LEASE AGREEMENT
THIS LEASE AGREEMENT (this "LEASE") is made and entered into by and
between PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P., a Delaware limited
partnership ("LANDLORD"), and SCRIPPS BANK, a California banking corporation
("TENANT"), upon all the terms set forth in this Lease and in all Exhibits and
Riders hereto, to each and all of which terms Landlord and Tenant hereby
mutually agree.
ARTICLE I
BASIC LEASE INFORMATION AND CERTAIN DEFINITIONS
1.1. Each reference in this Lease to information and definitions
contained in the Basic Lease Information and Certain Definitions and each use of
the terms capitalized and defined in this Section 1.1 shall be deemed to refer
to, and shall have the respective meaning set forth in, this Section 1.1.
A. Premises: That certain space identified by diagonal
lines or shaded area on the floor plans
attached hereto as Exhibit "A", consisting
of a portion of the first (1st) floor and
the entire second (2nd) floor of the
Building.
B. Building: The building to be constructed and to be
located at 11988 El Camino Real, San Diego,
California 92130.
C. Land: Those certain parcels of land underlying the
Project.
D. Parking Facility: The parking areas to be located on the Land.
E. Project: The Land and all improvements to be
constructed thereon, including the Building,
the Parking Facility, and all Common Areas,
all as conceptually shown on EXHIBIT "B"
attached hereto.
F. Commencement Date: The date defined in Section 3.1 hereof.
G. Usable Area of Premises: 25,845 square feet.
H. Term: Ten (10) years, unless this Lease is sooner
terminated as provided herein, beginning on
the Commencement Date.
I. Net Rentable Area of the 29,349 square feet of Net Rentable Area
Premises: consisting of (i) approximately 9,235 square
feet of Net Rentable Area on the first (1st)
floor of the Building, and (ii)
approximately 20,114 square feet of Net
Rentable Area on the second (2nd) floor of
the Building.
J. Net Rentable Area of the 163,635 square feet of Net Rentable Area.
Building:
K. Tenant's Share: 17.94%, representing a fraction, the
numerator of which is the Net Rentable Area
of the Premises and the denominator of which
is the Net Rentable Area of the Building,
subject to future adjustment pursuant to the
provisions of Section 5.4 hereof
L. Rent: The Base Rent and the Additional Rent.
M. Base Rent: The Base Rent shall be as shown in this
Section 1.1(M) below. Base Rent includes
Base Year Operating Costs.
Monthly Base
Rent per Square
Month of Lease Monthly Base Foot of Net
Term Rent Rentable Area
---- ---- -------------
1-12 $77,774.85 $2.65
13-24 $79,242.30 $2.70
25-36 $80,709.75 $2.75
37-48 $82,177.20 $2.80
49-60 $83,644.65 $2.85
61-72 $85,112.10 $2.90
73-84 $86,579.55 $2.95
85-96 $88,047.00 $3.00
97-108 $89,514.45 $3.05
109-120 $90,981.90 $3.10
N. Additional Rent The Additional Rent shall be all other sums
due and payable by Tenant under the Lease,
including, but not limited to, Tenant's
Share of Operating Costs.
0. Base Year Operating The grossed up (to 95% occupancy) Operating
Costs: Costs for the calendar year 2001.
P. Parking Permits: Tenant shall be entitled to take, at no
charge during the initial Term, one hundred
three (103) Parking Permits consisting of
(i) seventy-eight (78) unassigned parking
spaces to be used in common with others in
the Parking Facility and (ii) twenty-five
(25) reserved parking spaces in, subject to
Article 6, the Parking Facility.
Q. Tenant's Permitted Uses: Tenant may use the Premises for general
office use and for no other purpose
whatsoever, except that the portion of the
Premises located on the ground floor may be
used for retail banking purposes.
R. Security Deposit: None.
S. Broker(s): Business Real Estate Brokerage Company
representing Landlord and CB Richard Ellis
representing Tenant.
T. Landlord's Address for Prentiss Properties Acquisition Partners,
Notice: L.P.
3890 West Northwest Highway, Suite 400
Dallas, Texas 75220
Attention: Thomas F. August
With a copy to:
Prentiss Properties Acquisition Partners,
L.P.
970 West 190th Street, Suite 550
Torrance, California 90502
Attention: Chris Hipps
U. Landlord's Address for Prentiss Properties Acquisition Partners,
Payment: L.P.
P. 0. Box 100435
Pasadena, California 91189-0435
V. Tenant's Address for Scripps Bank
Notice: P.0 Box 8996
La Jolla, California 92038
Attention: Linda Ahlswede-Cox
W. Guarantor(s): None.
X. Extension Option(s): See Section 3.6 hereof.
Y. Allowance for Leasehold See EXHIBIT "C".
Improvements:
-2-
ARTICLE 2
PREMISES AND QUIET ENJOYMENT
2.1. Landlord hereby leases the Premises to Tenant, and Tenant
hereby rents and hires the Premises from Landlord, for the Term. During the
Term, Tenant shall have the right to use, in common with others and in
accordance with the Rules and Regulations, the Common Areas.
2.2. Provided that Tenant fully and timely performs all the terms
of this Lease on Tenant's part to be performed, including payment by Tenant of
all Rent, Tenant shall have, hold and enjoy the Premises during the Term without
hindrance or disturbance from or by Landlord; subject, however, to all of the
terms, conditions and provisions of any and all ground leases, deeds to secure
debt, mortgages, restrictive covenants, easements, and other encumbrances now or
hereafter affecting the Premises or the Project (collectively, the
"ENCUMBRANCES"). Landlord shall, on or before the Commencement Date, endeavor to
provide Tenant with notice of any such Encumbrances hereafter affecting the
Premises or the Project that may, in Landlord's good faith opinion, adversely
affect Tenant's rights and obligations hereunder.
ARTICLE 3
TERM; COMMENCEMENT DATE
DELIVERY AND ACCEPTANCE OF PREMISES
3.1. The Commencement Date shall be the earlier of (a) the date the
Premises are deemed Available for Occupancy pursuant to Section 3.2 hereof or
(b) the date Tenant, or anyone claiming by, through or under Tenant, occupies
all or any portion of the Premises for the purpose of the conduct of Tenant's
(or such other person's) business therein; provided, however, that until the
Premises are deemed Available for Occupancy (pursuant to Section 3.2 hereof) the
Base Rent payable by Tenant for the Premises after the occurrence of the
Commencement Date pursuant to Section 3.1(b) above shall be prorated based on
the ratio of the total Net Rentable Area in the Premises and the Net Rentable
Area in the Premises actually occupied by Tenant (or anyone claiming by, through
or under Tenant) for the purpose of the conduct of Tenant's (or such other
person's) business therein.
3.2. A. The Premises shall be deemed Available for Occupancy
as soon as the following conditions have been met: (a) the Leasehold
Improvements (as defined in EXHIBIT "C" to the Lease) have been substantially
completed as determined by Landlord's architect or space planner; (b) either a
certificate of occupancy (temporary or final) or other certificate permitting
the lawful occupancy of the Premises has been issued for the Premises, or such
portion of the Premises, as the case may be, by the appropriate governmental
authority; and (c) at least three (3) Business Days' notice of the anticipated
occurrence of the conditions in clauses (a) and (b) above has been given to
Tenant.
B. Notwithstanding anything to the contrary contained herein, if
there is a delay in the Availability for Occupancy of the Premises due to Tenant
Delay (as defined in EXHIBIT "C" to the Lease), then the Premises shall be
deemed Available for Occupancy on the date on which the Premises would have been
available for occupancy but for such Tenant Delay, even though a certificate of
occupancy or other certificate permitting the lawful occupancy of the Premises
has not been issued or the Leasehold Improvements have not been commenced or
completed.
C. In the event that the Premises is not Available for
Occupancy by January 1, 2001 ("COMPLETION OUTSIDE DATE"), as such Completion
Outside Date may be extended by the number of days of Tenant Delays and by
the number of days of "Force Majeure Delays" (as defined below), then the
sole remedy of Tenant shall be the right to deliver a notice to Landlord (the
"TERMINATION NOTICE") electing to terminate this Lease effective upon receipt
of the Termination Notice by Landlord (the "TERMINATION EFFECTIVE DATE").
Except as provided hereinbelow, the Termination Notice must be delivered by
Tenant to Landlord, if at all, not earlier than the Completion Outside Date
and not later than five (5) business days after the Completion Outside Date.
If Tenant delivers the Termination Notice to Landlord, then Landlord shall
have the right to suspend the Termination Effective Date for a period ending
thirty (30) days after the original Termination Effective Date. In order to
suspend the Termination Effective Date, Landlord must deliver to Tenant,
within five (5) business days after receipt of the Termination Notice, a
certificate of the general contractor certifying that it is such contractor's
best good faith judgment that the Premises will be Available for Occupancy
within thirty (30) days after the original Termination Effective Date. If the
Premises is Available for Occupancy within said thirty (30) day suspension
period, then the Termination Notice shall be of no further force and effect;
if, however, the Premises is not Available for Occupancy within said thirty
(30) day suspension period, then this Lease shall terminate as of the date of
expiration of such thirty (30) day period. If prior to the Completion Outside
Date Landlord determines that the Premises will not be Available for
Occupancy by the Completion Outside Date, Landlord shall have the right to
deliver a written notice to Tenant stating Landlord's opinion as to the date
by which the Premises will be Available for Occupancy and Tenant shall be
required, within five (5) business days after receipt of such notice, to
either deliver the Termination Notice (which will mean that this Lease shall
thereupon terminate and shall be of no further force and effect) or agree to
extend the Completion Outside Date to that date which is set by Landlord.
Failure of Tenant to so respond in writing within said five (5) business day
period shall be deemed to constitute Tenant's agreement to extend the
Completion Outside Date to that date which is set by Landlord. If the
Completion Outside Date is so extended, Landlord's right to request Tenant to
elect to either terminate or further extend the Completion Outside Date shall
remain and shall continue to remain, with each of the notice periods and
response periods set forth above, until the Premises is Available for
Occupancy or until this Lease is terminated. For purposes of this Section
3.2.C, "FORCE MAJEURE DELAYS" shall mean and refer to a period of delay or
delays encountered by Landlord affecting Landlord's completion of the
Building and/or the Project and/or the work of construction of the Leasehold
Improvements
-3-
because of delays due to excess time in obtaining governmental permits or
approvals for a lot split/lot line adjustment of the Land and/or pertaining to
grading permits and/or building permits beyond the time period normally required
to obtain such permits or approvals for similar work, similarly improved, in the
Carmel Valley area of San Diego County; fire, earthquake or other acts of God;
acts of the public enemy; riot; insurrection; governmental regulations of the
sales of materials or supplies or the transportation thereof; strikes or
boycotts; shortages of material or labor or any other cause beyond the
reasonable control of Landlord.
3.3. The Net Rentable Area of the Premises and the Building are as
stated in Sections 1.1I and J, respectively. By written instrument
substantially in the form of EXHIBIT "D" attached hereto, Landlord shall notify
Tenant of the Commencement Date, the Net Rentable Area of the Premises and all
other matters stated therein. The Commencement Notice shall be conclusive and
binding on Tenant as to all matters set forth therein, unless within ten (10)
days following delivery of such Commencement Notice, Tenant contests any of the
matters contained therein by notifying Landlord in writing of Tenant's
objections. The foregoing notwithstanding, Landlord's failure to deliver any
Commencement Notice to Tenant shall not affect Landlord's determination of the
Commencement Date.
3.4. Except as otherwise provided in Paragraph 10 of EXHIBIT "C",
Tenant may not enter or occupy the Premises prior to the Commencement Date
without Landlord's express written consent and any entry by Tenant shall be
subject to all of the terms of this Lease; provided however, that no such early
entry shall change the Commencement Date or the date on which the Term expires
(the "EXPIRATION DATE").
3.5. Occupancy of the Premises or any portion thereof by Tenant or
anyone claiming through or under Tenant for the conduct of Tenant's or such
other person's business therein shall be conclusive evidence that Tenant and all
parties claiming through or under Tenant (a) have accepted the Premises or such
portion as suitable for the purposes for which the Premises are leased
hereunder, (b) have accepted the Common Areas as being in a good and
satisfactory condition, and (c) have waived any defects in the Premises and the
Project; provided however, that, if any Leasehold Improvements have been
constructed and installed to prepare the Premises for Tenant's occupancy,
Tenant's acceptance of the Premises, and waiver of any defect therein, shall
occur upon Landlord's substantial completion of the Leasehold Improvements in
accordance with the terms of EXHIBIT "C" hereof, subject only to Landlord's
completion of items on Landlord's punchlist (in accordance with Section 9 of
EXHIBIT "C") and latent defects of which Tenant has given Landlord notice within
forty five (45) days following the date on which Landlord first makes the
Premises available to Tenant for any occupancy or any work in the Premises to be
undertaken by Tenant.
3.6. A. Subject to the terms of this Section 3.6 and
Section 3.7, Landlord hereby grants to Tenant an option (the "EXTENSION OPTION")
to extend the Term of this Lease with respect to the entire Premises for one (1)
additional period of five (5) years (the "OPTION TERM"), on the same terms,
covenants and conditions as provided for in this Lease during the initial Lease
Term, except that the rent payable by Tenant during such Option Term (including
all economic terms such as, without limitation, monthly Base Rent, a new Base
Year for Operating Costs, parking charges, etc.), shall be equal to the "fair
market rental rate" for the Premises for the Option Term as defined and
determined in accordance with the provisions of this Section 3.6 below;
provided, however, that under no circumstances shall the "fair market rental
rate" be less than the Base Rent rate paid by Tenant at the end of the original
Lease Term.
B. The Extension Option must be exercised, if at all, by
written notice ("EXTENSION NOTICE") delivered by Tenant to Landlord no earlier
than the date which is twelve (12) months, and no later than the date which is
six (6) months, prior to the expiration of the then current Term of this Lease.
C. The term "FAIR MARKET RENTAL RATE" as used herein
shall mean the annual amount per rentable square foot, projected during the
relevant period, that a willing, comparable, non-equity tenant (excluding
sublease and assignment transactions) would pay, and a willing, comparable
landlord of a comparable quality building located in the Comparison Area would
accept, at arm's length (what Landlord is accepting in current transactions for
the Building may be considered), for space unencumbered by any other tenant's
expansion right and comparable in size, quality and floor height as the Premises
taking into account the value of the existing improvements in the Premises to
Tenant, as compared with the value of the existing improvements in such
comparable space, with such value to be based on the age, quality and layout of
the existing improvements in the Premises (and the extent to which the same
could be utilized by Tenant with consideration given to the fact that the
improvements existing in the Premises are specifically suitable to Tenant) and
taking into account items that lessors customarily consider in renewal
transactions including, but not limited to, rental rates, office space
availability, tenant size, operating expenses and allowance, parking charges,
and any other amounts then being charged by Landlord or the lessors of such
similar office buildings.
D. Landlord's determination of fair market rental rate
shall be delivered to Tenant in writing not later than thirty (30) days
following Landlord's receipt of Tenant's Extension Notice. Tenant will have
thirty (30) days ("TENANT'S REVIEW PERIOD") after receipt of Landlord's notice
of the fair market rental rate within which to accept such fair market rental
rate or to object thereto in writing. Tenant's failure to accept the fair market
rental rate submitted by Landlord in writing within Tenant's Review Period will
conclusively be deemed Tenant's disapproval thereof. If Tenant objects to (or is
deemed to have disapproved) the fair market rental rate submitted by Landlord
within Tenant's Review Period, then Landlord and Tenant will attempt in good
faith to agree upon such fair market rental rate using their best good faith
efforts. If Landlord and Tenant fail to reach agreement on such fair market
rental rate within fifteen (15) days following the expiration of Tenant's Review
Period (the "OUTSIDE AGREEMENT DATE"), then Tenant may, within five (5) business
days following the Outside Agreement Date, demand by written notice to Landlord
that each party's determination be submitted to appraisal in accordance with the
provisions below of this Section 3.6. Tenant's failure to timely demand
appraisal will constitute Tenant's rescission of its Extension Notice and the
Extension Option will be void and of no further force or effect.
-4-
E. (1) Landlord and Tenant shall each appoint one
independent, unaffiliated appraiser who shall by profession be a real estate
broker who has been active over the five (5) year period ending on the date of
such appointment in the leasing of comparable office space in the Comparison
Area. Each such appraiser will be appointed within thirty (30) days after the
Outside Agreement Date.
(2) The two (2) appraisers so appointed will
within fifteen (15) days of the date of the appointment of the last appointed
appraiser agree upon and appoint a third appraiser who shall be qualified under
the same criteria set forth herein above for qualification of the initial two
(2) appraisers.
(3) The determination of the appraisers shall be
limited solely to the issue of whether Landlord's or Tenant's last proposed (as
of the Outside Agreement Date) new fair market rental rate for the Premises is
the closest to the actual new fair market rental rate for the Premises as
determined by the appraisers, taking into account the requirements of Paragraph
C and this Paragraph E regarding same.
(4) The three (3) appraisers shall within thirty
(30) days of the appointment of the third appraiser reach a decision as to
whether the parties shall use Landlord's or Tenant's submitted new fair market
rental rate (i.e., the appraisers may only select Landlord's or Tenant's
submission and may not select a compromise position), and shall notify Landlord
and Tenant thereof.
(5) The decision of the majority of the three
(3) appraisers shall be binding upon Landlord and Tenant. The cost of each
party's appraiser shall be the responsibility of the party selecting such
appraiser, and the cost of the third appraiser (or arbitration, if necessary)
shall be shared equally by Landlord and Tenant.
(6) If either Landlord or Tenant fails to
appoint an appraiser within the time period in Paragraph E(1) herein above, the
appraiser appointed by one of them shall reach a decision, notify Landlord and
Tenant thereof and such appraiser's decision shall be binding upon Landlord and
Tenant.
(7) If the two (2) appraisers fail to agree upon
and appoint a third appraiser, both appraisers shall be dismissed and the matter
to be decided shall be forthwith submitted to arbitration under the provisions
of the American Arbitration Association (but subject to the requirements of
Paragraph C and this Paragraph E).
(8) In the event that the new Monthly Base Rent
is not established prior to end of the initial Term of the Lease, the monthly
Base Rent immediately payable at the commencement of such Option Term shall be
the monthly Base Rent payable in the immediately preceding month.
Notwithstanding the above, once the fair market rental is determined in
accordance with this section, the parties shall settle any underpayment or
overpayment on the next monthly Base Rent payment date falling not less than
thirty (30) days after such determination.
3.7. A. As used in this Section, the word "OPTION" means the
Extension Option pursuant to Section 3.6 herein.
B. The Option is personal to the original Tenant
executing this Lease ("ORIGINAL TENANT") or any successor by merger or
acquisition of all or substantially all of Tenant's assets (the "PERMITTED
TRANSFEREE") and may be exercised only by the original Tenant executing this
Lease or a Permitted Transferee while occupying the entire Premises and may not
be exercised or be assigned, voluntarily or involuntarily, by any person or
entity other than the original Tenant executing this Lease or a Permitted
Transferee. The Option is not assignable separate and apart from this Lease, nor
may the Option be separated from this Lease in any manner, either by reservation
or otherwise.
C. Tenant shall have no right to exercise the Option,
notwithstanding any provision of the grant of Option to the contrary, and
Tenant's exercise of the Option may, at Landlord's option, be nullified by
Landlord and deemed of no further force or effect, if Tenant shall be in default
under the terms of this Lease after the expiration of applicable cure periods
as of Tenant's exercise of the Option or at any time after the exercise of such
Option and prior to the commencement of the Option event.
ARTICLE 4
RENT
4.1. Tenant shall pay to Landlord, without notice, demand, offset
or deduction, in lawful money of the United States of America, at Landlord's
Address for Payment specified in Section 1.1.U above, or at such other place as
Landlord shall designate in writing from time to time: (a) the Base Rent in
equal monthly installments, in advance, on the first day of each calendar month
during the Term, and (b) the Additional Rent, at the respective times required
hereunder. The first monthly installment of Base Rent shall be paid in advance
on the date of Tenant's execution of this Lease and applied to the first
installment of Base Rent coming due under this Lease. Payment of Rent shall
begin on the Commencement Date; provided, however, that, if either the
Commencement Date or the Expiration Date falls on a date other than the first
day of a calendar month, the Rent due for such fractional month shall be
prorated on a per diem basis between Landlord and Tenant so as to charge Tenant
only for the portion of such fractional month falling within the Term.
4.2. All past due installments of Rent not paid within five (5)
days after notice that such amount is due shall be subject to a late charge of
five percent (5%) of the amount of the late payment and shall further bear
interest until paid at a rate per annum (the "INTEREST RATE") equal to the
greater of fifteen percent (15%) or four percent (4%)
-5-
above the prime rate of interest from time to time publicly announced by Bank of
America, a national banking association, or any successor thereof; provided,
however, that, if at the time such interest is sought to be imposed the rate of
interest exceeds the maximum rate permitted under federal law or under the laws
of the State of California, the rate of interest on such past due installments
of Rent shall be the maximum rate of interest then permitted by applicable law.
ARTICLE 5
OPERATING COSTS
5.1. Tenant shall pay to Landlord, as Additional Rent, for each
year or fractional year during the Term, an amount ("TENANT'S OPERATING COSTS
PAYMENT") equal to Tenant's Share of Operating Costs, for such year in excess
of Tenant's Share of Base Year Operating Costs, such amount to be calculated
and paid as follows:
A. Beginning on January 1st of the year following the
year in which the Commencement Date occurs, and on the first day of January of
each year during the Term thereafter, or as soon thereafter as is practicable,
Landlord shall furnish Tenant with a statement ("LANDLORD'S OPERATING COSTS
ESTIMATE") setting forth Landlord's reasonable estimate of grossed up Operating
Costs for the forthcoming year and Tenant's Operating Costs Payment for such
year. On the first day of each calendar month during such year, Tenant shall pay
to Landlord one-twelfth (1/12th) of Tenant's Operating Costs Payment as
estimated on Landlord's Operating Costs Estimate. If for any reason Landlord has
not provided Tenant with Landlord's Operating Costs Estimate on the first day of
January of any year during the Term, then (a) until the first day of the
calendar month following the month in which Tenant is given Landlord's Operating
Costs Estimate, Tenant shall continue to pay to Landlord on the first day of
each calendar month the sum, if any, payable by Tenant under this Section 5.1
for the month of December of the preceding year, and (b) promptly after
Landlords' Operating Costs Estimate is furnished to Tenant, Landlord shall give
notice to Tenant stating whether the installments of Tenant's Operating Costs
Payments previously made for such year were greater or less than the
installments of Tenant's Operating Costs Payments to be made for such year, and
(i) if there shall be a deficiency, Tenant shall pay the amount thereof to
Landlord within twenty (20) days after the delivery of Landlord's Operating
Costs Estimate, or (ii) if there shall have been an overpayment, Landlord shall
apply such overpayment as a credit against the next accruing monthly
installment(s) of Tenant's Operating Costs Payment due from Tenant until fully
credited to Tenant (or pay such amount to Tenant if this Lease has expired or
terminated), and (iii) on the first day of the calendar month following the
month in which Landlord's Operating Costs Estimate is given to Tenant and on the
first day of each calendar month throughout the remainder of such year, Tenant
shall pay to Landlord an amount equal to one-twelfth (1/12th) of Tenant's
Operating Costs Payment.
B. On the first day of March of each year during the
Term (beginning on the first day of March of the second year following the year
in which the Commencement Date occurs), or as soon thereafter as is practicable,
Landlord shall furnish Tenant with a statement of the grossed up Operating Costs
for the preceding year. Within thirty (30) days after Landlord's giving of such
statement, Tenant shall make a lump sum payment to Landlord in the amount, if
any, by which Tenants' Operating Costs Payment for such preceding year as shown
on such Landlord's statement, exceeds the aggregate of the monthly installments
of Tenant's Operating Costs Payments paid during such preceding year. If
Tenant's Operating Costs Payment, as shown on such Landlord's statement, is less
than the aggregate of the monthly installments of Tenant's Operating Costs
Payment actually paid by Tenant during such preceding year, then Landlord shall
apply such amount to the next accruing monthly installment(s) of Tenant's
Operating Costs Payment due from Tenant until fully credited to Tenant.
C. If the Term ends on a date other than the last day of
December, the actual Operating Costs for the year in which the Expiration Date
occurs shall be prorated so that Tenant shall pay that portion of Tenant's
Operating Costs Payment for such year represented by a fraction, the numerator
of which shall be the number of days during such fractional year falling within
the Term, and the denominator of which is 365 (or 366, in the case of a leap
year). The provisions of this Section 5.1 shall survive the Expiration Date or
any sooner termination provided for in this Lease.
5.2. A. For purposes of this Lease, the term "OPERATING
COSTS" shall mean any and all expenses, costs and disbursements of every kind
which Landlord pays, incurs or becomes obligated to pay in connection with the
operation, management, repair and maintenance of all portions of the Project and
which are allocated by Landlord to the Building (as opposed to the adjacent
building(s)) on a reasonable and consistent basis. All Operating Costs shall be
determined according to consistently applied accounting principles. Operating
Costs include, without limitation, the following: (a) Wages, salaries, benefits
and fees of all personnel or entities to the extent engaged in the operation,
repair, maintenance, management, or safekeeping of the Project, including taxes,
insurance, and benefits relating thereto and the costs of all supplies and
materials used in the operation, repair, maintenance and security of the
Project; (b) Cost of performance by Landlord's personnel of, or of all service
agreements for, maintenance, janitorial services, access control, alarm service,
window cleaning, elevator maintenance and landscaping for the Project. Such cost
shall include the rental of personal property used by Landlord's personnel in
the maintenance and repair of the Project; (c) Cost of utilities for the
Project, including water, sewer, power, electricity for common areas, gas, fuel,
lighting and all air-conditioning, heating and ventilating costs; (d) Cost of
all insurance, including casualty and liability insurance applicable to the
Project and to Landlord's equipment, fixtures and personal property used in
connection therewith, business interruption or rent insurance against such
perils as are commonly insured against by prudent landlords, such other
insurance as may be required by any lessor or mortgagee of Landlord, and such
other insurance which Landlord considers reasonably necessary in the operation
of the Project, together with all appraisal and consultants' fees in connection
with such insurance; (e) All Taxes. For purposes hereof, the term "TAXES" shall
mean, all taxes, assessments, and other governmental charges, applicable to or
assessed against the Project or any portion thereof, or applicable to or
assessed against Landlord's personal property used in connection therewith,
whether federal, state, county, or municipal and whether assessed by taxing
districts or authorities presently taxing the Project or the operation thereof
or by other taxing authorities subsequently created, or otherwise, and any other
taxes and assessments attributable to
-6-
or assessed against all or any part of the Project or its operation; including
any reasonable expenses, including fees and disbursements of attorneys, tax
consultants, arbitrators, appraisers, experts and other witnesses, incurred by
Landlord in contesting any taxes or the assessed valuation of all or any part of
the Project. If at any time during the Term there shall be levied, assessed, or
imposed on Landlord or all or any part of the Project by any governmental entity
any general or special ad valorem or other charge or tax directly upon rents
received under leases, or if any fee, tax, assessment, or other charge is
imposed which is measured by or based, in whole or in part, upon such rents, or
if any charge or tax is made based directly or indirectly upon the transactions
represented by leases or the occupancy or use of the Project or any portion
thereof, such taxes, fees, assessments of other charges shall be deemed to be
Taxes; provided, however, that any (i) franchise, corporation, income or net
profits tax, unless substituted for real estate taxes or imposed as additional
charges in connection with the ownership of the Project, which may be assessed
against Landlord or the Project or both, (ii) transfer taxes assessed against
Landlord or the Project or both, (iii) penalties or interest on any late
payments of Landlord, and (iv) personal property taxes of Tenant or other
tenants in the Project, shall be excluded from Taxes. If any or all of the Taxes
paid hereunder are by law permitted to be paid in installments, notwithstanding
how Landlord pays the same, then, for purposes of calculating Operating Costs,
such Taxes shall be deemed to have been divided and paid in the maximum number
of installments permitted by law, and there shall be included in Operating Costs
for each year only such installments as are required by law to be paid within
such year, together with interest thereon and on future such installments as
provided by law; (f) Legal and accounting costs incurred by Landlord or paid by
Landlord to third parties (exclusive of legal fees with respect to disputes with
individual tenants, negotiations of tenant leases, or with respect to the
ownership rather than the operation of the Project), appraisal fees, consulting
fees, all other professional fees and disbursements and all association dues;
(g) Cost of non-capitalized repairs and general maintenance for the Project
(excluding repairs and general maintenance paid by proceeds of insurance or by
Tenant, other tenants of the Project or other third parties); (h) Amortization
of the cost of improvements or equipment which are capital in nature and which
(1) are for the purpose of reducing Operating Costs for the Project, up to the
amount reasonably anticipated to be saved as a result of the installation
thereof, as reasonably estimated by Landlord, or (2) are required by any
governmental authority, or (3) replace any Building equipment needed to operate
the Project at the same quality levels as prior to the replacement. All such
costs, including interest thereon, shall be amortized on a straight-line basis
over the useful life of the capital investment items, as reasonably determined
by Landlord, but in no event beyond the reasonable useful life of the Project as
a first class office project; (i) the Project management office rent or rental
value; (j) a management fee comparable to that being charged by institutional
landlords of comparable projects in the Comparison Area, but not to be less than
four percent (4%) or more than five percent (5%) of revenues from the Building
(whether or not Landlord engages a manager for the Project or manages the
Project with Landlord's personnel) and all items reimbursable to the Project
manager, if any, pursuant to any management contract for the Project; and (k)
amounts payable to any associations created under any instruments of record
affecting the Building or the Land, as amended from time to time.
B. "Operating Costs" shall not include (a) costs for any
capital repairs, replacements or improvements, except as provided above; (b)
expenses for which Landlord is reimbursed or indemnified (either by an insurer,
condemnor, tenant, warrantor or otherwise), to the extent of funds received by
Landlord; (c) expenses incurred in leasing or procuring tenants (including lease
commissions, advertising expenses and expenses of renovating space for tenants);
(d) payments for rented equipment, the cost of which would constitute a capital
expenditure not permitted pursuant to the foregoing if the equipment were
purchased; (e) interest or amortization payments on any mortgages; (f) net basic
rents under ground leases; (g) costs representing an amount paid to an affiliate
of Landlord which is in excess of the amount which would have been paid in the
absence of such relationship; (h) costs specially billed to and paid by specific
tenants; (i) damage and repairs to the extent actually reimbursed to Landlord
under any insurance policy carried by Landlord in connection with the Building,
Common Areas or Parking Facilities; j) Landlord's general overhead expenses not
related to the Building, Common Areas or Parking Facility; (k) costs (including
permit, license and inspection fees) incurred in renovating or otherwise
improving, decorating, painting or altering space for other tenants or other
occupants of the vacant space within the Building; (l) costs incurred due to a
violation by Landlord or any other tenant in the Building of the terms and
conditions of any lease; (m) rentals and other related expenses for leasing HVAC
systems, elevators, or other items (except when needed in connection with normal
repairs and maintenance of the Building or the Project) which if purchased,
rather than rented, would constitute a capital improvement not included in
Operating Costs pursuant to this Lease; (n) depreciation, amortization and
interest payments, except as specifically included in Operating Costs pursuant
to the terms of this Lease and except on materials, tools, supplies and
vendor-type equipment purchased by Landlord to enable Landlord to supply
services Landlord might otherwise contract for with a third party, where such
depreciation, amortization and interest payments would otherwise have been
included in the charge for such third party's services, all as determined in
accordance with generally accepted accounting principles, consistently applied,
and when depreciation or amortization is permitted or required, the item shall
be amortized over its reasonably anticipated useful life; or (o) interest and
tax penalties incurred as a result of Landlord's negligence, inability or
unwillingness to make payments or file returns when due. There shall be no
duplication of costs or reimbursements. Operating Costs attributable to the
Common Areas or Parking Facilities in general will be equitably prorated among
all of the buildings in the Project and Tenant shall be responsible for Tenant's
Share of those costs attributable to the Building. In the event of any dispute
as to the amount of Tenant's Share of Operating Costs, Tenant or a nationally
recognized accounting firm selected by Tenant and reasonably satisfactory to
Landlord (billing hourly and not on a contingency fee basis) will have the
right, by prior written notice ("AUDIT NOTICE") given within sixty (60) days
("AUDIT PERIOD") following receipt of Landlord's annual reconciliation ("ACTUAL
STATEMENT") and at reasonable times during normal business hours, to audit
Landlord's accounting records with respect to Operating Costs relative to the
year to which such Actual Statement relates at the offices of Landlord's
property manager. In no event will Landlord or its property manager be required
to (i) photocopy any accounting records or other items or contracts, (ii) create
any ledgers or schedules not already in existence, (iii) incur any costs or
costs relative to such inspection, or (iv) perform any other tasks other than
making available such accounting records as aforesaid. Neither Tenant nor its
auditor may leave the offices of Landlord's property manager with copies of any
materials supplied by Landlord. Tenant must pay Tenant's Share of Operating
Costs when due pursuant to the terms of this Lease and may not withhold payment
of Operating Costs or any other rent pending results of the audit or during a
dispute regarding Operating Costs. The audit must be completed within thirty
(30) days of the date of Tenant's Audit Notice and the results of such audit
shall be delivered to Landlord within forty-five (45) days of the date of
Tenant's Audit Notice.
-7-
If Tenant does not comply with any of the aforementioned time frames, then such
Actual Statement will be conclusively binding on Tenant. If such audit or review
correctly reveals that Landlord has overcharged Tenant, then within thirty (30)
days after the results of such audit are made available to Landlord, Landlord
agrees to reimburse Tenant the amount of such overcharge. If the audit reveals
that Tenant was undercharged, then within thirty (30) days after the results of
the audit are made available to Tenant, Tenant agrees to reimburse Landlord the
amount of such undercharge. In all cases, Tenant agrees to pay the cost of such
audit. Tenant agrees to keep the results of the audit confidential and will
cause its agents, employees and contractors to keep such results confidential.
To that end, Landlord may require Tenant and its auditor to execute a
confidentiality agreement provided by Landlord.
C. For purposes of this Section 5.2.C, the term
"CONTROLLABLE OPERATING COSTS" shall mean all Operating Costs (as defined above)
except those Operating Costs described in subsections 5.2(A)(c), 5.2(A)(d) and
5.2(A)(e) above. Notwithstanding anything to the contrary contained herein and
solely for purposes of calculating Tenant's Operating Costs Payment, the
aggregate Controllable Operating Costs for any year after the Base Year shall
not increase more than seven percent (7%) over the maximum permitted
Controllable Operating Costs for the immediately preceding year (regardless of
the actual Controllable Operating Costs incurred for such preceding calendar
year); provided, however, if the actual Controllable Operating Costs for any
calendar year are greater than the maximum amount permitted to be charged to
Tenant hereunder, the difference shall be added to Controllable Operating Costs
for succeeding calendar years until such excess(es) is/are exhausted. The
maximum permitted Controllable Operating Costs for the Base Year shall be the
actual amounts of permitted Controllable Operating Costs for the Base Year.
5.3. If the Building is not fully completed (in accordance with the
base building plans for the Building), occupied (meaning ninety-five percent
(95%) of the Net Rentable Area of the Building) and/or assessed (for purposes of
Taxes) during any full or fractional year of the Term (including the Base Year),
the actual Operating Costs (including Taxes) shall be adjusted for such year to
an amount which Landlord estimates would have been incurred in Landlord's
reasonable judgment had the Building been ninety-five percent (95%) completed,
occupied and fully assessed.
5.4. If during the Term any change occurs in either the number of
square feet of the Net Rentable Area of the Premises or of the Net Rentable
Area of the Building, Tenant's Share of Operating Costs shall be adjusted,
effective as of the date of any such change. Landlord shall promptly notify
Tenant in writing of such change and the reason therefor. Any changes made
pursuant to this Section 5.4 shall not alter the computation of Operating Costs
as provided in this Article 5, but, on and after the date of any such change,
Tenant's Operating Costs Payment pursuant to Section 5.1A shall be computed upon
Tenant's Share thereof, as adjusted. If such estimated payments of Tenant's
Share are so adjusted during a year, a reconciliation payment for Tenant's Share
of Operating Costs pursuant to this Article 5 for the calendar year in which
such change occurs shall be computed pursuant to the method set forth in Section
5.1B, such computation to take into account the daily weighted average of
Tenant's Share of Operating Costs during such year.
ARTICLE 6
PARKING
Subject to the terms hereof, Landlord hereby grants to Tenant a license
to use in common with other tenants and with the public the Parking Facility and
shall issue Parking Permits for such use. Each such Parking Permit shall entitle
Tenant to one (1) unassigned parking space in the Parking Facility. Each
reserved Parking Permit shall entitle Tenant to one (1) reserved, covered
parking space in the Parking Facility in a location to be designated by Landlord
from time to time in Landlord's reasonable discretion. Notwithstanding anything
above to the contrary, Landlord shall have the right, in its sole and absolute
discretion, to provide up to ten (10) of such reserved Parking Permits in the
uncovered parking lot depicted on EXHIBIT "B". Any costs incurred by Landlord to
designate Tenant's reserved parking spaces as reserved for Tenant shall be paid
by Tenant, as additional rent, within ten (10) days after Tenant's receipt of an
invoice therefor. All such parking shall be free of charge throughout the
initial Lease Term. Thereafter, the charge for all parking shall be at the
prevailing rates as determined by Landlord. The number of parking permits to be
issued to Tenant is set forth in Section 1.1P. Landlord shall not be obligated
to provide Tenant with any additional Parking Permits. If Tenant fails to
observe the Rules and Regulations with respect to the Parking Facility, then
Landlord, at its option, shall have the right to treat such failure as a default
under this Lease and to terminate Tenant's Parking Permits, without legal
process, and to remove Tenant's vehicles and those of its employees, licensees
or invitees and all of Tenant's personal property from the Parking Facility. If
all or any portion of the Parking Facility shall be damaged or rendered
unusable by fire or other casualty or any taking pursuant to eminent domain
proceeding (or deed in lieu thereof), and as a result thereof Landlord or the
garage operator is unable to make available to Tenant the parking provided for
herein, then the number of cars which Tenant shall be entitled to park hereunder
shall be proportionately reduced so that the number of cars which Tenant may
park in the Parking Facility after the casualty or condemnation in question
shall bear the same ratio to the total number of cars which can be parked in the
Parking Facility at such time as the number of cars Tenant had the right to park
in the Parking Facility prior to such casualty condemnation bore to the
aggregate number of cars which could be parked therein at that time.
ARTICLE 7
UTILITIES AND SERVICES
7.1 A. During the Term, Landlord shall furnish Tenant with
the following services: (a) hot and cold water in Building Standard bathrooms
and chilled water in Building Standard drinking fountains; (b) heating,
ventilating or air-conditioning, as appropriate, during Business Hours (as
defined in Article 26) at such temperatures
-8-
and in such amounts as customarily and seasonally provided to tenants occupying
comparable space in first-class office buildings in the San Diego Corporate
Center/Del Mar Heights office submarket area ("COMPARISON AREA"); (c) electrical
wiring and facilities and power for normal general office use to accommodate a
maximum capacity of seven and one-half (7.5) watts limited to a maximum demand
consumption of three and one-quarter (3.25) watts per square foot of Usable Area
in the Premises available at the bus riser during all hours; (d) electric
lighting for the Common Areas of the Project; (e) passenger elevator service, in
common with others, for access to and from the Premises twenty-four (24) hours
per day, seven (7) day per week; provided, however, that Landlord shall have the
right to limit the number of (but not cease to operate all) elevators to be
operated after Business Hours and on Saturdays, Sundays and Holidays; (f)
janitorial cleaning services; (g) facilities for Tenant's loading, unloading,
delivery and pick-up activities, including access thereto during Business Hours,
subject to the Rules and Regulations, the type of facilities, and other
limitations of such loading facilities; and (h) replacement, as necessary, of
all Building Standard lamps and ballasts in Building Standard light fixtures
within the Premises. All services referred to in this Section 7.1A shall be
provided by Landlord and paid for by Tenant as part of Tenant's Operating Costs
Payment.
B. If Tenant requires electricity, air-conditioning,
heating or other services, including cleaning services, routinely supplied by
Landlord for hours or days in addition to the hours and days specified in
Section 7.1A, Landlord shall make commercially reasonable efforts to provide
such additional service after reasonable prior written request therefor from
Tenant, and Tenant shall reimburse Landlord for the amount Landlord reasonably
determines to be its total actual cost of providing such additional service as
further described below. Landlord shall have no obligation to provide any
additional service to Tenant at any time Tenant is in default under this Lease
unless Tenant pays to Landlord, in advance, the actual cost of such additional
service. If Tenant uses electricity, water or heat or air-conditioning in the
Premises during hours or days in addition to the hours and days specified in
Section 7.1A or otherwise in excess of that required to be supplied by Landlord
pursuant to Section 7.1.A above, or if Tenant's consumption of electricity in
the Premises shall exceed three and one-quarter (3.25) watts of lights and
receptacle demand electrical load per square foot of Usable Area of the
Premises, Tenant shall pay to Landlord, upon billing, all actual costs incurred
by Landlord in connection with the provision of such excess consumption, the
actual cost of the installation, operation, and maintenance of equipment which
is installed in order to supply and measure such excess consumption, the actual
cost of the increased wear and tear on existing or future equipment in the
Building caused by such excess consumption and depreciation of any such
equipment. If any machinery or equipment which generates abnormal heat or
otherwise creates unusual demands on the air-conditioning or heating system
serving the Premises is used in the Premises and if Tenant has not, within five
(5) days after demand from Landlord, taken such steps, at Tenant's expense, as
shall be necessary to cease such adverse affect on the air-conditioning or
heating system, Landlord shall have the right to install supplemental air-
conditioning or heating units in the Premises, and the full cost of such
supplemental units (including the cost of acquisition, installation, operation,
use and maintenance thereof) shall be paid by Tenant to Landlord in advance or
on demand.
C. At no time shall use of electricity in the Premises
exceed the capacity of existing feeders and risers to or wiring in the Premises.
Any risers or wiring to meet Tenant's excess electrical requirements shall, upon
Tenant's written request, be installed by Landlord, at Tenant's sole cost, if,
in Landlord's reasonable judgment, the same are necessary and shall not (i)
cause permanent damage or injury to the Project, the Building or the Premises,
(ii) cause or create a dangerous or hazardous condition, (iii) entail excessive
or unreasonable alterations, repairs or expenses, or (iv) interfere with or
disturb other tenants or occupants of the Building.
7.2. Landlord's obligation to furnish the utility services
specified herein shall be subject to the rules and regulations of the supplier
of such electricity or other utility services and the rules and regulations of
any municipal or other governmental authority regulating the business of
providing electricity and other utility services. Landlord shall have the right,
at Landlord's option, upon not less than thirty (30) days' prior written notice
to Tenant (provided such prior notice will be less if either the discontinuance
of such service is required by applicable law or Landlord receives shorter
notice from the utility company providing electricity or other utility service),
to discontinue utility services to the Premises and arrange for a direct
connection thereof through a public utility supplying such service. If Landlord
gives such notice of discontinuance, Landlord shall make all necessary
arrangements with the public utility supplying such utility service directly to
the Building to furnish such utility service to the Premises, and, unless
prohibited by law or regulations of such public utility, Landlord shall not
discontinue such utility service to the Premises until such public utility is
ready to supply service to the Premises. Tenant shall, however, be responsible
for contracting promptly and directly with such public utility supplying such
service and for paying all deposits for, and all costs relating to, such
service.
7.3. No failure to furnish, or any stoppage of, the services
referred to in this Article 7 resulting from in any cause shall make Landlord
liable in any respect for damages to any person, property or business, or be
construed as an eviction of Tenant, or entitle Tenant to any abatement of Rent
or other relief from any of Tenant's obligations under this Lease. Should any
malfunction of any systems or facilities occur within the Project or should
maintenance or alterations of such systems or facilities become necessary,
Landlord shall repair the same promptly and with reasonable diligence, and
Tenant, except as otherwise expressly provided below, shall have no claim for
rebate, abatement of Rent, or damages because of malfunctions or any such
interruptions in service. Tenant hereby waives the provisions of California
Civil Code Section 1932(1) or any other applicable existing or future law,
ordinance or governmental regulation permitting the termination of this Lease
due to an interruption, failure or inability to provide any services.
7.4. Tenant may, at its sole cost and expense, install its own
security system ("TENANT'S SECURITY SYSTEM") in the Premises; provided, however,
that Tenant shall coordinate the installation and operation of Tenant's Security
System with Landlord to assure that Tenant's Security System is, in Landlord's
reasonable discretion, compatible with Landlord's security system and the
Building systems and equipment and to the extent that Tenant's Security System
is not compatible with Landlord's security system and the Building systems and
equipment, Tenant shall not be entitled to install or operate it. Tenant shall
be solely responsible, at Tenant's sole cost and expense, for the monitoring,
operation and removal (upon the expiration or earlier termination of this Lease)
of Tenant's Security
-9-
System. Tenant acknowledges and agrees that Tenant's obligations to indemnify,
defend and hold Landlord harmless as provided in Article 17 of this Lease shall
apply to Tenant's use and operation of Tenant's Security System and that the
installation of Tenant's Security System shall be subject to the terms and
conditions of Article 10 of this Lease. Landlord and Tenant acknowledge and
agree that nothing contained in this Section 7.4 shall be construed to limit the
rights of Landlord under Article 20 of this Lease. In connection with Tenant's
installation of Tenant's Security System, Tenant shall provide to Landlord,
commencing with the installation of Tenant's Security System in the Premises,
the telephone number(s) of an authorized representative of Tenant to whom
Landlord shall give reasonable prior notice (as determined by Landlord, given
the circumstances, emergency or otherwise) in the event Landlord must enter the
Premises pursuant to Article 20 hereof, but in no event shall Landlord,
following Landlord's provision of such reasonable notice to Tenant's authorized
representative, be obligated to delay Landlord's entry into the Premises or to
monitor or otherwise operate Tenant's Security System while inside the Premises.
ARTICLE 8
ASSIGNMENT AND SUBLETTING
8.1. Neither Tenant nor its legal representatives or successors in
interest shall, by operation of law or otherwise, assign, mortgage, pledge,
encumber or otherwise transfer this Lease or any part hereof, or the interest of
Tenant under this Lease, or in any sublease or the rent thereunder. The Premises
or any part thereof shall not be sublet, occupied or used for any purpose by
anyone other than Tenant, without Tenant's obtaining in each instance the prior
written consent of Landlord in the manner hereinafter provided. As indicated in,
and subject to, Section 8.4 below, Landlord's consent shall not be unreasonably
withheld. Tenant shall not modify, extend, or amend a sublease previously
consented to by Landlord without obtaining Landlord's prior written consent
thereto.
8.2. An assignment of this Lease shall be deemed to have occurred
(a) if, in a single transaction or in a series of transactions, a more than
fifty percent (50%) interest in Tenant, any guarantor of this Lease, or any
subtenant (whether stock, partnership, interest or otherwise) is transferred,
diluted, reduced, or otherwise affected with the result that the present holder
or owners of Tenant, such guarantor, or such subtenant have less than a Fifty
percent (50%) interest in Tenant, such guarantor or such subtenant, or (b) if
Tenant's obligations under this Lease are taken over or assumed in consideration
of Tenant leasing space in another office building. The transfer of the
outstanding capital stock of any corporate Tenant, guarantor or subtenant
through the "OVER-THE-COUNTER" market or any recognized national securities
exchange shall not be included in the calculation of such 50% interest in clause
(a) above.
8.3. Notwithstanding anything to the contrary in Section 8.1,
Tenant shall have the right, upon notice to Landlord, to (a) sublet or license
all or part of the Premises to any related corporation or other entity which
controls Tenant, is controlled by Tenant or is under common-control with
Tenant; or (b) assign this Lease to a successor corporation into which or with
which Tenant is merged or consolidated or which acquired substantially all of
Tenant's assets and property; provided that (i) such successor corporation
assumes all of the obligations and liabilities of Tenant and shall have assets,
capitalization and net worth at least sufficient to perform the obligations of
Tenant under this Lease, accounting for the obligations assumed by such
successor in such transaction, (ii) Tenant shall provide in its notice to
Landlord the information required in Section 8.4, and (iii) such assignment or
sublease is not a subterfuge by Tenant to avoid its obligations under this
Lease. An assignee of Tenant's entire interest in this Lease may be referred to
herein as a "PERMITTED ASSIGNEE". No such transaction shall operate to release
Tenant from any liability under this Lease. For the purpose hereof "CONTROL"
shall mean ownership of not less than fifty percent (50%) of all the voting
stock or legal and equitable interest in such corporation or entity.
8.4. If Tenant should desire to assign this Lease or sublet the
Premises (or any part thereof), Tenant shall give Landlord written notice no
later than the time required for notice under Section 8.3 in the case of an
assignment or subletting, or thirty (30) days in advance of the proposed
effective date of any other proposed assignment or sublease, specifying (a) the
name, current address, and business of the proposed assignee or sublessee, (b)
the amount and location of the space within the Premises proposed to be so
subleased, (c) the proposed effective date and duration of the assignment or
subletting, and (d) the proposed rent or consideration to be paid to Tenant by
such assignee or sublessee. Tenant shall promptly supply Landlord with financial
statements and other information as Landlord may request to evaluate the
proposed assignment or sublease. For assignments and sublettings other than
those permitted by Section 8.3, Landlord shall have fifteen (15) days following
receipt of such notice and other information requested by Landlord within which
to notify Tenant in writing that Landlord elects: (i) to terminate this Lease as
to the space so affected as of the proposed effective date set forth in Tenant's
notice, in which event Tenant shall be relieved of all further obligations
hereunder as to such space, except for obligations under Articles 17, 19 and 22
and all other provisions of this Lease which expressly survive the termination
hereof; or (ii) to permit Tenant to assign or sublet such space; provided,
however, that, if the rent rate agreed upon between Tenant and its proposed
subtenant is greater than the rent rate that Tenant must pay Landlord hereunder
for that portion of the Premises, or if any consideration shall be promised to
or received by Tenant in connection with such proposed assignment or sublease
(in addition to rent), then 50% of such excess rent and other consideration
shall be considered Additional Rent owed by Tenant to Landlord (less brokerage
commissions, attorneys' fees and other disbursements reasonably incurred by
Tenant for such assignment and subletting if acceptable evidence of such
disbursements is delivered to Landlord), and shall be paid by Tenant to
Landlord, in the case of excess rent, in the same manner that Tenant pays Base
Rent and, in the case of any other consideration, within ten (10) Business Days
after receipt thereof by Tenant; or (iii) to refuse, in Landlord's reasonable
discretion, to consent to Tenant's assignment or subleasing of such space and to
continue this Lease in full force and effect as to the entire Premises. Landlord
cannot unreasonably withhold its consent, but the parties agree that Landlord
shall be deemed reasonable in its refusal to consent to an assignment or
subletting for the following reasons (without limiting any other reasons): the
proposed assignee or subtenant is not financially creditworthy, is a
governmental authority or agency, an organization or person enjoying sovereign
or diplomatic immunity, a medical or dental practice or a user that will attract
a volume, frequency or type of visitor or employee to the Building which is not
consistent with the standards
-10-
of a high quality office building or that will impose an excessive demand on or
use of the facilities or services of the Building. It shall also be reasonable
for Landlord to refuse to consent to any assignment or subletting if (x) Tenant
is then in default under this Lease, or (y) such assignment of subletting would
cause a default under another lease in the Building or under any ground lease,
deed of trust, mortgage, restrictive covenant, easement or other encumbrance
affecting the Project. If Landlord should fail to notify Tenant in writing of
such election within the aforesaid fifteen (15) day period, Landlord shall be
deemed to have elected option (iii) above. Tenant agrees to reimburse Landlord
for reasonable legal fees not to exceed One Thousand Dollars ($1,000.00), and
any other reasonable costs incurred by Landlord in connection with any proposed
assignment or subletting and such payment shall not be deducted from the
Additional Rent owed to Landlord pursuant to subsection (ii) above. Tenant shall
deliver to Landlord copies of all documents executed in connection with any
permitted assignment or subletting, which documents shall be in form and
substance reasonably satisfactory to Landlord. No acceptance by Landlord of any
Rent or any other sum of money from any assignee, sublessee or other category of
transferee shall be deemed to constitute Landlord's consent to any assignment,
sublease, or transfer.
8.5. Any attempted assignment or sublease by Tenant in violation of
the terms and provisions of this Article 8 shall be void and shall constitute a
material breach of this Lease. In no event, shall any assignment, subletting or
transfer, whether or not with Landlord's consent, relieve Tenant of its primary
liability under this Lease for the entire Term, and Tenant shall in no way be
released from the full and complete performance of all the terms hereof. If
Landlord takes possession of the Premises before the expiration of the Term of
this Lease, Landlord shall have the right, at its option, to terminate all
subleases, or to take over any sublease of the Premises or any portion thereof
and such subtenant shall attorn to Landlord, as its landlord, under all the
terms and obligations of such sublease occurring from and after such date, but
excluding previous acts, omissions, negligence, or defaults of Tenant.
8.6. The term "Landlord," as used in this Lease, so far as
covenants or obligations on the part of Landlord are concerned, shall be limited
to mean and include only the owner or owners, at the time in question, of the
fee title to, or a lessee's interest in a ground lease of, the Land or the
Building. In the event of any transfer, assignment or other conveyance or
transfers of any such title or interest, Landlord herein named (and in case of
any subsequent transfers or conveyances, the then grantor) shall be
automatically freed and relieved from and after the date of such transfer,
assignment or conveyance of all liability as respects the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed and, without further agreement, the transferee of
such title or interest shall be deemed to have assumed and agreed to observe and
perform any and all obligations of Landlord hereunder, during its ownership of
the Project. Landlord may transfer its interest in the Project without the
consent of Tenant.
ARTICLE 9
REPAIRS
9.1. Landlord agrees to repair and maintain the structural portions
of the Building and the plumbing, heating, ventilating, air conditioning and
electrical systems installed or furnished by Landlord, unless such maintenance
and repairs are (i) attributable to items installed in the Premises by Tenant or
which are above standard interior improvements (such as, for example, custom
lighting, special HVAC and/or electrical panels or systems, kitchen or restroom
facilities and appliances constructed or installed within the Premises) or (ii)
caused by the negligence or willful misconduct or gross negligence of Tenant or
its agents, contractors, invitees and licensees, in which case Tenant will pay
to Landlord, as additional rent, the cost of such maintenance and repair plus a
fee equal to fifteen percent (15%) of the actual costs to cover overhead and a
fee for Landlord's agent or manager. Amounts payable by Tenant pursuant to this
Section 9.1 shall be payable on demand after receipt of an invoice therefor from
Landlord. Landlord has no obligation and has made no promise to maintain, alter,
remodel, improve, repair, decorate, or paint the Premises, the Building or the
Project or any part thereof, except as specifically set forth in this Lease. In
no event shall Landlord have any obligation to maintain, repair or replace any
furniture, furnishings, fixtures or personal property of Tenant. Tenant hereby
waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942
and or any similar law, statute or ordinance now or hereafter in effect.
9.2. Tenant shall keep the Premises (including the Leasehold
Improvements) in good order and in a safe, neat and clean condition, and, when
and if needed, at Tenant's sole cost and expense, shall make all repairs to the
Premises and every part thereof. In the event Tenant fails to promptly commence
and diligently pursue the performance of such maintenance or the making of such
repairs or replacements, then Landlord, at its option, may perform such
maintenance or make such repairs and Tenant shall reimburse Landlord, on demand
after Tenant receives an invoice therefor, the cost thereof plus a fee equal to
fifteen percent (15%) of the actual costs to cover overhead and a fee for
Landlord's agent or manager.
9.3. All repairs made by Tenant pursuant to Section 9.2 shall be
performed in a good and workmanlike manner by contractors or other repair
personnel selected by Tenant from an approved list of contractors and repair
personnel maintained by Landlord in the Project's management office; provided,
however, that neither Tenant nor its contractors or repair personnel shall be
permitted to do any work affecting the Central Systems (as such term is defined
in EXHIBIT "C" hereof). In no event shall such work be done for Landlord's
account or in a manner which allows any liens to be filed in violation of
Article 11. To the extent any repairs involve the making of alterations to the
Premises, Tenant shall comply with the provisions of Article 10.
9.4. Subject to the other provisions of this Lease imposing
obligations regarding repair upon Tenant, Landlord shall repair all machinery
and equipment necessary to provide the services of Landlord described in Article
7 (provided that Tenant shall pay the costs of any repair to such systems or any
part thereof damaged by Tenant and Tenant's employees, customers, clients,
agents, licensees and invitees) and for repair of all portions of the Project
which do not comprise a part of the Premises and are not leased to others.
-11-
ARTICLE 10
ALTERATIONS
10.1. Tenant shall not at any time during the Term make any
alterations to the Premises without first obtaining Landlord's written consent
thereto, which consent Landlord shall not unreasonably withhold or delay;
provided, however, that Landlord shall not be deemed unreasonable by refusing to
consent to any alterations which are visible from the exterior of the Building
or the Project, which will or are likely to cause any weakening of any part of
the structure of the Premises, the Building or the Project or which will or are
likely to cause damage or disruption to the Central Systems or which are
prohibited by any underlying ground lease or mortgage. Notwithstanding the
foregoing, Landlord's prior approval will not be required for any alterations to
the interior of the Premises which are not visible from the exterior of the
Premises which are either cosmetic in nature (such as floor or wall coverings)
or are nonstructural in nature and do not affect any Central Systems and cost
less than Ten Thousand Dollars ($10,000.00) in the aggregate, provided Landlord
receives prior notice thereof and the other conditions set forth in this Article
10 are satisfied. Should Tenant desire to make any alterations to the Premises,
Tenant shall submit all plans and specifications for such proposed alterations
to Landlord for Landlord's review before Tenant allows any such work to
commence, and Landlord shall promptly approve or disapprove such plans and
specifications for any of the reasons set forth in this Section 10.1 or for any
other reason reasonably deemed sufficient by Landlord. Tenant shall select and
use only contractors, subcontractors or other repair personnel from those listed
on Landlord's approved list maintained by Landlord in the Project management
office. Upon Tenant's receipt of written approval from Landlord, and upon
Tenant's payment to Landlord of a reasonable fee prescribed by Landlord for the
work of Landlord and Landlord's employees and representatives in reviewing and
approving such plans and specifications, Tenant shall have the right to proceed
with the construction of all approved alterations, but only so long as such
alterations are in strict compliance with the plans and specifications so
approved by Landlord and with the provisions of this Article 10. All alterations
shall be made at Tenant's sole cost and expense, by contractors retained by
Tenant pursuant to this Section 10.1 above; however, if Tenant requests, and
Landlord agrees, that Landlord shall retain the contractors, Tenant shall pay to
Landlord a fee of fifteen percent (15%) of the actual costs of such work to
cover Landlord's overhead and a fee for Landlord's agent or manager in
supervising and coordinating such work. In no event, however, shall anyone other
than Landlord or Landlord's employees or representatives perform work to be done
which affects the Central Systems.
10.2. All construction, alterations and repair work done by or for
Tenant shall (a) be performed in such a manner as to maintain harmonious labor
relations; (b) not adversely affect the safety of the Project, the Building or
the Premises or the systems thereof and not affect the Central Systems; (c)
comply with all building, safety, fire, plumbing, electrical, and other codes
and governmental and insurance requirements; (d) not result in any usage in
excess of Building Standard of water, electricity, gas, or other utilities or of
heating, ventilating or air-conditioning (either during or after such work)
unless prior written arrangements satisfactory to Landlord are made with respect
thereto; (e) be completed promptly and in a good and workmanlike manner and in
compliance with all rules and regulations promulgated by Landlord; and (f) not
disturb Landlord or other tenants in the Building. After completion of any
alterations to the Premises, Tenant will deliver to Landlord a copy of "as
built" plans and specifications depicting and describing such alterations.
10.3. All Leasehold Improvements, alterations and other physical
additions made to or installed by or for Tenant in the Premises shall be and
remain Landlord's property (except for Tenant's furniture, personal property and
movable trade fixtures) and shall not be removed without Landlord's written
consent; provided, however, Landlord may, by notice to Tenant given concurrently
with Landlord's approval of any alterations or physical additions made to the
Premises after the Commencement Date, elect to require Tenant to remove same
upon the expiration or earlier termination of the Term of this Lease. Tenant
agrees to remove, at its sole cost and expense, all of Tenant's furniture,
personal property and movable trade fixtures, and, if directed to or permitted
to do so by Landlord in writing, all, or any part of, the alterations and other
physical additions made by Tenant to the Premises, on or before the Expiration
Date or any earlier date of termination of this Lease. Tenant shall repair, or
promptly reimburse Landlord for the cost of repairing, all damage done to the
Premises or the building by such removal. Any alterations or physical additions
made by Tenant which Landlord does not direct or permit Tenant to remove at any
time during or at the end of the Term shall become the property of Landlord at
the end of the Term without any payment to Tenant. Landlord reserves the right
to require Tenant to remove any alterations or physical additions made by Tenant
to which Landlord did not expressly consent. If Tenant fails to remove any of
Tenant's furniture, personal property or movable trade fixtures by the
Expiration Date or any sooner date of termination of the Lease or, if Tenant
fails to remove any alterations and other physical additions made by Tenant to
the Premises which Landlord has in writing directed Tenant to remove, Landlord
shall have the right, on the fifth (5th) day after Landlord's delivery of
written notice to Tenant to deem such property abandoned by Tenant and to
remove, store, sell, discard or otherwise deal with or dispose of such abandoned
property in a commercially reasonable manner. Tenant shall be liable for all
costs of such disposition of Tenant's abandoned property, and Landlord shall
have no liability to Tenant in any respect regarding such property of Tenant.
The provisions of this Section 10.3 shall survive the expiration or any earlier
termination of this Lease.
ARTICLE 11
LIENS
Tenant shall keep the Project, the Building and the Premises and
Landlord's interest therein free from any liens arising from any work performed,
materials furnished, or obligations incurred by, or on behalf of Tenant (other
than by Landlord pursuant to Exhibit "C"). Notice is hereby given that neither
Landlord nor any mortgagee or lessor of Landlord shall be liable for any labor
or materials furnished to Tenant except as furnished to Tenant by Landlord
pursuant to Exhibit "C". If any lien is filed for such work or materials, such
lien shall encumber only Tenant's interest in leasehold improvements on the
Premises. Within ten (10) days after Tenant learns of the filing of any
-12-
such lien, Tenant shall notify Landlord of such lien and shall either discharge
and cancel such lien of record or post a bond sufficient under the laws of the
State of California to cover the amount of the lien claim plus any penalties,
interest, attorneys' fees, court costs, and other legal expenses in connection
with such lien. If Tenant fails to so discharge or bond such lien within ten
(10) calendar days after written demand from Landlord, Landlord shall have the
right, at Landlord's option, to pay the full amount of such lien without inquiry
into the validity thereof, and Landlord shall be promptly reimbursed by Tenant,
as Additional Rent, for all amounts so paid by Landlord, including expenses,
interest, and attorneys' fees.
ARTICLE 12
USE AND COMPLIANCE WITH LAWS
12.1 The Premises shall be used only for the uses specifically set
forth in Section 1.1Q and for no other purposes whatsoever. Tenant shall use
and maintain the Premises in a clean, careful, safe, lawful and proper manner
and shall not allow within the Premises, any offensive noise, odor, conduct or
private or public nuisance or permit Tenant's employees, agents, licensees or
invitees to create a public or private nuisance or act in a disorderly manner
within the Building or in the Project. Any statement as to the particular nature
of the business to be conducted by Tenant in the Premises and uses to be made
thereof by Tenant as set forth in Section 1.1Q hereof shall not constitute a
representation or warranty by Landlord that such business or uses are lawful or
permissible under any certificate of occupancy for the Premises or the Building
or are otherwise permitted by law. Landlord does, however, represent that any
certificate of occupancy issued with respect to the Premises shall allow use for
executive and administrative offices.
12.2. Tenant shall, at Tenant's sole expense, (a) comply with all
laws, orders, ordinances, and regulations of federal, state, county, and
municipal authorities having jurisdiction over the Premises, (b) comply with any
directive, order or citation made pursuant to law by any public officer
requiring abatement of any nuisance or which imposes upon Landlord or Tenant any
duty or obligation arising from Tenant's occupancy or use of the Premises or
from conditions which have been created by or at the request or insistence of
Tenant, or required by reason of a breach of any of Tenant's obligations
hereunder or by or through other fault of Tenant, (c) comply with all insurance
requirements applicable to the Premises and (d) indemnify and hold Landlord
harmless from any loss, cost, claim or expense which Landlord incurs or suffers
by reason of Tenant's failure to comply with its obligations under clauses (a),
(b) or (c) above. If Tenant receives notice of any such directive, order
citation or of any violation of any law, order, ordinance, regulation or any
insurance requirement, Tenant shall promptly notify Landlord in writing of such
alleged violation and furnish Landlord with a copy of such notice.
12.3. Because Tenant is preparing the Construction Drawings for the
Leasehold Improvements, Tenant shall be solely responsible for causing, at
Tenant's sole cost and expense, the Premises (including the Leasehold
Improvements therein) to comply with the Americans With Disabilities Act of
1990, as subsequently amended (the "ADA"), and all similar federal, state and
local laws, rules and regulations and subsequent amendments thereof; provided,
however, that Landlord shall be responsible for causing the other portions of
the Building (excluding the Premises) to comply with the requirements of the ADA
and other applicable laws in effect as of the date of this Lease including such
laws pertaining to the presence of Hazardous Materials and seismic requirements.
Further, Operating Costs shall not include any cost (if any) incurred by
Landlord in connection with upgrading the Building or the Premises to comply
with the requirements of the ADA and other applicable laws that are in effect as
of the date of this Lease, including penalties or damages incurred due to such
noncompliance; provided, however that to the extent such costs are incurred as a
result of Tenant's specific use of the Premises, or as a result of any
alterations to the Premises made by or on behalf of Tenant, in which case such
costs will be the sole responsibility of Tenant. Landlord shall use commercially
reasonable efforts to remedy any problems which may arise with systems and
equipment serving the Building as a result of the transition from calendar year
1999 to calendar year 2000 and the expense of such efforts shall be excluded
from Operating Costs. Upon written request from Tenant, Landlord shall provide
Tenant with documentation reasonably evidencing Landlord's compliance with the
requirements of this Section 12.3.
ARTICLE 13
DEFAULT AND REMEDIES
13.1. The occurrence of any one or more of the following events
shall constitute an "EVENT OF DEFAULT" of Tenant under this Lease: (a) if Tenant
fails to pay any Rent hereunder as and when such Rent becomes due and such
failure shall continue for more than five (5) days after Landlord gives Tenant
notice of past due Rent; (b) if the Premises are abandoned or if Tenant fails
to take possession of the Premises on the Commencement Date or promptly
thereafter; (c) if Tenant permits to be done anything which creates a lien upon
the Premises and fails to discharge or bond such lien or post such security with
Landlord as is required by Article 11; (d) if Tenant violates the provisions of
Article 8 by attempting to make an unpermitted assignment or sublease; (e) if
Tenant fails to maintain in force all policies of insurance required by this
Lease and such failure shall continue for more than ten (10) days after Landlord
gives Tenant notice of such failure; or (f) if Tenant fails to perform or
observe any other terms of this Lease and such failure shall continue for more
than thirty (30) days after Landlord gives Tenant notice of such failure, or, if
such failure cannot be corrected within such thirty (30) day period, if Tenant
does not commence to correct such default within said thirty (30) day period and
thereafter diligently prosecute the correction of same to completion within a
reasonable time and in any event prior to the time a failure to complete such
correction could cause Landlord to be subject to prosecution for violation of
any law, rule, ordinance or regulation or causes, or could cause, a default
under any mortgage, underlying lease, tenant leases or other agreements
applicable to the Project. The provisions of any notice given pursuant to the
foregoing will be in lieu of, and not in addition to, any notice required under
applicable law (including, without limitation, California Code of Civil
Procedure Section 1161 regarding unlawful detainer actions and any successor
statute or similar law)
-13-
13.2. If an Event of Default occurs, Landlord shall have the right
at any time to give a written termination notice to Tenant and, on the date
specified in such notice, Tenant's right to possession shall terminate and this
Lease shall terminate. Upon such termination, Landlord shall have the right to
recover from Tenant:
A. The worth at the time of award of all unpaid Base
Rent and Additional Rent which had been earned at the time of termination;
B. The worth at the time of award of the amount by which
all unpaid Base Rent and Additional Rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided;
C. The worth at the time of award of the amount by which
all unpaid Base Rent and Additional Rent for the balance of the term of this
Lease after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; and
D. All other amounts necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform all of
Tenant's obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom. The "worth at the time of award" of the
amounts referred to in clauses (a) and (b) above shall be computed by allowing
interest at the Interest Rate. The "worth at the time of award" of the amount
referred to in clause (c) above shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
Notwithstanding the occurrence of an Event of Default, pursuant to
California Civil Code Section 1951.4, or any successor statute thereof, Landlord
may continue this Lease in effect after Tenant's breach and abandonment and
recover all rent as it becomes due, if Tenant has the right to sublet or assign,
subject only to reasonable restrictions. Acts of maintenance or preservation or
efforts to relet the Premises or the appointment of a receiver upon initiative
of Landlord to protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession unless written notice of
termination is given by Landlord to Tenant. The remedies provided for in this
Lease are in addition to all other remedies available to Landlord at law or in
equity by statute or otherwise.
13.3. No agreement to accept a surrender of the Premises and no act
or omission by Landlord or Landlord's agents during the Term shall constitute an
acceptance or surrender of the Premises unless made in writing and signed by
Landlord. No re-entry or taking possession of the Premises by Landlord shall
constitute an election by Landlord to terminate this Lease unless a written
notice of such intention is given to Tenant.
13.4. No provision of this Lease shall be deemed to have been waived
by Landlord unless such waiver is in writing and signed by Landlord. Landlord's
acceptance of Rent following an Event of Default hereunder shall not be
construed as a waiver of such Event of Default. No custom or practice which may
arise between the parties in connection with the terms of this Lease shall be
construed to waive or lessen Landlord's right to insist upon strict performance
of the terms of this Lease, without a written notice thereof to Tenant from
Landlord.
13.5. The rights granted to Landlord in this Article 13 shall be
cumulative of every other right or remedy provided in this Lease or which
Landlord may otherwise have at law or in equity or by statute, and the exercise
of one or more rights or remedies shall not prejudice or impair the concurrent
or subsequent exercise of other rights or remedies or constitute a forfeiture or
waiver of Rent or damages accruing to Landlord by reason of any Event of Default
under this Lease. Tenant agrees to pay to Landlord all costs and expenses
incurred by Landlord in the enforcement of this Lease, including all attorneys'
fees incurred in connection with the collection of any sums due hereunder or the
enforcement of any right or remedy of Landlord.
13.6. Landlord will not be in default in the performance of any
obligation required to be performed by Landlord under this Lease unless Landlord
fails to perform such obligation within thirty (30) days after the receipt of
written notice from Tenant specifying in detail Landlord's failure to perform;
provided however, that if the nature of Landlord's obligation is such that more
than thirty (30) days are required for performance, then Landlord will not be
deemed in default if it commences such performance within such thirty (30) day
period and thereafter diligently pursues the same to completion. Upon any
default by Landlord, Tenant may exercise any of its rights provided at law or in
equity, subject to the limitations on liability set forth in Section 25.5 of
this Lease; provided, however: (a) Tenant shall have no right to offset or abate
Rent in the event of any default by Landlord under this Lease, except to the
extent offset rights are specifically provided to Tenant in this Lease; (b)
Tenant shall have no right to terminate this Lease; (c) Tenant's rights and
remedies hereunder shall be limited to the extent (i) Tenant has expressly
waived in this Lease any of such rights or remedies and/or (ii) this Lease
otherwise expressly limits Tenant's rights or remedies; and (d) in no event
shall Landlord be liable for consequential damages or loss of business profits.
ARTICLE 14
INSURANCE
14.1. A. Tenant, at its sole expense, shall obtain and keep in
force during the Term the following insurance: (a) "SPECIAL FORM" insurance
insuring all property located in the Premises, including furniture, equipment,
fittings, installations, fixtures, supplies and any other personal property,
leasehold improvements and alterations, including the Leasehold Improvements
("TENANT'S PROPERTY"), in an amount equal to ninety percent (90%) of the full
replacement value, it being understood that no lack or inadequacy of insurance
by Tenant shall in any event make Landlord subject to any claim by virtue of any
theft of or loss or damage to any uninsured or inadequately insured property;
(b) Extra Expense insurance in an amount that will reimburse Tenant for direct
or indirect loss of earnings attributable to all perils insured against under
Section 14.1(a) or attributable to the prevention of access to the Premises by
civil authority; (c) Commercial general public liability insurance including
-14-
personal injury, bodily injury, broad form property damage, operations hazard,
owner's protective coverage, contractual liability, with a cross liability
clause and a severability of interests clause to cover Tenant's indemnities set
forth herein, and products and completed operations liability, in limits not
less than Two Million Dollars ($2,000,000) inclusive per occurrence or such
higher limits as Landlord may reasonably require from time to time during the
Term; (d) Worker's Compensation and Employer's Liability insurance, in form and
amount as required by applicable law for Worker's Compensation, and One Million
Dollars ($1,000,000) per occurrence for Employer's Liability; and (e) any other
form or forms of insurance or any changes or endorsements to the insurance
required herein as Landlord, or any mortgagee or lessor of Landlord may
reasonably require, from time to time, in form or in amount, and for insurance
risks against which a prudent tenant would protect itself, but only to the
extent coverage for such risks and amounts are available in the insurance market
at commercially acceptable rates.
B. Tenant shall have the right to include the insurance
required by Section 14.1A under Tenant's policies of "BLANKET INSURANCE,"
provided that no other loss which may also be insured by such blanket insurance
shall affect the insurance coverages required hereby and further provided that
Tenant delivers to Landlord a certificate specifically stating that such
coverages apply to Landlord, the Premises and the Project. All policies of
insurance required by Section 14.1A(c) shall name Landlord as additional insured
and shall also name all mortgagees and lessors of Landlord, of which Tenant has
been notified, additional insureds, all as their respective interest may appear.
All such policies or certificates shall be issued by insurers reasonably
acceptable to Landlord and in form satisfactory to Landlord. Tenant shall
deliver to Landlord certificates with certificates of policies, together with
satisfactory evidence of payment of premiums for such policies, by the
Commencement Date and, with respect to renewals of such policies, not later than
thirty (30) days prior to the end of the expiring term of coverage. All policies
of insurance shall be endorsed to be primary and noncontributory to any
insurance which may be carried by Landlord. All such policies shall contain an
agreement by the insurers that the insurers shall notify Landlord and any
mortgagee or lessor of Landlord in writing, by certified mail, return receipt
requested, not less than thirty (30) days before any material change,
cancellation, including cancellation for nonpayment of premium, or other
termination thereof or change therein and shall (with respect to the insurance
required by clauses (a) and (b) of Section 14.1A) include a clause or
endorsement denying the insurer any rights or subrogation against Landlord.
14.2. Landlord shall insure the Building and the Project (but
excluding the Leasehold Improvements) against damage with property insurance and
shall carry commercial general public liability insurance, all in such amounts
and with such deductible as Landlord reasonably deems appropriate. As provided
hereinabove, Landlord shall not be required to carry insurance of any kind on
Tenant's Property, and Tenant hereby agrees that Tenant shall have no right to
receive any proceeds from any insurance policies carried by Landlord.
14.3. Tenant shall not knowingly conduct or permit to be conducted
in the Premises any activity, or place any equipment in or about the Premises or
the Building, which will invalidate the insurance coverage in effect or increase
the rate of insurance on the Premises or the Building, and Tenant shall comply
with all requirements and regulations of Landlord's insurers which are provided
in writing to Tenant. If any invalidation of coverage or increase in the rate of
fire insurance or other insurance occurs or is threatened by any insurance
company due to any act or omission by Tenant, or its agents, employees,
representatives, or contractors, such statement or threat shall be conclusive
evidence that the increase in such rate is due to such act of Tenant or the
contents or equipment in or about the Premises, and, as a result thereof, Tenant
shall be liable for such increase and shall be considered Additional Rent
payable with the next monthly installment of Base Rent due under this Lease. In
no event shall Tenant introduce or permit to be kept on the Premises or brought
into the Building any dangerous, noxious, radioactive or explosive substance.
14.4. Landlord and Tenant each hereby waive any right of subrogation
and right of recovery or cause of action for injury or loss to the extent that
such injury or loss is covered by fire, extended coverage, "Special Form" or
similar policies covering real property or personal property (or which would
have been covered if Tenant or Landlord, as the case may be, was carrying the
insurance required by this Lease). Said waivers shall be in addition to, and not
in limitation or derogation of, any other waiver or release contained in this
Lease. Insurance policies shall be properly endorsed, if necessary, to prevent
the invalidation of said policies by reason of such waivers.
ARTICLE 15
DAMAGE BY FIRE OR OTHER CAUSE
15.1. If the Building or any portion thereof (exclusive of the
Premises) is damaged or destroyed by any casualty to the extent that, in
Landlord's reasonable judgment, (a) repair of such damage or destruction would
not be economically feasible, or (b) the damage or destruction to the Building
cannot be repaired within two hundred seventy (270) days after the date Landlord
learns of the necessity for repairs as a result of such damage or destruction,
or if the proceeds from insurance remaining after any required payment to any
mortgagee or lessor of Landlord are insufficient to repair such damage or
destruction, Landlord shall have the right, at Landlord's option, to terminate
this Lease (provided Landlord terminates the leases, where Landlord has the
right to do so, of all of the other tenants of the Building similarly affected)
by giving Tenant notice of such termination, within sixty (60) days after the
date Landlord learns of the necessity for repairs as a result of such damage or
destruction.
15.2. If the Premises or any portion thereof is damaged or destroyed
by any casualty, and if, in Landlord's reasonable opinion, the Premises cannot
be rebuilt or made fit for Tenant's purposes within two hundred seventy (270)
days after the date Landlord learns of the necessity for repairs as a result of
such damage or destruction, or if the proceeds from the insurance Landlord is
required to maintain pursuant to Article 14 hereof (or the amount of proceeds
which would have been available if Landlord was carrying such insurance) are
insufficient to repair such damage or destruction, then either Landlord or
Tenant shall have the right, at the option of either party, to terminate this
Lease by giving the other written notice, within sixty (60) days after Landlord
learns of the necessity for repairs as a result of such damage or destruction.
-15-
15.3. In the event of partial destruction or damage to the Building
or the Premises which is not subject to Section 15.1 or 15.2, but which renders
the Premises partially but not wholly untenantable or renders the Premises
wholly untenantable for a short enough period of time that this Lease is not
otherwise terminated in accordance with the terms of this Article 15, this Lease
shall not terminate and Rent shall be abated in proportion to the area of the
Premises which cannot be used or occupied by Tenant as a result of such
casualty. Landlord shall in such event, within a reasonable time after the date
of such destruction or damage, subject to force majeure (as defined in Section
25.6) or to Tenant Delay and to the extent and availability of insurance
proceeds, restore the Premises to as near the same condition as existed prior to
such partial damage or destruction. If Landlord fails to proceed with reasonable
diligence to rebuild the Premises, or if the Premises are not repaired or
rebuilt within two hundred seventy (270) days after Landlord learns of the
necessity for repairs as a result of such damage or destruction, for a reason
other than force majeure or Tenant Delays, then Tenant may, at Tenant's sole
option, elect to terminate this Lease upon thirty (30) days written notice to
Landlord, unless Landlord cures the failure within such thirty (30) day period
of time, in which case Tenant's termination notice shall be of no effect. In no
event shall Rent abate (except to the extent Landlord recovers insurance
therefor) nor shall any termination by Tenant occur if damage to or destruction
of the Premises is the result of the negligence or willful act of Tenant, or
Tenant's agents, employees, representatives, contractors, successors, assigns,
licensees or invitees.
15.4. If any material portion of the Premises is destroyed by fire
or other causes at any time during the last year of the Term, such that the
Premises or a material portion thereof cannot be occupied for in excess of
thirty (30) days as a result thereof, then either Landlord or Tenant shall have
the right, at the option of either party, to terminate this Lease by giving
written notice to the other within fifteen (15) days after the date of such
destruction.
15.5. Landlord shall have no liability to Tenant for inconvenience,
loss of business, or annoyance arising from any repair of any portion of the
Premises or the Building. Tenant hereby waives California Civil Code Sections
1932(2) and 1933(4), providing for termination of hiring upon destruction of the
thing hired and Sections 1941 and 1942, providing for repairs to and of the
Premises.
15.6. In the event of termination of this Lease pursuant to Sections
15.1, 15.2, 15.3 or 15.4, all Rent shall be apportioned and paid to the date on
which possession is relinquished or the date of such damage, whichever last
occurs, and Tenant shall immediately vacate the Premises according to such
notice of termination; provided, however, that those provisions of this Lease
which are designated to cover matters of termination and the period thereafter
shall survive the termination hereof.
15.7. In the event of any damage or destruction of all or any part
of the Premises, Tenant shall: (a) immediately notify Landlord thereof, and (b)
within thirty (30) days of such damage or destruction, deliver to Landlord all
insurance proceeds received by Tenant with respect to the Leasehold Improvements
and Tenant's alterations and improvements to the Premises (excluding proceeds
for Tenant's furniture and other personal property), whether or not this Lease
is terminated as permitted in this Article 15, and Tenant hereby assigns to
Landlord all rights to receive such insurance proceeds. If Tenant fails to
receive insurance proceeds covering the full replacement cost of such Leasehold
Improvements and Tenant's alterations and improvements to the Premises which are
damaged, Tenant shall be deemed to have self-insured the replacement cost of
such Leasehold Improvements and Tenant's alterations and improvements, and upon
any damage or destruction thereto, Tenant shall immediately pay to Landlord the
full replacement cost of such items, less any insurance proceeds actually
received by Landlord from Landlord's or Tenant's insurance with respect to such
items.
ARTICLE 16
CONDEMNATION
16.1. In the event the whole or substantially the whole of the
Building or the Premises are taken or condemned by eminent domain or by any
conveyance in lieu thereof (such taking, condemnation or conveyance in lieu
thereof being hereinafter referred to as "CONDEMNATION"), this Lease shall
terminate on the earlier of the date the condemning authority takes possession
or the date title vests in the condemning authority.
16.2. In the event any portion of the Building shall be taken by
condemnation (whether or not such taking includes any portion of the Premises),
which taking, in Landlord's judgment, is such that the Building cannot be
restored in an economically feasible manner for use substantially as originally
designed, then Landlord shall have the right, at Landlord's option, to terminate
this Lease (provided Landlord also terminates the leases of the other tenants of
the Building similarly situated), effective as of the date specified by Landlord
(at least sixty (60) days in the future) in a written notice of termination from
Landlord to Tenant.
16.3. In the event any portion of the Parking Facility shall be
taken by condemnation, which taking in Landlord's judgment is such that the
Parking Facility cannot be restored in an economically feasible manner for use
substantially as originally designed, including in such consideration the
possible use of additional Parking Facility in the vicinity of the Building,
then Landlord shall have the right, at Landlord's option, to terminate this
Lease (provided Landlord also terminates the leases, where Landlord has the
right to do so, of the other tenants of the Building similarly affected),
effective as of the date specified by Landlord (at least sixty (60) days in the
future) in a written notice of termination from Landlord to Tenant.
16.4. In the event that a portion, but less than substantially the
whole, of the Premises shall be taken by condemnation, then this Lease shall be
terminated as of the date of such condemnation as to the portion of the Premises
so taken, and unless Landlord exercises its option to terminate this Lease
pursuant to Section 16.2 or Tenant exercises its option to terminate this Lease
pursuant to this Section 16.4 below, this Lease shall remain in full force and
effect as to the remainder of the Premises. If any part of the Premises shall
be taken by condemnation and such partial condemnation renders the Premises
unusable for the business of Tenant, as reasonably determined by Tenant, or in
the event a substantial portion of the Building or the Parking Facility is taken
by condemnation
-16-
rendering the Premises unusable for the business of Tenant, as reasonably
determined by Tenant, then in either such event Tenant may elect to terminate
this Lease as of the date specified by Tenant in a written notice of termination
from Tenant to Landlord, which date shall not be later than sixty (60) days
following the date of the taking. If such condemnation is not sufficiently
extensive to render the Premises unusable for the business of Tenant as
reasonably determined by Tenant, and Landlord has not elected to terminate this
Lease in accordance with the provisions of Section 16.2, 16.3 or this Section
16.4, then Landlord shall promptly restore the Premises to a condition
comparable to its condition immediately prior to such condemnation (excluding
Tenant's alterations, furniture, fixtures and equipment), less the portion
thereof lost in such condemnation, and this Lease shall continue in full force
and effect, except that after the date of any such taking of the Premises, the
Rent shall be equitably apportioned from and after such date.
16.5. In the event of termination of this Lease pursuant to the
provisions of Section 16.1, 16.2, or 16.3, the Rent shall be apportioned as of
such date of termination; provided, however, that those provisions of this Lease
which are designated to cover matters of termination and the period thereafter
shall survive the termination hereof.
16.6. All compensation awarded or paid upon a condemnation of any
portion of the Project shall belong to and be the property of Landlord without
participation by Tenant. Nothing herein shall be construed, however, to preclude
Tenant from prosecuting any claim directly against the condemning authority for
loss of business, loss of good will, moving expenses, damage to, and cost of
removal of, trade fixtures, furniture and other personal property belonging to
Tenant.
16.7. If any portion of the Project other than the Building or the
Parking Facility is taken by condemnation, or if the temporary use or occupancy
of all or any part of the Premises shall be taken by condemnation during the
Term, this Lease shall be and remain unaffected by such condemnation, and Tenant
shall continue to pay in full the Rent payable hereunder. In the event of any
such temporary taking for use or occupancy of all or any part of the Premises,
Tenant shall be entitled to appear, claim, prove and receive the portion of the
award for such taking that represents compensation for use or occupancy of the
Premises during the Term and Landlord shall be entitled to appear, claim, prove
and receive the portion of the award that represents the cost of restoration of
the Premises and the use or occupancy of the Premises after the end of the Term
hereof. In the event of any such condemnation of any portion of the Project
other than the Building, Landlord shall be entitled to appear, claim, prove and
receive all of that award. In the event of any permanent taking of the Premises,
Tenant will have the right to recover from the condemning authority (but not
from Landlord) any compensation as may be separately awarded or recoverable by
Tenant for the taking of Tenant's furniture, fixtures, equipment and other
personal property within the Premises, for Tenant relocation expenses, and for
any loss of good will or other damage to Tenant's business by reason of such
taking, but Tenant will not be entitled to any so-called bonus or excess value
of this Lease, which will be the sole property of Landlord.
16.8. Landlord and Tenant each hereby waive the provisions of
California Code of Civil Procedure Section 1265.130 and any other applicable
existing or future law, ordinance or governmental regulation providing for, or
allowing either party to petition the courts of the state in which the Project
is located for, a termination of this lease upon a partial taking of the
Premises and/or the Building.
ARTICLE 17
INDEMNIFICATION
17.1. Tenant shall, and hereby agrees to, indemnify and hold
Landlord harmless from any damage to any property or injury to, or death of,
any person arising from (a) the use or occupancy of the Premises, or (b) the
negligent or intentionally wrongful use or occupancy of the Common Areas by
Tenant, its agents, employees, representatives, contractors, successors,
assigns, licensees, or invitees, except to the extent such damage or injury is
caused by the negligence or willful misconduct of Landlord, its agents,
employees, representatives, or contractors (in which case Landlord shall be
responsible to the extent such damage or injury is not covered by insurance
required to be carried by Tenant under this Lease or actually carried by
Tenant). Landlord shall not be liable for any damage or injury caused by other
tenants or persons in the Building or by occupants of adjacent property thereto,
or by the public, or caused by construction (except to the extent caused by the
negligence or willful misconduct of Landlord (in which case Landlord shall be
responsible to the extent such damage or injury is not covered by insurance
required to be carried by Tenant under this Lease or actually carried by
Tenant)) or by any private, public or quasipublic work. Tenant's foregoing
indemnity shall include attorneys' fees, investigation costs, and all other
reasonable costs and expenses incurred by Landlord in any connection therewith.
The provisions of this Article 17 shall survive the expiration or termination of
this Lease with respect to any damage, injury, or death occurring before such
expiration or termination. If Landlord is made a party to any litigation
commenced by or against Tenant or relating to this Lease or to the Premises, and
provided that in any such litigation Landlord is not finally adjudicated to be
solely at fault, then Tenant shall pay all costs and expenses, including
attorneys' fees and court costs, incurred by or imposed upon Landlord because of
any such litigation, and the amount of all such costs and expenses, including
attorneys' fees and court costs, shall be a demand obligation owing by Tenant to
Landlord.
17.2. Landlord shall, and hereby agrees to, indemnify and hold
Tenant harmless from any damages in connection with loss of life, bodily or
personal injury or property damage arising from any occurrence in the Common
Areas to the extent not the result of the negligence or willful misconduct of
Tenant. If Tenant is made a party to any litigation commenced by or against
Landlord or relating to this Lease or to the Premises, and provided that in any
such litigation Tenant is not finally adjudicated to be solely at fault, then
Landlord shall pay all costs and expenses, including attorneys' fees and court
costs, incurred by or imposed upon Tenant because of any such litigation, and
the amount of all such costs and expenses, including attorneys' fees and court
costs, shall be a demand obligation owing by Landlord to Tenant.
-17-
ARTICLE 18
SUBORDINATION AND ESTOPPEL CERTIFICATES
18.1. This Lease and all rights of Tenant hereunder are subject and
subordinate to all underlying leases now or hereafter in existence, and to any
supplements, amendments, modifications, and extensions of such leases heretofore
or hereafter made and to any deeds to secure debt, mortgages, or other security
instruments which now or hereafter cover all or any portion of the Project or
any interest of Landlord therein, and to any advances made on the security
thereof, and to any increases, renewals, modifications, consolidations,
replacements, and extensions of any of such mortgages. This provision is
declared by Landlord and Tenant to be self-operative and no further instrument
shall be required to effect such subordination of this Lease. Upon demand,
however, Tenant shall execute, acknowledge, and deliver to Landlord any further
instruments and certificates evidencing such subordination as Landlord, and any
mortgagee or lessor of Landlord shall reasonably require, and if Tenant fails to
so execute, acknowledge and deliver such instruments within ten (10) days after
Landlord's request, Tenant shall be in default of this Lease. Tenant shall not
unreasonably withhold, delay, or defer its written consent reasonable
modifications in this Lease which are a condition of any construction, interim
or permanent financing for the Project or any reciprocal easement agreement with
facilities in the vicinity of the Building, provided that such modifications do
not increase the obligations of Tenant hereunder or materially and adversely
affect Tenant's use and enjoyment of the Premises. This Lease is further subject
and subordinate to: (a) all applicable ordinances of any government authority
having jurisdiction over the Project, relating to easements, franchises, and
other interests or rights upon, across, or appurtenant to the Project; and (b)
all utility easements and agreements, now or hereafter created for the benefit
of the Project. Notwithstanding anything above to the contrary, Landlord agrees
to provide Tenant with commercially reasonable non-disturbance agreement(s) in
favor of Tenant from any ground lessors, mortgage holders and deed of trust
beneficiaries of Landlord acquiring an interest in the Building or the
underlying land after the date of this Lease until the expiration of the Term of
this Lease in consideration of, and as an express condition precedent to, any
subordination of this Lease provided for hereunder.
18.2. Notwithstanding the generality of the foregoing provisions of
Section 18.1, any mortgagee or lessor of Landlord shall have the right at any
time to subordinate any such mortgage or underlying lease to this Lease, or to
any of the provisions hereof, on such terms and subject to such conditions as
such mortgagee or lessor of Landlord may consider appropriate in its discretion.
At any time, before or after the institution of any proceedings for the
foreclosure of any such mortgage, or the sale of the Building under any such
mortgage, or the termination of any underlying lease, Tenant shall, upon request
of such mortgagee or any person or entities succeeding to the interest of such
mortgagee or the purchaser at any foreclosure sale ("SUCCESSOR LANDLORD"),
automatically become the Tenant (or if the Premises has been validly subleased,
the subtenant) of the Successor Landlord, without change in the terms or other
provisions of this Lease (or, in the case of a permitted sublease, without
change in this Lease or in the instrument setting forth the terms of such
sublease); provided, however, that the Successor Landlord shall not be (i) bound
by any payment made by Tenant of Rent or Additional Rent for more than one (1)
month in advance, except for (i) a Security Deposit previously paid to Landlord
(and then only if such Security Deposit has been deposited with and is under the
control of the Successor Landlord and/or (ii) overpayment of installments of
Tenant's Operating Costs Payments (based on Landlord' Operating Costs Estimate)
in excess of actual Operating Costs for such period payable by Tenant), (ii)
bound by any termination, modification, amendment or surrender of the Lease done
without the Successor Landlord's consent, (iii) liable for any damages or
subject to any offset or defense by Tenant to the payment of Rent by reason of
any act or omission of any prior landlord (including Landlord), or (iv)
personally or corporately liable, in any event, beyond the limitations on
liability set forth in Section 25.5 of this Lease. This agreement of Tenant to
attorn to a Successor Landlord shall survive any such foreclosure sale,
trustee's sale conveyance in lieu thereof or termination of any underlying
lease. Tenant shall upon demand at any time, before or after any such
foreclosure or termination execute, acknowledge, and deliver to the Successor
Landlord any written instruments and certificates evidencing such attornment as
such Successor Landlord may reasonably require; provided, however, that Landlord
shall use its reasonable efforts to require that such agreement provide that
upon such attornment, as long as Tenant is not in default hereunder, Tenant's
possession of the Premises under this Lease shall not be disturbed.
18.3. Tenant shall, from time to time, within ten (10) business days
after request from Landlord, or from any mortgagee or lessor of Landlord,
execute, acknowledge and deliver in recordable form a certificate certifying, to
the extent true, that this Lease is in full force and effect and unmodified (or,
if there have been modifications, that the same is in full force and effect as
modified and stating the modifications); that the Term has commenced and the
full amount of the Rent then accruing hereunder; the dates to which the Rent has
been paid; that Tenant has accepted possession of the Premises and that any
improvements required by the terms of this Lease to be made by Landlord have
been completed to the satisfaction of Tenant; the amount, if any, that Tenant
has paid to Landlord as a Security Deposit; that no Rent under this Lease has
been paid more than thirty (30) days in advance of its due date; that the
address for notices to be sent to Tenant is as set forth in this Lease (or has
been changed by notice duly given and is as set forth in the certificate); that
Tenant, as of the date of such certificate, has no charge, lien, or claim of
offset under this Lease or otherwise against Rent or other charges due or to
become due hereunder; that, to the knowledge of Tenant, Landlord is not then in
default under this Lease; and such other matters as may be requested by Landlord
or any mortgagee or lessor of Landlord. Any such certificate may be relied upon
by Landlord, any Successor Landlord, or any mortgagee or lessor of Landlord.
18.4. Landlord shall use its good faith efforts to deliver to
Tenant, within ninety (90) days after Tenant's written request, a Subordination,
Non-Disturbance and Attornment Agreement substantially in the form of EXHIBIT
"E" attached hereto and made a part hereof (or such other form as may be
required by any ground lessor, mortgage holder or deed of trust beneficiary of
Landlord's interest in the Project) ("NON-DISTURBANCE AGREEMENT"), which
Non-Disturbance Agreement Tenant shall execute and deliver to Landlord within
five (5) days after Tenant's receipt thereof. Within ninety (90) days after
Landlord's receipt of the Non-Disturbance Agreement (executed by Tenant),
Landlord shall use its good faith efforts to cause the Non-Disturbance Agreement
to be executed by any ground lessors, mortgage holders and deed of trust
beneficiaries in existence as of the date hereof.
-18-
ARTICLE 19
SURRENDER OF THE PREMISES
Upon the Expiration Date or earlier termination of this Lease, Tenant,
at Tenant's sole cost and expense, shall peacefully vacate and surrender the
Premises to Landlord in good order, broom clean and in the same condition as at
the beginning of the Term or as the Premises may thereafter have been improved
by Landlord or Tenant (subject to Section 10.3 hereof), reasonable use and wear
thereof and repairs which are Landlord's obligations under Articles 9, 15 and 16
only excepted, and Tenant shall remove all of Tenant's Property and turn over
all keys for the Premises to Landlord. No provision of this Lease shall impose
upon Landlord any obligation to care for or preserve any of Tenant's Property
left upon the Premises, and Tenant hereby waives and releases Landlord from any
claim or liability in connection with the removal of such property from the
Premises and the storage thereof and specifically waives the provisions of
California Civil Code Section 1542 with respect to such release. Should Tenant
continue to hold the Premises after the expiration or earlier termination of
this Lease, such holding over, unless otherwise agreed to by Landlord in
writing, shall constitute and be construed as a tenancy at sufferance at monthly
installments of Rent equal to one hundred fifty percent (150%) of the monthly
portion of Rent in effect as of the date of expiration or earlier termination,
and subject to all of the other terms, charges and expenses set forth herein
except any right to renew this Lease or to expand the Premises or any right to
additional services. Tenant shall also be liable to Landlord for all damage
which Landlord suffers because of any holding over by Tenant, and Tenant shall
indemnify Landlord against all claims made by any other tenant or prospective
tenant against Landlord resulting from delay by Landlord in delivering
possession of the Premises to such other tenant or prospective tenant. The
provisions of this Article 19 shall survive the expiration or earlier
termination of this Lease.
ARTICLE 20
LANDLORD'S RIGHT TO INSPECT
Landlord shall retain duplicate keys to all doors of the Premises.
Tenant shall provide Landlord with new keys should Tenant receive Landlord's
consent to change the locks. Landlord shall have the right to enter the
Premises to provide janitorial service as required under this Lease and other
times at reasonable hours following reasonable prior notice (or, in the event
of an emergency, at any hour) (a) to exhibit the same to present to
prospective mortgagees, lessors or purchasers during the Term and to
prospective tenants during the last year of the Term, (b) to inspect the
Premises, (c) to confirm that Tenant is complying with all of Tenant's
covenants and obligations under this Lease, (d) to make repairs required of
Landlord under the terms of this Lease, (e) to make repairs to areas
adjoining the Premises, and (f) to repair and service utility lines or other
components of the Building; provided, however, Landlord shall use reasonable
efforts to minimize interference with Tenant's business.
ARTICLE 21
SECURITY DEPOSIT
Tenant's Security Deposit (if any) shall be held by Landlord,
without liability for interest except to the extent required by law, as
security for the performance of Tenant's obligations under this Lease.
Unless required by applicable law, Landlord shall not be required to keep the
Security Deposit segregated from other funds of Landlord. Tenant shall not
assign or in a any way encumber the Security Deposit. Upon the occurrence of
any Event of Default by Tenant, Landlord shall have the right, without
prejudice to any other remedy, to use the Security Deposit, or portions
thereof, to the extent necessary to pay any arrearages in Rent, and any other
damage, injury or expense. Following any such application of all or any
portion of the Security Deposit, Tenant shall pay to Landlord, on demand, the
amount so applied in order to restore the Security Deposit to its original
amount. If Tenant is not in default at the termination of this Lease, any
remaining balance of the Security Deposit shall be returned to Tenant,
provided that Tenant surrenders the Premises without damage pursuant to
Article 19 hereof. If Landlord transfers its interest in the Premises during
the Term, Landlord shall assign the Security Deposit to the transferee, and
thereafter Landlord shall have no further liability to Tenant for the
Security Deposit.
ARTICLE 22
BROKERAGE
Tenant and Landlord each represent and warrant to the other that it
has not entered into any agreement with, or otherwise had any dealings with,
any broker or agent in connection with the negotiation or execution of this
Lease which could form the basis of any claim by any such broker or agent for
a brokerage fee or commission, finder's fee, or any other compensation of any
kind or nature in connection herewith, other than with Brokers listed in
Section 1.1.S (who shall be paid by Landlord in accordance with Landlord's
separate agreement(s) with the Brokers) and each party shall, and hereby
agrees to, indemnify and hold the other harmless from all costs (including
court costs, investigation costs, and attorneys' fees), expenses, or
liability for commissions or other compensation claimed by any broker or
agent with respect to this Lease which arise out of any agreement or
dealings, or alleged agreement or dealings, between the indemnifying party
and any such agent or broker, other than with Brokers. This provision shall
survive the expiration or earlier termination of this Lease.
-19-
ARTICLE 23
OBSERVANCE OF RULES AND REGULATIONS
Tenant and Tenant's servants, employees, agents, visitors, and
licensees shall observe faithfully and comply strictly with all Rules and
Regulations (herein so called) attached to this Lease as Rider No. 1, as such
Rules and Regulations may be changed from time to time. Landlord shall at all
times have the right to make reasonable changes in and additions to such Rules
and Regulations; provided Landlord gives Tenant prior notice of such changes and
provided that such new rules and regulations or changes in existing rules and
regulations do not conflict with this Lease, and do not materially interfere
with the lawful conduct of Tenant's business in the Premises. Any failure by
Landlord to enforce any of the Rules and Regulations now or hereafter in effect,
either against Tenant or any other tenant in the Building, shall not constitute
a waiver of any such Rules and Regulations. Landlord shall not be liable to
Tenant for the failure or refusal by any other tenant, guest, invitee, visitor,
or occupant of the Building to comply with any of the Rules and Regulations.
Landlord shall enforce the Rules and Regulations in a nondiscriminatory manner.
ARTICLE 24
NOTICES
All notices, consents, demands, requests, documents, or other
communications (other than payment of Rent) required or permitted hereunder
(collectively, "NOTICES") shall be deemed given, whether actually received or
not, when dispatched for hand delivery or delivery by air express courier (with
signed receipts) to the other party, or on the second Business Day after deposit
in the United States mail, postage prepaid, certified, return receipt requested,
except for notice of change of address which shall be deemed given only upon
actual receipt. The addresses of the parties for notices are set forth in
Article 1, or any such other addresses subsequently specified by each party in
notices given pursuant to this Article 24.
ARTICLE 25
MISCELLANEOUS
25.1. PROFESSIONAL FEES. In any action or proceeding brought by
either party against the other under this Lease, the prevailing party shall be
entitled to recover from the other party its professional fees for attorneys,
appraisers and accountants, its investigation costs, and any other legal
expenses and court costs incurred by the prevailing party in such action or
proceeding.
25.2. REIMBURSEMENTS. Wherever the Lease requires Tenant to
reimburse Landlord for the cost of any item, such costs will be the reasonable
and customary charge periodically established by Landlord for such item.
Landlord shall keep in its manager's office a schedule of such charges (which
Landlord may periodically change) for Tenant's examination. The schedule of
charges may include, at the discretion of Landlord, a reasonable allocation of
overhead, administrative, and related costs and a reasonable fee for Landlord's
agent or manager who performs such services or arranges for performance of such
services. All such charges shall be payable upon demand as Additional Rent.
25.3. SEVERABILITY. Every agreement contained in this Lease is, and
shall be construed as, a separate and independent agreement. If any term of this
Lease or the application thereof to any person or circumstances shall be invalid
or unenforceable, the remaining agreements contained in this Lease shall not be
affected.
25.4. NON-MERGER. There shall be no merger of this Lease with any
ground leasehold interest or the fee estate in the Project or any part thereof
by reason of the fact that the same person may acquire or hold, directly or
indirectly, this Lease or any interest in this Lease as well as any ground
leasehold interest or fee estate in the Project or any interest in such fee
estate.
25.5. LANDLORD'S LIABILITY. Anything contained in this Lease to the
contrary notwithstanding, Tenant agrees that Tenant shall look solely to the
estate and property of Landlord in the Project for the collection of any
judgment or other judicial process requiring the payment of money by Landlord
for any default or breach by Landlord under this Lease, subject, however, to the
prior rights of any mortgagee or lessor of the Project. No other assets of
Landlord or any members, partners, shareholders, or other principals of Landlord
shall be subject to levy, execution or other judicial process for the
satisfaction of Tenant's claim.
25.6. FORCE MAJEURE. Whenever the period of time is herein
prescribed for action to be taken by Landlord or Tenant, Landlord or Tenant
shall not be liable or responsible for, and there shall be excluded from the
computation for any such period of time, any delays due to force majeure, which
term shall include strikes, riots, acts of God, shortages of labor or materials,
war, governmental approvals, laws, regulations, or restrictions, or any other
cause of any kind whatsoever which is beyond the reasonable control of Landlord
or Tenant. Force Majeure shall not excuse or delay Tenant's obligation to pay
Rent or any other amount due under this Lease.
25.7. HEADINGS. The article headings contained in this Lease are for
convenience only and shall not enlarge or limit the scope or meaning of the
various and several articles hereof. Words in the singular number shall be held
to include the plural, unless the context otherwise requires. All agreements and
covenants herein contained shall be binding upon the respective heirs, personal
representatives, and successors and assigns of the parties thereto.
-20-
25.8. SUCCESSORS AND ASSIGNS. All agreements and covenants herein
contained shall be binding upon the respective heirs, personal representatives,
successors and assigns or the parties hereto. If there be more than one Tenant,
the obligations hereunder imposed upon Tenant shall be joint and several. If
there is a guarantor of Tenant's obligations hereunder, Tenant's obligations
shall be joint and several obligations of Tenant and such guarantor, and
Landlord need not first proceed against Tenant hereunder before proceeding
against such guarantor, and any such guarantor shall not be released from its
guarantee for any reason, including any amendment of this Lease, any forbearance
by Landlord or waiver of any of Landlord's rights, the failure to give Tenant or
such guarantor any notices, or the release of any party liable for the payment
or performance of Tenant's obligations hereunder. Notwithstanding the foregoing,
nothing contained in this Section 25.8 shall be deemed to override Article 8.
25.9. LANDLORD'S REPRESENTATIONS. Neither Landlord nor Landlord's
agents or brokers have made any representations or promises with respect to the
Premises, the Building, the Parking Facility, the Land, or any other portions of
the Project except as herein expressly set forth and all reliance with respect
to any representations or promises is based solely on those contained herein. No
rights, easements, or licenses are acquired by Tenant under this Lease by
implication or otherwise except as, and unless, expressly set forth in this
Lease.
25.10. ENTIRE AGREEMENTS; AMENDMENTS. This Lease and the Exhibits and
Riders attached hereto set forth the entire agreement between the parties and
cancel all prior negotiations, arrangements, brochures, agreements, and
understandings, if any, between Landlord and Tenant regarding the subject matter
of this Lease. No amendment or modification of this Lease shall be binding or
valid unless expressed in writing executed by both parties hereto.
25.11. TENANT'S AUTHORITY. If Tenant signs as a corporation,
execution hereof shall constitute a representation and warranty by Tenant that
Tenant is a duly organized and existing corporation, that Tenant has been and is
qualified to do business in the State of California and in good standing with
the State of California, that the corporation has full right and authority to
enter into this Lease, and that all persons signing on behalf of the corporation
were authorized to do so by appropriate corporate action. If Tenant signs as a
limited liability company, partnership, trust, or other legal entity, execution
hereof shall constitute a representation and warranty by Tenant that Tenant has
complied with all applicable laws, rules, and governmental regulations relative
to Tenant's right to do business in the State of California, that such entity
has the full right and authority to enter into this Lease, and that all persons
signing on behalf of Tenant were authorized to do so by any and all necessary or
appropriate company, partnership, trust, or other actions.
25.12. GOVERNING LAW. This Lease shall be governed by and construed
under the laws of the State of California. Should any provision of this Lease
require judicial interpretation, Landlord and Tenant hereby agree and stipulate
that the court interpreting or considering same shall not apply the presumption
that the terms hereof shall be more strictly construed against a party by reason
of any rule or conclusion that a document should be construed more strictly
against the party who itself or through its agents prepared the same, it being
agreed that all parties hereto have participated in the preparation of this
Lease and that each party had full opportunity to consult legal counsel of its
choice before the execution of this Lease.
25.13. TENANT'S USE OF NAME OF THE BUILDING. Tenant shall not,
without the prior written consent of Landlord, use the name of the Building for
any purpose other than as the address of the business to be conducted by Tenant
in the Premises, and Tenant shall not do or permit the doing of anything in
connection with Tenant's business or advertising (including brokers' flyers
promoting sublease space) which in the reasonable judgment of Landlord may
reflect unfavorably on Landlord or the Building or confuse or mislead the public
as to any apparent connection or relationship between Tenant and Landlord, the
Building, or the Land.
25.14. VIEW AND LIGHTS. Any elimination or shutting off of light,
air, or view by any structure which may be erected on lands adjacent to the
Building shall in no way affect this Lease and Landlord shall have no liability
to Tenant with respect thereto.
25.15. CHANGES TO PROJECT BY LANDLORD. Landlord shall have the
unrestricted right to make changes to all portions of the Project in Landlord's
reasonable discretion for the purpose of improving access or security to the
Project or the flow of pedestrian and vehicular traffic therein. Landlord shall
have the right at any time, without the same constituting an actual or
constructive eviction and without incurring any liability to Tenant therefor, to
change the arrangement or location of entrances or passageways, doors and
doorways, corridors, elevators, stairs. bathrooms, or any other Common Areas so
long as reasonable access to the Premises remains available. Landlord shall also
have the right to (a) rearrange, change, expand or contract portions of the
Project constituting Common Areas, (b) to use Common Areas while engaged in
making improvements, repairs or alterations to the Project, or any portion
thereof, and (c) to do and perform such other acts and make such other changes
in to or with respect to the Project, or any portion thereof, as Landlord may,
in the exercise of sound business judgment, deem to be appropriate. Without
liability to Tenant, Landlord shall be entitled to change the name or address of
the Building or the Project. A name change shall not require any prior notice to
Tenant; provided, however, Landlord will provide Tenant with reasonable advance
notice if Landlord voluntarily changes the address of the Building. Landlord
shall have the right to close, from time to time, the Common Areas and other
portions of the Project for such temporary periods as Landlord deems legally
sufficient to evidence Landlord's ownership and control thereof and to prevent
any claim of adverse possession by, or any implied or actual dedication to, the
public or any party other than Landlord.
25.16. TIME OF ESSENCE. Time is of the essence of this Lease.
25.17. LANDLORD'S ACCEPTANCE OF LEASE. The submission of this Lease
to Tenant shall not be construed as an offer and Tenant shall not have any
rights with respect thereto unless said Lease is consented to by mortgagee, and
any lessor of Landlord, to the extent such consent is required, and Landlord
executes a copy of this Lease and delivers the same to Tenant.
-21-
25.18. PERFORMANCE BY TENANT. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant, at Tenant's sole cost and expense, and without any abatement of Rent. If
Tenant shall fail to pay any Rent, other than Base Rent, required to be paid by
it hereunder or shall fail to perform any other act on its part to be performed
hereunder, and such failure shall continue for longer than the period of cure,
if any, permitted in Section 13.1, Landlord may, at its option, without waiving
or releasing Tenant from obligations of Tenant, make any such payment or perform
any such other act on behalf of Tenant. All sums so paid by Landlord and all
necessary incidental costs, together with interest thereon at the Interest Rate,
from the date of such payment by Landlord, shall be payable to Landlord on
demand. Tenant covenants to pay any such sums, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of the non-payment thereof by Tenant as in the case of default by
Tenant in the payment of Rent.
25.19. FINANCIAL STATEMENTS. At any time during the term of this
Lease, Tenant shall, upon ten (10) days prior written notice from Landlord,
provide Landlord with the most recent existing financial statement and existing
financial statements of the two (2) years prior to the most recent financial
statement year. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Tenant,
shall be audited by an independent certified public accountant.
25.20. AUTOMATED TELLER MACHINE AND DEPOSITORY. Landlord and Tenant
hereby agree that Tenant shall be entitled, during the Lease Term (and any
Option Term, if applicable) at its sole cost and expense and subject to the
terms and conditions of this Section 25.20, to install, maintain and operate (i)
one (1) automated teller machine ("ATM"), together with related equipment,
accessories, and identifying signage (collectively, the "ATM EQUIPMENT") and
(ii) one (1) after-hours depository ("DEPOSITORY"), all at the location in the
Premises shown on Exhibit "A-1." Tenant's installation of the ATM, the ATM
Equipment and the Depository shall comply with all the terms and conditions of
the Work Letter Agreement attached hereto as Exhibit "C" and otherwise in
compliance with Article 10 and for purposes of this Lease, the ATM, the ATM
Equipment and the Depository shall be considered part of the Leasehold
Improvements. In connection with Tenant's installation, maintenance and
operation of the ATM, the ATM Equipment and the Depository, Tenant shall, at its
sole cost and expense (i) obtain all necessary federal, state, and local
permits, licenses, and approvals; (ii) comply with all laws applicable to the
installation, use and operation of the ATM, the ATM Equipment and the
Depository, including, without limitation any provisions of the ADA; (iii)
maintain the ATM, the ATM Equipment and the Depository, and the area in the
vicinity thereof in clean and working condition and service the ATM and fill the
ATM with cash and supplies (such services shall be performed before or after the
normal business hours of the Project, except as deemed reasonably necessary by
Tenant) and except for such periodic servicing and maintenance, Tenant shall
operate the ATM continuously during reasonably operating hours as determined by
Tenant from time to time; (iv) provide all security measures that are customary
for similar facilities in comparable buildings in the vicinity of the Project
including, without limitation, mirrors, surveillance cameras, door locks,
adequate lighting, card entry systems, and warning signage and Tenant shall
review such security measures at least annually and revise same to reflect then
customary security measures; (v) pay all real, personal property, or other taxes
or fees assessed or imposed on the ATM, the ATM Equipment and the Depository;
(vi) remove, upon the expiration or earlier termination of the Lease (or at
Landlord's option, upon the transfer or assignment of the Original Tenant's
interest in this Lease), the ATM, the ATM Equipment and the Depository,
including any ATM Signage (as that term is defined below) and repair any damage
to the Project caused by such removal; and (vii) arrange with, and pay directly
to, the applicable public or private utilities, as the case may be, for
furnishing, installing, and maintaining of all telecommunications lines,
services, and equipment as may be required by Tenant for the operation of the
ATM, the ATM Equipment and the Depository and, in connection therewith, Tenant
shall not modify or disturb any telecommunications lines, services and/or
equipment in the Project without Landlord's prior written consent. Further,
subject to Landlord's prior approval (which approval shall not be unreasonably
withheld to the extent that such signage is required by applicable law), Tenant
shall be permitted, at Tenant's sole cost and expense, to install signage and
any other advertising material or displays at the ATM ("ATM SIGNAGE"), which ATM
Signage shall identify Tenant and/or any automated teller network operated by
Tenant and/or any shared automatic teller networks with which the ATM is
affiliated. Tenant shall be responsible, at its sole cost and expense, for
obtaining any permits or governmental approval required for the ATM Signage and
for the maintenance and repair of the ATM Signage. Landlord reserves the right
(but Landlord shall have no obligation) to engage a security consultant to
determine whether any additional or different security measures are necessary at
the Project as a result of Tenant's installation of the ATM, the ATM Equipment
and the Depository and Tenant shall pay as additional rent, within ten (10) days
after Landlord's invoice, all costs and expenses incurred by Landlord in
connection therewith and Tenant shall, at Tenant's sole cost and expense,
promptly implement such recommendations of such security consultant; provided,
however, that if Landlord engages said security consultant, such engagement
shall be for the sole benefit of Landlord and Tenant shall not rely thereon.
Landlord may restrict the hours of operation of the ATM or require Tenant to
temporarily discontinue services in connection with Landlord's maintenance and
repair of the Project or any portion thereof, or if necessary in Landlord's
reasonable judgment, for the security of the Project or its occupants or
contents, and any such action by Landlord shall not be deemed a constructive
eviction of Tenant or a disturbance of Tenant's use of the Premises or the
Project and without Landlord incurring any liability to Tenant whatsoever.
Landlord shall have no responsibility whatsoever for the ATM, the ATM Equipment
and the Depository and shall not be liable for any damage or disruption to same
however caused, including without limitation, due to a disruption in electrical
or telecommunication service. Landlord makes no representations as to the
suitability of the Project for an ATM or the Depository, whether or not the ATM
and/or the Depository may be installed in the Project under applicable zoning
ordinances or other laws, or as to the safety or security of the Project. The
ATM and the Depository and surrounding area with respect thereto shall be deemed
to constitute a portion of the Premises for purposes of Articles 14 and 17
above.
25.21. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant
that upon Tenant paying the rent required under this Lease and paying all other
charges and performing all of the covenants and provisions on Tenant's part to
be observed and performed under this Lease, Tenant may peaceably and quietly
have, hold and enjoy the Premises in accordance with this Lease without
hindrance or molestation by Landlord or its employees or agents.
-22-
25.22. SIGNAGE.
A. INTERIOR SIGNAGE.
(1) FULL FLOORS. Subject to Landlord's prior
written approval, in its sole discretion, and provided all signs are in keeping
with the quality, design and style of the Building and Project, Tenant, for any
portion of the Premises which comprises an entire floor of the Building, at its
sole cost and expense, may install identification signage anywhere in such full
floor portion of the Premises including in the elevator lobby of such full floor
portion of the Premises, provided that such signs must not be visible from the
exterior of the Building. Tenant shall be responsible, at Tenant's sole cost and
expense, for maintenance and repair of any such signs. In addition, Tenant shall
cause such signs to be removed from the Premises and shall repair all damage to
the Premises and the Building resulting from such removal, at Tenant's sole cost
and expense, prior to the expiration or earlier termination of this Lease.
(2) MULTI-TENANT FLOORS. If other tenants occupy
space on the floor on which the Premises is located, Tenant's identifying
signage shall be provided by Landlord, at Tenant's cost, and such signage shall
be comparable to that used by Landlord for other similar floors in the Building
and shall comply with Landlord's Building standard signage program.
(3) DIRECTORY. Tenant, at Tenant's sole cost and
expense, shall be entitled to have Tenant's name, as well as the names of
Tenant's employees, listed on a directory sign in the main lobby of the
Building, up to a maximum of two (2) directory strips.
B. TENANT'S EXTERIOR SIGNAGE.
(1) TOP OF THE BUILDING SIGNAGE. Subject to the
terms hereof, the Original Tenant shall have the exclusive right to install, at
Original Tenant's sole cost and expense, signage identifying the Original
Tenant on the top of the exterior wall of the Building in the two (2) locations
generally depicted on Exhibit "F," attached hereto and incorporated herein by
this reference. The signage to which Tenant is entitled pursuant to the
immediately preceding sentence may be referred to herein as Tenant's "BUILDING
TOP SIGNAGE." The graphics, materials, color, design, lettering, lighting, size,
specifications, manner of affixing and exact location of the Building Top
Signage shall be subject to Landlord's sole and absolute (but good faith)
discretion. In addition, the Building Top Signage shall be subject to Tenant's
receipt of all required governmental permits and approvals and shall be subject
to all applicable governmental laws and ordinances, and any covenants,
conditions and restrictions affecting the Project; provided, however, if Tenant
does not receive the necessary governmental permits and approvals for the
Building Top Signage, Landlord's and Tenant's rights and obligations under the
remaining provisions of this Lease shall, except as otherwise provided in below,
be unaffected. The cost of installation of the Building Top Signage, as well as
all costs of design and construction of such signage and all other costs
associated with such signage including, without limitation, permits and
maintenance and repair, shall be the sole responsibility of Tenant.
(2) EYEBROW SIGN. The Original Tenant shall have
the right to install, at Original Tenant's sole cost and expense, one (1)
"eyebrow" sign (the "EYEBROW SIGN") identifying the Original Tenant on the
exterior of the Building in the location generally depicted on Exhibit "F". The
graphics, materials, color, design, lettering, lighting, size, specifications,
manner of affixing and exact location of the Eyebrow Sign shall be subject to
Landlord's sole and absolute (but good faith) discretion. In addition, the
Eyebrow Sign shall be subject to Tenant's receipt of all required governmental
permits and approvals and shall be subject to all applicable governmental laws
and ordinances, and any covenants, conditions and restrictions affecting the
Project; provided, however, if Tenant does not receive the necessary
governmental permits and approvals for the Eyebrow Sign, Landlord's and Tenant's
rights and obligations under the remaining provisions of this Lease shall,
except as otherwise provided in below, be unaffected. The cost of installation
of the Eyebrow Sign, as well as all costs of design and construction of such
signage and all other costs associated with such signage including, without
limitation, permits and maintenance and repair, shall be the sole responsibility
of Tenant. Notwithstanding anything above to the contrary, Landlord and Tenant
acknowledge and agree that, without limiting the generality of the foregoing,
Tenant's right to install such Eyebrow Sign is subject to Tenant's installation
of a separate primary entrance to the Premises (other than through the lobby of
the Building). As such, Tenant acknowledges and agrees that such entry shall be
included, if at all, in connection with the construction of the Leasehold
Improvements (and such entry shall be set forth in Tenant's Design Development
Drawings (and in the Final Plans) and shall, therefore, be subject to Landlord's
approval as to location and other specifications and criteria. Tenant further
acknowledges and agrees that the hard costs of the construction of such entry
(including, but not limited to, door(s) and hardware) shall, notwithstanding
anything in this Lease to the contrary, be shared by Landlord and Tenant on an
equal basis; provided, however, in no event shall Tenant be obligated to expend
more than Five Thousand Dollars ($5,000.00) in connection with the hard
construction costs associated with such entry access.
(3) SIGNAGE TERMINATION. The Building Top
Signage and the Eyebrow Sign are collectively referred to herein as the
"EXTERIOR SIGNAGE." The rights to the Exterior Signage are personal to the
Original Tenant and shall exist only as long as the Original Tenant actually
occupies the entire Premises. Upon the expiration or sooner termination of this
Lease, or if at any time after the Commencement Date, Tenant fails to occupy the
entire Premises (each, a "SIGNAGE TERMINATION EVENT"), then Tenant's Exterior
Signage rights shall forever terminate and Tenant shall, at Tenant's sole cost
and expense, cause the Exterior Signage to be removed from the Building and to
repair any damage (including any discoloration) to the Building resulting from
such removal. If Tenant fails to remove its Exterior Signage from the Building
and to repair any damage to the Building resulting from such removal within
thirty (30) days following a Signage Termination Event, then Landlord may
perform such work, and all costs and expenses incurred by Landlord in so
performing shall be reimbursed by Tenant to Landlord within thirty (30) days
after Tenant's receipt of Landlord's invoice therefor. The immediately preceding
sentence shall survive the expiration or earlier termination of this Lease.
Notwithstanding anything to the contrary contained in this Section 22.22.B,
Landlord shall have the right, in its sole discretion (and without the necessity
of
-23-
obtaining Tenant's consent or providing prior notice to Tenant), to grant to
any other tenant(s) of the Building "eyebrow" signage or other signage rights in
the Project which other tenant(s') signage may be more prominent than Tenant's
Exterior Signage.
(4) CONDITIONAL RENT ABATEMENT. Notwithstanding
anything above to the contrary, Landlord acknowledges and agrees that in the
event Tenant, after utilizing Tenant's best efforts (including appearing before
the applicable governmental bodies and instituting court action (if necessary)),
fails to obtain the necessary governmental permits and approvals for Tenant's
Building Top Signage and/or Eyebrow Sign (to the extent a separate entryway to
the Premises in compliance with all laws, permits and approvals has been
constructed ) within six (6) months from the Commencement Date (the "TRIGGER
DATE") then, after such Trigger Date, the applicable monthly Base Rent per
square foot of Net Rentable Area set forth in Section 1.1.M of this Lease shall
be deemed reduced by five cents ($0.05) (the "SPECIAL RENT ABATEMENT");
provided, however, that (i) Tenant shall only be entitled to the Special Rent
Abatement to the extent that, and only for so long as, the applicable
governmental authorities disallow any form of Tenant's Building Top Signage
and/or (subject to the terms hereof) Eyebrow Signage and (ii) Tenant shall not,
in any event, be entitled to any such Special Rent Abatement for the period of
time prior to the Trigger Date (i.e., the first six (6) months of the Term).
C. PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs,
notices, logos, pictures, names or advertisements which are visible from the
exterior of the Premises and that have not been separately approved by Landlord
may be removed without notice by Landlord at the sole expense of Tenant. Except
as expressly set forth herein, Tenant may not install any signs on the exterior
of the Project. Any signs, window coverings, or blinds (even if the same are
located behind the Landlord-approved window coverings for the Building), or
other items visible from the exterior of the Premises or Building, shall be
subject to the prior written approval of Landlord, in its sole discretion.
25.23. WAIVER OF JURY TRIAL. Each party hereby waives any right to a
trial by jury in any action seeking specific performance of any provision of
this Lease, for damages for any breach under this Lease, or otherwise for
enforcement of any right or remedy hereunder.
25.24. LEASING RESTRICTIONS. So long as the Original Tenant (i) is
not in default under this Lease and (ii) is occupying all of the Net Rentable
Area in the Premises as a licensed banking company or banking corporation in the
business of accepting money deposits from the general public, Landlord will not,
without Tenant's prior written consent (which consent shall not be unreasonably
withheld, conditional or delayed), lease any space in the ground floor of the
Building to any tenant whose primary stated use in its lease is a licensed
banking company or banking corporation, savings and loan, bank thrift or credit
union but only to the extent that any such tenant entity's business involves
accepting money deposits from the general public; provided, however, that such
restriction is only for the benefit of the Original Tenant and not any other
person or entity. If the circumstances descried in items (i) or (ii) do not
apply, the leasing restriction in the immediately preceding sentence shall
thereafter be null and void.
25.25. SECURED AREAS. Notwithstanding anything to the contrary
contained herein, Tenant shall be entitled, during the Lease Term to designate a
reasonable portion (or portions) of the Premises as a "SECURED AREA" and to
install door locks or other access control systems as necessary to secure such
Secured Area(s), provided that Tenant gives Landlord prior written notice of
Tenant's designation of such Secured Area(s) and that such Secured Area(s) shall
be used by Tenant solely for the purposes permitted under this Lease. Tenant
hereby agrees and acknowledges that Landlord shall have no obligation to perform
janitorial services in such Secured Area(s) unless Tenant provides Landlord a
written request for same and provides Landlord with access to such Secured
Area(s) (by providing Landlord a key or other device, by scheduling Landlord's
entry with an escort or otherwise) and, in the event that Tenant does not
provide Landlord with a key or other device to gain access to such Secured
Area(s), Landlord shall have the right to use reasonable force to gain access to
such Secured Area(s) in the case of emergency and Landlord shall have no
liability whatsoever to Tenant in connection therewith. Landlord and Tenant
hereby agree and acknowledge that, except as provided in the immediately
preceding sentence, Landlord shall enter such Secured Area(s) only upon one (1)
business days' prior notice to Tenant and only after providing Tenant with the
opportunity to have a representative of Tenant present as an escort. Landlord
and Tenant hereby agree to use commercially reasonable efforts to schedule any
such entries into the Secured Area(s) by Landlord at times that are mutually
convenient to both Landlord and Tenant, taking into consideration the nature of
Tenant's operations in the Premises. Tenant agrees that Tenant shall be
responsible, at its sole cost and expense, for complying with all applicable
laws regarding such Secured Area(s) and that such Secured Area(s) are subject to
the indemnification provisions of Article 17 above.
ARTICLE 26
OTHER DEFINITIONS
When used in this Lease, the terms set forth hereinbelow shall have the
following meanings:
(a) "BUSINESS DAYS" shall mean Monday through Friday (except for
Holidays); "BUSINESS HOURS" shall mean 7:30 a.m. to 6:00 p.m. on Monday through
Friday and 9:00 a.m. to 1:00 p.m. on Saturdays (except for Holidays); and
"HOLIDAYS" shall mean those holidays designated by Landlord, which holidays
shall be consistent with those holidays designated by landlords of other
first-class office buildings in the Comparison Area.
(b) "COMMON AREAS" shall mean those certain areas and facilities
of the Building and the Parking Facility and those certain improvements to the
Land which are from time to time provided by Landlord for the use of tenants of
the Building and their employees, clients, customers, licensees and invitees or
for use by the public, which facilities and improvements include any health
facility (if any) in the Project, any and all corridors, elevator foyers,
vending areas, bathrooms, electrical and telephone rooms, mechanical rooms,
janitorial areas and other similar facilities of the Building and of the Parking
Facility and any and all grounds, parks, landscaped areas, outside
-24-
sitting areas, sidewalks, walkways, tunnels, pedestrianways, skybridges, and
generally all other improvements located on the Land, or which connect the Land
to other buildings.
(c) The words "DAY" or "DAYS" shall refer to calendar days, except
where "Business Days" are specified.
(d) The words "HEREIN", "HEREOF", "HEREBY", "HEREUNDER" and words
of similar import shall be construed to refer to this Lease as a whole and not
to any particular Article or Section thereof unless expressly so stated.
(e) The words "INCLUDE" and "INCLUDING" shall be construed as if
followed by the phrase "without being limited to."
(f) "NET RENTABLE AREA" and "USABLE AREA" shall mean "Net Rentable
Area" and "Usable Area" (as applicable) determined in accordance with the
Standard Method For Measuring Floor Area in Office Buildings ANSI/BOMA
Z65.1-1996 ("BOMA STANDARD"); provided, however, that for all purposes under
this Lease the calculation of the Usable Area shall in no event include the area
comprising the elevator lobbies, telephone rooms, electrical rooms, mechanical
rooms, freight vestibule areas or restrooms. Landlord shall have the right,
within ninety (90) days after the Commencement Date, to verify the Net Rentable
Area and/or Usable Area of the Premises in accordance with the BOMA Standard (as
modified pursuant to the immediately preceding sentence). Tenant shall have the
right, at its sole cost and expense, within sixty (60) days after the
Commencement Date, to have a qualified architect or space planner reasonably
approved by Landlord verify the Net Rentable Area and/or Usable Area of the
Premises and the Building in accordance with the BOMA Standard (as modified
pursuant to the immediately preceding sentence); provided, however, that such
determination shall be subject to the reasonable review and approval of Landlord
and its designated consultants, surveyors, or engineers. If, as a result of such
verification (and approval by Landlord), it is determined that the Net Rentable
Area and/or Usable Area of the Premises are different than the amounts set
forth in Section 1.1 above, all corresponding amounts set forth this Lease
(including, without limitation, Tenant's Share, the amount of monthly Base Rent,
the amount of the Security Deposit and the Allowance) shall be retroactively
adjusted and appropriate payments, if applicable, shall be made by Landlord to
Tenant or Tenant to Landlord (as applicable) within ten (10) days after such
determination and approval by Landlord. Both parties agree to execute a
commercially reasonable instrument in order to document such revised amounts.
From time to time throughout the Term of this Lease, Landlord shall have the
right, at its sole cost and expense, to verify the Net Rentable Area and/or
Usable Area of the Premises, the Building and the Project in accordance with the
BOMA Standard and this subparagraph (f) (pertaining to adjustment of certain
Lease provisions and appropriate payments (if applicable)).
(g) Reference to Landlord as having "NO LIABILITY TO TENANT" or
being "WITHOUT LIABILITY TO TENANT" or words of like import shall mean that
Tenant is not entitled to terminate this Lease, or to claim actual or
constructive eviction, partial or total, or to receive any abatement or
diminution of rent, or to be relieved in any manner of any of Tenant's other
obligations hereunder, or to be compensated for loss or injury suffered or to
enforce any other right or kind of liability whatsoever against Landlord under
or with respect to this Lease or with respect to Tenant's use or occupancy of
the Premises.
(h) A "REPAIR" shall be deemed to include such rebuilding,
replacement and restoration as may be necessary to achieve and maintain good
working order and condition.
(i) The "TERMINATION OF THIS LEASE" and words of like import
includes the expiration of the Term or the cancellation of this Lease pursuant
to any of the provisions of this Lease or to law. Upon the termination of this
Lease, the Term shall end at 11:59 p.m. (local time for the Building) on the
date of termination as if such date were the Expiration Date, and neither party
shall have any further obligation or liability to the other after such
termination except (i) as shall be expressly provided for in this Lease and (ii)
for such obligations as by their nature or under the circumstances can only be,
or by the provisions of this Lease, may be, performed after such termination
and, in any event, unless expressly otherwise provided in this Lease, any
liability for a payment (which shall be apportioned as of the date of such
termination) which shall have accrued to or with respect to any period ending at
the time of termination shall survive the termination of this Lease.
(j) The "TERMS OF THIS LEASE" shall be deemed to include all
terms, covenants, conditions, provisions, obligations, limitations,
restrictions, reservations and agreements contained in this Lease.
(k) "TENANT" shall be deemed to include Tenant's successors and
assigns (to the extent permitted by Landlord) and any and all occupants of the
Premises permitted by Landlord and claiming by, through or under Tenant.
ARTICLE 27
RIGHT OF FIRST NEGOTIATION
27.1. IN GENERAL. Subject to the terms hereof, Landlord hereby
grants to Tenant a right of first negotiation with respect to space on the
ground floor of the Building (the "FIRST NEGOTIATION SPACE"). Notwithstanding
the foregoing, such first negotiation right shall be subordinate and secondary
to all rights of expansion, first refusal, first offer or similar rights granted
to Brandes Investment Partners, L.P., an existing tenant of the Project (the
rights described above to be known as "SUPERIOR RIGHTS"). Tenant's right of
first negotiation shall be on the terms and conditions set forth in this Article
27.
27.2. PROCEDURE FOR NEGOTIATION. Landlord shall notify Tenant (the
"FIRST NEGOTIATION NOTICE") from time to time when Landlord receives a proposal
for all or any portion of the First Negotiation Space which Landlord
-25-
would seriously consider (and where no holder of a Superior Right desires to
lease such space). The First Negotiation Notice shall describe the space so
offered to Tenant and shall set forth Landlord's proposed economic terms and
conditions applicable to Tenant's lease of such space (collectively, the
"ECONOMIC TERMS").
27.3. PROCEDURE FOR ACCEPTANCE. If Tenant wishes to exercise
Tenant's right of first negotiation with respect to the space described in the
First Negotiation Notice, then within three (3) business days after delivery of
the First Negotiation Notice to Tenant ("ELECTION DATE"), Tenant shall deliver
notice to Landlord of Tenant's exercise its right of first negotiation with
respect to the entire space described in the First Negotiation Notice based on
the Economic Terms contained therein. If Tenant does not exercise its right of
first negotiation within such three (3) business day period or if Tenant
exercises its right of first negotiation but objects to any of the Economic
Terms then, in any event, Landlord shall be free to lease the space described in
the First Negotiation Notice to any person or entity within twelve (12) months
after the Election Date upon any terms Landlord desires and Tenant's right of
first negotiation shall terminate as to the First Negotiation Space described in
the First Negotiation Notice. Notwithstanding anything to the contrary contained
herein, Tenant must elect to exercise its right of first negotiation, if at all,
with respect to all of the space offered by Landlord to Tenant at any particular
time, and Tenant may not elect to lease only a portion thereof.
27.4. CONDITION OF FIRST NEGOTIATION SPACE. Subject to the Economic
Terms, Tenant shall lease the First Negotiation Space in its "then as-is"
condition as of the date of Landlord's delivery of the First Negotiation Space
to Tenant. Tenant may construct improvements in the First Negotiation Space in
accordance with Article 10 of the Lease.
27.5. LEASE OF FIRST NEGOTIATION SPACE. If Tenant timely exercises
Tenant's right to lease the First Negotiation Space as set forth herein,
Landlord and Tenant shall, within five (5) business days after the Election
Date, execute an amendment adding such First Negotiation Space to this Lease
upon the same non-economic terms and conditions as applicable to the initial
Premises, and the economic terms and conditions as provided in this Article 27.
Tenant shall commence payment of rent for the First Negotiation Space and the
Lease Term of the First Negotiation Space shall commence on the date Landlord
makes such First Negotiation Space available to Tenant. The Lease Term for the
First Negotiation Space shall expire co-terminously with Tenant's lease of the
initial Premises; provided, however, that notwithstanding anything above to the
contrary, Tenant acknowledges and agrees that in no event shall Landlord be
obligated to provide Tenant with a First Negotiation Notice during the last
thirty-six (36) months of the Lease Term and, accordingly, Tenant will not have
a right to lease any First Negotiation Space for a term of less than thirty-six
(36) months.
27.6. NO DEFAULTS. The rights contained in this Article 27 shall be
personal to the Original Tenant and any Permitted Assignee of the Original
Tenant's entire interest in this Lease and may only be exercised by the
Original Tenant (and such Permitted Assignee) if the Original Tenant occupies
the entire Premises as of the date of the First Negotiation Notice. Tenant
shall not have the right to lease First Negotiation Space as provided in this
Article 27 if, as of the date of the First Negotiation Notice, or, at
Landlord's option, as of the scheduled date of delivery of such First
Negotiation Space to Tenant, Tenant is in default under this Lease or Tenant
has previously been in default under this Lease more than once.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
set forth on the cover page hereof.
TENANT: LANDLORD:
SCRIPPS BANK, PRENTISS PROPERTIES ACQUISITION
a California banking corporation PARTNERS, L.P., a Delaware limited
partnership
By: Prentiss Properties I, Inc.
By: /s/ Ronald J. Carlson Its: General Partner
-----------------------------
Name: Ronald J. Carlson
------------------------
Title: President & CEO
-----------------------
By: /s/ Christopher M. Hipps
----------------------------
Name: Christopher M. Hipps
-----------------------
Title: Senior Vice President
-----------------------
By: /s/ M. Catherine Wright
-----------------------------
Name: M. Catherine Wright
------------------------ By: /s/ J. Kevan Dilbeck
Title: Sr. Vice President/CFO ---------------------------
----------------------- Name: J. Kevan Dilbeck
----------------------
Title: Senior Vice President
----------------------
-26-
EXHIBIT "C"
WORK LETTER AGREEMENT
[ALLOWANCE]
This WORK LETTER AGREEMENT ("AGREEMENT") supplements the Office Lease
(the "LEASE") dated October 21, 1999, executed concurrently herewith, by and
between PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P., a Delaware limited
partnership ("LANDLORD"), and SCRIPPS BANK, a California banking corporation
("TENANT"), covering certain premises described in the Lease (the "PREMISES").
All terms not defined herein shall have the same meaning as set forth in the
Lease.
1. CONSTRUCTION OF BUILDING.
At Landlord's sole cost, Landlord shall construct, through its
contractor, the Parking Facility and the Building shell, including the following
as part of the Building shell: (a) concrete floor; (b) unfinished ceilings on
tenant space; (c) finished core area, including elevators, toilet rooms,
electrical rooms, telephone rooms, janitorial closets, exit stairs and
mechanical shaft; (d) dry wall (taped and finished, not painted) around surfaces
of core walls; (e) primary heating, ventilating and air conditioning service to
the edge of the Building core (not including branch distribution, controls and
heat pumps); (f) primary sprinkler stem, main distribution loops, primary loop
piping and distribution piping on an open-plan, unoccupied basis; and (g) life
safety systems as required by code for the Building shell. The elevators and the
items described in clauses (e), (f) and (g) above are referred to in the Lease
as the "CENTRAL SYSTEMS."
2. CONSTRUCTION PLANS FOR PREMISES.
All plans and drawings required by this Paragraph shall be prepared in
accordance with the schedule provided in Paragraph 7 below.
2.1. Tenant shall retain J.A. Lindberg Interiors (the
"SPACE PLANNER") to prepare, for Landlord's approval, preliminary space plans
sufficient to convey the architectural design of the Premises, including
preliminary partition layout and reflective ceiling plans ("TENANT'S DESIGN
DEVELOPMENT DRAWINGS"). Tenant's Design Development Drawings shall be furnished
to Landlord on or before the due date specified in Section 7(ii) of this
Agreement. If Landlord shall disapprove of any portion of Tenant's Design
Development Drawings, Landlord shall advise Tenant of such revisions, and
reasons therefor, as are reasonably required by Landlord for the purpose of
obtaining approval. Tenant shall then submit to Landlord for Landlord's
approval, a redesign of Tenant's Design Development Drawings, incorporating the
revisions requested by Landlord and such modifications thereof as are suggested
by Tenant, said modifications to be subsequently approved by Landlord prior to
Tenant's submission of Final Plans.
2.2. Based on Tenant's Design Development Drawings which
have been approved by Landlord, Tenant shall retain Smith Consulting Architects
("ARCHITECT") and cause Architect to prepare complete architectural plans,
drawings and specifications and complete engineered mechanical, structural and
electrical working drawings for the Premises showing the subdivision, layout,
finish and decoration work (including carpeting and other floor coverings)
desired by Tenant (collectively, "FINAL PLANS"; the work shown thereon being
called the "LEASEHOLD IMPROVEMENTS") and in such form and such detail as may be
reasonably required by Landlord; provided, however, that Tenant shall be
required to use the architectural firm of Syska & Hennessy for those portions of
the Final Plans pertaining to the electrical, mechanical and plumbing systems.
The Final Plans shall: (i) comply with all applicable laws and ordinances, and
the rules and regulations of all governmental authorities having jurisdiction;
(ii) comply with all applicable insurance regulations; (iii) include locations
and complete dimensions; and (iv) be compatible with the Building shell, with
the design, construction and equipment of the Building and with the standards
set forth in Schedule I to this EXHIBIT "C" (the "BUILDING STANDARDS"), it being
agreed that Tenant shall not deviate from the Building Standards without the
prior written approval of Landlord. Tenant's Final Plans shall be furnished to
Landlord on or before the due date specified in Section 7(vi) of this Agreement
for the approval of Landlord. The approval/disapproval process for the Final
Plans shall be as provided in Subparagraph 2.1 above for approval by Landlord of
Tenant's Design Development Drawings and in accordance with Paragraph 7 hereof
(and Landlord shall have approval rights over the same as provided in
Subparagraph 2.1 above).
2.3. If the Final Plans or any amendment thereof or
supplement thereto shall, due to the original design of the Premises as depicted
in Tenant's Design Development Drawings, require changes in the Building shell,
the increased cost of the Building shell work caused by such changes shall be
charged against the Allowance or shall be promptly paid by Tenant if the
Allowance has been expended.
2.4. Tenant's Design Development Drawings and the Final
Plans are sometimes referred to herein as the "CONSTRUCTION DRAWINGS." Tenant
and Tenant's Architect shall verify, in the field, the dimensions and conditions
as shown on the relevant portions of the Base Building Plans, and Tenant and
Tenant's Architect shall be solely responsible for the same, and Landlord shall
have no responsibility in connection therewith. Landlord's review of the
Construction Drawings as set forth in this Agreement, shall be for its sole
purpose and shall not imply Landlord's review of the same, or obligate Landlord
to review the same, for quality, design, code compliance or other like matters.
Accordingly, notwithstanding that any Construction Drawings are reviewed by
Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord's space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction
Drawings.
EXHIBIT "C"
-1-
2.5. On or before the due date specified in Paragraph
7(xii), Tenant shall deliver to Landlord all applicable building permits
necessary to allow Landlord's contractor to commence and fully complete the
construction of the Leasehold Improvements (collectively, the "PERMITS") and, in
connection therewith, Tenant shall coordinate with Landlord in order to allow
Landlord, at Landlord's option, to take part in all phases of the permitting
process, and shall supply Landlord, as soon as possible, with all plan check
numbers and dates of submittal. Notwithstanding the foregoing, Tenant hereby
agrees that neither Landlord nor Landlord's consultants shall be responsible for
obtaining any building permit for the Premises and that the obtaining of the
same shall be Tenants responsibility; provided, however, that Landlord shall, in
any event, cooperate with Tenant in executing permit applications and performing
other ministerial acts reasonably necessary to enable Tenant to obtain any such
permit.
3. ALLOWANCE FOR WORK.
3.1. Tenant shall receive from Landlord an allowance
(the "ALLOWANCE") of Thirty-Five Dollars ($35.00) per square foot of Usable
Area of the Premises, i.e., Nine Hundred Four Thousand Five Hundred
Seventy-Five Dollars ($904,575.00), which Allowance shall be used solely for
the design, engineering and permitting fees, materials procurement,
construction management fees, and installation of the Leasehold Improvements
and other aspects of the Work Cost as hereinafter defined. All items of the
Leasehold Improvements, whether or not the cost thereof is covered by the
Allowance, shall become the property of Landlord upon expiration or earlier
termination of the Lease and shall remain on the Premises at all times during
the Term of this Lease. Tenant shall be entitled to no payment, credit or
rent reduction for any part of the Allowance not used by Tenant. Tenant shall
have the option, exercisable by written notice to Landlord within ten (10)
days after Tenant's submittal to Landlord of Tenant's Design Development
Drawings, to increase the amount of the Allowance by up to Five Dollars
($5.00) per square foot of Usable Area of the Premises (the "INCREASED
ALLOWANCE AMOUNT"); provided, however, that notwithstanding anything in this
Exhibit "C" to the contrary, such Increased Allowance Amount may only be used
by Tenant for the design and construction of Leasehold Improvements
pertaining to the ground floor portion of the Premises. If Tenant exercises
such option, the monthly Base Rent payable by Tenant throughout the ten (10)
year Lease Term shall be increased by an amount sufficient to fully amortize
such Increased Allowance Amount throughout said ten (10) year period based
upon equal monthly payments of principal and interest, with interest imputed
on the outstanding principal balance at the rate of ten and one-half percent
(10.5%) per annum. By way of illustration only, a Five Dollar ($5.00) per
square foot of Useable Area Increased Allowance Amount will result in an
increase, on a per rentable square foot basis, in the Base Rent of $0.0675
per square foot of Rentable Area of the Premises per month (or $0.81 per
square foot of Rentable Area of the Premises per year).
3.2. Prior to the commencement of any Leasehold
Improvements, Landlord shall submit to Tenant a preliminary written statement
of Work Cost (as hereinafter defined) of all Leasehold Improvements, which
preliminary written statement shall be based on the Tenant's Final Plans.
Thereupon Tenant shall either approve the estimate or disapprove specific
items and submit to Landlord revisions of Final Plans to reflect the deletion
of and/or substitution for such disapproved items. Submission and approval of
the preliminary Work Cost statement shall proceed in accordance with the
schedule provided in Paragraph 7 below. Upon Tenant's approval of said
statement, such approved statement to be hereinafter known as the "WORK COST
STATEMENT," Landlord shall have the right to purchase materials and to
commence the construction of the items included in said Work Cost Statement
pursuant to Paragraph 4 hereof. If the Work Cost Statement exceeds the
Allowance, Tenant shall be liable for and shall pay to Landlord within five
(5) business days after invoice therefor, the estimated excess costs for the
Leasehold Improvements. If the Work Cost exceeds the amount reflected on the
Work Cost Statement due to changes requested by Tenant or any governmental
entity, Tenant agrees to pay to Landlord such excess (except to the extent
the Allowance is still available) within five (5) business days after invoice
therefor (less any sums previously paid by Tenant for such excess pursuant to
the Work Cost Statement). In no event will the Allowance be used to pay for
Tenant's furniture, artifacts, equipment, telephone systems or any other
item of personal property which is not affixed to the Premises.
3.3. Until Tenant approves the Work Cost Statement and
pays any excess costs to Landlord as contemplated in Subparagraph 3.2 above,
Landlord shall be under no obligation to perform the installation of the items
of the Leasehold Improvements.
4. CONSTRUCTION.
Following Tenant's approval of the Work Cost Statement described in
Subparagraph 3.2 and upon Tenant's payment of any amounts as contemplated in
Subparagraph 3.2 above, and at such time when, in Landlord's discretion, the
Building has reached the stage of construction where it is appropriate to
commence construction, a contractor or contractors selected by Landlord shall
commence and diligently proceed with the construction of all of the Leasehold
Improvements. Landlord shall cause such contractor to submit to bidding, all
trades except for that portion of the Leasehold Improvements involving
mechanical, electrical and sprinkler work, which mechanical, electrical and
sprinkler work shall, in any event, be performed by landlord's subcontractors
for the Project. Landlord shall have the right to review the bids and to perform
a reconciliation in order to adjust inconsistent or incorrect assumptions so
that a like-kind comparison can be made and low bidder(s) determined. Landlord
shall select the lowest bidder who can meet Landlord's construction schedule.
Promptly upon the commencement of the Leasehold Improvements, Landlord shall
furnish Tenant with a schedule setting forth the projected completion dates
therefor and showing the deadlines for any actions required to be taken by
Tenant during such construction, and Landlord may from time to time during the
prosecution of the Leasehold Improvements modify or amend such schedule due to
delays encountered by Landlord. Landlord shall make a reasonable effort to meet
such schedule (as the same may be modified or amended).
5. WORK COST.
"WORK COST" means: (i) all design and engineering fees incurred by
Tenant or Landlord in connection with the preparation of the preliminary space
plans and Final Plans; (ii) governmental agency plan check, permit and other
fees; (iii) sales and use taxes; (iv) Title 24 fees; (v) testing and
inspecting costs; (vi) the actual costs and
EXHIBIT "C"
-2-
charges for material and labor, contractor's profit and general overhead
incurred by Landlord in having the Leasehold Improvements constructed; (vii) all
other costs to be expended by Landlord in the construction of the Leasehold
Improvements, including those costs incurred by Landlord for construction of
elements of the Leasehold Improvements in the Premises, which construction was
performed by Landlord prior to the execution of this Lease by Landlord and
Tenant (i.e., during or after the construction of the Building shell) and which
construction is for the benefit of tenants and is customarily performed by
Landlord prior to the execution of leases for such space in the Building for
reasons of economics [examples of such construction would include wall
construction, column enclosures and painting outside of the core of the
Building, ceiling hanger wires and window treatment; and (viii) an
administration fee for Landlord of 5% of the total Work Cost specified in (i)
through (vii) above.
6. ELEVATOR.
Landlord shall, consistent with its obligations to other tenants then
in occupancy in the Building, make an elevator available to Tenant in connection
with initial decorating, furnishing and moving into the Premises.
7. SCHEDULE.
Preparation and approval of all plans and drawings and the Work Cost
Statement shall proceed as indicated below and each action shall be completed on
or before the date herein specified:
Due Date
in Calendar Days
Action Responsibility Following Date of Lease
------ -------------- -----------------------
(i) Delivery to Tenant's architect of Building Landlord (Delivered September 23,
background drawings 1999)
(ii) Delivery to Landlord of Tenant's Design Tenant January 3, 2000
Development Drawings
(iii) Delivery to Tenant of written notice approving Landlord January 10, 2000
or disapproving Tenant's Design Development
Drawings
(iv) Delivery to Landlord, if necessary, of redesign of Tenant January 31, 2000
Tenant's Design Development Drawings
(v) Delivery to Tenant of written notice of final Landlord February 7, 2000
approval of Tenant's Design Development
Drawings
(vi) Delivery to Landlord of Final Plans. Tenant March 20, 2000
(vii) Delivery to Tenant of written notice approving Landlord March 27, 2000
or disapproving Final Plans
(viii) Delivery to Landlord, if necessary, of redesign of Tenant April 3, 2000
Final Plans
(ix) Delivery to Tenant of written notice of final Landlord April 10, 2000
approval of Final Plans
(x) Delivery to Tenant of Work Cost estimate Landlord April 124, 2000
(xi) Delivery to Landlord of written notice of final Tenant May 1, 2000
approval of Work Cost Statement
(xii) Delivery to Landlord of Building Permits Tenant May 8, 2000
8. DELAYS.
Except as otherwise set forth in Section 3.1 of the Lease, the Term of
the Lease shall not commence until Landlord has substantially completed all work
to be performed by Landlord in this Work Letter Agreement as provided in Section
3.1 of the Lease; provided, however, that if Landlord shall be delayed in
substantially completing said work as a result of any of the following
(collectively, "TENANT DELAYS"):
(i) Tenant's failure to complete any action item on or
before the due date which is the responsibility of Tenant, or
(ii) Tenant's changes to the Final Plans after the final
approval date in Subparagraph 7(ix) above, or
(iii) Tenant's request for materials, finishes, or
installations other than Building Standard work, or
EXHIBIT "C"
-3-
(iv) Any delay of Tenant in making payment to Landlord for
Tenant's share of Work Cost,
then as soon as reasonably possible following the Commencement Date, Landlord
shall provide to Tenant a reasonably particularized statement of the net number
of Tenant Delays, and Tenant shall pay to Landlord, as Additional Rent under
this Lease, the product of the per diem Base Rent times the number of days of
such net Tenant Delays, such payment to be made within thirty (30) days of
receipt of the invoice from Landlord together with said particularized
statement.
9. PUNCH-LIST ITEMS.
Within five (5) days of Substantial Completion, Tenant shall provide to
Landlord a detailed punch-list of unfinished items of the Leasehold
Improvements. Upon receipt of the punch-list, Landlord shall, at Landlord's sole
cost and expense, proceed diligently to remedy such items; provided, however,
that Tenant shall be responsible, at Tenant's sole cost and expense, for the
remediation of any items on the punch-list caused by Tenant's acts or
omissions.
10. EARLY ENTRY.
Provided that Tenant and its agents will not, in Landlord's sole
discretion, interfere with the Contractor's work in the Building and the
Premises and subject to the terms hereof, Landlord shall allow Tenant access to
the Premises prior to the date of Substantial Completion of the Leasehold
Improvements for the purpose of Tenant installing equipment or trade fixtures
(including Tenant's data and telephone equipment, transmission cables and lines,
and interior permanent and non-permanent improvements) in the Premises only.
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 Paragraph 10.
TENANT: LANDLORD:
SCRIPPS BANK, PRENTISS PROPERTIES ACQUISITION
a California banking corporation PARTNERS, L.P., a Delaware limited
partnership
By: Prentiss Properties I, Inc.
By: /s/ Ronald J. Carlson Its: General Partner
-----------------------------
Name: Ronald J. Carlson
------------------------
Title: President & CEO
-----------------------
By: /s/ Christopher M. Hipps
----------------------------
Name: Christopher M. Hipps
-----------------------
Title: Senior Vice President
-----------------------
By: /s/ M. Catherine Wright
-----------------------------
Name: M. Catherine Wright
------------------------
Title: Sr. Vice President/CEO
----------------------- By: /s/ J. Kevan Dilbeck
---------------------------
Name: J. Kevan Dilbeck
----------------------
Title: Senior Vice President
----------------------
EXHIBIT "C"
-4-