees
charged pursuant to any requirements in connection with the installation,
maintenance or use of the Antenna Equipment and comply with all precautions and
safeguards recommended by any governmental authority, and (iii) make necessary
repairs, replacements or maintenance of the Antenna Equipment.
24.8. If any of the conditions set forth in this Section 24 are not complied
with by Tenant, then without limiting Landlord's rights and remedies it may
otherwise have under the Lease, Tenant shall, upon written notice from Landlord,
have the obligation either to (i) reposition the Antenna Equipment to a location
reasonably designated by Landlord (if Landlord elects to permit such
repositioning), and make the repairs and restorations required under Section
24.9 below, or (ii) otherwise correct such noncompliance within ten (10) days
after receipt of written notice (or such longer period as may be reasonably
required as long as Tenant commences such correction within such 10-day period
and diligently prosecutes same to completion). If Tenant fails to correct such
noncompliance within such ten (10) day period (as may be extended as set forth
above), then Tenant shall immediately discontinue its use of the Antenna
Equipment and remove the same, in all events at Tenant's sole expense.
24.9. Upon the expiration or earlier termination of the Lease, Tenant shall,
subject to the control and direction of Landlord, remove the Antenna Equipment,
repair any damage caused thereby, and restore the roof and other facilities of
the Building to their condition existing prior to the installation of the
Antenna Equipment, to the extent that they are conditioned as a result of the
use, installation or operation of the Antenna Equipment.
24.10. Tenant's rights pursuant to this Lease shall be personal to Tenant and
may not be assigned without the written consent of Landlord, which consent shall
not be unreasonably withheld or delayed.
If Tenant exercises its rights under this Article 24 (and only for so long as
Tenant exercises its rights under this Article 24), Tenant shall pay to
Landlord, on or before the first (1st) day of each calendar month during the
Term, pro-rated for any partial month, the sum of $250.00 as Additional Rent,
which amount shall automatically increase by four percent (4%) on date of each
Fixed Monthly Rent adjustment pursuant to Section 3.3 of the Lease. Tenant's
failure to pay such amounts, upon the expiration of any applicable notice and
cure period set forth in this Lease with regard to the non-payment of Rent,
shall entitle Landlord to exercise any and all remedies available to Landlord
pursuant to this Lease. Additionally, upon the expiration of any applicable
notice and cure period, but with one (1) additional business days' notice,
Landlord shall have the right to remove the Antenna Equipment, at Tenant's
expense.
ARTICLE 25
RIGHT OF FIRST NEGOTIATION
25. Right of First Negotiation. Tenant shall have an ongoing right of first
negotiation with respect to any space becoming available on the third (3rd)
Floor of the Building (the "First Negotiation Space"); provided that such right
of first negotiation shall commence only following the expiration of the
existing leases pertaining to the First Negotiation Space (as the same may be
extended pursuant to an express right granted therein), and shall be subject and
subordinate to all other expansion, first offer, first negotiation, and similar
rights, which have been granted to other tenants of the Building prior to the
date of this Lease and relate to the First Negotiation Space (collectively, the
"Superior Right Holders"). Tenant's right of first negotiation shall be on the
terms and conditions set forth in this Article 25.
25.1 Procedure for Negotiation. Landlord shall notify Tenant (the `First
Negotiation Notice") when the First Negotiation Space becomes available for
lease to third parties (other than Superior Right Holders). The First
Negotiation Notice shall describe the space so offered to Tenant.
25.2 Procedure for Acceptance. If Tenant wishes to exercise its right of first
negotiation, then within seven (7) business days of delivery of the First
Negotiation Notice to Tenant, Tenant shall deliver notice to Landlord of
Tenant's intention to exercise its right of first negotiation. If Tenant timely
exercises its right of first negotiation as set forth herein, Landlord and
Tenant shall, within ten (10) business days after Landlord's receipt of Tenant's
notice, meet and negotiate in good faith the lease of the space described in
such First Negotiation Notice from Landlord to Tenant (the "Negotiation
Meeting"). If Landlord and Tenant do not reach agreement as to the material
economic terms of the lease of such space within ten (10) business days of the
Negotiating Meeting, Landlord shall be free to lease the space described in the
First Negotiation Notice to anyone to whom Landlord desires on terms not
materially more favorable than the terms offered to Tenant.
[INTENTIONALLY LEFT BLANK]
35
25.3 Termination of Right of Right of First Negotiation. Tenant shall not have
the right to exercise its right of first negotiation, as provided in this
Article 25, if Tenant, as of the date of the attempted exercise of such right of
first negotiation by Tenant, is in material default under any of the terms and
conditions of this Lease. Tenant's right of first negotiation set forth in this
Article 25 may be exercised only by Tenant or an Affiliate, and may only be
exercised by Tenant if Tenant occupies fifty percent (50%) or more of the
Premises.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease, effective
the day and year first above written.
LANDLORD: TENANT:
GALLERIA PARK PARTNERS, LLC, SIZZLER INTERNATIONAL, INC.,
a Delaware limited liability company a Delaware corporation
By: DOUGLAS, EMMETT AND COMPANY,
a California corporation,
its agent
By: /s/ Michael Means By: /s/ Michael B. Green
-------------------------------- ----------------------------------
Michael Means, Vice President Signer's Name: Michael B. Green
--------------------
[ ] President [X] Vice President
or [ ] Chief Executive Officer
(Check Title Above)
Dated: 7/17/01 and
------------------------------- By: /s/ A. Keith Wall
----------------------------------
Signer's Name: A. Keith Wall
--------------------
[ ] Secretary [ ] Treasurer or
[X] Chief Financial Officer
(Check Title Above)
Dated: 7/9/01
--------------------------------
36
EXHIBIT A - PREMISES PLAN
Suite 300 at 15301 Ventura Boulevard, Sherman Oaks, California 91403
Rentable Area: approximately 22,402 square feet
Usable Area: approximately 18,084 square feet
(Measured pursuant to the provisions of Section 1.4 of the Lease)
37
EXHIBIT B
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating to
the construction of the tenant improvements in the Premises. This Tenant Work
Letter is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of "this Lease" shall mean the relevant portion of
Articles 1 through 25 of the Office Lease to which this Tenant Work Letter is
attached as Exhibit B and of which this Tenant Work Letter forms a part, and all
references in this Tenant Work Letter to Sections of "this Tenant Work Letter"
shall mean the relevant portion of Sections 1 through 7 of this Tenant Work
Letter.
SECTION 1
LANDLORD'S INITIAL CONSTRUCTION IN THE PREMISES
Section 1.1. Base, Shell and Core of the Premises as Constructed by Landlord.
Landlord has constructed (or shall cause to be constructed), at its sole cost
and expense, the base, shell, and core (i) of the Premises and (ii) of the
floors of the Building on which the Premises are located (collectively, the
"Base, Shell, and Core"). The Base, Shell and Core shall include the following
items:
1. All common areas on Tenant's floors including men's and women's toilet
rooms, elevators, including call buttons, etc., will comply with ADA;
2. Drinking fountain at the core on Tenant's floors;
3. Electrical/telephone closets with 10 watts per rentable square foot of
normal power on a connected load basis;
4. One (1) 480/277 volt power panels connected to the Building power source;
5. Tenant will have access to supplemental electrical power capacity should
existing capacity prove inadequate, which will be metered and charged back
to Tenant;
6. Telephone and telecommunications cabling and wiring and access to the
telephone room in the third (3rd) floor;
7. Mechanical equipment room;
8. Landlord will provide sheet rock covered core walls (including elevator
lobby), perimeter and interior columns and exterior walls above and below
the windows, taped and spackled, ready for Tenant's painting or wall
coverings;
9. Smooth and level concrete floors in accordance with industry standards;
10. HVAC: Primary HVAC duct loop from the mechanical equipment room around the
Core of the Building;
11. A finished common area and elevator lobby on Tenant's floors, with
elevator lobby finished in a manner reasonably acceptable to Landlord;
12. Sprinklers: Provide temporary and permanent protection consisting of
mains, laterals and uprights, installed according to Building code. Tenant
to install distribution of heads in accordance with the Approved Working
Drawings;
13. Fire protection alarm and communication system installed according to
Building code, with communication system to be backed up by emergency fire
system. Tenant to connect to main system for distribution;
14. Any life safety, life support systems and security systems as may be
required by Building code (including the connection of such systems to the
Building's main system, if applicable);
15. All other mechanical, electrical and/or fire, earthquake, life safety Core
and shall improvements which are dictated by relevant code and/or
regulatory requirements, including the Americans With Disabilities Act;
16. Building standard men's and women's toilet rooms;
17. Secured electrical service rooms including all required switchgear,
feeders, transformers, panels, breakers and related equipment necessary
for the provision of emergency electrical panels for emergency systems and
Building standard electrical;
18. Building stairways;
19. Building sprinkler system main distribution loop, main floor shut-off
valves, alarms, primary loop piping, distribution piping and heads
installed with detectors as required by applicable building codes on an
open plan, unoccupied basis; and
20. Finished ceiling height of no less than 8'6" in all areas of the Premise,
measured from the concrete slab. If there is any obstruction (e.g., a
pipe) which extends lower than 8'6", then Landlord shall relocate such
obstruction at Landlord's sole cost and expense, unless such obstruction
is a structural component of the Base, Shell and Core which cannot be
readily relocated without significant expense or damage to the Building.
SECTION 2
TENANT IMPROVEMENTS; CONSTRUCTION DRAWINGS
2.1. Tenant Improvements. Landlord shall cause PLE Builders, Inc., (the
"Contractor"), to construct the improvements in the Premises (the "Tenant
Improvements") in a good and workmanlike manner,
EXHIBIT B (continued)
TENANT WORK LETTER
pursuant to the Sizzler Construction Drawings prepared by City Spaces, dated
June 16, 2001 attached hereto and made a part hereof (the "Approved Working
Drawings"). Tenant shall pay to Landlord the sum of $3,500.00 concurrently with
its execution and delivery of the Lease as Tenant's contribution to the cost of
Tenant Improvements.
Section 2.2. Permits. Landlord shall immediately submit the Approved Working
Drawings to the appropriate municipal authorities for all applicable building
permits necessary to allow Landlord to commence and fully complete the
construction of the Tenant Improvements (the "Permits"), and, in connection
therewith, Landlord shall coordinate with Tenant in order to allow Tenant, at
its option, to take part in all phases of the permitting process.
SECTION 3
CHANGE ORDERS
In the event that Tenant makes, any revisions, changes, or substitutions to
the Approved Working Drawings or the Tenant Improvements, any additional costs
which arise in connection with such revisions, changes or substitutions shall be
paid by Tenant to Landlord immediately upon Landlord's request.
SECTION 4
CONTRACTOR'S WARRANTIES AND GUARANTIES
Landlord hereby assigns to Tenant all rights that it may have against the
Contractor (or any subcontractors or suppliers) relating to the Tenant
Improvements, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Tenant Improvements.
SECTION 5
TENANT'S COVENANTS
Tenant hereby indemnifies Landlord for any loss, claims, damages or delays
arising from the actions of Tenant's space planner/architect on the Premises or
in the Building.
SECTION 6
COMPLETION OF THE TENANT IMPROVEMENTS;
COMMENCEMENT DATE
Section 6.1 Substantial Completion. For purposes of this Lease, "Substantial
Completion" of the Premises shall occur after the latest to occur of (i) the
completion of construction of the Tenant Improvements in the Premises pursuant
to the Approved Working Drawings, with the exception of any punch list items and
any tenant fixtures, work-stations, built-in furniture, or equipment to be
installed by Tenant or under the supervision of Contractor, (ii) the delivery of
the Premises to Tenant, and (iii) the issuance of a certificate of occupancy (or
the equivalent thereof) for the Premises by the appropriate governmental agency
having jurisdiction.
Section 6.2 Delay of the Substantial Completion of the Premises. Except as
provided in this Section 6.2, the Commencement Date shall occur as set forth in
-----------
the Lease and Section 6.1, above. If there shall be a delay or there are delays
-----------
in the Substantial Completion of the Premises or in the occurrence of any of the
other conditions precedent to the Commencement Date, as set forth in of the
Lease, as a direct, indirect, partial, or total result of:
Section 6.2.1 Tenant's failure to timely approve any matter requiring Tenant's
approval or to timely provide Landlord with any item which Tenant is obligated
to provide to Landlord under this Exhibit B (including, without limitation,
Tenant's failure to provide Landlord with the Final Working Drawings on or
before June 22, 2001);
6.2.2 A breach by Tenant of the terms of this Tenant Work Letter or the
Lease;
6.2.3 Tenant's request for changes in the Approved Working Drawings;
6.2.4 Changes in any of the Approved Working Drawings because the same do
not comply with applicable laws;
6.2.5 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time
given the anticipated date of Substantial Completion of the Premises, as
set forth in the Lease, or which are different from, or not included in,
Landlord's standard improvement package items for the Building;
6.2.6 Changes to the base, shell and core work of the Building required by
the Approved Working Drawings; or
6.2.7 Any other acts or omissions of Tenant, or its agents, or employees
(collectively, "Tenant Delay(s)");
B-2
EXHIBIT B (continued)
TENANT WORK LETTER
then, notwithstanding anything to the contrary set forth in the Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Premises, the date of Substantial Completion of the Premises
shall be deemed to be the date the Substantial Completion of the Premises would
have occurred if no Tenant Delay(s), as set forth above, had occurred.
Notwithstanding any contrary provision of this Section 6, no Tenant Delay
shall be deemed to have occurred unless and until Tenant receives written notice
of the alleged Tenant Delay (the "Tenant Delay Notice") and fails to cure or
remedy the condition or circumstance causing such alleged Tenant Delay within
two (2) business days after Tenant's receipt of the Tenant Delay Notice.
SECTION 7
MISCELLANEOUS
Section 7.1 Tenant's Entry Into the Premises Prior to Substantial Completion.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Building and the Premises, Contractor shall allow Tenant access to the
Premises prior to the Substantial Completion of the Premises for the purpose of
Tenant installing overstandard equipment or fixtures (including Tenant's data
and telephone equipment) in the Premises. Prior to Tenant's entry into the
Premises as permitted by the terms of this Section 7.1, Tenant shall submit a
-----------
schedule to Landlord and Contractor, for their approval, which schedule shall
detail the timing and purpose of Tenant's entry. Tenant shall hold Landlord
harmless from and indemnify, protect and defend Landlord against any loss or
damage to the Building or Premises and against injury to any persons caused by
Tenant's actions pursuant to this Section 7.1.
-----------
Section 7.2 Freight Elevators. Landlord shall, consistent with its obligations
to other tenants of the Building, make the freight elevator reasonably available
to Tenant in connection with initial decorating, furnishing and moving into the
Premises.
Section 7.3 Tenant's Representative. Tenant has designated Diane Hardesty
and/or Michael Green as its sole representatives with respect to the matters set
forth in this Tenant Work Letter, who, until further notice to Landlord, shall
have full authority and responsibility to act on behalf of the Tenant as
required in this Tenant Work Letter.
Section 7.4 Landlord's Representative. Landlord has designated Bill Hughes as
its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.
Section 7.5 INTENTIONALLY OMITTED.
Section 7.6 Time of the Essence in This Tenant Work Letter. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. In all instances where Tenant is required to approve or deliver
an item, if no written notice of approval is given or the item is not delivered
within the stated time period, at Landlord's sole option, at the end of such
period the item shall automatically be deemed approved or delivered by Tenant
and the next succeeding time period shall commence.
Section 7.7 Tenant's Lease Default. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in the
Lease beyond any applicable notice and/or cure period, or a default by Tenant
under this Tenant Work Letter beyond any applicable notice and/or cure period,
has occurred at any time on or before the Substantial Completion of the
Premises, then (i) in addition to all other rights and remedies granted to
Landlord pursuant to the Lease, Landlord shall have the right to cause
Contractor to cease the construction of the Premises (in which case, Tenant
shall be responsible for any delay in the Substantial Completion of the Premises
caused by such work stoppage as set forth in Section 5 of this Tenant Work
---------
Letter), and (ii) all other obligations of Landlord under the terms of this
Tenant Work Letter shall be forgiven until such time as such default is cured
pursuant to the terms of the Lease.
[INTENTIONALLY LEFT BLANK]
B-3
EXHIBIT B (continued)
TENANT WORK LETTER
Section 8. Prior to Tenant's taking occupancy of the Premise, a representative
of each of Landlord and Tenant shall conduct a joint inspection of the Premises
for the purpose of developing a "punch list" of Tenant Improvements items, if
any, that require repair or correction by Landlord. Provided that said items
were included in the Approved Working Drawings, Landlord shall diligently
proceed to correct those items within thirty (30) days of receipt of Tenant's
list. Tenant's failure or refusal to participate in such inspection in a timely
manner (provided Tenant has received reasonable notice of the readiness of the
Premises for such inspection), shall constitute Tenant's waiver of its rights
pursuant to this Section 8.
LANDLORD: TENANT:
GALLERIA PARK PARTNERS, LLC, SIZZLER INTERNATIONAL, INC.,
a Delaware limited liability company a Delaware corporation
By: DOUGLAS, EMMETT AND COMPANY,
a California corporation,
its agent
By: /s/ Michael Means By: /s/ Michael B. Green
----------------------------- -----------------------------------
Michael Means, Vice President Signer's Name: Michael B. Green
Dated: 7/17/01 --------------------
----------------------------- [ ] President [X] Vice President
or [ ] Chief Executive Officer
(Check Title Above)
and
By: /s/ A. Keith Wall
-----------------------------------
Signer's Name: A. Keith Wall
--------------------
[ ] Secretary [ ] Treasurer
or [X] Chief Financial Officer
(Check Title Above)
Dated: 7/9/01
--------------------------------
B-4
EXHIBIT B-1
CONSTRUCTION BY TENANT DURING TERM
1. If Tenant wishes to make a Tenant Change, as specified in Section 12.12 of
the Lease, such Tenant Change shall be completed pursuant to the provisions of
Section 12.12. of the Lease and this Exhibit B-1. Tenant shall bear all costs
of said Tenant Change.
Contractor shall complete construction to the Premises pursuant to the final
Plans and Specifications approved in writing by Landlord and Tenant (the "Tenant
Change"), in compliance with all applicable codes and regulations. Tenant's
selections of finishes and materials shall be indicated on the Plans and
Specifications, and shall be equal to or better than the minimum Building
standards and specifications. All work not shown on the final Plans and
Specifications, but which is to be included in the Tenant Change, including but
not limited to, telephone service installation, furnishings or cabinetry, shall
be installed pursuant to Landlord's reasonable directives.
2. Prior to commencing any work:
a) Tenant's proposed Contractor and the Contractor's proposed subcontractors
and suppliers shall be approved in writing by Landlord, which approval shall
not be unreasonably withheld, conditioned or delayed. As a condition of such
approval, so long as the same are reasonably cost competitive, then
Contractor shall use Landlord's Heating, Venting, and Air-conditioning,
plumbing, and electrical subcontractors for such work.
During completion of any Tenant Change, neither Tenant or Contractor
shall permit any sub-contractors, workmen, laborers, material or equipment
to come into or upon the Building if the use thereof, in Landlord's
reasonable judgment, would violate Landlord's agreement with any union
providing work, labor or services in or about the Building.
b) Contractor shall submit to Landlord and Tenant a written bid for completion
of the Tenant Change. Said bid shall include Contractor's overhead, profit,
and fees, and, if the proposed Tenant Change is for cosmetic work in excess
of $5,000 in aggregate value per occurrence or for structural work of any
kind, Contractor shall:
i) pre-pay to Landlord's managing agent $250.00 as partial payment of said
managing agent's construction administration fee, as specified
hereinbelow, and
ii) upon completion of said Tenant Change, pay an administration fee for
supervision of said Tenant Change equal to fifty dollars ($50.00) per
hour, to a maximum of seven and one-half percent (7.5%) of the total
cost of the Tenant Change, to defray said agent's costs for supervision
of the construction;
c) Tenant or Contractor shall submit all Plans and Specifications to Landlord,
and no work on the Premises shall be commenced before Tenant has received
Landlord's final written approval thereof, which shall not be unreasonably
withheld, delayed or conditioned;
d) Contractor shall complete all architectural and planning review and obtain
all permits, including signage, required by the city, state or county in
which the Premises are located; and
e) Contractor shall submit to Landlord verification of public liability and
worker's compensation insurance adequate to fully protect Landlord and
Tenant from and against any and all liability for death or injury to persons
or damage to property caused in or about or by reason of the construction of
any work done by Contractor or Contractor's subcontractors or suppliers.
3. Contractor and Contractor's subcontractors and suppliers shall be subject to
Landlord's reasonable administrative control and supervision. Landlord shall
provide Contractor and Contractor's subcontractors and suppliers with reasonable
access to the Premises.
4. During construction of the Tenant Change, Contractor shall adhere to the
procedures contained hereinbelow, which represent Landlord's minimum
requirements for completion of the Tenant Change.
5. Upon completion of the Tenant Change, Tenant shall provide Landlord with
such evidence as Landlord may reasonably request that the Contractor has been
paid in full, and Contractor shall provide Landlord with lien releases as
requested by Landlord, confirmation that no liens have been filed against the
Premises or the Building. If any liens arise against the Premises or the
Building as a result of the Tenant Change, Tenant shall at Tenant's sole
expense, remove such liens pursuant to the terms of the Lease and provide
Landlord evidence that the title to the Building and Premises have been cleared
of such liens.
6. Whether or not Tenant or Contractor timely complete the Tenant Change,
unless the Lease is otherwise terminated pursuant to the provisions contained
therein, Tenant acknowledges and agrees that Tenant's obligations under the
Lease to pay Fixed Monthly Rent and/or Additional Rent shall continue unabated.
CONSTRUCTION POLICY
The following policies outlined are the construction procedures for the
Building. As a material consideration to Landlord for granting Landlord's
permission to Tenant to complete the construction contemplated hereunder, Tenant
agrees to be bound by and follow the provisions contained hereinbelow:
1. Administration
a) Contractors to notify the management office for the Building prior to
starting any work. All jobs must be scheduled by the general contractor or
sub-contractor when no general contractor is being used.
b) The general contractor is to provide the Building Manager with a copy of the
projected work schedule for the suite, prior to the start of construction.
EXHIBIT B-1 (continued)
CONSTRUCTION BY TENANT DURING TERM
c) Contractor will make sure that at least one set of drawings will have the
Building Manager's initials approving the plans and a copy delivered to the
Building Office.
d) As-built construction, including mechanical drawings and air balancing
reports will be submitted at the end of each project.
e) The HVAC contractor is to provide the following items to the Building
Manager upon being awarded the contract from the general contractor:
i) A plan showing the new ducting layout, all supply and return air grille
locations and all thermostat locations. The plan sheet should also
include the location of any fire dampers.
ii) An Air Balance Report reflecting the supply air capacity throughout the
suite, which is to be given to the Chief Building Engineer at the finish
of the HVAC installation.
f) All paint bids should reflect a one-time touch-up paint on all suites. This
is to be completed approximately five (5) days after move-in date.
g) The general contractor must provide for the removal of all trash and debris
arising during the course of construction. At no time are the building's
trash compactors and/or dumpsters to be used by the general contractor's
clean-up crews for the disposal of any trash or debris accumulated during
construction. The Building Office assumes no responsibility for bins.
Contractor is to monitor and resolve any problems with bin usage without
involving the Building Office. Bins are to be emptied on a regular basis and
never allowed to overflow. Trash is to be placed in the bin.
h) Contractors will include in their proposals all costs to include: parking,
elevator service, additional security (if required), restoration of carpets,
etc. Parking will be validated only if contractor is working directly for
the Building Office.
i) Any problems with construction per the plan, will be brought to the
attention of and documented to the Building Manager. Any changes that need
additional work not described in the bid will be approved in writing by the
Building Manager. All contractors doing work on this project should first
verify the scope of work (as stated on the plans) before submitting bids;
not after the job has started.
2. Building Facilities Coordination
a) All deliveries of material will be made through the parking lot entrance.
b) Construction materials and equipment will not be stored in any area without
prior approval of the Building Manager.
c) Only the freight elevator is to be used by construction personnel and
equipment. Under no circumstances are construction personnel with materials
and/or tools to use the "passenger" elevators.
3. Housekeeping
a) Suite entrance doors are to remain closed at all times, except when hauling
or delivering construction materials.
b) All construction done on the property that requires the use of lobbies or
common area corridors will have carpet or other floor protection. The
following are the only prescribed methods allowed:
i) Mylar: Extra heavy-duty to be taped from the freight elevator to the
suite under construction.
ii) Masonite: 1/4 inch Panel, Taped to floor and adjoining areas. All
corners, edges and joints to have adequate anchoring to provide safe and
"trip-free" transitions. Materials to be extra heavy-duty and installed
from freight elevator to the suite under construction.
c) Restroom wash basins will not be used to fill buckets, make pastes, wash
brushes, etc. If facilities are required, arrangements for utility closets
will be made with the Building Office.
d) Food and related lunch debris are not to be left in the suite under
construction.
e) All areas the general contractor or their sub-contractors work in must be
kept clean. All suites the general contractor works in will have
construction debris removed prior to completion inspection. This includes
dusting of all window sills, light diffusers, cleaning of cabinets and
sinks. All common areas are to be kept clean of building materials at all
times so as to allow tenants access to their suites or the building.
4. Construction Requirements
a) All Life and Safety and applicable Building Codes will be strictly enforced
(i.e. tempered glass, fire dampers, exit signs, smoke detectors, alarms,
etc.). Prior coordination with the Building Manager is required.
b) Electric panel schedules must be brought up to date identifying all new
circuits added.
c) All electrical outlets and lighting circuits are to be properly identified.
Outlets will be labeled on back side of each cover plate.
d) All electrical and phone closets being used must have panels replaced and
doors shut at the end of each day's work. Any electrical closet that is
opened with the panel exposed must have a work person present.
e) All electricians, telephone personnel, etc. will, upon completion of their
respective projects, pick up and discard their trash leaving the telephone
and electrical rooms clean. If this is not complied with, a clean-up will be
conducted by the building janitors and the general contractor will be back-
charged for this service.
B1-2
EXHIBIT B-1 (continued)
CONSTRUCTION BY TENANT DURING TERM
f) Welding or burning with an open flame will not be done without prior
approval of the Building Manager. Fire extinguishers must be on hand at all
times.
g) All "anchoring" of walls or supports to the concrete are not to be done
during normal working hours (7:30 AM - 6:00 PM, Monday through Friday). This
work must be scheduled before or after these hours during the week or on the
weekend.
h) All core drilling is not to be done during normal working hours (7:30 AM -
6:00 PM, Monday through Friday). This work must be scheduled before or after
these hours during the week or on the weekend.
i) All HVAC work must be inspected by the Building Engineer. The following
procedures will be followed by the general contractor:
i) A preliminary inspection of the HVAC work in progress will be scheduled
through the Building Office prior to the reinstallation of the ceiling
grid.
ii) A second inspection of the HVAC operation will also be scheduled
through the Building Office and will take place with the attendance of
the HVAC contractor's Air Balance Engineer. This inspection will take
place when the suite in question is ready to be air-balanced.
iii) The Building Engineer will inspect the construction on a periodic basis
as well.
j) All existing thermostats, ceiling tiles, lighting fixtures and air
conditioning grilles shall be saved and turned over to the Building
Engineer.
Good housekeeping rules and regulations will be strictly enforced. The
building office and engineering department will do everything possible to make
your job easier. However, contractors who do not observe the construction
policy will not be allowed to perform within this building. The cost of
repairing any damages that are caused by Tenant or Tenant's contractor during
the course of construction shall be deducted from Tenant's Allowance or Tenant's
Security Deposit, as appropriate.
LANDLORD: TENANT:
GALLERIA PARK PARTNERS, LLC, SIZZLER INTERNATIONAL, INC.,
a Delaware limited liability company a Delaware corporation
By: DOUGLAS, EMMETT AND COMPANY,
a California corporation,
its agent
By: /s/ Michael Means By: /s/ Michael B. Green
----------------------------- -----------------------------------
Michael Means, Vice President Signer's Name: Michael B. Green
Dated: 7/17/01 --------------------
----------------------------- [ ] President [X] Vice President
or [ ] Chief Executive Officer
(Check Title Above)
and
By: /s/ A. Keith Wall
-----------------------------------
Signer's Name: A. Keith Wall
--------------------
[ ] Secretary [ ] Treasurer
or [X] Chief Financial Officer
(Check Title Above)
Dated: 7/9/01
--------------------------------
B1-3
EXHIBIT C
RULES AND REGULATIONS
BUILDING RULES AND REGULATIONS
1. Access. Tenant and/or Tenant's agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders shall only
use the sidewalks, entrances, lobby(ies), garage(s), elevators, stairways, and
public corridors as a means of ingress and egress, and shall take such actions
as may reasonably be necessary to ensure that the same remain unobstructed at
all times.
The entrance and exit doors to the Premises are to be kept closed at all
times except as required for orderly passage to and from the Premises. Except on
balconies available for the joint or exclusive use of Tenant as otherwise
specified hereinabove, Tenant shall not permit its agents, clients, contractors,
directors, employees, invitees, licensees, officers, partners or shareholders to
loiter in any part of the Building or obstruct any means of ingress or egress.
Tenant shall not cover any doors, and shall not cover any window, other than
with vertical or mini-blinds pre-approved in writing by Landlord. Landlord
specifically disapproves the installation of any film or foil covering
whatsoever on the windows of the Premises.
Neither Tenant, nor its agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders shall go up on the roof
or onto any balcony serving the Building, except upon such roof, portion
thereof, or balcony as may be contiguous to the Premises and is designated in
writing by Landlord as a roof-deck, roof-garden area, or exclusive use balcony
area.
2. Restroom Facilities. The toilet rooms, toilets, urinals, wash bowls and
other apparatus (the "Restroom Facilities"), whether contained in the common
areas of the Building and/or the interior of the Premises, shall not be used for
any purpose other than that for which they were designed. Tenant shall not
permit its agents, clients, contractors, directors, employees, invitees,
licensees, officers, partners or shareholders to throw foreign substances of any
kind whatsoever or papers not specifically designated for use in the Restroom
facilities down any toilet, or to dispose of the same in any way not in keeping
with the instructions provided to Tenant by the management of the Building
regarding same, and Tenant hereby specifically agrees to reimburse Landlord
directly for the expense of any breakage, stoppage or damage resulting from
Tenant's violation of this rule.
3. Heavy Equipment. Landlord reserves the right, in Landlord's sole
discretion, to decline, limit or designate the location for installation of any
safes, other unusually heavy, or unusually large objects to be used or brought
into the Premises the Building. In each case where Tenant requests installation
of one or more such unusually heavy item(s), which request shall be conclusively
evidenced by Tenant's effort to bring such item(s) into the Building or
Premises, Tenant shall reimburse Landlord for the costs of any engineering or
structural analysis required by Landlord in connection therewith. In all cases,
each such heavy object shall be placed on a metal stand or metal plates or such
other mounting detail of such size as shall be prescribed by Landlord.
Tenant hereby indemnifies Landlord against any damage or injury done to
persons, places, things or the Building or its common areas when such damage or
injury primarily arises out of Tenant's installation or use of one or more
unusually heavy objects. Tenant further agrees to reimburse Landlord for the
costs of repair of any damage done to the Building or property therein by
putting in, taking out, or maintaining such safes or other unusually heavy
objects.
4. Transportation of Freight. Except as otherwise agreed to by Landlord in
writing, Tenant or Tenant's agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders shall only carry
freight, furniture or bulky materials in or out of the Building before or after
Normal Business Hours, as specified in Section 15 of these rules. Tenant may
only install and/or move such freight, furniture or bulky material after
previous written notice of its intention to complete such a move, given to the
Office of the Building. The persons and/or company employed by Tenant for such
work must be professional movers, reasonably acceptable to Landlord, and said
movers must provide Landlord with a certificate of insurance evidencing the
existence of worker's compensation and all risk liability coverage in a minimum
amount of $2,000,000.
Tenant may, subject to the provisions of the immediately preceding
paragraph, move freight, furniture, bulky matter and other material in or out of
the Premises on Saturdays between the hours of 8:00 A.M. and 6:00 P.M., provided
that Tenant pays in advance for Landlord's reasonably anticipated additional
costs, if any, for elevator operators, security guards and other expenses
arising by reason of such move by Tenant.
5. Flammable Materials. Except for such limited quantities of office materials
and supplies as are customarily utilized in Tenant's normal business operations,
Tenant shall not use or keep in the Premises or the Building any kerosene,
gasoline, flammable or combustible fluid or material, other than those limited
quantities of normal business operating materials as may reasonably be necessary
for the operation or maintenance of office equipment. Nor shall Tenant keep or
bring into the Premises or the Building any other toxic or hazardous material
specifically disallowed pursuant to California state law.
6. Cooking / Odors / Nuisances. Tenant shall not permit its agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders to engage in the preparation and/or serving of foods unless the
Premises includes a self-contained kitchen area. Nor shall Tenant permit the
odors arising from such cooking, or any other improper noises, vibrations, or
odors to be emanate from the Premises. So long as the following items are
approved by the Underwriters Laboratory, Tenant shall have the right to supply
and install, at Tenant's sole expense, a dishwasher, microwave oven, toaster and
vending machine(s) in the Premises.
EXHIBIT C (continued)
RULES AND REGULATIONS
Tenant hereby agrees to instruct all persons entering the Premises to comply
with the requirements of the Building, by advising all persons entering the
Premises that smoking of any tobacco or other substance is prohibited at all
times, except in such common areas located outside the Building as may be
designated by the Building management.
Tenant shall not permit Tenant's agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders to interfere
in any way with other tenants of the Building or with those having business with
them.
Tenant shall not permit its agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders to bring or
keep within the Building any animal, bird or bicycle, except such seeing-eye dog
or other disability assistance type animal as may comply with the requirements
of any handicapped ordinances having jurisdiction therefor.
Tenant shall store its trash and garbage within the Premises. No material
shall be placed in the trash boxes or receptacles if such material is a
hazardous waste or toxic substance or is of such a nature that its disposal in
Landlord's ordinary and customary manner of removing and disposing of trash and
garbage would be a violation of any law, ordinance or company regulation
governing such disposal. All garbage and refuse disposal shall be made only
through entry ways and elevators provided for such purposes and at such times as
Landlord shall designate. As and when directed by Landlord and/or if required
by any governmental agency having jurisdiction therefor, Tenant shall comply
with all directives for recycling and separation of trash.
Tenant shall not employ any person to do janitorial work in any part of the
Premises without the prior written consent of Landlord, which consent may be
withheld in Landlord's sole discretion.
Landlord reserves the right to exclude or expel from the Building any person
who in Landlord's sole discretion is intoxicated or under the influence of
liquor or drugs or who, in any manner, engages in any act in violation of the
Rules and Regulations of the Building.
Tenant shall not conduct any public or private auction, fire sale or other
sale of Tenant's personal property, furniture, fixtures or equipment or any
other property located in or upon the Premises, without Landlord's prior written
consent, which consent shall be in Landlord's sole discretion.
7. Storage. Tenant may only store goods, wares, or merchandise on or in the
Premises in areas specifically designated by Landlord for such storage.
8. Directives to Management. Tenant's requirements, other than those Landlord
specifically agrees to perform elsewhere in this Lease, shall only be attended
to upon the Building management's receipt of Tenant's written request therefor.
Landlord's employees shall not perform any work or do anything outside of their
regular duties unless under special instruction from the Building management.
No security guard, janitor or engineer or other employee of the Building
management shall admit any person (Tenant or otherwise) to the Premises without
specific instructions from the Office of the Building and written authorization
for such admittance from Tenant.
9. Keys and Locks. Landlord shall furnish Tenant with two keys to each door
lock existing in the Premises. Tenant shall reimburse Landlord a reasonable
charge for these and any additional keys. Tenant shall not be permitted to have
keys made, nor shall Tenant alter any lock or install a new or additional lock
or bolts on any door of the Premises without Landlord's prior written consent.
Tenant shall, in each case, furnish Landlord with a key for any additional lock
installed or changed by Tenant or Tenant's agent(s). Tenant, upon the
expiration or earlier termination of this Lease, shall deliver to Landlord all
keys in the possession of Tenant or Tenant's agents, clients, contractors,
directors, employees, invitees, licensees, officers, partners or shareholders
for doors in the Building, whether or not furnished to Tenant by Landlord. If
Tenant, or Tenant's agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders, lose or misplace any
key(s) to the Building, Landlord shall, in Landlord's sole discretion, either
replace said key(s) or re-key such locks as may be affected thereby, and Tenant
shall reimburse Landlord for all such costs of such re-keying and/or
replacement.
10. Solicitation. Tenant and/or its agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders shall not
permit any canvassing, peddling, soliciting and/or distribution of handbills or
any other written materials to occur in the Premises and/or the Building, nor
shall Tenant or Tenant's agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders engage in such
solicitation or distribution activities.
11. Retail Sales, Services and Manufacturing Prohibited. Except with the prior
written consent of Landlord, Tenant shall not sell, or permit the retail sale
of, newspapers, magazines, periodicals, theater tickets or any other goods or
merchandise to the general public in or on the Premises, nor shall Tenant carry
on or permit or allow any employee or other person to carry on the independent
business of stenography, typewriting or any similar business in or from the
Premises for the service or accommodation of other occupants of any other
portion of the Building. Tenant shall not permit the Premises to be used for
manufacturing or for any illegal activity of any kind, or for any business or
activity other than for Tenant's specific use.
12. Change in Name or Address. Landlord shall have the right, exercisable
without notice and without liability to Tenant, to change the name and street
address of the Building.
13. Projections from Premises. Tenant shall not install any radio or television
antenna, loudspeaker or other device on the roof or the exterior walls of the
Building or in any area projecting outside the interior walls of the Premises.
Tenant shall not install or permit to be installed any awnings, air conditioning
units or other projections, without the prior written consent of Landlord.
C-2
EXHIBIT C (continued)
RULES AND REGULATIONS
14. Superiority of Lease. These Rules and Regulations are in addition to, and
shall not be construed to in any way modify or amend, in whole or in part, the
covenants, agreements or provisions of this Lease. If a conflict or
disagreement between the Lease and these Rules becomes apparent, this Lease
shall prevail.
15. Changes to Rules and Regulations. Provided such changes do not materially
harm Tenant's ability to conduct its normal business operations, and do not
materially decrease Tenant's rights or materially increase Tenant's obligations
under this Lease, Landlord shall retain the right to change, add or rescind any
rule or regulation contained herein, or to make such other and further
reasonable and non-discriminatory Rules and Regulations as in Landlord's sole
judgment may, from time to time, become necessary for the management, safety,
care and cleanliness of the Premises, the Building or the Parking Facilities, or
for the preservation of good order therein, or for the convenience of other
occupants and tenants therein, so long as such recision, addition, deletion or
change is thereafter reasonably applied to all occupants of the Building
affected thereby.
PARKING RULES AND REGULATIONS
A. Tenant shall strictly comply with all posted speed limits, directional
signs, yield signs, stops signs and all other signs within or about the
parking facilities.
B. Tenant shall register all vehicle license plate numbers with the Building
management.
C. Tenant shall be responsible for the cost of repairing any damage to the
parking facilities or cleaning any debris created or left by Tenant,
including, without limitation, oil leakage from motor vehicles parked in the
parking facilities under its auspices.
D. Landlord, in addition to reserving the right to designate one or more areas
solely for visitor parking, which areas may be changed by Landlord from time
to time with or without prior notice to Tenant, reserves the right to
allocate additional visitor spaces on any floor of the parking facilities.
Tenant shall not park any vehicles in any spaces designated as visitor only
spaces or customer spaces within the parking facilities.
E. Tenant shall strictly comply with all rules, regulations, ordinances, speed
limits, and statutes affecting handicapped parking and/or access, and shall
not park any vehicles within the fire lanes, along parking curbs or in
striped areas.
F. Tenant shall only use the number of parking permits allocated to it and
shall not permit more than one of its employees to utilize the same parking
permit. Landlord reserves the right to assign or re-assign parking spaces
within the Parking facilities to Tenant from time to time, and provided
Landlord is required to do so by reason of any action arising out of a
governmental mandate imposed on Landlord, Landlord further reserves the
right at any time to substitute an equivalent number of parking spaces in a
parking facilities or subterranean or surface parking facility within a
reasonable distance of the Premises.
G. Except with Landlord's managing agent(s)' prior written consent, Tenant
shall not leave vehicles in the parking facilities overnight on a regular
basis, nor park any vehicles in the parking facilities other than
automobiles, motorcycles, motor-driven or non-motor-driven bicycles or four-
wheeled trucks or vans. Landlord may, in its sole discretion, designate
separate areas for bicycles and motorcycles. Tenant shall ensure that
vehicles parking in the parking facilities by using the parking permits
assigned to Tenant shall be parked entirely within the striped lines
designating a single space and are not so situated or of such a width or
length as to impede access to or egress from vehicles parked in adjacent
areas or doors or loading docks. Further, all vehicles utilizing Tenant's
parking permits shall not be higher than any height limitation that may be
posted, or of such a size, weight or dimension so that entry of such vehicle
into the parking facilities would cause any damage or injury thereto.
H. Tenant shall not allow any of the vehicles parked using Tenant's permits, or
the vehicles of any of Tenant's suppliers, shippers, customers or invitees
to be loaded or unloaded in any area other than those specifically
designated by Landlord for loading.
I. Tenant shall not use or occupy the parking facilities in any manner which
will unreasonably interfere with the use of the parking facilities by other
tenants or occupants of the Building. Without limitation, Tenant agrees to
promptly turn off any vehicle alarm system activated and sounding an alarm
in the parking facilities. In the event said alarm system fails to turn off
and no longer sound an intruder alert fifteen (15) minutes after commencing
such an alarm, Landlord shall reserve the right to remove the vehicle from
the parking facilities at Tenant's sole expense.
J. Tenant acknowledges that the Rules and Regulations as posted herein shall be
in effect twenty-four hours per day, seven days per week, without exception.
[INTENTIONALLY LEFT BLANK]
C-3
EXHIBIT C (continued)
RULES AND REGULATIONS
K. Tenant acknowledges that the uniformed guard officers and parking attendants
serving the parking facilities are authorized to issue verbal and written
warnings of Tenant's violations of any of the rules and regulations
contained herein. Except in the case of a car alarm continuing to sound in
excess of a maximum of fifteen minutes, in which case no further notice by
Landlord shall be required. If Tenant or Tenant's agents, contractors,
directors, employees, officers, partners or shareholders continue to
materially breach these rules and regulations after expiration of written
notice and the opportunity to cure has been given to Tenant, then in
addition to such other remedies and request for injunctive relief it may
have, Landlord shall have the right, without additional notice, to remove or
tow away the vehicle involved and store the same, all costs of which shall
be borne exclusively by Tenant and/or revoke Tenant's parking privileges and
rights under the Lease.
LANDLORD: TENANT:
GALLERIA PARK PARTNERS, LLC, SIZZLER INTERNATIONAL, INC.,
a Delaware limited liability company a Delaware corporation
By: DOUGLAS, EMMETT AND COMPANY,
a California corporation,
its agent
By: By:
----------------------------- -----------------------------------
Michael Means, Vice President Signer's Name:
--------------------
Dated: [ ] President [ ] Vice President
----------------------------- or [ ] Chief Executive Officer
(Check Title Above)
and
By:
-----------------------------------
Signer's Name:
--------------------
[ ] Secretary [ ] Treasurer
or [ ] Chief Financial Officer
(Check Title Above)
Dated:
--------------------------------
C-4
EXHIBIT D
FIRST AMENDMENT - COMMENCEMENT DATE AND TERM
This Amendment to Lease (the "Amendment"), dated July 9, 2001, is made by
and between GALLERIA PARK PARTNERS, LLC, a Delaware limited liability company
("Landlord"), with offices at 808 Wilshire Boulevard, Suite 200, Santa Monica,
California 90401, and SIZZLER INTERNATIONAL, INC., a Delaware corporation
("Tenant"), with offices at 6101 West Centinela Avenue, Suite 200, Culver City,
California 90030.
WHEREAS,
A. Landlord, pursuant to the provisions of that certain written, dated
(the "Lease"), leased to Tenant and Tenant leased from Landlord space in the
property located at (the "Building"), commonly known as Suite (the "Premises");
B. The provisions of said Lease specify that the Commencement Date shall
be the date Landlord substantially completes the Improvements for which Landlord
is obligated under the Lease, as conclusively evidenced by Tenant taking
possession of the Premises;
C. Tenant took possession of the Premises on;
NOW, THEREFORE, in consideration of the covenants and provisions contained
herein, and other good and valuable consideration, the sufficiency of which
Landlord and Tenant hereby acknowledge, Landlord and Tenant agree:
1. Confirmation of Defined Terms. Unless modified herein, all terms previously
defined and capitalized in the Lease shall hold the same meaning for the
purposes of this Amendment.
2. Confirmation of Commencement Date and Term. The Commencement Date is hereby
confirmed to be _______, and the Term is hereby confirmed from and including
_________ to and including ________________.
3. Revision in Fixed Monthly Rent. Tenant acknowledges and agrees commencing
____________, and continuing through _____________, Tenant shall pay the
initial Fixed Monthly Rent of $____________ per month. Furthermore, as of
the Commencement Date, the provisions of Section 3.3 are hereby deleted in
their entirety, and replaced in lieu thereof, with the following:
"Commencing _______________, and continuing through ____________, the Fixed
Monthly Rent payable by Tenant shall increase from $____________ per month to
$__________ per month;
Commencing _____________, and continuing through ______________ the Fixed
Monthly Rent payable by Tenant shall increase from $______________ per month
to $___________ per month;
Commencing _____________, and continuing through ____________, the Fixed
Monthly Rent payable by Tenant shall increase from $_______________ per month
to $____________ per month; and
Commencing _____________, and continuing throughout the remainder of the
initial Term, the Fixed Monthly Rent payable by Tenant shall increase from
$___________ per month to $_______________ per month."
4. Acceptance of Premises. Tenant acknowledges and agrees that Landlord has
completed the Improvements for which Landlord was obligated under the Lease
to Tenant's satisfaction, and, as of the Commencement Date, the Premises were
in good order and repair, subject to the provisions of Section 1.1 of the
Lease.
5. Warranty of Authority. If Landlord or Tenant signs as a corporation or a
partnership, each of the persons executing this Amendment on behalf of
Landlord or Tenant hereby covenants and warrants that the corporation
executing hereinbelow is a duly authorized and existing entity that is
qualified to do business in California; that the person(s) signing on behalf
of either Landlord or Tenant have full right and authority to enter into this
Amendment; and that each and every person signing on behalf of either
Landlord or Tenant are authorized in writing to do so.
6. Broker Representation. Landlord and Tenant represent to one another that it
has dealt with no broker in connection with this Amendment other than
Douglas, Emmett and Company and Grubb & Ellis Company. Landlord and Tenant
shall hold one another harmless from and against any and all liability, loss,
damage, expense, claim, action, demand, suit or obligation arising out of or
relating to a breach by the indemnifying party of such representation.
Landlord agrees to pay all commissions due to the brokers listed above
created by Tenant's execution of this Amendment.
7. Successors and Heirs. The provisions of this Amendment shall inure to the
benefit of Landlord's and Tenant's respective successors, assigns, heirs and
all persons claiming by, through or under them.
8. Confidentiality. Landlord and Tenant agree that the covenants and provisions
of this Amendment shall not be divulged to anyone not directly involved in
the management, administration, ownership, lending against, or subleasing of
the Premises, other than Tenant's or Landlord's counsel-of-record or leasing
or sub-leasing broker of record.
9. Submission of Document. No expanded contractual or other rights shall exist
between Landlord and Tenant with respect to the Premises, as contemplated
under this Amendment, until both Landlord and Tenant have executed and
delivered this Amendment, whether or not any additional rental or security
deposits have been received by Landlord, and notwithstanding that Landlord
has delivered to Tenant an unexecuted copy of this Amendment.
EXHIBIT D (continued)
FIRST AMENDMENT - COMMENCEMENT DATE AND TERM
The submission of this Amendment to Tenant shall be for examination
purposes only, and does not and shall not constitute a reservation of or an
option for the Tenant to lease the Premises, or otherwise create any
interest by Tenant in the Premises or any other portion of the Building
other than the original Premises currently occupied by Tenant. Execution of
this Amendment by Tenant and its return to Landlord shall not be binding
upon Landlord, notwithstanding any time interval, until Landlord has in
fact executed and delivered this Amendment to Tenant.
10. Disclosure. Landlord and Tenant acknowledge that principals of Landlord
have a financial interest in Douglas Emmett Realty Advisors, Douglas Emmett
and Company, and P.L.E. Builders.
11. Governing Law. The provisions of this Amendment shall be governed by the
laws of the State of California.
12. Reaffirmation. Landlord and Tenant acknowledge and agree that the Lease,
as amended herein, constitutes the entire agreement by and between Landlord
and Tenant, and supersedes any and all other agreements written or oral
between the parties hereto. Furthermore, except as modified herein, all
other covenants and provisions of the Lease shall remain unmodified and in
full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this document as of
the day and year written below.
LANDLORD: TENANT:
GALLERIA PARK PARTNERS, LLC, SIZZLER INTERNATIONAL, INC.,
a Delaware limited liability company a Delaware corporation
By: DOUGLAS, EMMETT AND COMPANY,
a California corporation,
its agent
By: /s/ Michael Means By: /s/ Michael B. Green
----------------------------- -----------------------------------
Michael Means, Vice President Signer's Name: Michael B. Green
--------------------
Dated: 7/17/01 [ ] President [X] Vice President
----------------------------- or [ ] Chief Executive Officer
(Check Title Above)
and
By: /s/ A. Keith Wall
-----------------------------------
Signer's Name: A. Keith Wall
--------------------
[ ] Secretary [ ] Treasurer
or [X] Chief Financial Officer
(Check Title Above)
Dated: 7/9/01
--------------------------------
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