EXHIBIT 10.3
INDUSTRIAL LEASE AGREEMENT
BETWEEN THE COMPANY AND HAVEN GATEWAY LLC
DATED AS OF AUGUST 17, 2000
HAVEN GATEWAY CENTRE
INDUSTRIAL LEASE
THIS HAVEN GATEWAY CENTRE INDUSTRIAL LEASE (this "Lease") is made as of
August 17, 2000, by and between
"LANDLORD" HAVEN GATEWAY LLC, a Delaware limited liability company
and
"TENANT" THE CHILDREN'S PLACE RETAIL STORES, INC., a Delaware corporation
SECTION 1: DEFINITIONS
1.1 DEFINITIONS: Each underlined term in this section shall have the meaning
set forth next to that underlined term.
1.2 ACCESS LAWS: The Americans With Disabilities Act of 1990 (including the
Americans with Disabilities Act Accessibility Guidelines for Building and
Facilities) and all other Governmental Requirements relating to the
foregoing.
1.3 ADDITIONAL RENT: Defined in paragraph captioned "ADDITIONAL RENT".
1.4 BASE BUILDING. Defined in the Work Letter Agreement attached hereto as
EXHIBIT C.
1.5 BASE RENT:
Monthly Base Rent:
LEASE MONTHS MONTHLY BASE RENT
1-29 $73,800.56
30-59 $79,422.04
60-87 $84,844.53
Annual Base Rent:
LEASE MONTHS ANNUAL BASE RENT
1-29 $885,606.72
30-59 $953,064.48
60-87 $1,018,134.36
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1.6 BROKERS: Tenant was represented in this transaction by The Seeley Company,
a licensed real estate broker.
Landlord was represented in this transaction by Investment Development
Services and Cushman and Wakefield, licensed real estate brokers.
1.7 BUILDING: A free-standing industrial building being constructed on the
Land, which Building shall be commonly known as 3800 East Philadelphia
Street, Ontario, California, which will contain approximately 248,738
rentable square feet and be built substantially in accordance with the
Shell Specifications.
1.8 BUSINESS DAY: Calendar days, except for Saturdays and Sundays and holidays
when banks are closed in Los Angeles, California.
1.9 CLAIMS: An individual and collective reference to any and all claims,
demands, damages, injuries, losses, liens, liabilities, penalties, fines,
lawsuits, actions, other proceedings and expenses (including attorney's
fees and expenses incurred in connection with the proceeding whether at
trial or on appeal).
1.10 COMMENCEMENT DATE: The earlier to occur of: (a) the date on which Tenant
first conducts business in any portion of the Premises, or (b) thirty (30)
days after Substantial Completion. Except as set forth in this Lease,
Tenant shall not be obligated to pay Base Rent or Additional Rent under
this Lease until the Commencement Date occurs.
1.11 ESTIMATED OPERATING COSTS ALLOCABLE TO THE PREMISES: Defined in paragraph
captioned "ADDITIONAL RENT".
1.12 EVENTS OF DEFAULT: One or more of those events or states of facts defined
in the paragraph captioned "EVENTS OF DEFAULT".
1.13 EXCESS ALLOWANCE: Defined in the Work Letter Agreement attached hereto as
EXHIBIT C.
1.14 GOVERNMENTAL AGENCY: The United States of America, the state in which the
Land is located, any county, city, district, municipality or other
governmental subdivision, court or agency or quasi-governmental agency
having jurisdiction over the Land and any board, agency or authority
associated with any such governmental entity, including the fire
department having jurisdiction over the Land.
1.15 GOVERNMENTAL REQUIREMENTS: Any and all statutes, ordinances, codes, laws,
rules, regulations, orders and directives of any Governmental Agency as
now or later amended.
1.16 HAZARDOUS SUBSTANCE(S): Asbestos, PCBs, petroleum or petroleum-based
chemicals or substances, urea formaldehyde or any chemical, material,
element, compound, solution, mixture, sub-stance or other matter of any
kind whatsoever which is now or later defined, classified, listed,
designated or regulated as hazardous, toxic or radioactive by any
Governmental Agency.
1.17 LAND: The land upon which the Building is located in County of San
Bernardino, State of California, as legally described in EXHIBIT A
attached to this Lease.
1.18 LANDLORD: The limited liability company named on the first page of this
Lease, or its successors and assigns as provided in paragraph captioned
"ASSIGNMENT BY LANDLORD".
1.19 LANDLORD'S AGENTS: Landlord's partners, officers, directors, agents,
employees, trustees, members, investment advisors, consultants and
contractors.
1.20 LEASE TERM: Commencing on the Commencement Date, and ending eighty seven
(87) months later, subject to renewal or earlier termination in accordance
with the terms of this Lease. If the Commencement Date is a date other
than the first day of a calendar month, the Lease Term shall be extended
by the number of days remaining in the month in which the Commencement
Date occurs.
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1.21 MANAGER: Investment Development Services, Inc., or its replacement, as
specified by written notice from Landlord to Tenant.
1.22 MANAGER'S ADDRESS: 888 West Sixth Street, 9th Floor, Los Angeles,
California 90017, which address may be changed by written notice from
Landlord to Tenant.
1.23 OPERATING COSTS: Defined in paragraph captioned "ADDITIONAL RENT".
1.24 OPERATING COSTS ALLOCABLE TO THE PREMISES: Defined in paragraph captioned
"ADDITIONAL RENT".
1.25 PARKING RIGHTS: As of the Commencement Date, Tenant shall be permitted to
use two hundred (200) parking spaces on an exclusive basis in the
Building's parking area (as reasonably designated by Landlord) for the
following: 161 passenger cars (6 of which are for handicapped spaces), 2
vans and 37 trailers. Tenant is aware and agrees that the final number of
parking spaces may change if required by any Governmental Agency.
1.26 PERMITTED USE: Warehousing and Distribution of goods that are
non-Hazardous Substances, and related office use incidental thereto, so
long as such use is consistent with Governmental Requirements and with
first-class industrial buildings of the same or similar use as the
Building and located in the metropolitan area in which the Building is
located.
1.27 INTENTIONALLY OMITTED
1.28 PREPAID RENT: $93,276.75, to be applied toward Base Rent and Additional
Rent for the first full calendar month of the Lease Term or to the first
calendar month in which full Base Rent and Additional Rent is due.
1.29 PREMISES: The entire Building, as depicted on the Plan attached hereto as
EXHIBIT B. Landlord and Tenant hereby agree that the Premises consist of
approximately 248,738 rentable square feet. Landlord and Tenant
acknowledge and agree that the term "Premises" is used interchangeably
with the term "Building" throughout this Lease. On or about the
Commencement Date, Landlord shall provide to Tenant the certification of
Landlord's architect or civil engineer as to the exact square footage of
the Premises, and such certification shall be binding and conclusive on
Landlord and Tenant for all purposes under this Lease. If the amount of
the rentable square feet and/or the usable square feet of the Premises is
adjusted as a result of such architect's certification, then Base Rent,
Tenant's Pro Rata Share of the Project and the Tenant Improvement
Allowance shall be equitably adjusted by Landlord accordingly.
1.30 PRIME RATE: Defined in paragraph captioned "Default Rate".
1.31 PROJECT: The Haven Gateway Centre within which the Building and Land are
located, which Project shall consist of approximately 73.64 acres and,
when completed, estimated to be approximately 1,530,777 rentable square
feet, as the same may be adjusted by Landlord from time to time. If the
amount of rentable square feet of the Project is adjusted, then Tenant's
Pro Rata Share shall be equitably adjusted by Landlord accordingly.
1.32 PROPERTY TAXES: (1) Any form of ad valorem real or personal property tax
or assessment imposed by any Governmental Agency on the Land, Building,
related improvements or any personal property owned by Landlord associated
with the Building or Land; (2) any other form of tax or assessment,
license fee, license tax, tax or excise on rent or any other levy, charge,
expense or imposition made or required by any Governmental Agency on any
interest of Landlord in the Building, Land, related improvements or
personal property; (3) any fee for services charged by any Governmental
Agency for any services such as fire protection, street, sidewalk and road
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maintenance, refuse collection, school systems or other services provided
or formerly provided to property owners and residents within the general
area of the Land; (4) any governmental impositions allocable to or
measured by the area of any or all of the Building, Land, related
improvements or personal property, or the amount of any base rent,
additional rent or other sums payable under any lease for any or all of
the Building, Land, related improvements or personal property, including
any tax on gross receipts or any excise tax or other charges levied by any
Governmental Agency with respect to the possession, leasing, operation,
maintenance, alteration, repair, use or occupancy of any or all of the
Land or Building, related improvements or personal property or the rent
earned by any part of or interest in the Building or Land, related
improvements or personal property; (5) any impositions by any Governmental
Agency on any transaction evidenced by a lease of any or all of the
Building or Land, related improvements or personal property or charge with
respect to any document to which Landlord is a party creating or
transferring an interest or an estate in any or all of the Building or
Land, related improvements or personal property; and (6) any increase in
any of the foregoing based upon construction of improvements or change of
ownership of any or all of the Land, related improvements or personal
property. Property Taxes shall not include taxes on Landlord's net income,
any inheritance, estate or gift taxes, excess profits taxes, franchise
taxes and capital stock taxes.
1.33 PUNCH LIST WORK: Minor items of repair, correction, adjustment or
completion as such phrase is commonly understood in the construction
industry in the metropolitan area in which the Land is located.
1.34 SECURITY DEPOSIT: Fifty Thousand Four Hundred Eighty Two and 00/100
Dollars ($50,482.00).
1.35 SHELL SPECIFICATIONS: Defined in the Work Letter Agreement attached hereto
as EXHIBIT C.
1.36 SHELL WORK: Defined in the Work Letter Agreement attached hereto as
EXHIBIT C.
1.37 SUBSTANTIAL COMPLETION: The date that the Shell Work has been
substantially completed substantially in accordance with the Shell
Specifications, subject only to Punch List Work.
1.38 TENANT: The person or entity(ies) named on the first page of this Lease.
1.39 TENANT ALTERATIONS: Defined in paragraph captioned "TENANT ALTERATIONS".
1.40 TENANT IMPROVEMENT ALLOWANCE: The maximum amount to be expended by
Landlord (subject to the Excess Allowance) for the cost of Tenant
Improvements (including architectural, engineering, permitting and space
planning fees), which maximum shall not exceed Four Hundred Thirty Five
Thousand Two Hundred Ninety One and 50/100 Dollars ($435,291.50).
1.41 TENANT IMPROVEMENTS: Those alterations or improvements to be constructed
in the Premises by Tenant in accordance with and subject to the terms and
conditions of the Work Letter Agreement attached hereto as EXHIBIT C.
1.42 TENANT'S AGENTS: Any and all officers, partners, contractors,
subcontractors, consultants, licensees, agents, concessionaires,
subtenants, servants, employees, customers, guests, invitees or visitors
of Tenant.
1.43 TENANT'S PRO RATA SHARE: One Hundred Percent (100%) of Operating Costs
pertaining to the Building and/or the Land; Sixteen and 25/100 Percent
(16.25%) of Operating Costs pertaining to the Project as a whole.
1.44 YEAR: A calendar year commencing January 1 and ending December 31.
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SECTION 2: PREMISES AND TERM
2.1 LEASE OF PREMISES. Landlord leases the Premises to Tenant, and Tenant
leases the Premises from Landlord, upon the terms and conditions set forth
in this Lease.
2.2 LEASE TERM. The Lease Term shall be for the period stated in the
definition of that term, unless earlier terminated as provided in this
Lease. The estimated date of Substantial Completion is currently October
1, 2000, and the estimated Commencement Date is accordingly October 31,
2000. Subject to Section 2.6 below, if Landlord is unable to deliver the
Base Building to Landlord by the estimated date of Substantial Completion,
this Lease shall not be void or voidable, and Landlord shall not be deemed
to be in default hereunder, nor shall Landlord be liable for any loss or
damage directly or indirectly arising out of or resulting from such delay.
Tenant agrees to accept possession of the Base Building at such times as
Landlord is able to tender the same.
2.3 EARLY ENTRY INTO PREMISES. Tenant may enter into the Premises prior to
Substantial Completion, upon receipt of Landlord's prior written consent
(which shall not be unreasonably withheld or delayed), solely for the
purpose of installing furniture and trade fixtures, and installing and
testing telephones, wiring, computers, photocopy equipment, and other
business equipment. Such early entry will not advance the Commencement
Date so long as Tenant does not commence business operations from any part
of the Premises. All of the provisions of this Lease shall apply to Tenant
during any early entry, including the insurance provisions of the Lease,
but excluding the obligation to pay Base Rent unless and until Tenant has
commenced business operations in the Premises, whereupon Base Rent shall
commence. Landlord may revoke its permission for Tenant's early entry if
Tenant's activities or workers interfere with the completion of the Tenant
Improvements. If Tenant is granted early entry, Landlord shall not be
responsible for any loss, including theft, damage or destruction to any
work or material installed or stored by Tenant at the Premises or for any
injury to Tenant or Tenant's Agents except that caused as a direct result
of the gross negligence or willful misconduct of Landlord. Landlord shall
have the right to post appropriate notices of non-responsibility and to
require Tenant to provide Landlord with evidence that Tenant has fulfilled
its obligation to provide insurance pursuant to the provisions of this
Lease. During such early entry, Landlord shall have in place the insurance
set forth in Section 4.14 below, and shall, after written request by
Tenant, provide certificates of insurance, or their equivalents, to
Tenant, evidencing the same.
2.4 TENANT IMPROVEMENTS. Tenant shall construct the Tenant Improvements
pursuant to the Work Letter attached as EXHIBIT C.
2.5 SUBSTANTIAL COMPLETION. Landlord shall notify Tenant in writing at least
five (5) Business Days in advance of the estimated date of Substantial
Completion. If Tenant believes that Substantial Completion has not
occurred, Tenant shall notify Landlord in writing of its objections within
ten (10) Business Days after its receipt of the Landlord's notice
described in the preceding sentence. Landlord shall have a reasonable time
after its receipt of Tenant's notice in which to take such action as may
be necessary to achieve Substantial Completion, and shall notify Tenant in
writing when such has been completed. Taking of possession by Tenant shall
establish the date of Substantial Completion as specified in the
definition of that term and the establishment of such fact upon the taking
of possession shall occur even if Tenant disputes whether Substantial
Completion has occurred or attempts to condition or qualify the taking of
possession. Such taking of possession shall further establish that the
Base Building is in good and
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satisfactory condition when possession was so taken. Tenant acknowledges
that no representations as to the condition of the Premises or Base
Building have been made by Landlord, unless such are expressly set forth
in this Lease. In the event of any dispute as to whether Substantial
Completion has occurred, the certificate of Landlord's general contractor
shall be conclusive, except that any delay in receipt of such certificate
or in Substantial Completion which is caused by Tenant or Tenant's Agents
shall be charged to Tenant in the amount of the daily Base Rent multiplied
by the number of days of such delays. If on the date of Substantial
Completion, Punch List Work remains to be completed, Landlord and Tenant
shall agree on such Punch List Work and Landlord will diligently complete
such Punch List Work. In no event shall Tenant's refusal or failure to
agree on the nature and extent of Punch List Work or the existence of
items of Punch List Work delay or postpone the occurrence of the date of
Substantial Completion or the Commencement Date. If the estimated date of
Substantial Completion changes at any time after Landlord has given notice
pursuant to this Paragraph, then Landlord shall give at least five (5)
Business Days advance notice of the new estimated date of Substantial
Completion.
If Substantial Completion has not occurred on or before October 1,
2000 (the "First Deadline Date"), Tenant shall have the right, as its sole
remedy, to one (1) day of Base Rent abatement, commencing upon the
Commencement Date, for each day that the date of Substantial Completion
extends beyond the First Deadline Date; provided however, that,
notwithstanding anything to the contrary contained in this Lease, in no
event shall Tenant receive more than sixty (60) days of Base Rent
abatement pursuant to this Section 2.5, and the initial Lease Term shall
be extended one (1) day for each day of Base Rent abatement that Tenant
receives pursuant to this Section 2.5. Notwithstanding anything to the
contrary contained in this Lease, the First Deadline Date shall be
extended for any delays in Substantial Completion caused by any acts or
omissions of Tenant or Tenant's Agents, force majeure event (as set forth
in Section 6.8 below) or governmental delay.
If Substantial Completion has not occurred on or before December 31,
2000 (the "Second Deadline Date"), Tenant shall have the right, as its
sole remedy, to terminate this Lease by notifying Landlord in writing of
such election within five (5) Business Days after the Second Deadline
Date, but prior to Substantial Completion. In the event of any such
termination, neither Landlord nor Tenant shall have any rights,
liabilities or obligations accruing under the Lease after the effective
date of termination, except for such rights and liabilities which, by the
terms of this Lease or at law, are obligations of the Tenant or Landlord
which expressly survive the expiration of the Lease, and any prepaid
amount that has not been properly applied by Landlord shall be promptly
returned to Tenant. Notwithstanding anything to the contrary contained in
this Lease, the Second Deadline Date shall be extended for any delays in
Substantial Completion caused by any acts or omissions of Tenant or
Tenant's Agents, force majeure event (as set forth in Section 6.8 below)
or governmental delay; provided however, that the Second Deadline Date
shall not be extended as a result of any failure to enter into the Edison
Lease, as set forth in the immediately following paragraph.
Landlord hereby represents and warrants to Tenant that the failure
of Landlord to enter into either the Edison Lease or the side yard
agreement to be executed in connection with the Edison Lease (the "Yard
Agreement") shall not in and of itself preclude the issuance of the
certificate of occupancy, or the equivalent sign-off by the appropriate
building inspector, with respect to the Premises. In the event that after
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Substantial Completion, any failure to enter into either the Edison Lease
or the Yard Agreement unconditionally in and of itself precludes the
issuance of the certificate of occupancy, or the equivalent sign-off by
the appropriate building inspector, with respect to the Premises (the
"Edison Completion Failure"), then Tenant may terminate this Lease within
ten (10) Business Days after either Landlord or Tenant notifies the other
of the Edison Completion Failure.
2.6 TENANT'S CONTRIBUTION TO TENANT IMPROVEMENT COSTS. If the cost of the
Tenant Improvements exceeds the Tenant Improvement Allowance and Excess
Allowance, if any, Tenant shall pay to Landlord such excess in accordance
with the terms of the Work Letter Agreement attached hereto as EXHIBIT C.
All Tenant Improvements, regardless of which party constructed them, shall
become the property of Landlord and shall remain upon and be surrendered
with the Premises upon the expiration or earlier termination of this
Lease; PROVIDED THAT, at Landlord's election and upon notice to Tenant,
Tenant shall be required to remove all or any portion of the Tenant
Improvements upon the expiration or earlier termination of this Lease.
2.7 CONDITION OF PREMISES "AS-IS". Subject to the performance by Landlord of
its obligations to perform (or cause to be performed) the Shell Work in
accordance with the Work Letter Agreement, Tenant hereby agrees that the
Premises shall be taken "as is", "with all faults", without any
representations or warranties, and Tenant hereby agrees and warrants that
it has investigated and inspected the condition of the Premises and the
suitability of same for Tenant's purposes, and Tenant does hereby waive
and disclaim any objection to, cause of action based upon, or claim that
its obligations hereunder should be reduced or limited because of the
condition of the Premises or the Base Building or the suitability of same
for Tenant's purposes. Tenant acknowledges that neither Landlord nor any
agent nor any employee of Landlord has made any representations or
warranty with respect to the Premises or the Base Building or with respect
to the suitability of either for the conduct of Tenant's business, and
Tenant expressly warrants and represents that Tenant has relied solely on
its own investigation and inspection of the Premises and the Base Building
in its decision to enter into this Lease and let the Premises in an "as
is" condition. The taking of possession of the Premises by Tenant shall
conclusively establish that the Premises and the Base Building were at
such time in satisfactory condition.
2.8 MEMORANDUM OF COMMENCEMENT DATE. At Landlord's election and request,
Tenant shall execute a Memorandum of Commencement Date in the form
attached as EXHIBIT D. In no event shall Tenant record this Lease or the
Memorandum of Commencement Date; provided however, that Tenant may record,
at its sole cost and expense, a short form Memorandum of this Lease,
provided that Tenant shall simultaneously deliver to Landlord a
termination of such Memorandum, in recordable form, executed by Tenant, in
form and content satisfactory to Landlord, which termination shall be held
in trust by Landlord and may be recorded by Landlord, at Tenant's expense,
on or after the expiration or earlier termination of the Lease.
2.9 USE AND CONDUCT OF BUSINESS. The Premises are to be used only for the
Permitted Uses, and for no other business or purpose without the prior
consent of Landlord. Landlord makes no representation or warranty as to
the suitability of the Premises for Tenant's intended use. Tenant shall,
at its own cost and expense, obtain and maintain any and all licenses,
permits, and approvals necessary or appropriate for its use, occupation
and operation of the Premises. Tenant's inability to obtain or maintain
any such license, permit or approval necessary or appropriate for its use,
occupation or
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operation of the Premises shall not relieve it of its obligations under
this Lease, including the obligation to pay Base Rent and Additional Rent.
No act shall be done in or about the Premises or Project that is unlawful
or that will increase the existing rate of insurance on any or all of the
Land or Building or Project. Tenant shall not commit or allow to be
committed or exist: (a) any waste upon the Premises, (b) any public or
private nuisance, or (c) any act or condition which may disturb the quiet
enjoyment of any other tenant in the Building, or in any other building
located within the Project, violate any of Landlord's contracts affecting
any or all of the Land or Building or Project (provided that such
contracts do not materially and unreasonably interfere with Tenant's
Permitted Use), create or contribute to any work stoppage, strike,
picketing, labor disruption or dispute, interfere in any way with the
business of Landlord or any other tenant in the Project or with the rights
or privileges of any contractors, subcontractors, licensees, agents,
concessionaires, subtenants, servants, employees, customers, guests,
invitees or visitors or any other persons lawfully in and upon the Land or
Building or Project, or causes any impairment or reduction of the good
will or reputation of the Land or Building or Project. Tenant shall not,
without the prior consent of Landlord, use any apparatus, machinery,
device or equipment in or about the Premises which will cause any
substantial noise or vibration or any increase in the normal consumption
level of electric power. If any of Tenant's apparatus, machinery,
equipment or devices should disturb the quiet enjoyment of any other
tenant in the Building or Project, then Tenant shall provide, at its sole
cost and expense, adequate insulation or take other such reasonable
action, including removing such apparatus, machinery, equipment or
devices, as may be necessary to eliminate the disturbance.
2.10 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS AND RULES AND REGULATIONS.
Tenant shall comply with all Governmental Requirements relating to the
Premises (including, without limitation, Tenant's use, occupancy and
operation thereof) and all other covenants, conditions and restrictions
and other matters of record, and Tenant shall observe such reasonable
rules and regulations as may be adopted and delivered to Tenant by
Landlord from time to time for the safety, care and cleanliness of the
Building or Project, and for the preservation of good order in the
Building and Project, including the Rules and Regulations attached to this
Lease as EXHIBIT E.
2.11 OPTION TO RENEW.
2.11.1 RENEWAL OPTIONS. Provided Tenant is not in material default under
this Lease beyond applicable notice and cure periods, and subject to the
terms and conditions of this section 2.11, Tenant shall have (a) one (1)
option to renew (the "FIRST OPTION TO RENEW") the term of the Lease with
respect to the entire Premises for a period of thirty-three (33) months
(the "FIRST OPTION TERM"), and (b) one (1) option to renew (the "SECOND
OPTION TO RENEW") the term of the Lease with respect to the entire
Premises for an additional period of sixty (60) months (the "SECOND OPTION
TERM"). If Tenant does not timely and properly exercise the First Option
to Renew, then the Second Option to Renew shall immediately become null
and void with no further force and effect. Except as set forth in this
section 2.11, all terms and conditions shall remain the same during the
Option Term. Monthly Base Rent during the First Option Term shall be as
follows:
First Option Term Months Monthly Base Rent
------------------------ -----------------
1-29 $89,645.18
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30-33 $90,316.77
Monthly Base Rent during the Second Option Term, if any, shall be the
greater of (i) the then Fair Market Rental Rate, and (ii) the Monthly Base
Rent for the last month of the immediately preceding First Option Term.
The Annual Base Rent for each Option Term shall be equal to twelve (12)
times the adjusted Monthly Base Rent. "Fair Market Rental Rate" shall mean
the net effective market rental then being offered and accepted for
comparable space and location in the city of Ontario, California, in first
class industrial buildings comparable in location and condition to the
Building, all as reasonably determined by Landlord, computed as described
in the remainder of this paragraph. The net effective market rental shall
equal the arithmetic average of the rental rate over the term of such
comparable lease less any customary concessions (including tenant
improvement allowances), provided that the value of the then existing
Tenant Improvements shall be taken into account.
2.11.2 NOTICE OF EXERCISE. Tenant shall give Landlord written notice of
its unconditional exercise an Option to Renew at least two hundred seventy
(270) days but not more than three hundred sixty (360) days prior to the
expiration of the immediately preceding term of the Lease. If Tenant fails
to notify Landlord in writing of its unconditional exercise its Option to
Renew as set forth in the preceding paragraph, the Option to Renew shall
terminate, and Landlord shall be free to enter into a lease with a third
party. Within twenty (20) days after Landlord receives the notice
described in the previous sentence with respect to the Second Option Term,
Landlord will provide Tenant with Landlord's determination of the Fair
Market Rental Rate for the Second Option Term. If such determination is
based upon the Fair Market Rental Rate, Tenant shall have thirty (30) days
from Landlord's notification of the proposed Base Rent to accept
Landlord's determination of Base Rent for the Second Option Term or
provide its own determination of Fair Market Rental Rate for Landlord's
consideration accompanied by market information on which Tenant based its
determination.
2.11.3 DISPUTE REGARDING FAIR MARKET RENTAL RATE. If Landlord and Tenant
are unable to agree on the Fair Market Rental Rate for the Second Option
Term using their best good faith efforts within thirty (30) days from
Landlord's notification of the proposed Base Rent, Landlord shall, no more
than ten (10) days thereafter, select an independent M.A.I. (certified in
the State of California) real estate appraiser, or real estate broker with
at least seven (7) years experience in the metropolitan area of the
Ontario, California industrial real estate market, who shall prepare a
written appraisal or market report of the Fair Market Rental Rate using
the assumptions described in paragraph 2.11.1. The report shall be
completed and delivered to Tenant and Landlord within thirty (30) days
from the date Landlord selects the appraiser or real estate broker. Such
appraiser's/broker's determination of Fair Market Rental Rate for the
Second Option Term shall be determinative unless Tenant disputes it as
provided in the next sentence. If Tenant disputes such report Tenant shall
within five (5) days following delivery of the report, deliver to Landlord
notice (a) that Tenant disputes such report, and (b) of the identity of
another appraiser or real estate broker selected by Tenant meeting the
qualifications set forth in this paragraph. The appraiser/broker selected
by Tenant shall submit his report of the Fair Market Rental Rate for the
Second Option Term using the assumptions described in paragraph 2.11.1
within twenty (20) days following the delivery of Tenant's notice to
Landlord disputing the initial report. If the two reports are within two
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and one-half percent (2.5%) of each other, the Fair Market Rental Rate for
the Second Option Term shall be that set forth in the report of Landlord's
appraiser/broker. If not, then within five (5) days after the delivery of
the second report, the two appraisers/brokers shall appoint a third
appraiser/broker meeting the qualifications set forth in this paragraph,
and the third appraiser/broker shall deliver his decision within ten (10)
days following his selection and acceptance of the appraisal assignment.
The third appraiser/broker shall be limited in authority to selecting, in
his opinion, which of the two earlier reports determinations best reflects
the Fair Market Rental Rate under the assumptions set forth in this
paragraph. The third appraiser/broker must choose one of the two earlier
reports, and, upon doing so, the third appraiser's/broker's determination
shall be the controlling determination of the Fair Market Rental Rate for
the Second Option Term. Each party shall pay the costs and fees of the
appraiser/broker it selected; if a third appraiser/broker is selected, the
party whose report is not selected to be the Fair Market Rental Rate by
said third appraiser/broker shall pay all of said third
appraiser's/broker's costs and fees.
2.11.4 CONDITIONS. The rights contained in this section may be exercised
only if the originally named Tenant (and not any assignee, sublessee, or
other transferee of Tenant's interest in this Lease) occupies more than
fifty percent (50%) of the Premises throughout the Lease, and more than
sixty percent (60%) of the Premises as of the date it exercises the Option
to Renew in accordance with the terms of this section.
SECTION 3: BASE RENT, ADDITIONAL RENT AND OTHER SUMS PAYABLE UNDER LEASE
3.1 PAYMENT OF RENTAL. Tenant agrees to pay Base Rent, Additional Rent and any
other sum due under this Lease to Landlord without demand, deduction,
credit, adjustment or offset of any kind or nature, in lawful money of the
United States when due under this Lease, at the offices of Manager at
Manager's Address, or to such other party or at such other place as
Landlord may from time to time designate in writing.
3.2 BASE RENT. (a) On execution of this Lease, Tenant shall pay to Landlord
the amount specified in the definition of Prepaid Rent for the month
specified in the definition of that term. Tenant agrees to pay Base Rent
to Landlord without demand, in advance on or before the first day of each
calendar month of the Lease Term. Base Rent for any partial month at the
beginning or end of the Lease Term shall be prorated. Base Rent for any
partial month at the beginning of the Lease Term shall be paid by Tenant
on the Commencement Date.
(b) Provided Tenant is not in default under any of the terms, covenants
and conditions of the Lease, Tenant shall be credited with the payment of
Monthly Base Rent with respect to the Premises for the second (2nd), third
(3rd) and fourth (4th) months of the Lease Term. No such Base Rent credit
shall reduce the amount of Additional Rent and other charges which is
otherwise payable by Tenant under this Lease. Tenant understands and
agrees that the foregoing rental credit is conditioned upon Tenant's not
having wrongfully terminated this Lease or Landlord not having terminated
this Lease by reason of Tenant's default under this Lease (each such
termination, a "Trigger Event"). Accordingly, (i) upon the occurrence of
any Trigger Event during any portion of the rental credit period, the
foregoing rental credit shall be null and void, and all of the Base Rent
which, in the absence of such rental credit, would have been payable
during such period up to the date of the Trigger Event shall become
immediately due and payable by Tenant
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and Tenant shall pay Base Rent during the remainder of such rental credit
period as such Base Rent would have become due and payable in the absence
of such rental credit provision, and (ii) upon the occurrence of any
Trigger Event after the rental credit period, all Base Rent which would
have been payable during such rental credit period in the absence of such
rental credit shall become immediately due and payable by Tenant.
3.3 SECURITY DEPOSIT. On execution of this Lease, Tenant shall pay to Landlord
the sum specified in the definition of the term Security Deposit, as
security for the full and faithful payment of all sums due under this
Lease and the full and faithful performance of every covenant and
condition of this Lease to be performed by Tenant. If Tenant shall breach
or default with respect to any payment obligation or other covenant or
condition of this Lease, Landlord may apply all or any part of the
Security Deposit to the payment of any sum in default or any damage
suffered by Landlord as a result of such breach or default, and in such
event, Tenant shall, upon demand by Landlord, deposit with Landlord the
amount so applied so that Landlord shall have the full Security Deposit on
hand at all times during the Lease Term. In the event Tenant defaults,
beyond applicable notice and cure periods, on its obligations to pay Base
Rent, Additional Rent or any other sum under this Lease on more than two
occasions during any twelve (12) month period, Landlord may, at any time
thereafter require an increase in the Security Deposit by an amount equal
to one hundred percent (100%) of the amount specified in the definition of
the term Security Deposit and Tenant shall immediately deposit such
additional amount with Landlord upon Landlord's demand. Following such
increase, the definition of the term Security Deposit shall refer to the
amount of the Security Deposit prior to the increase plus the increased
amount. The remedy of increasing the Security Deposits for Tenant's
multiple defaults shall be in addition to and not a substitute for any of
Landlord's other rights and remedies under this Lease or applicable Law.
Additionally, Landlord's use or application of all or any portion of the
Security Deposit shall not impair any other rights or remedies provided
under this Lease or under applicable law and shall not be construed as a
payment of liquidated damages. If Tenant shall have fully complied with
all of the covenants and conditions of this Lease, the remaining Security
Deposit shall be repaid to Tenant, without interest, within thirty (30)
Business Days after the expiration of this Lease. Tenant may not mortgage,
assign, transfer or encumber the Security Deposit and any such act on the
part of Tenant shall be without force or effect. In the event any
bankruptcy, insolvency, reorganization or other creditor-debtor
proceedings shall be instituted by or against Tenant, the Security Deposit
shall be deemed to be applied first to the payment of Base Rent,
Additional Rent and all other sums payable under this Lease to Landlord
for all periods prior to the institution of such proceedings and the
balance, if any, may be retained by Landlord and applied against
Landlord's damages. In the event of a sale or transfer of Landlord's
estate or interest in the Land and Building, Landlord shall have the right
to transfer the Security Deposit to the vendee or the transferee, and
Landlord shall be considered released by Tenant from all liability for the
return of the Security Deposit. Tenant shall look solely to the transferee
for the return of the Security Deposit, and it is agreed that all of the
foregoing shall apply to every transfer or assignment made of the Security
Deposit to a new transferee. No mortgagee or purchaser of any or all of
the Building at any foreclosure proceeding brought under the provisions of
any mortgage shall (regardless of whether the Lease is at the time in
question subordinated to the lien of any mortgage) be liable to Tenant or
any other person for any or all of such sum (or any other or additional
security deposit or other payment made by Tenant under the provisions of
this Lease), unless Landlord has
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actually delivered it in cash to such mortgagee or purchaser, as the case
may be. In the event of any rightful and permitted assignment of Tenant's
interest in this Lease, the Security Deposit shall be deemed to be held by
Landlord as a deposit made by the assignee, and Landlord shall have no
further liability to the assignor with respect to the return or the
Security Deposit.
No right or remedy available to Landlord in this Lease shall
preclude or extinguish any other right to which Landlord may be entitled.
It is understood that if Tenant fails to perform its obligations and to
take possession of the Premises as provided in this Lease, the Prepaid
Rent and the Security Deposit shall not be deemed liquidated damages.
Landlord may apply such sums to reduce Landlord's damages and such
application of funds shall not preclude Landlord from recovering from
Tenant all additional damages incurred by Landlord.
3.4 ADDITIONAL RENT. Definitions of certain terms used in this paragraph are
set forth in subparagraph 3.4.5. Tenant agrees to pay to Landlord, as
additional rent as computed in this paragraph (individually and
collectively the "Additional Rent"), all Operating Costs Allocable to the
Premises. Tenant acknowledges that this is intended to be a triple net
lease.
3.4.1 RENTAL ADJUSTMENT FOR ESTIMATED OPERATING COSTS. Landlord shall
furnish Tenant a written statement of Estimated Operating Costs
Allocable to the Premises for each Year and the amount payable
monthly by Tenant for such costs shall be computed as follows:
one-twelfth (1/12) of the amount of Estimated Operating Costs
Allocable to the Premises shall be Additional Rent and shall be
paid monthly by Tenant for each month during such Year after the
Commencement Date. If such written statement is furnished after
the commencement of the Year (or as to the first Year during the
Lease Term, after the Commencement Date), Tenant shall also make a
retroactive lump-sum payment to Landlord equal to the monthly
payment amount multiplied by the number of months during the Year
(or as to the first Year during the Lease Term, after the
Commencement Date) for which no payment was paid. Notwithstanding
the foregoing, Landlord reserves the right, from time to time
during each Year, to revise the Estimated Operating Costs
Allocable to the Premises and upon advance written notice to
Tenant of such revision, Tenant shall adjust its payment to
Landlord under this subparagraph 3.4.1 accordingly.
3.4.2 ACTUAL COSTS. After the close of each Year, Landlord shall deliver
to Tenant a written statement setting forth the Operating Costs
Allocable to the Premises during the preceding Year. If such
Operating Costs Allocable to the Premises for any Year exceed the
Estimated Operating Costs Allocable to the Premises paid by Tenant
to Landlord pursuant to subparagraph 3.4.1 for such Year, Tenant
shall pay the amount of such excess to Landlord within twenty (20)
Business Days after receipt of such statement by Tenant. If such
statement shows the Operating Costs Allocable to the Premises to
be less than the Estimated Operating Costs Allocable to the
Premises paid by Tenant to Landlord pursuant to subparagraph
3.4.1, then the amount of such overpayment shall be paid by
Landlord to Tenant within twenty (20) Business Days following the
date of such statement or, at Landlord's option, shall be credited
towards the installment(s) of Additional Rent next coming due from
Tenant.
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3.4.3 DETERMINATION OF OPERATING COSTS. The determination of Operating
Costs Allocable to the Premises shall be reasonably made by
Landlord.
3.4.4 END OF TERM. If this Lease shall terminate on a day other than the
last day of a Year, (a) Landlord shall estimate the Operating
Costs Allocable to the Premises for such Year predicated on the
most recent reliable information available to Landlord; (b) the
amount determined under clause (a) of this sentence shall be
prorated by multiplying such amount by a fraction, the numerator
of which is the number of days within the Lease Term in such Year
and the denominator of which is 360; (c) if the clause (b) amount
exceeds the Estimated Operating Costs Allocable to the Premises
paid by Tenant for the last Year in the Lease Term, then Tenant
shall pay the excess to Landlord within ten (10) Business Days
after Landlord's delivery to Tenant of a statement for such
excess; and (d) if the Estimated Operating Costs Allocable to the
Premises paid by Tenant for the last Year in the Lease Term
exceeds the clause (b) amount, then Landlord shall refund to
Tenant the excess within the ten (10) Business Day period
described in clause (c) if Tenant is not then in default of any of
its obligations under this Lease. Landlord's and Tenant's
obligations under this paragraph shall survive the expiration or
other termination of this Lease.
3.4.5 DEFINITIONS. Each underlined term in this subparagraph shall have
the meaning set forth next to that underlined term:
(a) ESTIMATED OPERATING COSTS ALLOCABLE TO THE PREMISES.
Landlord's estimate of Operating Costs Allocable to the Premises
for a Year to be given by Landlord to Tenant pursuant to
subparagraph 3.4.1.
(b) OPERATING COSTS. All commercially reasonable expenses paid or
incurred by Landlord in connection with the ownership, operation,
maintenance and/or repair of: (i) the Building; (ii) the Project,
provided that for purposes of this Lease, such expenses shall be
limited to that amount of operating costs for the entire Project
which is fairly and equitably allocated by Landlord, in its
absolute discretion, to the Building; and (iii) the personal
property used in conjunction with such maintenance, operation,
ownership and repair, including, without limitation, all expenses
paid or incurred by Landlord for: (a) utilities, including
electricity, water, gas, sewers, fire sprinkler charges, refuse
collection, telephone charges, cable television or other
electronic or microwave signal reception, steam, heat, cooling or
any other service which is now or in the future considered a
utility and which are not payable directly by tenants in the
Building; (b) supplies; (c) cleaning and janitorial services
(including window washing) landscaping and landscaping maintenance
(including irrigating, trimming, mowing, fertilizing, seeding and
replacing plants), snow removal and other services; (d) security
services, if any; (e) insurance; (f) management fees; (g) Property
Taxes, tax consultant fees and expenses, and costs of appeals of
any Property Taxes; (h) services of independent contractors; (i)
compensation (including employment taxes and fringe benefits) of
all persons who perform duties in connection with any service,
repair, maintenance, replacement or improvement or other work
included in this subparagraph; (j) license, permit and inspection
fees; (k) assessments and special assessments due to deed
restrictions, declarations or owners associations or other means
of allocating costs of a larger tract of which the Land is a part;
(l) rental of any machinery or equipment; (m) audit fees and
accounting services related to the Building, and
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charges for the computation of the rents and charges payable by
tenants in the Building (but only to the extent the cost of such
fees and services are in addition to the cost of the management
fee); (n) the cost of improvements, repairs or replacements; (o)
maintenance and service contracts; (p) legal fees and other
expenses of legal or other dispute resolution proceedings; (q)
maintenance and repair of the roof and roof membranes, (r) costs
incurred by Landlord for compliance with Access Laws, as set forth
in the paragraph entitled "Access Laws"; (s) elevator service and
repair, if any; (t) business taxes and license fees; (u)
maintenance and repair of the HVAC system in the Building and
Project; (v) ground rent payable to Edison (defined below) or its
successors pursuant to the Edison Lease (defined below); and (w)
any other expense or charge which in accordance with generally
accepted accounting and management principles would be considered
an expense of maintaining, operating, owning or repairing the
Building and the Project. Without limiting the foregoing,
Operating Costs shall include replacement of roofs and roof
membranes; exterior painting; parking area resurfacing, resealing
and restriping parking areas and driveways; upgrading of the HVAC
systems in the Building, and other capital improvements to the
Building or to the Project if such costs set forth earlier in this
sentence are to be equitably allocated as provided above in this
subparagraph; PROVIDED THAT, such capital improvements, whether
installed before or after the Commencement Date, shall be
amortized with market interest over their estimated useful lives
as determined by Landlord and only the amortization installments
and interest attributable to the Lease Term shall be an Operating
Cost under this Lease.
Operating Costs shall not include any of the following:
interest and amortization of funds borrowed by Landlord for items
other than capital improvements; leasing commissions and
advertising, promotional and space planning expenses incurred in
procuring tenants; salaries, wages, or other compensation paid to
officers or executives of Landlord in their capacities as officers
and executives; any cost or expense related to the testing for,
removal, transportation, or storage of Hazardous Substances from
the Building, except to the extent caused by or required as a
result of the acts or omissions of Tenant or Tenant's Agents;
alterations, additions or improvements made to comply with any
Governmental Requirements in effect as of the date of this Lease,
other than those required as a result of the acts or omissions of
Tenant or Tenant's Agents or triggered by the Tenant Improvements
or Tenant's particular use of the Premises; any and all costs of
any kind or character for any injuries, damage and repairs
necessitated by the negligence or willful misconduct of Landlord
or Landlord's employees, contractors or agents; depreciation of
the Building and other improvements located on the Project; and
interest, penalties or other costs arising out of Landlord's
failure to make timely payment of its obligations.
(c) OPERATING COSTS ALLOCABLE TO THE PREMISES. The product of
Tenant's Pro Rata Share times Operating Costs.
3.4.6 JANITORIAL SERVICES. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall contract directly with a
janitorial service and shall pay for all janitorial services used
on or for the Premises.
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3.4.7 ADDITIONAL RENT. Any sums payable under this Lease pursuant to
this paragraph or otherwise shall be Additional Rent and, in the
event of nonpayment of such sums, Landlord shall have the same
rights and remedies with respect to such nonpayment as it has with
respect to nonpayment of the Base Rent due under this Lease.
3.4.8 OPERATING COST AUDIT. Landlord shall maintain records concerning
estimated and actual Operating Costs Allocable to the Premises for
no less than twelve (12) months following the period covered by
the statement or statements furnished Tenant, after which time
Landlord may dispose of such records. Provided that Tenant is not
then in default of its obligation to pay Base Rent, Additional
Rent or other payments required to be made by it under this Lease
and provided that Tenant is not otherwise in default under this
Lease, Tenant may, at Tenant's sole cost and expense, cause a
Qualified Person (as defined below) to inspect Landlord's records.
Such inspection, if any, shall be conducted no more than once each
Year, during Landlord's normal business hours within sixty (60)
Business Days after receipt of Landlord's written statement of
Operating Costs Allocable to the Premises for the previous year,
and upon Tenant first furnishing Landlord written notice of the
inspection, if any, at least fifteen (15) Business Days in advance
of such inspection. Any errors disclosed by the review shall be
promptly corrected by Landlord; provided, however, that if
Landlord disagrees with any such claimed errors, Landlord shall
have the right to cause another review to be made by an auditor of
Landlord's choice. In the event the results of the review of
records (taking into account, if applicable, the results of any
additional review caused by Landlord) reveal that Tenant has
overpaid obligations for a preceding period, the amount of such
overpayment shall be credited against Tenant's subsequent
installment of Base Rent, Additional Rent or other payments due to
Landlord under the Lease. In the event that such results show that
Tenant has underpaid its obligations for a preceding period, the
amount of such underpayment shall be paid by Tenant to Landlord
with the next succeeding installment obligation of estimated
Operating Costs Allocable to the Premises. If the actual Operating
Costs Allocable to the Premises for any given Year were improperly
computed and if the actual Operating Costs Allocable to the
Premises are overstated by more than 5%, Landlord shall reimburse
Tenant for the cost of its audit. A "QUALIFIED PERSON" means an
internal auditor of Tenant or an accountant or other person
experienced in accounting for income and expenses of industrial
projects.
3.5 UTILITIES. Landlord shall have the right from time to time to select the
company or companies providing electricity, gas, fuel, local telephone,
telecommunication and any other utility services to the Building. Tenant
shall contract directly and pay for all water, gas, heat, light, power,
telephone, telecommunications, sewer, fire sprinkler charges and other
utilities used on or from the Premises together with any taxes, penalties,
surcharges or similar charges relating to such utilities. If any such
service is not separately metered to the Premises, the cost therefor shall
be an Operating Cost under this Lease. If Tenant desires to use the
services of a provider of local telephone or telecommunication services
whose equipment is not then servicing the Building, no such provider shall
be permitted to install its lines or other equipment within the Building
without the prior written consent of Landlord.
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3.6 HOLDOVER. If Landlord agrees in writing that Tenant may hold over after
the expiration or earlier termination of this Lease, unless the parties
hereto otherwise agree in writing as to the terms of such holding over,
the holdover tenancy shall be subject to termination by Landlord or Tenant
at any time upon not less than thirty (30) days' prior written notice. If
Tenant holds over without the consent of Landlord, the same shall be a
tenancy at will terminable at any time, and Tenant shall be liable to
Landlord for, and Tenant shall indemnify, protect, defend and hold
Landlord harmless from and against, any damages, liabilities, losses,
costs, expenses or claims suffered or caused by such holdover, including
damages and costs related to any successor tenant of the Premises to whom
Landlord could not deliver possession of the Premises when promised.
During the first two (2) months of any holdover tenancy, whether with or
without consent, Tenant shall pay to Landlord from time to time upon
demand, an amount equal to one hundred twenty five percent (125%) of the
then applicable Base Rent, plus all Additional Rent and other sums payable
under this Lease, and be bound by all the terms, covenants and conditions
specified in this Lease, as so far applicable. During all subsequent
months of any holdover tenancy, whether with or without consent, Tenant
shall pay to Landlord from time to time upon demand, an amount equal to
one hundred fifty percent (150%) of the then applicable Base Rent, plus
all Additional Rent and other sums payable under this Lease, and be bound
by all the terms, covenants and conditions specified in this Lease, as so
far applicable. No holding over by Tenant, whether with or without consent
of Landlord, shall operate to extend this Lease. The preceding provisions
of this Paragraph 3.6 shall not be construed as Landlord's consent to any
holding over by Tenant.
3.7 LATE CHARGE. If Tenant fails to make any payment of Base Rent, Additional
Rent or other amount within five (5) days from when due under this Lease,
a late charge is immediately due and payable by Tenant equal to five
percent (5%) of the amount of any such payment. Landlord and Tenant agree
that this charge compensates Landlord for the administrative costs caused
by the delinquency. The parties agree that Landlord's damage would be
difficult to compute and the amount stated in this paragraph represents a
reasonable estimate of such damage. Assessment or payment of the late
charge contemplated in this paragraph shall not excuse or cure any Event
of Default or breach by Tenant under this Lease or impair any other right
or remedy provided under this Lease or under law.
3.8 DEFAULT RATE. Any Base Rent, Additional Rent or other sum payable under
this Lease which is not paid when due shall bear interest at a rate equal
to the lesser of: (a) the published prime rate of Riggs Bank N.A., or such
other national banking institution designated by Landlord if such bank
ceases to publish a prime rate (the "PRIME RATE"), then in effect, plus
two (2) percentage points, or (b) the maximum rate of interest per annum
permitted by applicable law (the "DEFAULT RATE"), but the payment of such
interest shall not excuse or cure any Event of Default or breach by Tenant
under this Lease or impair any other right or remedy provided under this
Lease or under law.
SECTION 4: GENERAL PROVISIONS
4.1 MAINTENANCE AND REPAIR BY LANDLORD. Subject to the paragraphs captioned
"DAMAGE OR DESTRUCTION" and "CONDEMNATION", Landlord shall maintain the
public and common areas of the Project in reasonably good order and
condition, except ordinary wear and tear, and except for damage occasioned
by the act or omission of Tenant or Tenant's
16
Agents which shall be paid for entirely by Tenant upon written demand by
Landlord. In the event any or all of the Project becomes in need of
maintenance or repair which Landlord is required to make under this Lease,
and Landlord does not otherwise have notice of same, then Tenant shall
immediately give written notice to Landlord, and Landlord shall commence
such maintenance or repairs within a commercially reasonable time after
Landlord's receipt of such notice. Tenant hereby waives the benefit of
Sections 1941 and 1942 of the California Civil Code and any other statute
providing a right to make repairs and deduct the cost thereof from the
Rent. Tenant waives any right to terminate this Lease or offset or abate
Rent by reason of any failure of Landlord to make repairs to the Premises.
4.2 MAINTENANCE AND REPAIR BY TENANT. Except as is expressly set forth as
Landlord's responsibility pursuant to the paragraph captioned "MAINTENANCE
AND REPAIR BY LANDLORD," Tenant shall at Tenant's sole cost and expense
keep and maintain all portions of the Premises in good condition and
repair, including, without limitation, the structure of the Premises,
painting, cleaning of all exterior glass, plumbing and utility fixtures
and installations, carpets and floor coverings, all wall surfaces and
coverings including tile and paneling, replacement of all broken windows
(including without limitation any exterior windows), exterior and interior
doors, roof penetrations and membranes in connection with any Tenant
installations on the roof in accordance with Section 4.4 below, including
satellite dishes, light bulb replacement and interior preventative
maintenance. If Tenant fails to maintain or repair the Premises in
accordance with this paragraph, and there is an imminent threat of damage
to person or property (as reasonably determined by Landlord), then
Landlord may, but shall not be required to, enter the Premises to perform
such maintenance or repair at Tenant's sole cost and expense. Tenant shall
pay to Landlord the cost of such maintenance or repair plus a ten percent
(10%) administration fee, within twenty (20) Business Days of written
demand from Landlord. Tenant shall, at its own cost and expense, enter
into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all hot water, heating and air
conditioning systems and equipment located within or dedicated solely to
the Premises. The maintenance contractor and the contract must be
reasonably approved in advance by Landlord. The service contracts shall
include all services recommended by the equipment manufacturer within the
operation/maintenance manual and shall become effective (and a copy
thereof delivered to Landlord) within forty-five (45) days following the
date Tenant takes possession of the Premises.
4.3 COMMON AREAS/SECURITY. The common areas of the Project shall be subject to
Landlord's sole management and control. Without limiting the generality of
the immediately preceding sentence, Landlord reserves the exclusive right
as it deems necessary or desirable to install, construct, remove, maintain
and operate lighting systems, facilities, improvements, equipment and
signs on, in or to all parts of the common areas; change the number, size,
height, layout, or locations of walks, driveways and truckways or parking
areas now or later forming a part of the Land or Project; make alterations
or additions to the Building or Project or common area; close temporarily
all or any portion of the common areas to make repairs, changes or to
avoid public dedication; grant easements to which the Land will be
subject, replat, subdivide, or make other changes to the Land; place,
relocate and operate utility lines through, over or under the Land and
Building and Project; and use or permit the use of all or any portion of
the roofs of the Building; provided, however, that access to the Premises
and Tenant's ability to use the Premises for its normal business purposes
shall not be materially and adversely
17
affected thereby. Landlord has no duty or obligation to provide any
security services in, on or around the Premises, Land or Project, and
under no circumstances shall Landlord be responsible for, and Tenant
waives any rights with respect to, Landlord providing security or other
protection for Tenant or Tenant's Agents or property in, on or about the
Premises, Land or Project. Subject to Section 4.4 below, Tenant may, at
its sole cost and expense, install, establish and maintain security
services within the Premises; PROVIDED THAT such security services,
including, without limitation, any apparatus, facilities, equipment or
people utilized in connection with the provision of such security
services, comply with the Governmental Requirements and shall not cause
the Building or the Project to be out of compliance with the Governmental
Requirements. Notwithstanding the foregoing, any such security services
installed, established or maintained by Tenant must not affect or impact
any portion of the Building, Land or the Project other than the Premises
and shall not in any way limit or interfere with Landlord's ability to
exercise its rights as provided in the paragraph captioned "ACCESS".
Tenant's rights under this subparagraph are subject to all the
obligations, limitations and requirements as set forth in the paragraphs
captioned "TENANT ALTERATIONS" and "TENANT'S WORK PERFORMANCE". Landlord
reserves the right to relocate parking areas and driveways and to build
additional improvements in the common areas so long as Tenant's Parking
Rights are maintained, and Tenant's access to the Building are not
materially and adversely affected thereby.
4.4 TENANT ALTERATIONS. Tenant shall not make any alterations, additions or
improvements in or to the Premises, or make changes to locks on doors, or
add, disturb or in any way change any floor covering, wall covering,
fixtures, plumbing or wiring (individually and collectively "TENANT
ALTERATIONS"), without first obtaining the consent of Landlord which may
not be unreasonably withheld or delayed, except that Landlord may withhold
its approval in its sole and absolute discretion if the Tenant Alterations
will affect, as determined by Landlord, the structure or exterior of the
Building, or the Building systems. Tenant shall deliver to Landlord full
and complete plans and specifications for any proposed Tenant Alterations
and, if consent by Landlord is given, all such work shall be performed at
Tenant's expense by Tenant. Tenant shall pay to Landlord all costs
incurred by Landlord for any architectural, engineering, supervisory
and/or legal services in connection with any Tenant Alterations including,
without limitation, Landlord's review of the plans and specifications for
any Tenant Alterations. Without limiting the generality of the foregoing,
Landlord may require Tenant, at Tenant's sole cost and expense, to obtain
and provide Landlord with proof of insurance coverage and a payment and
performance bond, in forms, amounts and by companies acceptable to
Landlord. Should Tenant make any Tenant Alterations without Landlord's
prior written consent, or without satisfaction of any conditions
established by Landlord, Landlord shall have the right, in addition to and
without limitation of any right or remedy Landlord may have under this
Lease, at law or in equity, to require Tenant to remove some or all of the
Tenant Alterations at Tenant's sole cost and expense and restore the
Premises to the same condition existing prior to undertaking the Tenant
Alterations. All Tenant Alterations to the Premises, other than trade
fixtures (such as computer systems, telephone and communication systems,
storage systems, specialized HVAC equipment installed by Tenant at its
sole expense and servicing only its computer room, cubicles and those
trade fixtures set forth on Exhibit "F" attached hereto), shall become the
property of Landlord and shall remain upon and be surrendered with the
Premises upon the expiration or earlier termination of this Lease;
provided, however, at Landlord's sole
18
election, Tenant shall be obligated, at its sole cost and expense, to
remove all (or such portion as Landlord shall designate) of the Tenant
Alterations and repair any damage resulting from such removal and return
the Premises to the same condition existing prior to the undertaking upon
the expiration or earlier termination of this Lease. Tenant shall have the
right, at the time it requests Landlord's consent and delivers all plans
and specifications to any Tenant Alteration (other than with respect to
trade fixtures, such as computer systems, telephone and communication
systems, storage systems, specialized HVAC equipment installed by Tenant
at its sole expense and servicing only its computer room, and cubicles,
which Landlord acknowledges remain Tenant's property to be removed upon
the expiration or earlier termination of the Lease) to make a written
request that Landlord notify Tenant whether Tenant shall be obligated to
remove the applicable Tenant Alteration at the end of the Lease Term, in
which event Tenant shall only be obligated to remove (i) those Tenant
Alterations that Landlord notified Tenant it must remove at the end of the
Lease Term at the same time of and in connection with Tenant's requested
approval of the Tenant Alterations, and (ii) those Tenant Alterations that
Tenant did not seek or did not obtain Landlord's written consent to leave
in place at the end of the Lease Term, and that Landlord requires Tenant
to remove. If Tenant fails to remove any such Tenant Alterations as
required by Landlord's consent, Landlord may do so and Tenant shall pay
the entire cost thereof to Landlord within ten (10) Business Days after
Tenant's receipt of Landlord's written demand therefor. Tenant shall
reimburse Landlord, upon receipt of demand therefor, for all out of pocket
costs and expenses incurred by Landlord during its review of Tenant's
plans and specifications (regardless of whether Landlord approves Tenant's
request) and Tenant's construction. Nothing contained in this paragraph or
the paragraph captioned "TENANT'S WORK PERFORMANCE" shall be deemed a
waiver of the provisions of the paragraph captioned "MECHANIC'S LIENS."
4.5 TENANT'S WORK PERFORMANCE. Any Tenant Alterations, and the Tenant
Improvements, to be performed by Tenant under this Lease shall be
performed by contractors employed by Tenant under one or more construction
contracts, in form and content approved in advance in writing by Landlord
(which approval shall be subject to Landlord's discretion and may include
a requirement by Landlord that the prime contractor and the respective
subcontractors of any tier: (a) be parties to, and bound by, a collective
bargaining agreement with a labor organization affiliated with the
Building and Construction Trades Council of the AFL CIO and (b) employ
only members of such labor organizations to perform work within their
respective jurisdictions). Tenant's contractors, workers and suppliers
shall work in harmony with and not interfere with workers or contractors
of Landlord or other tenants of Landlord. If Tenant's contractors, workers
or suppliers do, in the opinion of Landlord, cause such disharmony or
interference, Landlord's consent to the continuation of such work may be
withdrawn upon written notice to Tenant. All Tenant Alterations shall be
(1) completed in accordance with the plans and specifications approved by
Landlord; (2) completed in accordance with all Governmental Requirements;
(3) carried out promptly in a good and workmanlike manner; (4) of all new
materials; and (5) free of defect in materials and workmanship. Tenant
shall pay for all damage to the Premises, Building Land and Project caused
by Tenant or Tenant's Agents. Tenant shall indemnify, defend and hold
harmless Landlord and Landlord's Agents from any Claims arising as a
result of the Tenant Alterations or any defect in design, material or
workmanship of any Tenant Alterations.
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4.6 SURRENDER OF POSSESSION. Tenant shall, at the expiration or earlier
termination of this Lease, surrender and deliver the Premises to Landlord
in as good condition as when received by Tenant from Landlord or as later
improved, reasonable use and wear excepted, and free from all tenancies or
occupancies by any person.
4.7 REMOVAL OF PROPERTY. Upon expiration or earlier termination of this Lease,
Tenant may remove its personal property, office supplies and office
furniture and equipment if (a) such items are readily moveable and are not
attached to the Premises; (b) such removal is completed prior to the
expiration or earlier termination of this Lease; (c) Tenant is not in
material default of any covenant or condition of this Lease at the time of
such removal; and (d) Tenant immediately repairs all damage caused by or
resulting from such removal. All other property in the Premises and any
Tenant Alterations (including, wall-to-wall carpeting, paneling, wall
covering or lighting fixtures and apparatus) or any other article affixed
to the floor, walls, ceiling or any other part of the Premises, shall
become the property of Landlord and shall remain upon and be surrendered
with the Premises; provided, however, at Landlord's sole election, Tenant
shall be obligated, at its sole cost and expense, to remove all (or such
portion as Landlord shall designate) of the Tenant Alterations and all (or
such portion as Landlord shall designate) of the Tenant Improvements
constructed in the Premises, and repair any damage resulting from such
removal. Except as Landlord and Tenant may otherwise expressly agree,
Tenant waives all rights to any payment or compensation for such Tenant
Alterations. If Tenant shall fail to remove any of its property of any
nature from the Premises or Land at the expiration or earlier termination
of this Lease or when Landlord has the right of re-entry, Landlord may, at
its option, remove and store such property without liability for loss of
or damage to such property, such storage to be for the account and at the
expense of Tenant. If Tenant fails to pay the cost of storing any such
property, Landlord may, at its option, after it has been stored for a
period of twenty (20) Business Days or more, sell or permit to be sold,
any or all such property at public or private sale (and Landlord may
become a purchaser at such sale), in such manner and at such times and
places as Landlord in its sole discretion may deem proper, without notice
to Tenant, and Landlord shall apply the proceeds of such sale: FIRST, to
the cost and expense of such sale, including reasonable attorney's fees
actually incurred; SECOND, to the payment of the costs or charges for
storing any such property; THIRD, to the payment of any other sums of
money which may then be or later become due Landlord from Tenant under
this Lease; and, FOURTH, the balance, if any, to Tenant.
4.8 ACCESS. Tenant shall permit Landlord and Landlord's Agents to enter into
the Premises at any time on at least one (1) Business Day's notice (except
in case of emergency, in which case no notice shall be required), for the
purpose of inspecting the same or for the purpose of repairing, altering
or improving the Premises or the Project. Nothing contained in this
paragraph shall be deemed to impose any obligation upon Landlord not
expressly stated elsewhere in this Lease. When reasonably necessary,
Landlord may temporarily close Building or Land entrances (but not all
entrances, unless required by Governmental Requirements, or in the event
of emergency), Building doors or other facilities, without liability to
Tenant by reason of such closure and without such action by Landlord being
construed as an eviction of Tenant or as relieving Tenant from the duty of
observing or performing any of the provisions of this Lease; provided
however, that if any such closure by Landlord unreasonably prevents Tenant
from using or gaining access to the
20
Premises, then Base Rent and Additional Rent due under this Lease during
the period that Tenant is unreasonably prevented from using or gaining
access to the Premises shall be abated (to the extent of Landlord's rental
loss insurance proceeds) in proportion to the portion of the Premises for
which Tenant is unreasonably denied use or access, unless such closure
arises out of the acts or omissions of Tenant or Tenant's Agents, in which
event there shall be no such abatement. During the last six (6) months of
the Lease Term, Landlord shall have the right to enter the Premises at any
time during the Lease Term for the purpose of showing the Premises to
prospective tenants and to erect near (but not on) the Premises a suitable
sign indicating the Premises are available. Tenant shall give written
notice to Landlord at least twenty (20) Business Days prior to vacating
the Premises and shall arrange to meet with Landlord for a joint
inspection of the Premises prior to vacating. In the event of Tenant's
failure to give such notice or arrange such joint inspection, Landlord's
inspection at or after Tenant's vacating the Premises shall be deemed
correct, unless better evidence exists, for purposes of determining
Tenant's responsibility for repairs and restoration. Except for Landlord's
gross negligence or willful misconduct, Landlord shall not be liable for
the consequences of admitting by passkey, or refusing to admit to the
Premises, Tenant or any of Tenant's Agents, or other persons claiming the
right of admittance.
4.9 DAMAGE OR DESTRUCTION.
4.9.1 RESTORATION OF PREMISES. If the Premises are damaged by fire,
earthquake or other casualty, Tenant shall give immediate written
notice thereof to Landlord. If Landlord estimates that the damage
can be repaired in accordance with the then established
Governmental Requirements within two hundred seventy (270) days
after Landlord is notified by Tenant of such damage (which
estimate shall be delivered to Tenant by Landlord within
forty-five (45) days after Landlord has knowledge of the damage)
and if there are sufficient insurance proceeds available to repair
such damage, then Landlord shall proceed with reasonable diligence
to restore the Building to substantially the condition which
existed prior to the damage and this Lease shall not terminate.
If, in Landlord's estimation, the damage cannot be repaired within
such 270 day period or if there are insufficient insurance
proceeds available to repair such damage, Landlord may elect in
its absolute discretion to either: (a) terminate this Lease or (b)
restore the Building to substantially the condition which existed
prior to the damage and this Lease will continue. If Landlord
restores the Building under this paragraph, then (1) the Lease
Term shall be extended for the time required to complete such
restoration, (2) Tenant shall pay to Landlord, upon demand,
Tenant's Pro Rata Share of any applicable deductible amount
specified under Landlord's insurance and (3) Landlord shall not be
required to repair or restore Tenant Improvements, Tenant
Alterations, or any or all furniture, fixtures, equipment,
inventory, improvements or other property which was in or about
the Premises at the time of the damage and was not owned by
Landlord. Base Rent, Additional Rent and any other sum due under
this Lease during any reconstruction period shall be abated in
proportion to the portion of the Premises rendered untenantable by
the damage.
4.9.2 DAMAGE IN EXCESS OF FIFTY PERCENT. If the Project is damaged by
fire, earthquake or other casualty and more than fifty percent
(50%) of the Project is rendered untenantable, Landlord may, in
its absolute discretion and without limiting any other options
available to Landlord under this Lease or otherwise, elect to
terminate this Lease by notice in writing to Tenant within thirty
(30) Business Days after Landlord has knowledge of such damage.
Such notice
21
shall be effective twenty (20) Business Days after receipt by
Tenant, unless a later date is set forth in Landlord's notice.
4.9.3 TERMINATION OF LEASE BY MORTGAGE HOLDER'S ELECTION.
Notwithstanding anything contained in this Lease to the contrary,
if there is damage to the Premises, or Building and the holder of
any indebtedness secured by a mortgage or deed of trust covering
any such property requires that the insurance proceeds be applied
to such indebtedness or the insurance proceeds are otherwise
inadequate to complete the repair of the damages to the Premises,
the Building or both, then Landlord shall have the right to
terminate this Lease by delivering written notice of termination
to Tenant within fifteen (15) Business Days after such requirement
is made by such holder.
4.9.4 DESTRUCTION NEAR END OF TERM. Notwithstanding the foregoing, if
the Premises or the Project are wholly or partially damaged or
destroyed within the final twelve (12) months of the Lease Term,
Landlord and Tenant may each, at its option, elect to terminate
this Lease upon written notice given to the other within thirty
(30) days following such damage or destruction.
4.9.5 WAIVER. Tenant waives the provisions of any statutes presently
existing or hereafter enacted (including, without limitation,
California Civil Code sections 1932 and 1933) which relate to
termination of leases when the thing leased is destroyed and
agrees that such event will be governed by the terms of this
Lease.
4.9.6. TERMINATION BY TENANT. Notwithstanding anything to the contrary
set forth in this Section 4.9 above, within forty-five (45) days
after the date of any such damage or destruction, Landlord shall
notify Tenant of the estimated time to complete the repairs and
restoration of the Premises and Project, as estimated by an
independent contractor approved by Landlord (the "Landlord
Response Notice"). Notwithstanding anything to the contrary set
forth in the proceeding paragraph, if Landlord notifies Tenant
that the estimated time to complete the repairs or restoration
will exceed two hundred ten (210) days from the date of such
damage or destruction, Tenant may terminate this Lease effective
as of the date of such damage or destruction by delivering written
notice thereof to Landlord within thirty (30) days after receipt
of Landlord's Response Notice. If the Lease is not terminated as
provided above, and the repairs and restoration are not completed
within two hundred ten (210) days after the damage or destruction,
Tenant may deliver written notice to Landlord stating that if the
repairs and restoration are not completed within forty-five (45)
days thereafter, Tenant will terminate the Lease. If the repairs
and restoration are not completed within forty-five (45) days
after Tenant delivers such notice to Landlord, Tenant may
terminate the Lease effective as of the date of such damage or
destruction by delivering written notice thereof to Landlord.
4.10 CONDEMNATION. If all of the Premises, or such portions of the Building as
may be required for the Tenant's Permitted Use, are taken by eminent
domain or by conveyance in lieu thereof, this Lease shall automatically
terminate as of the date the physical taking occurs, and all Base Rent,
Additional Rent and other sums payable under this Lease shall be paid to
that date. In case of taking of a part of the Premises or a portion of the
Building not required for the Tenant's Permitted Use, then this Lease
shall continue in full force and effect and the Base Rent shall be
equitably reduced based on the proportion by which the floor area of the
Premises is reduced, such reduction in Base Rent to be
22
effective as of the date the physical taking occurs. Additional Rent and
all other sums payable under this Lease shall not be abated but Tenant's
Pro Rata Share shall be reduced as equitable under the circumstances.
Landlord reserves all rights to damages or awards for any taking by
eminent domain relating to the Premises, Building, Land and the unexpired
term of this Lease. Tenant assigns to Landlord any right Tenant may have
to such damages or award and Tenant shall make no claim against Landlord
for damages for termination of its leasehold interest or interference with
Tenant's business. Tenant shall have the right, however, to claim and
recover from the condemning authority compensation for any loss to which
Tenant may be entitled for Tenant's moving expenses or other relocation
costs; PROVIDED THAT, such expenses or costs may be claimed only if they
are awarded separately in the eminent domain proceedings and not as a part
of the damages recoverable by Landlord. Tenant waives all rights it may
have under California Code of Civil Procedure section 1265.130, or
otherwise, to terminate this Lease based on a partial condemnation.
Landlord acknowledges that nothing contained herein shall prevent Tenant
from recovering damages from a Governmental Authority in connection with
an inverse condemnation claim, or similar claim, instituted by Tenant as a
result of any failure to enter into the Edison Lease.
4.11 PARKING. Tenant shall have the nonexclusive privilege to use parking
spaces within the Project in common with other tenants of Landlord, but
only in areas reasonably designated by Landlord. Tenant's parking
privileges shall be subject to the rules and regulations relating to
parking adopted by Landlord from time to time. In no event shall the
number of parking stalls used by Tenant and Tenant's Agents exceed the
number of stalls allocated to Tenant in the definition of the Parking
Rights. Landlord shall have no obligation whatsoever to monitor, secure or
police the use of the parking or other common areas. Tenant shall pay,
upon fifteen (15) days notice from Landlord, Landlord's then standard
charge for the parking spaces.
4.12 INDEMNIFICATION. Tenant shall indemnify and defend (except for Claims
arising solely as a direct result of the negligence or willful misconduct
of Landlord or its authorized agents, contractors, employees, members,
trustees, officers or partners) and hold harmless (except for Claims
arising solely as a direct result of the gross negligence or willful
misconduct of Landlord or its authorized agents, contractors, employees,
members, trustees, officers or partners) Landlord and Landlord's Agents
from and against any and all Claims, arising in whole or in part out of
(a) the possession, use or occupancy of the Premises or the business
conducted in the Premises, (b) any act, omission or negligence of Tenant
or Tenant's Agents, or (c) any breach or default under this Lease by
Tenant. Neither Landlord nor Landlord's Agents shall, to the extent
permitted by law, have any liability to Tenant, or to Tenant's Agents, for
any Claims arising out of any cause whatsoever, including repair to any
portion of the Premises; interruption in the use of the Premises or any
equipment therein; any accident or damage resulting from any use or
operation by Landlord, Tenant or any person or entity of heating, cooling,
electrical, sewerage or plumbing equipment or apparatus; termination of
this Lease by reason of damage to the Premises or Project; fire, robbery,
theft, vandalism, mysterious disappearance or any other casualty; actions
of any other tenant of the Project or of any other person or entity;
inability to furnish any service required of Landlord as specified in this
Lease; or leakage in any part of the Premises or the Project from rain,
ice or snow, or from drains, pipes or plumbing fixtures in the Premises or
the Project; except for Claims to the extent arising as a direct result of
the gross negligence or willful misconduct of Landlord or its authorized
agents, contractors, employees, members,
23
trustees, officers or partners; Landlord shall indemnify, protect, defend
and hold Tenant harmless from and against all Claims directly arising
solely out of the gross negligence or willful misconduct of Landlord or
its authorized agents, contractors, employees, members, trustees, officers
and partners; PROVIDED THAT, in no event shall Landlord be responsible for
any interruption to Tenant's business or for any indirect or consequential
losses suffered by Tenant or Tenant's Agents. The obligations of this
paragraph shall be subject to the paragraph entitled "WAIVER OF
SUBROGATION".
4.13 TENANT INSURANCE.
4.13.1 FORM OF POLICIES. Tenant shall, throughout the Lease Term, at its
own expense, keep and maintain in full force and effect the
following policies, each of which shall be endorsed as needed to
provide that the insurance afforded by these policies is primary
and that all insurance carried by Landlord is strictly excess and
secondary and shall not contribute with Tenant's liability
insurance:
(a A policy of commercial general liability insurance, including
a contractual liability endorsement covering Tenant's
obligations under the paragraph captioned "INDEMNIFICATION",
insuring against claims of bodily injury and death or property
damage or loss with a combined single limit at the
Commencement Date of this Lease of not less than Two Million
Dollars ($2,000,000.00) per occurrence, which limit shall be
reasonably increased during the Lease Term at Landlord's
reasonable request to reflect both increases in liability
exposure arising from inflation as well as from changing use
of the Premises or changing legal liability standards, which
policy shall be payable on an :occurrence" rather than a
"claims made" basis, and which policy identifies Landlord and
Manager and, at Landlord's request, Landlord's mortgage
lender(s) or investment advisors, as additional named
insureds;
(b A policy of extended property insurance (what is commonly
called "all risk") covering Tenant's Improvements and Tenant's
Alterations, furniture, fixtures, equipment, inventory, and
other personal property located on the Premises for one
hundred percent (100%) of the current replacement value of
such property;
(c Business interruption insurance in an amount sufficient to
cover costs, damages, lost income, expenses, Base Rent,
Additional Rent and all other sums payable under this Lease,
should any or all of the Premises not be usable for a period
of up to twelve (12) months;
(d A policy of worker's compensation insurance as required by law
and employer's liability insurance with limits of no less than
One Million Dollars ($1,000,000); and
(e A policy of comprehensive automobile liability insurance,
including loading and unloading, and covering owned, non-owned
and hired vehicles, with limits of no less than One Million
Dollars ($1,000,000) per occurrence.
4.13.2 APPROVAL OF INSURER. All insurance policies required under this
paragraph shall be with companies with a Best rating of AXII or
better and each policy shall provide that it is not subject to
cancellation or reduction in coverage except after thirty (30)
days' written notice to Landlord. Tenant shall deliver to Landlord
and, at Landlord's request Landlord's mortgage lender(s), prior to
the Commencement Date and from time to time thereafter,
certificates evidencing the existence and amounts of all such
policies.
24
4.13.3 LANDLORD OBTAINED INSURANCE. If Tenant fails to timely acquire or
maintain any insurance or provide any certificate required by this
paragraph, Landlord may, after thirty (30) days' prior written
notice to Tenant (except in the event of emergency, as reasonably
determined by Landlord, in which event only reasonable notice
under the circumstances shall be required) but shall not be
required to, obtain such insurance or certificates and the
reasonable costs associated with obtaining such insurance or
certificates shall be payable by Tenant to Landlord within five
(5) days after demand.
4.14 LANDLORD'S INSURANCE. Landlord shall, commencing with Tenant's early entry
period set forth in Section 2.3 above, and continuing throughout the Lease
Term, keep and maintain in full force and effect:
(a A policy of commercial general liability insurance, insuring
against claims of bodily injury and death or property damage or
loss with a combined single limit at the Commencement Date of not
less than Five Million Dollars ($5,000,000.00), which policy shall
be payable on an "occurrence" rather than a "claims made" basis;
and
(b A policy of extended property insurance (what is commonly called
"all risk") covering the Building and Landlord's personal
property, if any, located at the Building in the amount of one
hundred percent (100%) of the then current replacement value of
such property (specifically excluding Tenant Improvements, Tenant
Alterations, or any or all furniture, fixtures, equipment,
inventory, improvements or other property which was in or about
the Premises at the time of the damage and was not owned by
Landlord).
(c Landlord may, but shall not be required to, maintain other types
of insurance as Landlord deems appropriate, including, but not
limited to, property insurance coverage for earthquakes and floods
in such amounts as Landlord deems appropriate. Such policies may
be "blanket" policies which cover other properties owned by
Landlord.
4.15 WAIVER OF SUBROGATION. Notwithstanding anything in this Lease to the
contrary, Landlord and Tenant hereby each waive and release the other from
any and all Claims or any loss or damage that may occur to the Land,
Premises, Project or personal property located therein, by reason of fire
or other casualty regardless of cause or origin, including the negligence
or misconduct of Landlord, Tenant, Landlord's Agents or Tenant's Agents,
but only to the extent of the insurance proceeds paid to such releasor
under its policies of insurance or, if it fails to maintain the required
policies, the insurance proceeds that would have been paid to such
releasor if it had maintained such policies. Each party to this Lease
shall promptly give to its insurance company written notice of the mutual
waivers contained in this subparagraph, and shall cause its insurance
policies to be properly endorsed, if necessary, to prevent the
invalidation of any insurance coverages by reason of the mutual waivers
contained in this subparagraph.
4.16 ASSIGNMENT AND SUBLETTING BY TENANT.
4.16.1 RESTRICTIONS ON TRANSFER. Tenant shall not have the right to
assign, transfer, mortgage or encumber this Lease in whole or in
part, nor sublet the whole or any part of the Premises, nor allow
the occupancy of all or any part of the Premises by another,
without first obtaining Landlord's consent, which consent may not
be unreasonably withheld or delayed. Notwithstanding any permitted
assignment or subletting, Tenant shall at all times remain
directly, primarily and fully responsible and liable for the
payment of all sums payable under this
25
Lease and for compliance with all of its other obligations as
tenant under this Lease. Upon the occurrence of an Event of
Default, if the Premises or any part of the Premises are then
subject to an assignment or subletting, Landlord, in addition to
any other remedies provided in this Lease or by law, may at its
option collect directly from such assignee or subtenant all rents
becoming due to Tenant under such assignment or sublease and apply
such rents against any sums due to Landlord from Tenant under this
Lease, and no such collection shall be construed to constitute a
novation or release of Tenant from the further performance of
Tenant's obligations under this Lease. Tenant makes an absolute
assignment to Landlord of such assignments and subleases and any
rent, security deposits and other sums payable under such
assignments and subleases as collateral to secure the performance
of the obligations of Tenant under this Lease; provided however,
that, until an Event of Default occurs, Tenant shall, subject to
Section 4.16.6 below, be entitled to collect the rent, security
deposits and other sums payable under such assignments and
subleases.
4.16.2 LANDLORD CONSENT, PROCEDURE. In the event Tenant desires to assign
this Lease or to sublet all or any portion of the Premises, Tenant
shall give written notice of such desire to Landlord setting forth
the name of the proposed subtenant or assignee, the proposed term,
the nature of the proposed subtenant's or assignee's business to
be conducted on the Premises, the rental rate, and any other
particulars of the proposed subletting or assignment that Landlord
may reasonably request. Without limiting the preceding sentence,
Tenant shall also provide Landlord with: (a) such financial
information as Landlord may reasonably request; and (b) a copy of
the proposed sublease or assignment or letter of intent. Tenant
shall pay to Landlord, upon Landlord's demand therefor, Landlord's
reasonable attorneys' fees incurred in the review of such
documentation and in documenting Landlord's consent, plus an
administrative fee of $1,000.00 for processing such proposed
assignment or sublease. Receipt of such fees shall not obligate
Landlord to approve the proposed assignment or sublease.
4.16.3 LANDLORD CONSENT, RELEVANT FACTORS. In determining whether to
grant or withhold consent to a proposed assignment or sublease,
Landlord may consider, and weigh, any factor it deems relevant in
its reasonable discretion. Without limiting what may be construed
as a factor considered by Landlord, Tenant agrees that any one or
more of the following will be proper grounds for Landlord's
disapproval of a proposed assignment or sublease:
(a The proposed assignee or subtenant does not, in Landlord's
good faith judgment, have financial worth or creditworthiness
equal to or greater than that of Tenant as of the execution
date of this Lease or sufficient financial worth to insure
full and timely performance under this Lease;
(b Landlord has received insufficient evidence of the financial
worth or creditworthiness of the proposed assignee or
subtenant to make the determination set forth in clause (b);
(c The proposed assignee or subtenant has a reputation for
disputes in contractual relations, failure to observe and
perform its contractual obligations in a timely and complete
manner or for negative business
26
relations in the business community for or otherwise as a
tenant of property or otherwise;
(d Intentionally Omitted;
(e Intentionally Omitted;
(f The use of the Premises by the proposed assignee or subtenant
will not be identical with the Permitted Uses;
(g In Landlord's judgment, the proposed assignee or subtenant is
engaged in a business, or the Premises or any part of the
Premises will be used in a manner, that is not in keeping with
the then standards of the Project, or that is not compatible
with the businesses of other tenants in the Project, or that
is inappropriate for the Project, or that will violate any
negative covenant as to use contained in any other lease of
space in the Project;
(h The use of the Premises by the proposed assignee or subtenant
will violate any Governmental Requirement or create a
violation of Access Laws;
(i Tenant is in default of any obligation of Tenant under this
Lease, or Tenant has defaulted under this Lease on three (3)
or more occasions during the twenty-four (24) months preceding
the date that Tenant shall request such consent;
(j Landlord does not approve of any of the tenant improvements
required for the proposed assignee or subtenant; or
(k Landlord has had contact with the proposed assignee or
subtenant, in the six (6) months preceding Tenant's request,
regarding the leasing of space by such proposed assignee or
subtenant in the Project or any other buildings owned by
Landlord in the metropolitan area in which the Land is
located.
4.16.4 NOTICE REGARDING LANDLORD'S CONSENT. Within ten (10) Business Days
after Landlord's receipt of all required information to be
supplied by Tenant pursuant to this paragraph, Landlord shall
notify Tenant of Landlord's approval, disapproval or conditional
approval of any proposed assignment or subletting or of Landlord's
election to require recapture as described below. Landlord shall
have no obligation to respond unless and until all required
information has been submitted. In the event Landlord approves of
any proposed assignment or subletting, Tenant and the proposed
assignee or sublessee shall execute and deliver to Landlord an
assignment (or subletting) and assumption agreement in form and
content satisfactory to Landlord in its sole discretion.
4.16.5 AFFILIATE TRANSFER. Provided that the tangible net worth of the
proposed transferee is reasonably satisfactory to Landlord, and
provided that same is not intended as a subterfuge denying
Landlord the benefits of this paragraph, a transfer to (1) any
entity controlling, controlled by or under common control with
Tenant (a "Corporate Affiliate"); (2) any entity with which Tenant
has merged or consolidated, or (3) any entity which acquires all
or substantially all of the shares of stock or assets of Tenant,
and which continues to operate substantially the same business at
the Premises as had been maintained by Tenant, shall be a
permitted transfer which shall not require Landlord's consent
hereunder (provided that Tenant shall provide Landlord with notice
thereof). For purposes of determining whether an entity is a
"Corporate Affiliate," the term "CONTROL" shall mean the ownership
of substantially all of the outstanding
27
voting stock of the corporation, or the possession of power to
direct or control the direction of management and policy of such
corporation.
4.16.6 EXCESS RENT. If Landlord consents to any assignment or sublease
and Tenant receives rent or any other consideration, either
initially or over the term of the assignment or sublease, in
excess of the Base Rent, Additional Rent and other regularly
recurring charges under the Lease (or, in the case of a sublease
of a portion of the Premises, in excess of the Base Rent,
Additional Rent and other regularly recurring charges under the
Lease paid by Tenant on a square footage basis under this Lease),
Tenant shall pay to Landlord fifty percent (50%) of such excess,
after deducting the reasonable expenses incurred by Tenant for (i)
any changes, alterations and improvements to the Premises paid for
by Tenant in connection with the assignment or sublease, (ii) any
other out-of-pocket monetary concessions provided by Tenant to the
transferee, (iii) any brokerage commissions paid for by Tenant in
connection with the assignment or sublease, and (iv) any other
normal and customary commercially reasonable out-of-pocket
expenses that Tenant incurs directly in connection with the
assignment or sublease.
4.16.7 RECAPTURE. Landlord shall have the right to recapture the Premises
or the applicable portion thereof (a "RECAPTURE") by giving
written notice of such Recapture to Tenant within fifteen (15)
Business Days after receipt of Tenant's written request for
Landlord's consent to such proposed assignment or subletting.
Notwithstanding the foregoing, Landlord shall not have such right
of recapture during the first three (3) years of the initial Lease
Term. Tenant shall have no right to retract its request for
Landlord's consent to assign or sublease once such request has
been made. Such Recapture shall terminate this Lease as to the
applicable space effective on the prospective effective date of
assignment or subletting, which shall be the last day of a
calendar month and shall not be earlier than forty-five (45)
Business Days after receipt of Tenant's request hereunder. If less
than the entire Premises are recaptured, Landlord and Tenant agree
that this Lease shall remain in full force and effect with respect
to that remaining area not recaptured by Landlord. Tenant agrees
to surrender that portion of the Premises recaptured by Landlord
in accordance with the terms and conditions of this Lease.
Notwithstanding the first sentence of this subparagraph, Landlord
shall have no right to Recapture the Premises or applicable
portion thereof if Tenant's proposed assignment or sublet is to an
affiliate, wholly-owned subsidiary or successor entity.
4.16.8 EARLY TRANSFER REQUEST. Notwithstanding the foregoing provisions
of this Section 4.16, in the event that Tenant requests Landlord's
consent to a proposed sublease during the first three (3) years of
the Lease Term, and such sublease (a) is for less than one hundred
twenty-one thousand (121,000) rentable square feet (and when
combined with other subleases is for less than 121,000 rentable
square feet in the aggregate), (b) unconditionally expires within
the first four (4) years of the initial Lease Term, and (c) is not
a subterfuge by Tenant to avoid Tenant's obligations under this
Lease, then the following provisions shall apply: (i) Landlord
shall approve or disapprove of such proposed sublease within ten
(10) Business Days after receipt of Tenant's request thereto along
with all information required to be provided by Tenant pursuant to
this Section 4.16; failure to timely approve or disapprove shall
28
constitute Landlord's approval thereto; (ii) Landlord shall not
unreasonably withhold its consent to such proposed sublease, and
may only withhold its consent for the following reasons:
(A) The proposed subtenant does not, in Landlord's reasonable,
good faith judgment, have sufficient financial worth to insure
full and timely performance under this Lease, or Landlord has
received insufficient evidence to make such determination;
(B) The proposed subtenant is engaged in a business, or the
Premises or any part of the Premises will be used in a manner,
that is not in keeping with the Permitted Use or the then
standards of the Project, or that is not reasonably compatible
with the businesses of other tenants in the Project, or that
will violate any negative covenant as to use contained in any
other lease of space in the Project;
(C) The use of the Premises by the proposed subtenant will violate
any Governmental Requirement or create a violation of Access
Laws;
(D) Landlord does not reasonably approve of any of the tenant
improvements required for the proposed subtenant; or
(E) Landlord has had contact with the proposed subtenant, in the
six (6) months preceding Tenant's request, regarding the
leasing of space by such proposed subtenant in the Project,
and Landlord has space available in the Project that could
reasonably be leased to such proposed subtenant on similar
terms and conditions as are being offered by Tenant.
4.17 ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
assign, in whole or in part, its rights and obligations under this Lease
and in any and all of the Land or Building or Project. If Landlord sells
or transfers any or all of the Project or Building, including the
Premises, Landlord and Landlord's Agents shall, upon consummation of such
sale or transfer, be released automatically from any liability relating to
obligations or covenants under this Lease to be performed or observed
after the date of such transfer, and in such event, provided that the
transferee assumes Landlord's obligations hereunder in writing, Tenant
agrees to look solely to Landlord's successor-in-interest with respect to
such liability; PROVIDED THAT, as to the Security Deposit and Prepaid
Rent, Landlord shall not be released from liability therefor unless
Landlord has delivered (by direct transfer or credit against the purchase
price) the Security Deposit or Prepaid Rent to its successor-in-interest.
4.18 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS. Tenant shall, from time to
time, upon the written request of Landlord, execute, acknowledge and
deliver to Landlord or its designee a written statement stating: (a) the
date this Lease was executed and the date it expires; (b) the date Tenant
entered into occupancy of the Premises; (c) the amount of monthly Base
Rent and Additional Rent and the date to which such Base Rent and
Additional Rent have been paid; and (d) certifying that (1) this Lease is
in full force and effect and has not been assigned, modified, supplemented
or amended in any way (or specifying the date of the agreement so
affecting this Lease); (2) Landlord is not in breach of this Lease (or, if
so, a description of each such breach) and that no event, omission or
condition has occurred which would result, with the giving of notice or
the passage of time or both, in a breach of this Lease by Landlord; (3)
this Lease represents the entire agreement between the parties with
respect to the Premises; (4) all required contributions by Landlord to
Tenant on account of Tenant Improvements have been received; (5) on the
date of execution, there exist no defenses or offsets which the
29
Tenant has against the enforcement of this Lease by the Landlord; (6) no
Base Rent, Additional Rent or other sums payable under this Lease have
been paid in advance except for Base Rent and Additional Rent for the then
current month or any prepaid rent as specified on the Estoppel
Certificate; (7) no security has been deposited with Landlord (or, if so,
the amount of such security); (8) it is intended that any Tenant's
statement may be relied upon by a prospective purchaser or mortgagee of
Landlord's interest or an assignee of any such mortgagee; and (9) such
other information as may be reasonably requested by Landlord. If Tenant
fails to respond within fifteen (15) days of its receipt of a written
request by Landlord as provided in this paragraph, such shall be a breach
of this Lease after an additional five (5) days notice from Landlord. In
addition, Tenant shall, from time to time, upon the written request of
Landlord, deliver to or cause to be delivered to Landlord or its designee
then current financial statements (including a statement of operations and
balance sheet) certified as accurate by a certified public accountant or
financial officer of Tenant and prepared in conformance with generally
accepted accounting principles for Tenant.
4.19 MODIFICATION FOR LENDER. If, in connection with obtaining construction,
interim or permanent financing for the Building or Land, Landlord's
lender, if any, shall demand commercially reasonable modifications to this
Lease as an express condition to such financing, Tenant will not
unreasonably withhold or delay its consent to such modifications; PROVIDED
THAT, such modifications do not adversely affect the obligations of Tenant
under this Lease or adversely affect Tenant's rights under this Lease.
4.20 HAZARDOUS SUBSTANCES.
4.20.1 Tenant agrees that neither Tenant, any of Tenant's Agents nor any
other person will store, place, generate, manufacture, refine,
handle, or locate on, in, under or around the Land or Building or
Project any Hazardous Substance, except for storage, handling and
use of reasonable quantities and types of cleaning fluids and
office supplies in the Premises in the ordinary course and the
prudent conduct of Tenant's business in the Premises, PROVIDED
THAT, (a) the storage, handling and use of such permitted
Hazardous Substances must at all times conform to all Governmental
Requirements and to applicable fire, safety and insurance
requirements; (b) the types and quantities of permitted Hazardous
Sub-stances which are stored in the Premises must be reason-able
and appropriate to the nature and size of Tenant's operation in
the Premises and reasonable and appropriate for a first-class
building of the same or similar use and in the same market area as
the Building; (c) no Hazardous Substance shall be spilled or
disposed of on, in, under or around the Land or Building or
Project or otherwise discharged from the Premises or any area
adjacent to the Land or Building; and (d) in no event will Tenant
be permitted to store, handle or use on, in, under or around the
Premises any Hazardous Substance which will increase the rate of
fire or extended coverage insurance on the Land or Building or
Project, unless: (1) such Hazardous Substance and the expected
rate increase have been specifically disclosed in writing to
Landlord; (2) Tenant has agreed in writing to pay any rate
increase related to each such Hazardous Substance; and (3)
Landlord has approved in writing each such Hazardous Substance,
which approval shall be subject to Landlord's discretion.
4.20.2 Tenant shall indemnify, defend and hold harmless Landlord and
Landlord's Agents from and against any and all Claims arising out
of any breach of any provision of this paragraph, which expenses
shall also include laboratory
30
testing fees, personal injury claims, clean-up costs and
environmental consultants' fees. Tenant agrees that Landlord may
be irreparably harmed by Tenant's breach of this paragraph and
that a specific performance action may appropriately be brought by
Landlord; PROVIDED THAT, Landlord's election to bring or not bring
any such specific performance action shall in no way limit, waive,
impair or hinder Landlord's other remedies against Tenant.
4.20.3 As of the execution date of this Lease, Tenant represents and
warrants to Landlord that, except as otherwise disclosed by Tenant
to Landlord, Tenant has no intent to bring any Hazardous
Substances on, in or under the Premises except for the type and
quantities authorized in the first paragraph of the paragraph
captioned "HAZARDOUS SUBSTANCES".
To Landlord's actual knowledge as of the date of the execution of
this Lease, and without independent investigation and inquiry, (a)
no Landlord's Hazardous Materials (defined below) have been
handled in or about the Premises or Building by Landlord, except
in compliance with all applicable laws, and (b) Landlord has not
received any written notice of the presence of Hazardous Materials
at the Premises or Building in violation of applicable laws. The
term "Landlord Hazardous Materials" shall mean Hazardous Materials
which are present in, on, under or about the Building or Premises
as of the date of this Lease and which are released or brought in,
on, under or about the Building or Premises by Landlord or any
agent of Landlord. Landlord's Hazardous Materials shall
specifically not include any Hazardous Materials released,
disturbed, transported, stored, generated or used by Tenant or
Tenant's Agents.
In the event of a breach of this Section during the Lease
Term, then Landlord's sole obligation and responsibility to Tenant
shall be (a) the commencement, within ninety (90) days after
Landlord receives notice of such breach or discovery and verifies
the accuracy of such claim, of a removal, encapsulation or other
containment program reasonably elected by Landlord which is
required by and complies with applicable laws, and (b) the
diligent prosecution of such program to completion, at no cost to
Tenant, in such a manner as will make the Premises or Building, as
the case may be, in compliance with applicable laws.
4.21 ACCESS LAWS.
4.21.1 NOTICE TO LANDLORD OF VIOLATION. Tenant agrees to notify Landlord
immediately if Tenant receives notification or otherwise becomes
aware of: (a) any condition or situation on, in, under or around
the Land or Building which may constitute a violation of any
Access Laws or (b) any threatened or actual lien, action or notice
that the Land or Building is not in compliance with any Access
Laws. If Tenant is responsible for such condition, situation,
lien, action or notice under this paragraph, Tenant's notice to
Landlord shall include a statement as to the actions Tenant
proposes to take in response to such condition, situation, lien,
action or notice.
4.21.2 PROHIBITED ACTS. Tenant shall not alter or permit any assignee or
subtenant or any other person to alter the Premises in any manner
which would violate any Access Laws or increase Landlord's
responsibilities for compliance with Access Laws, without the
prior approval of the Landlord. In connection with any such
approval, Landlord may require a certificate of compliance with
Access Laws
31
from an architect, engineer or other person acceptable to
Landlord. Tenant agrees to pay the reasonable fees incurred by
such architect, engineer or other third party in connection with
the issuance of such certificate of compliance. Landlord's consent
to any proposed Tenant Alteration shall (a) not relieve Tenant of
its obligations or indemnities contained in this paragraph or this
Lease or (b) be construed as a warranty that such proposed
alternation complies with any Access Law.
4.21.3 TENANT RESPONSIBILITY. Tenant shall be solely responsible for all
costs and expenses relating to or incurred in connection with: (a)
failure of the Premises to comply with the Access Laws; and (b)
bringing the Building into compliance with Access Laws, if and to
the extent such noncompliance arises out of or relates to: (1)
Tenant's use of the Premises, including the hiring of employees;
(2) any Tenant Alterations to the Premises; or (3) any Tenant
Improvements constructed in the Premises by or at the request of
Tenant, regardless of whether such improvements are constructed
prior to or after the Commencement Date.
4.21.4 LANDLORD RESPONSIBILITY. Landlord shall be responsible for all
costs and expenses relating to or incurred in connection with
bringing the common areas of the Building into compliance with
Access Laws, unless such costs and expenses are Tenant's
responsibility as provided in the preceding subparagraph. Any cost
or expense paid or incurred by Landlord to bring the Premises or
common areas of the Building into compliance with Access Laws
which is not Tenant's responsibility under the preceding
subparagraphs shall be amortized over the useful economic life of
the improvements (not to exceed ten (10) years) using an
amortization rate of twelve percent (12%) per annum, and shall be
an Operating Cost for purposes of this Lease.
4.22 QUIET ENJOYMENT. Landlord covenants that Tenant, upon paying Base Rent,
Additional Rent and all other sums payable under this Lease and performing
all covenants and conditions required of Tenant under this Lease shall and
may peacefully have, hold and enjoy the Premises without hindrance or
molestation by Landlord, subject to the terms of this Lease, any ground
lease, mortgage or deed of trust and all matters of record now or
hereafter encumbering the Premises or the Project.
4.23 SIGNS. Tenant shall not inscribe an inscription, or post, place, or in any
manner display any sign, notice, picture, placard or poster, or any
advertising matter whatsoever, anywhere in or about the Land or Building
or Project at places visible (either directly or indirectly as an outline
or shadow on a glass pane) from anywhere outside the Premises without
first obtaining Landlord's consent, which consent shall not be
unreasonably withheld. The exact size, appearance and location of such
sign shall be subject to Landlord's prior written approval and shall be
consistent with Landlord's existing sign criteria then in existence for
the Building. Any and all costs in connection with the permitting,
fabrication, installation, maintenance and removal of Tenant's sign
(including the cost of removal of the sign and repair to the Building
caused by such removal) shall be borne by Tenant. Tenant agrees to
maintain any such sign, awning, canopy, decoration, lettering, advertising
matter or other thing as may be approved, in good condition at all times.
Upon vacation of the Premises on the expiration or earlier termination of
this Lease, Tenant shall be responsible, at its sole cost, for the removal
of such sign or signs and the repair, painting and/or replacement of the
structure to which the sign or signs were attached, including
discoloration caused by such installation or
32
removal. If Tenant fails to perform such work, Landlord may cause the same
to be performed, and the cost thereof shall be Additional Rent immediately
due and payable upon rendition of a bill therefor.
4.24 SUBORDINATION. Provided Tenant is given written assurance in the
applicable lender's standard subordination, non-disturbance and attornment
form ("SNDA"), Tenant subordinates this Lease and all rights of Tenant
under this Lease to any mortgage, deed of trust, ground lease or vendor's
lien, or similar instrument which may from time to time be placed upon the
Premises (and all renewals, modifications, replacements and extensions of
such encumbrances), and each such mortgage, deed of trust, ground lease or
lien or other instrument shall be superior to and prior to this Lease. At
the request of Landlord, the holder of such mortgage or deed of trust or
any ground Lessor, Tenant shall execute, acknowledge and deliver promptly
in recordable form any instrument or subordination agreement that Landlord
or such holder may request; provided, however, such instrument shall
include a nondisturbance provision on the standard form of the applicable
lender or ground lessor. Notwithstanding the foregoing, the holder or
beneficiary of such mortgage, deed of trust, ground lease, vendor's lien
or similar instrument shall have the right to subordinate or cause to be
subordinated any such mortgage, deed of trust, ground lease, vendor's lien
or similar instrument to this Lease. Tenant further covenants and agrees
that if the lender or ground lessor acquires the Premises as a purchaser
at any foreclosure sale or otherwise, and provided that Tenant is given an
SNDA, Tenant shall recognize and attorn to such party as landlord under
this Lease, and shall make all payments required hereunder to such new
landlord without deduction or set-off and, upon the request of such
purchaser or other successor, execute, deliver and acknowledge documents
confirming such attornment. Tenant waives the provisions of any law or
regulation, now or hereafter in effect, which may give or purport to give
Tenant any right to terminate or otherwise adversely affect this Lease or
the obligations of Tenant hereunder in the event that any such foreclosure
or termination or other proceeding is prosecuted or completed.
4.25 INTENTIONALLY OMITTED.
4.26 BROKERS. As between Landlord and Tenant, Landlord will be responsible to
pay the commissions due and owing to the above Brokers set forth in
Section 1.6 above according to the terms and conditions of a separate
agreement between Landlord and such Brokers. Each party to this Lease
shall indemnify, defend and hold harmless the other party from and against
any and all Claims asserted against such other party by any real estate
broker, finder or intermediary relating to any act of the indemnifying
party in connection with this Lease.
4.27 EXCULPATION AND LIMITATION OF LIABILITY. Landlord has executed this Lease
by its trustee signing solely in a representative capacity.
Notwithstanding anything contained in this Lease to the contrary, Tenant
confirms that the covenants of Landlord are made and intended, not as
personal covenants of the trustee, or for the purpose of binding the
trustee personally, but solely in the exercise of the representative
powers conferred upon the trustee by its principal. Liability with respect
to the entry and performance of this Lease by or on behalf of Landlord,
however it may arise, shall be asserted and enforced only against the
lesser of (i) Landlord's estate and equity interest in the Building, or
(ii) the equity interest that Landlord would have in and to the Building
if the Building were encumbered by debt in an amount equal to eighty
percent (80%) of the value of the Building. None of Landlord's Agents
shall have any personal liability in the event of any claim against
Landlord arising out of or in connection with this Lease, the relationship
of
33
Landlord and Tenant or Tenant's use of the Premises. None of Tenant's
Agents shall have any personal liability in the event of any claim against
Tenant arising out of or in connection with this Lease or the relationship
of Landlord and Tenant. Further, in no event whatsoever shall any
Landlord's Agent have any liability or responsibility whatsoever arising
out of or in connection with this Lease, the relationship of Landlord and
Tenant or Tenant's use of the Premises. Any and all personal liability, if
any, beyond that which may be asserted under this paragraph, is expressly
waived and released by Tenant and by all persons claiming by, through or
under Tenant.
4.28 INTENTIONALLY OMITTED.
4.29 MECHANIC'S LIENS AND TENANT'S PERSONAL PROPERTY TAXES.
4.29.1 MECHANIC'S LIENS. Tenant shall have no authority, express or
implied, to create or place any lien or encumbrance of any kind or
nature whatsoever upon, or in any manner to bind, the interest of
Landlord or Tenant in the Premises or to charge the rentals
payable under this Lease for any Claims in favor of any person
dealing with Tenant, including those who may furnish materials or
perform labor for any construction or repairs. Tenant shall pay or
cause to be paid all sums legally due and payable by it on account
of any labor performed or materials furnished in connection with
any work performed on the Premises on which any lien is or can be
validly and legally asserted against its leasehold interest in the
Premises and Tenant shall indemnify, defend and hold harmless
Landlord from any and all Claims arising out of any such asserted
Claims. Tenant agrees to give Landlord immediate written notice of
any such Claim. Tenant shall notify Landlord in writing at least
ten (10) Business Days in advance of any work to be done on, in,
or about the Premises. In the event of such scheduled work,
whether Landlord received notice from Tenant or not, Landlord
shall have the right, at any time and from time to time, to enter
the Premises to post notices of non-responsibility in such
locations as Landlord deems appropriate. Landlord shall provide
reasonable notice to Tenant in advance of entering the Premises
for the purpose of posting the notices of non-responsibility.
4.29.2 PERSONAL PROPERTY TAXES. Tenant shall be liable for all taxes
levied or assessed against personal property, furniture or
fixtures placed by Tenant in the Premises. If any such taxes for
which Tenant is liable are levied or assessed against Landlord or
Landlord's property and Landlord elects to pay them or if the
assessed value of Landlord's property is increased by inclusion of
such personal property, furniture or fixtures and Landlord elects
to pay the taxes based on such increase, Tenant shall reimburse
Landlord for the sums so paid by Landlord, upon demand by
Landlord.
SECTION 5: DEFAULT AND REMEDIES
5.1 EVENTS OF DEFAULT.
5.1.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute a material default and breach of
this Lease by Tenant ("Event of Default"):
(a) abandonment (as defined in the California Civil Code) of all
or any portion of the Premises;
34
(b) failure by Tenant to make any payment of Base Rent, Additional
Rent or any other sum payable by Tenant under this Lease
within ten (10) days after written notice from Landlord that
same is due;
(c) failure by Tenant to observe or perform any covenant or
condition of this Lease, other than the making of payments,
where such failure shall continue for a period of twenty (20)
Business Days after written notice from Landlord;
(d) (1) the making by Tenant of any general assignment or general
arrangement for the benefit of creditors; (2) the filing by or
against Tenant of a petition in bankruptcy, including
reorganization or arrangement, unless, in the case of a
petition filed against Tenant, unless the same is dismissed
within thirty (30) days; (3) the appointment of a trustee or
receiver to take possession of substantially all of Tenant's
assets located in the Premises or of Tenant's interest in this
Lease; (4) any execution, levy, attachment or other process of
law against any property of Tenant or Tenant's interest in
this Lease, unless the same is dismissed within thirty (30)
days; (5) adjudication that Tenant is bankrupt; (6) the making
by Tenant of a transfer in fraud of creditors; or (7) the
failure of Tenant to generally pay its debts as they become
due;
(e) any information furnished by or on behalf of Tenant to
Landlord in connection with the entry of this Lease is
determined to have been materially false, misleading or
incomplete when made, and Tenant had notice that such
information was false, misleading or incomplete; or
(f) any assignment, subletting or other transfer for which the
prior consent of Landlord is required under this Lease and has
not been obtained, after Tenant has notice and a reasonable
opportunity to cure (but in no event longer than 10 days to
cure).
5.1.2 NOTICE OF DEFAULT. When this Lease requires service of a notice,
that notice shall replace rather than supplement any equivalent or
similar statutory notice, including any notices required by Code
of Civil Procedure section 1161 or any similar or successor
statute. When a statute requires service of a notice in a
particular manner, service of that notice (or a similar notice
required by this Lease) in the manner required by paragraph 6.1
shall replace and satisfy the statutory service-of-notice
procedures, including those required by Code of Civil Procedure
section 1162 or any similar or successor statute.
5.1.3 INTENTIONALLY OMITTED.
5.1.4 TREATMENT AS UNEXPIRED LEASE. If a petition in bankruptcy is filed
by or against Tenant, and if this Lease is treated as an
"unexpired lease" under applicable bankruptcy law in such
proceeding, then Tenant agrees that Tenant shall not attempt nor
cause any trustee to attempt to extend the applicable time period
within which this Lease must be assumed or rejected.
5.2 REMEDIES. If any Event of Default occurs, Landlord may at any time after
such occurrence, with or without notice or demand except as stated in this
paragraph, and without limiting Landlord in the exercise of any right or
remedy at law which Landlord may have by reason of such Event of Default,
exercise the rights and remedies, either singularly or in combination, as
are specified or described in the subparagraphs of this paragraph.
Landlord's duty to mitigate damages shall be as set forth in applicable
California law, and shall not be expanded in any manner by any provision
of this Lease.
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5.2.1 REMEDIES; TERMINATION AND RECOVERY OF POSSESSION. Landlord may
terminate this Lease and recover possession of the Premises, in
which case Tenant shall immediately surrender possession of the
Premises to Landlord and, in addition to any other rights and
remedies Landlord may have at law and in equity, Landlord shall
have the following rights:
(a) To re-enter the Premises (after notice required by applicable
law) then or at any time thereafter and remove all persons and
property and possess the Premises, without prejudice to any
other remedies Landlord may have by reason of Tenant's default
or of such termination, and Tenant shall have no further claim
hereunder.
(b) To recover all damages incurred by Landlord by reason of the
default, including without limitation (i) the worth at the
time of the award of the payments, including interest, owed by
Tenant to Landlord under this Lease that were earned or
accrued but unpaid at the time of termination; (ii) the worth
at the time of the award of the amount by which the payments
owed by Tenant to Landlord under the Lease that would have
been earned or accrued after the date of termination until the
time of the award exceeds the amount of the loss of payments
owed by Tenant to Landlord under this Lease for the same
period that Tenant affirmatively proves could have been
reasonably avoided; (iii) the worth at the time of the award
of the amount by which the payments owed by Tenant to Landlord
for the balance of the Lease Term after the time of the award
exceeds the amount of the loss of payments owed by Tenant for
the same period that Tenant proves could have been reasonably
avoided; (iv) all costs incurred by Landlord in retaking
possession of the Premises and restoring them to good order
and condition; (v) all costs, including without limitation
brokerage commissions, advertising costs and restoration and
remodeling costs, incurred by Landlord in reletting the
Premises; plus (vi) any other amount, including without
limitation attorneys' fees and audit expenses, necessary to
compensate Landlord for all detriment proximately caused by
Tenant's failure to perform its obligations under this Lease
or which in the ordinary course of things would be likely to
result therefrom. "The worth at the time of the award," as
used in clauses (i) and (ii) of this paragraph, is to be
determined by computing interest as to each unpaid payment
owed by Tenant to Landlord under the Lease, at the highest
interest rate permitted by law. "The worth at the time of the
award," as referred to in clause (iii) of this paragraph, is
to be determined by discounting such amount, as of the time of
award, by the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award plus one percent (1%).
(c) To remove (subject to applicable law), at Tenant's sole risk,
any and all personal property in the Premises and place such
in a public or private warehouse or elsewhere at the sole cost
and expense and in the name of Tenant. Any such warehouser
shall have all of the rights and remedies provided by law
against Tenant as owner of such property. If Tenant shall not
pay the cost of such storage within thirty (30) days following
Landlord's demand, Landlord may, subject to the provisions of
applicable law, sell any or all such property at a public or
private sale in such manner
36
and at such times and places as Landlord deems proper, without
notice to or demand upon Tenant. Tenant waives all claims for
damages caused by Landlord's removal, storage or sale of the
property and shall indemnify and hold Landlord free and
harmless from and against any and all loss, cost and damage,
including without limitation court costs and attorneys' fees.
Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact, coupled with an interest, with all rights
and powers necessary to effectuate the provisions of this
subparagraph 5.2.
5.2.2 REMEDIES; RECOVER RENT AS IT BECOMES DUE. Landlord may elect, in
its absolute discretion, to maintain Tenant's right to possession,
in which case this Lease shall continue in effect whether or not
Tenant shall have abandoned the Premises. In such event, Landlord
may enforce all of Landlord's rights and remedies under this
Lease, including the right to recover rent as it becomes due
hereunder, and, at Landlord's election, to re-enter and relet the
Premises on such terms and conditions as Landlord deems
appropriate. Without limiting the generality of the foregoing,
Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if
lessee has right to sublet or assign, subject only to reasonable
limitations). Landlord may execute any lease made pursuant hereto
in its own name, and Tenant shall have no right to collect any
such rent or other proceeds. Landlord's re-entry and/or reletting
of the Premises, or any other acts, shall not be deemed an
acceptance of surrender of the Premises or Tenant's interest
therein, a termination of this Lease or a waiver or release of
Tenant's obligations hereunder. Landlord shall have the same
rights with respect to Tenant's improvements and personal property
as under Section 5.2.1 above, even though such re-entry and/or
reletting do not constitute acceptance of surrender of the
Premises or termination of this Lease.
5.2.3 SUCCESSION TO TENANT RIGHTS. Whether or not Landlord elects to
terminate this Lease on account of any default by Tenant, Landlord
may:
(a) Terminate any sublease, license, concession, or other
consensual arrangement for possession entered into by Tenant
and affecting the Premises.
(b) Choose to succeed to Tenant's interest in such an arrangement.
If Landlord elects to succeed to Tenant's interest in such an
arrangement, Tenant shall, as of the date of notice by
Landlord of that election, have no further right to, or
interest in, the rent or other consideration receivable under
that arrangement.
5.2.4 RIGHTS AND REMEDIES CUMULATIVE. None of the foregoing remedial
actions, singly or in combination, shall be construed as an
election by Landlord to terminate this Lease unless Landlord has
in fact given Tenant written notice that this Lease is terminated:
an act by Landlord to maintain or preserve the Premises; any
efforts by Landlord to relet the Premises; any repairs or
alterations made by Landlord to the Premises; re-entry,
repossession or reletting of the Premises by Landlord pursuant to
this paragraph; or the appointment of a receiver, upon the
initiative of Landlord, to protect Landlord's interest under this
Lease. If Landlord takes any of the foregoing remedial action
without terminating this Lease, Landlord may nevertheless at any
time
37
after taking any such remedial action terminate this Lease by
written notice to Tenant.
5.2.5 MONEY DAMAGES UPON RELETTING. If Landlord relets the Premises,
Landlord shall apply the revenue from such reletting as follows:
FIRST, to the payment of any indebtedness other than Base Rent,
Additional Rent or any other sums payable under this Lease by
Tenant to Landlord; SECOND, to the payment of any cost of
reletting (including finders' fees and leasing commissions);
THIRD, to the payment of the cost of any alterations,
improvements, maintenance and repairs to the Premises; and FOURTH,
to the payment of Base Rent, Additional Rent and other sums due
and payable and unpaid under this Lease. Landlord shall hold and
apply the residue, if any, to payment of future Base Rent,
Additional Rent and other sums payable under this Lease as the
same become due, and shall deliver the eventual balance, if any,
to Tenant. Should revenue from letting during any month, after
application pursuant to the foregoing provisions, be less than the
sum of the Base Rent, Additional Rent and other sums payable under
this Lease and Landlord's expenditures for the Premises during
such month. Tenant shall be obligated to pay such deficiency to
Landlord as and when such deficiency arises.
5.2.6 REMEDIES NONEXCLUSIVE. Pursuit of any of the foregoing remedies
shall not preclude Landlord's pursuit of any of the other remedies
provided in this Lease or by law (all such remedies being
cumulative), nor shall pursuit by Landlord of any remedy provided
in this Lease constitute a forfeiture or waiver of any Base Rent,
Additional Rent or other sum payable under this Lease or of any
damages accruing to Landlord by reason of the violation of any of
the covenants or conditions contained in this Lease.
5.3 RIGHT TO PERFORM. If Tenant shall fail to pay any sum of money, other than
Base Rent or Additional Rent, required to be paid by it under this Lease
or shall fail to perform any other act on its part to be performed under
this Lease, and such failure shall continue for ten (10) Business Days
after notice of such failure by Landlord, or such shorter time if
reasonable under the circumstances, Landlord may, but shall not be
obligated to, and without waiving or releasing Tenant from any obligations
of Tenant, make such payment or perform such other act on Tenant's part to
be made or performed as provided in this Lease. Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and
remedies in the event of the nonpayment of sums due under this paragraph
as in the case of default by Tenant in the payment of Base Rent.
5.4 LANDLORD'S DEFAULT. Landlord shall not be in default under this Lease
unless Landlord fails to perform obligations required of Landlord within
twenty (20) Business Days after written notice is delivered by Tenant to
Landlord and to the holder of any mortgages or deeds of trust
(collectively, "LENDER") covering the Premises whose name and address
shall have theretofore been furnished to Tenant in writing, specifying the
obligation which Landlord has failed to perform; provided, however, that
if the nature of Landlord's obligation is such that more than twenty (20)
Business Days are required for performance, then Landlord shall not be in
default if Landlord or Lender commences performance within such twenty
(20) Business Day period and thereafter diligently prosecutes the same to
completion. All obligations of Landlord hereunder shall be construed as
covenants, not conditions. In the event of any default, breach or
violation of Tenant's rights under this Lease by Landlord, Tenant's
exclusive remedies shall be an action for specific performance or an
action for actual damages. Tenant hereby waives
38
the benefit of any laws granting it the right to perform Landlord's
obligation, a lien upon the property of Landlord and/or upon rent due
Landlord, or the right to terminate this Lease or withhold rent or any
other amounts due hereunder on account of any Landlord default.
5.5 ACCEPTANCE OF RENT WITHOUT WAIVING RIGHTS. Under the paragraph captioned
"NO WAIVER OF REMEDIES," Landlord may accept Tenant's payments without
waiving any rights under this Lease, including rights under a previously
served notice of default. If Landlord accepts partial payments which
cumulatively are less than the sum owed after serving a notice of default,
Landlord may nevertheless commence and pursue an action to enforce rights
and remedies under the previously serviced notice of default without
giving Tenant any further notice or demand.
SECTION 6: MISCELLANEOUS PROVISIONS
6.1 NOTICES. Any notice, approval, consent, request or written communication
required or permitted to be delivered under this Lease shall be: (a) in
writing; (b) transmitted by personal delivery, express or courier service,
United States Postal Service in the manner described below; and (c) deemed
to be delivered on the earlier of the date received or four (4) Business
Days after having been deposited in the United States Postal Service,
postage prepaid. Such writings shall be addressed to Landlord or Tenant,
as the case may be, at the respective designated addresses set forth
opposite their signatures, or at such other address(es) as they may, after
the execution date of this Lease, specify by written notice delivered in
accordance with this paragraph, with copies to the persons at the
addresses, if any, designated opposite each party's signature. Those
notices which contain a notice of breach or default or a demand for
performance may be sent by any of the methods described in clause (b)
above, but if transmitted by personal delivery or electronic means, shall
also be sent concurrently by certified or registered mail, return receipt
requested.
6.2 ATTORNEY'S FEES AND EXPENSES. In the event either party requires the
services of an attorney in connection with enforcing the terms of this
Lease, or in the event suit is brought for the recovery of Base Rent,
Additional Rent or any other sums payable under this Lease or for the
breach of any covenant or condition of this Lease, or for the restitution
of the Premises to Landlord or the eviction of Tenant during the Lease
Term or after the expiration or earlier termination of this Lease, the
prevailing party shall be entitled to a reasonable sum for attorney's and
paralegal's fees incurred at the trial or appellate levels and for all
costs and expenses associated with such levels. The prevailing party shall
be determined under Civil Code section 1717(b)(1) or any successor
statute.
6.3 NO ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of
an amount less than the Base Rent or Additional Rent or any other sum due
and payable under this Lease shall be deemed to be other than a payment on
account of the Base Rent, Additional Rent or other such sum, nor shall any
endorsement or statement on any check or any letter accompanying any check
or payment be deemed an accord and satisfaction, nor preclude Landlord's
right to recover the balance of any amount payable or Landlord's right to
pursue any other remedy provided in this Lease or at law.
6.4 SUCCESSORS; JOINT AND SEVERAL LIABILITY. Except as provided in the
paragraph captioned "EXCULPATION AND LIMITATION OF LIABILITY" and subject
to the paragraph captioned "ASSIGNMENT AND SUBLETTING BY LANDLORD", all of
the covenants and conditions
39
contained in this Lease shall apply to and be binding upon Landlord and
Tenant and their respective heirs, executors, administrators, successors
and assigns. In the event that more than one person, partnership, company,
corporation or other entity is included in the term "Tenant", then each
such person, partnership, company, corporation or other entity shall be
jointly and severally liable for all obligations of Tenant under this
Lease.
6.5 CHOICE OF LAW. This Lease shall be construed and governed by the laws of
the state of California.
6.6 NO WAIVER OF REMEDIES. The waiver by Landlord of any covenant or condition
contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of such covenant or condition nor shall any custom or
practice which may develop between the parties in the administration of
this Lease be construed to waive or lessen the rights of Landlord to
insist on the strict performance by Tenant of all of the covenants and
conditions of this Lease. No act or thing done by Landlord or Landlord's
Agents during the Lease Term shall be deemed an acceptance or a surrender
of the Premises, and no agreement to accept a surrender of the Premises
shall be valid unless made in writing and signed by Landlord. The mention
in this Lease of any particular remedy shall not preclude Landlord from
any other remedy it might have, either under this Lease or at law, nor
shall the waiver of or redress for any violation of any covenant or
condition in this Lease or in any of the rules or regulations attached to
this Lease or later adopted by Landlord, prevent a subsequent act, which
would have originally constituted a violation, from having all the force
and effect of an original violation. The receipt by Landlord of Base Rent,
Additional Rent or any other sum payable under this Lease with knowledge
of a breach of any covenant or condition in this Lease shall not be deemed
a waiver of such breach. The failure of Landlord to enforce any of the
rules and regulations attached to this Lease or later adopted, against
Tenant or any other tenant in the Project, shall not be deemed a waiver.
Any waiver by Landlord must be in writing and signed by Landlord to be
effective.
6.7 OFFER TO LEASE. The submission of this Lease to Tenant or its broker or
other agent does not constitute an offer to Tenant to lease the Premises.
This Lease shall have no force or effect until: (a) it is executed and
delivered by Tenant to Landlord; and (b) it is executed and delivered by
Landlord to Tenant.
6.8 FORCE MAJEURE. In the event that Landlord shall be delayed, hindered in or
prevented from the performance of any act or obligation required under
this Lease by reason of acts of God, strikes, lockouts, labor troubles or
disputes, inability to procure or shortage of materials or labor, failure
of power or utilities, delay in transportation, fire, vandalism, accident,
flood, severe weather, other casualty, Governmental Requirements
(including mandated changes in the Shell Specifications or the Shell Work
resulting from changes in pertinent Governmental Requirements or
interpretations thereof), riot, insurrection, civil commotion, sabotage,
explosion, war, natural or local emergency, acts or omissions of others,
including Tenant, or other reasons of a similar or dissimilar nature not
solely the fault of, or under the exclusive control of, Landlord, then
performance of such act shall be excused for the period of the delay and
the period for the performance of any such act shall be extended for the
period equivalent to the period of such delay.
6.9 LANDLORD'S CONSENT. Unless otherwise provided in this Lease (including
where expressly provided in this Lease that Landlord may not unreasonably
withhold its consent), whenever Landlord's consent, approval or other
action is required under the terms of this Lease, such consent, approval
or action shall be in writing and shall be subject to Landlord's good
faith business judgment or discretion.
40
6.10 SEVERABILITY; CAPTIONS. If any clause or provision of this Lease is
determined to be illegal, invalid, or unenforceable under present or
future laws, the remainder of this Lease shall not be affected by such
determination, and in lieu of each clause or provision that is determined
to be illegal, invalid or unenforceable, there be added as a part of this
Lease a clause or provision as similar in terms to such illegal, invalid
or unenforceable clause or provision as may be possible and be legal,
valid and enforceable. Headings or captions in this Lease are added as a
matter of convenience only and in no way define, limit or otherwise affect
the construction or interpretation of this Lease.
6.11 INTERPRETATION. Whenever a provision of this Lease uses the term (a)
"include" or "including", that term shall not be limiting but shall be
construed as illustrative, (b) "covenant", that term shall include any
covenant, agreement, term or provision, and (c) "at law", that term shall
mean at law or in equity, or both. This Lease shall be given a fair and
reasonable interpretation of the words contained in it without any weight
being given to whether a provision was drafted by one party or its
counsel.
6.12 INCORPORATION OF PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of
the agreements of the parties to this Lease with respect to any matter
covered or mentioned in this Lease, and no prior agreement or
understanding pertaining to any such matter shall be effective for any
purpose. No provision of this Lease may be amended or added to except by
an agreement in writing signed by the parties to this Lease or their
respective successors in interest.
6.13 AUTHORITY. If Tenant is a partnership, company, corporation or other
entity, each individual executing this Lease on behalf of Tenant
represents and warrants to Landlord on behalf of Tenant that he or she is
duly authorized to so execute and deliver this Lease and that all
partnership, company, corporation or other entity actions and consents
required for execution of this Lease on behalf of Tenant have been given,
granted or obtained. Landlord represents and warrants to Tenant that it is
duly authorized to execute and deliver this Lease and that all
partnership, company, corporation or other entity actions and consents
required for execution of this Lease have been given, granted or obtained.
If Tenant is a partnership, company, corporation or other business
organization, it shall, within ten (10) Business Days after demand by
Landlord, deliver to Landlord satisfactory evidence of the due
authorization of this Lease and the authority of the person executing this
Lease on its behalf.
6.14 TIME OF ESSENCE. Time is of the essence with respect to the performance of
every covenant and condition of this Lease.
6.15 SURVIVAL OF OBLIGATIONS. Notwithstanding anything contained in this Lease
to the contrary or the expiration or earlier termination of this Lease,
any and all obligations of either party accruing prior to the expiration
or termination of this Lease shall survive the expiration or earlier
termination of this Lease, and either party shall promptly perform all
such obligations whether or not this Lease has expired or terminated. Such
obligations shall include any and all indemnity obligations set forth in
this Lease.
6.16 INTENTIONALLY OMITTED.
6.17 LANDLORD'S AUTHORIZED AGENTS. Notwithstanding anything contained in the
Lease to the contrary, including without limitation, the definition of
Landlord's Agents, only officers of Riggs Bank N.A., are authorized to
amend, renew or terminate this Lease, or to compromise any of
Landlord's claims under this Lease or to bind Landlord in any manner.
Without limiting the effect of the previous sentence, no property manager
or broker shall be considered an authorized agent of Landlord to amend,
renew or
41
terminate this Lease or to compromise any of Landlord's claims under this
Lease or to bind Landlord in any manner.
6.18 EDISON LEASE. Notwithstanding anything to the contrary set forth in this
Lease, Tenant acknowledges that pursuant to that certain license agreement
(the Edison Lease") to be entered into by and between Southern California
Edison ("Edison") and Landlord affecting the Project (a preliminary draft
of which Tenant acknowledges as having been received by Tenant), certain
lease payments shall be required to be made by the Project owner to Edison
in consideration of the Project owner's right to build along Edison's
right of way at the Project. Tenant hereby agrees to comply with the terms
and conditions of the Edison Lease to the extent they apply to areas
covered by the terms of this Lease. Tenant further agrees that,
notwithstanding anything to the contrary contained in this Lease, all
payments and other charges under the Edison Lease shall be included as
part of Operating Costs for the Building.
6.19 WAIVER OF JURY TRIAL. LANDLORD AND TENANT BY PLACING THEIR INITIALS AT THE
END OF THIS PARAGRAPH HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY OF ANY CONTRACT OR TORT CLAIM, COUNTERCLAIM,
CROSS-COMPLAINT, OR CAUSE OF ACTION IN ANY ACTION, PROCEEDING,
COUNTERCLAIM, OR HEARING BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY
MATTER ARISING OUT OF OR RELATING IN ANY WAY TO THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT'S USE OR OCCUPANCY OF THE
PREMISES, INCLUDING ANY CLAIM OF INJURY OR DAMAGE OR THE ENFORCEMENT OF
ANY REMEDY UNDER ANY CURRENT OR FUTURE LAW, STATUTE, REGULATION, CODE OR
ORDINANCE.
[Landlord's Initials]: /s/ MAM [Tenant's Initials]: /s/ M.C.
--------- ----------
IN WITNESS WHEREOF, this Lease has been executed the day and year first
above set forth.
42
DESIGNATED ADDRESS FOR LANDLORD LANDLORD
Haven Gateway LLC Haven Gateway LLC, a Delaware limited
c/o Riggs & Company, liability company
a Division of Riggs Bank, N.A.
808 17th Street N.W. By: Riggs & Company, a division of
Washington D.C. 20006 Riggs Bank N.A., as Trustee of
Attn: Senior Asset Manager/Mary Anne the Multi-Employer Property
Martins Trust, Its Sole Member
Voice: 202-835-4997
Facsimile: 202-835-6887
By: /s/ Mary Anne Martins
---------------------
Name: Mary Anne Martins
-----------------
Its: Managing Director
-----------------
WITH COPY TO MANAGER:
Investment Development Services, Inc.
Attn: Dean Nucich
888 West Sixth Street, 9th Floor
Los Angeles, California 90017
Voice: 213-362-9300
Facsimile: 213-627-9937
Designated Address for Tenant: TENANT:
915 Secaucus Road The Children's Place Retail Stores,
Secaucus, New Jersey 07094 Inc., a Delaware corporation
By: /s/ Mario Ciampi
-----------------
Facsimile: (201) 558-2840
Name: Mario Ciampi
------------
Its: Senior Vice-President
---------------------
By: /s/ Steven Balasiano
---------------------
Name: Steven Balasiano
----------------
Its: Vice President and General Counsel
----------------------------------
43
LANDLORD ACKNOWLEDGMENT
)
DISTRICT OF COLUMBIA ) SS.
)
On this _____ day of _______________, 2000, before me personally appeared
_________________________, to me known to be a _____________________ of Riggs &
Company, a division of Riggs Bank N.A., the Trustee of the Multi-Employer
Property Trust, the national banking association that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said national banking association as trustee, for the
uses and purposes therein mentioned, and on oath stated that __________ was
authorized to execute said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
_______________________________________________
NAME: _________________________________________
NOTARY PUBLIC IN AND FOR THE DISTRICT OF COLUMBIA,
RESIDING AT ____________________. MY APPOINTMENT
EXPIRES: ______________________.
___________
44
TENANT ACKNOWLEDGMENT (CORPORATION)
STATE OF NEW JERSEY )
) ss.
COUNTY OF HUDSON )
On this _______ day of AUGUST, 2000, before me, a Notary Public in and for
the of ___________________________, personally appeared MARIO CIAMPI, the SENIOR
VICE PRESIDENT of THE CHILDREN'S PLACE, the DELAWARE corporation that executed
the within and foregoing instrument, and acknowledged said instrument to be the
free and voluntary act and deed of said corporation for the uses and purposes
therein mentioned, and on oath stated that s/he/they was/were authorized to
execute said instrument.
WITNESS my hand and official seal hereto affixed the day and year first as
above written.
_______________________________________________
Name: LAUREL ANDERSEN
NOTARY PUBLIC in and for the District of Columbia,
residing at ____________________. My appointment
expires: 7/9/05.
[NOTARIAL SEAL]
45
EXHIBIT A to Lease
LEGAL DESCRIPTION OF LAND
46
EXHIBIT B to Lease
DRAWING SHOWING LOCATION OF THE PREMISES
47
EXHIBIT C to Lease
WORK LETTER AND CONSTRUCTION AGREEMENT
(Tenant to Construct Improvements)
This Work Letter and Construction Agreement (this "Tenant Work Letter")
shall set forth the terms and conditions relating to the construction of the
Premises. This Tenant Work Letter is essentially organized chronologically and
addresses the issues of the construction of the Premises, in sequence, as such
issues will arise during the actual construction of the Premises. All references
in this Tenant Work Letter to Articles or Sections of "this Lease" shall mean
the relevant portions of the Lease to which this Tenant Work Letter is attached
as Exhibit C, and all references in this Tenant Work Letter to Sections of "this
Tenant Work Letter" shall mean the relevant portions of this Tenant Work Letter.
All general contractors and all subcontractors in connection with the Tenant
Improvements shall satisfy those union labor requirements set forth in the Lease
in the paragraph captioned "Tenant's Work Performance"; provided however, that
with respect to the installation in the Premises of the trade fixtures set forth
on Exhibit "F" attached hereto, if union labor is not available to properly
perform the installation of such trade fixtures, Tenant may utilize the services
of any other qualified sub-contractors which normally and regularly perform
similar work in similar industrial buildings and who are reasonably approved by
Landlord in writing in accordance with Section 4.1.2 below. The Tenant
Improvement Allowance may only be used for items of general construction to be
permanently affixed to the Premises, but not personal property or trade fixtures
(including the trade fixtures referenced in the immediately preceding sentence).
SECTION 1
DELIVERY OF THE BASE BUILDING
Landlord shall, at its sole cost and expense, perform the following work
in connection with this Lease (collectively, the "Shell Work"): design and
construct the shell of the Building (the "Base Building"), using Landlord's
standard guidelines, materials, specifications and procedures, substantially in
accordance with the specifications set forth on Schedule "1" attached hereto
(the "Shell Specifications"). Additionally, Landlord shall assign to Tenant on a
non-exclusive basis, to the extent assignable, all warranties and guaranties
relating to the Base Building. Tenant shall look to such warranties and
guaranties in the event of defects in the design and/or construction of the Base
Building, Landlord shall have no responsibility in connection therewith, and
Landlord shall have no liability whatsoever in connection with the design and
construction of the Base Building. Landlord shall, at no cost or expense to
Landlord, use commercially reasonable efforts to assist Tenant in the
enforcement of such warranties and guaranties. Upon the date of Substantial
Completion, Landlord shall deliver the Base Building to Tenant, and upon such
delivery, Tenant shall accept the same from Landlord in its then-existing
"as-is" condition.
SECTION 2
TENANT IMPROVEMENTS
2.1 Tenant Improvement Allowance.
48
2.1.1 Tenant shall be entitled to a one-time tenant improvement
allowance ("Tenant Improvement Allowance") in the amount of Four Hundred Thirty
Five Thousand Two Hundred Ninety One and 50/100 Dollars ($435,291.50) for the
cost relating to the initial design and the actual cost of constructing the
Tenant Improvements. Except as expressly set forth below in Section 2.1.2, in no
event shall Landlord be obligated to make disbursements pursuant to this Tenant
Work Letter in a total amount which exceeds the Tenant Improvement Allowance.
2.1.2 If the cost of the Tenant Improvements is budgeted to exceed
the Tenant Improvement Allowance, Tenant may request in writing, within thirty
(30) days after the date of the Lease, that Landlord pay up to an additional
Three Hundred Sixty Three Thousand Eight Hundred Fifty Three and 69/100 Dollars
($363,853.69) (the "Excess Allowance") to be utilized solely for the
construction of the Tenant Improvements. Tenant shall repay the Excess Allowance
to Landlord as follows: concurrently with its payments to Landlord of monthly
Base Rent, Tenant shall pay the amounts necessary to fully amortize the Excess
Allowance over the initial Lease Term, together with interest at the rate of
eleven percent (11%) per annum, with such amortized payments being due and
payable by Tenant monthly (together with Base Rent) commencing on the
Commencement Date and continuing through the expiration of the initial Lease
Term. If the Lease is canceled or terminated for any reason prior to the
expiration of the full initial Lease Term, then the unamortized Excess Allowance
shall become immediately due and payable to Landlord. If Tenant timely requests
the Excess Allowance, then the Excess Allowance shall be deemed part of the
Tenant Improvement Allowance for purposes of this Work Letter Agreement, subject
to Tenant's repayment obligations set forth in this Section 2.1.2 above. Upon
Landlord's demand, Tenant shall execute an amendment to the Lease, on Landlord's
form, to reflect the additional rent.
2.2 Disbursement of the Tenant Improvement Allowance
2.2.1 Tenant Improvement Allowance Items. Except as otherwise set
forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord only for the following items and costs (collectively the
"Tenant Improvement Allowance Items"):
2.2.1.1 Notwithstanding anything to the contrary set forth
herein, costs for the payment of the fees of the "Architect" and the
"Engineers", as those terms are defined in Section 3.1 of this Tenant Work
Letter, shall not exceed an aggregate amount equal to $3.50 for each usable
square foot of space in the Premises;
2.2.1.2 The payment of plan check, permit and license fees
relating to construction of the Tenant Improvements;
2.2.1.3 The cost of construction of the Tenant Improvements,
including, without limitation, testing and inspection costs and trash removal
costs, and contractors' fees and general conditions;
2.2.1.4 The cost of any changes in the Base Building when such
changes are required by the Construction Drawings (including if such changes are
due to the fact that such work is prepared on an unoccupied basis), such cost to
include all direct architectural and/or engineering fees and expenses incurred
in connection therewith;
49
2.2.1.5 The cost of any changes to the Construction Drawings
or Tenant Improvements required by Code;
2.2.1.6 Sales and use taxes and Title 24 fees; and
2.2.1.7 Payment to Landlord of a construction supervisor fee
equal to four percent (4%) of the construction costs of the Tenant Improvements
covered by the Tenant Improvement Allowance (which fee shall be inclusive of the
out-of-pocket costs incurred by Landlord in connection with the supervision of
the Tenant Improvements, but shall not include all other amounts due to Landlord
under this Work Letter and the Lease).
2.2.1.8 All other costs to be expended by Tenant and
reasonably approved Landlord in connection with the construction of the Tenant
Improvements.
2.2.2 Disbursement of Tenant Improvement Allowance. During the
construction of the Tenant Improvements, Landlord shall make monthly
disbursements of the Tenant Improvement Allowance for Tenant Improvement
Allowance Items for the benefit of Tenant and shall authorize the release of
monies for the benefit of Tenant as follows:
2.2.2.1 Disbursements. On or before each of (a) the thirtieth
(30th) day following Substantial Completion, and (b) the sixtieth (60th) day
following Substantial Completion, Tenant shall deliver to Landlord: (i) a
request for payment of the "Contractor", as that term is defined in Section 4.1
of this Tenant Work Letter, approved by Tenant, in a form to be provided by
Landlord, showing the schedule, by trade, of percentage of completion of the
Tenant Improvements in the Premises, detailing the portion of the work completed
and the portion not completed; (ii) invoices from all of "Tenant's Agents", as
that term is defined in Section 4.1.2 of this Tenant Work Letter, for labor
rendered and materials delivered to the Premises; (iii) executed mechanic's lien
releases from all of Tenant's Agents which shall comply with the appropriate
provisions, as reasonably determined by Landlord, of California Civil Code
Section 3262(d); and (iv) all other information reasonably requested by
Landlord. Tenant's request for payment shall be deemed Tenant's acceptance and
approval of the work furnished and/or the materials supplied as set forth in
Tenant's payment request. On or before the last day of the month following each
date in (a) and (b) above, Landlord shall deliver a check to Tenant made payable
to Tenant in payment of the lesser of: (A) the amounts so requested by Tenant,
as set forth in this Section 2.2.2.1, above, less a ten percent (10%) retention
(the aggregate amount of such retentions to be known as the "Final Retention"),
and (B) the balance of any remaining available portion of the Tenant Improvement
Allowance (not including the Final Retention), provided that Landlord does not
dispute any request for payment based on a non-compliance of any work with the
"Approved Working Drawings", as that term is defined in Section 3.4 below, or
due to any substandard work. Landlord's payment of such amounts shall not be
deemed Landlord's approval or acceptance of the work furnished or materials
supplied as set forth in Tenant's payment request.
2.2.2.2 Final Retention. Subject to the provisions of this
Tenant Work Letter, a check for the Final Retention payable to Tenant shall be
delivered by Landlord to Tenant following the completion of construction of the
Premises, provided that (i) Tenant delivers to Landlord a waiver and release in
accordance with the terms of California Civil Code Section 3262(d)(2) and a
waiver and release in accordance with either California Civil Code
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Section 3262(d)(3) or Section 3262(d)(4), (ii) Landlord has determined that no
substandard work exists which adversely affects the mechanical, electrical,
plumbing, heating, ventilating and air conditioning, life-safety or other
systems of the Project, the curtain wall of the Project, the structure or
exterior appearance of the Project, or any other tenant's use of such other
tenant's leased premises in the Project and (iii) Architect delivers to Landlord
a certificate, in a form reasonably acceptable to Landlord, certifying that the
construction of the Tenant Improvements in the Premises has been substantially
completed.
2.2.2.3 Other Terms. Landlord shall only be obligated to make
disbursements from the Tenant Improvement Allowance to the extent costs are
incurred by Tenant for Tenant Improvement Allowance Items. All Tenant
Improvement Allowance Items for which the Tenant Improvement Allowance has been
made available shall be deemed Landlord's property under the terms of this
Lease.
SECTION 3
CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawings. Tenant shall retain an
architect reasonably approved by Landlord (the "Architect") to prepare the
Construction Drawings. Landlord shall either approve or disapprove of Tenant's
proposed Architect within three (3) Business Days after Tenant submits the name
of, and reasonable information with respect to, its proposed architect to
Landlord; failure by Landlord to approve or disapprove within such three (3)
Business Day period shall constitute Landlord's approval of Tenant's proposed
architect. Tenant shall retain the engineering consultants designated by
Landlord (the "Engineers") to prepare all plans and engineering working drawings
relating to the structural, mechanical, electrical, plumbing, HVAC, life-safety,
and sprinkler work in the Premises, which work is not part of the Base Building.
The plans and drawings to be prepared by Architect and the Engineers hereunder
shall be known collectively as the "Construction Drawings". All Construction
Drawings shall comply with the drawing format and specifications acceptable to
Landlord. Tenant and Architect shall verify, in the field, the dimensions and
conditions as shown on the relevant portions of the base building plans, and
Tenant and 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 Section 3, 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, and Tenant's waiver and indemnity set forth in this Lease shall
specifically apply to the Construction Drawings.
3.2 Approved Working Drawings. Landlord shall approve (or disapprove)
working drawings prepared by Architect within five (5) days after Landlord
receives the final Working Drawings (the "Approved Working Drawings"). Tenant
shall submit the same to the City of Ontario and diligently pursue its receipt
of all applicable building permits. Tenant hereby agrees that neither Landlord
nor Landlord's consultants shall be responsible for obtaining any building
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permit or certificate of occupancy for the Premises and that obtaining the same
shall be Tenant's responsibility; provided, however, that Landlord shall
cooperate with Tenant in executing permit applications and performing other
ministerial acts reasonably necessary to enable Tenant to obtain any such permit
or certificate of occupancy. No changes, modifications or alterations in the
Approved Working Drawings may be made without the prior written consent of
Landlord, which consent may not be unreasonably withheld.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 Tenant's Selection of Contractors.
4.1.1 The Contractor. A general contractor shall be retained by
Tenant to construct the Tenant Improvements and Tenant shall contract directly
with such "Contractor". Landlord shall file a Notice of Non-Responsibility
regarding payments under Tenant's contract with the Contractor. Such general
contractor ("Contractor") must be approved in writing by Landlord, which
approval shall not be unreasonably withheld. Landlord shall either approve or
disapprove of Tenant's proposed general contractor within three (3) Business
Days after Tenant submits the name of, and reasonable information with respect
to, its proposed general contractor; failure to approve or disapprove within
such three (3) Business Day period shall constitute Landlord's approval of
Tenant's proposed general contractor.
4.1.2 Tenant's Agents. All subcontractors, laborers, materialmen,
and suppliers used by Tenant (such subcontractors, laborers, materialmen, and
suppliers, and the Contractor to be known collectively as "Tenant's Agents")
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed. Landlord shall either approve or disapprove of
Tenant's proposed subcontractors, laborers, materialmen or suppliers within
three (3) Business Days after Tenant submits the names of, and reasonable
information with respect to, the same to Landlord; failure to approve or
disapprove within such three (3) Business Day period shall constitute Landlord's
approval of the proposed subcontractors, laborers, materialmen or suppliers. If
Landlord does not approve any of Tenant's proposed subcontractors, laborers,
materialmen or suppliers, Tenant shall submit other proposed subcontractors,
laborers, materialmen or suppliers for Landlord's written approval.
4.2 Construction of Tenant Improvements by Tenant's Agency.
4.2.1 Construction Contract; Cost Budget. Prior to Tenant's
execution of the construction contract and general conditions with Contractor
(the "Contract"), Tenant shall submit the Contract to Landlord for its approval
with regard to proper insurance and licensing requirements and any other areas
which may adversely affect Landlord's interest in the Project, and which
approval shall not be unreasonably withheld or delayed by more than five (5)
business days after Landlord's receipt of the Contract. Prior to the
commencement of the construction of the Tenant Improvements, and after Tenant
has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord
with a detailed breakdown, by trade, of the final costs to be incurred or which
have been incurred in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Tenant or the Contractor,
which costs form a basis for the amount of the Contract (the "Final Costs").
Prior to the
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commencement of construction of the Tenant Improvements, Tenant shall supply
Landlord with cash in an amount (the "Over-Allowance Amount") equal to the
difference between the amount of the Final Costs and the amount of the Tenant
Improvement Allowance (less any portion thereof already disbursed by Landlord,
or in the process of being disbursed by Landlord, on or before the commencement
of construction of the Tenant Improvements). The Over-Allowance Amount shall be
disbursed by Landlord prior to the disbursement of any of the then remaining
portion of the Tenant Improvement Allowance, and such disbursement shall be
pursuant to the same procedure as the Tenant Improvement Allowance. In the event
that, after the Final Costs have been delivered by Tenant to Landlord, the costs
relating to the design and construction of the Tenant Improvements shall change,
any additional costs necessary to such design and construction in excess of the
Final Costs, shall be paid by Tenant to Landlord immediately as an addition to
the Over-Allowance Amount or at Landlord's option, Tenant shall make payments
for such additional costs out of its own funds, but Tenant shall continue to
provide Landlord with the documents described in Section 2.2.2.1 (i), (ii),
(iii) and (iv) of this Tenant Work Letter, above, for Landlord's approval, prior
to Tenant paying such costs.
4.2.2 Tenant's Agents.
4.2.2.1 Landlord's General Conditions for Tenant's Agents and
Tenant Improvement Work. Tenant's and Tenant's Agent's construction of the
Tenant Improvements shall comply with the following: (i) the Tenant Improvements
shall be constructed in strict accordance with the Approved Working Drawings;
(ii) Tenant's Agents shall submit schedules of all work relating to the Tenant's
Improvements to Contractor and Contractor shall, within five (5) business days
of receipt thereof, inform Tenant's Agents of any changes which are necessary
thereto, and Tenant's Agents shall adhere to such corrected schedule; and (iii)
Tenant shall abide by all rules made by Landlord's Project manager with respect
to the use of freight, loading dock and service elevators, storage of materials,
coordination of work with the contractors of other tenants, and any other matter
in connection with this Tenant Work Letter, including, without limitation, the
construction of the Tenant Improvements.
4.2.2.2 Indemnity. Tenant's indemnity of Landlord as set forth
in this Lease shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to any act or omission of
Tenant or Tenant's Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant's non-payment of any amount arising out of
the Tenant Improvements and/or Tenant's disapproval of all or any portion of any
request for payment. Such indemnity by Tenant, as set forth in this Lease, shall
also apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to Landlord's performance of any ministerial acts
reasonably necessary (i) to permit Tenant to complete the Tenant Improvements,
and (ii) to enable Tenant to obtain any Project permit or certificate of
occupancy for the Premises.
4.2.2.3 Requirements of Tenant's Agents. Each of Tenant's
Agents shall guarantee to Tenant and for the benefit of Landlord that the
portion of the Tenant Improvements for which it is responsible shall be free
from any defects in workmanship and materials for a period of not less than one
(1) year from the date of completion thereof. Each of Tenant's Agents shall be
responsible for the replacement or repair, without additional charge, of all
work done or furnished in accordance with its contract that shall become
defective within one (1) year after the later to occur of (i) completion of the
work performed by such contractor or
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subcontractors and (ii) the Commencement Date. The correction of such work shall
include, without additional charge, all additional expenses and damages incurred
in connection with such removal or replacement of all or any part of the Tenant
Improvements, and/or the Project and/or common areas that may be damaged or
disturbed thereby. All such warranties or guarantees as to materials or
workmanship of or with respect to the Tenant Improvements shall be contained in
the Contract or subcontract and shall be written such that such guarantees or
warranties shall inure to the benefit of both Landlord and Tenant, as their
respective interests may appear, and can be directly enforced by either. Tenant
covenants to give to Landlord any assignment or other assurances which maybe
necessary to effect such right of direct enforcement.
4.2.2.3.1 Lien-Free Basis. Tenant's Contractor and
agents shall perform all work on a lien-free basis. If a lien is filed or
recorded against the Project due to, or in any way associated with, the
construction of the Tenant Improvements, Tenant agrees to have such lien
released of record (in a manner and form approved by Landlord) within five (5)
days of Landlord's written notice to Tenant regarding same. If Tenant fails to
cause the release of such lien within such five (5) day period to Landlord's
satisfaction, Landlord may cause the removal of such lien, and Tenant agrees to
repay Landlord for all costs and expenses incurred by Landlord to release the
lien (including, but not limited to, the payment of the amount stated in the
lien, any filing, processing, recording and attorneys' fees) within ten (10)
days of Landlord's written request therefor, and such amount shall be considered
Additional Rent due under the Lease. If Tenant fails to pay Landlord as
aforesaid, such failure shall be deemed an uncured noticed material default
under the Lease, and Landlord may pursue any remedy provided for under the
Lease, at law or in equity.
4.2.2.4 Insurance Requirements
4.2.2.4.1 General Coverages. All of Tenant's Agents shall
carry worker's compensation insurance covering all of their respective
employees, and shall also carry public liability insurance, including property
damage, all with limits, in form and with companies as are required to be
carried by Tenant as set forth in this Lease.
4.2.2.4.2 Special Coverages. Tenant shall carry "Builder's All
Risk" insurance in an amount approved by Landlord covering the construction of
the Tenant Improvements, and such other insurance as Landlord may require, it
being understood and agreed that the Tenant Improvements shall be insured by
Tenant pursuant to this Lease immediately upon completion thereof. Such
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant's Agents shall carry excess
liability and Products and Completed Operating Coverage insurance, each in
amounts not less than $500,000 for each incident, $1,000,000 in aggregate, and
in form and with companies as are required to be carried by Tenant as set forth
in this Lease.
4.2.2.4.3 General Terms. Certificates for all insurance
carried pursuant to this Section 4.2.2.4 shall be delivered to Landlord before
the commencement of construction of the Tenant Improvements and before the
Contractor's equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give Landlord
thirty (30) days prior written notice of any cancellation or lapse of the
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effective date or any reduction in the amounts of such insurance. In the event
that the Tenant Improvements are damaged by any cause during the course of the
construction thereof, Tenant shall immediately repair the same at Tenant's sole
cost and expense. Tenant's Agents shall maintain all of the foregoing insurance
coverage in force until the Tenant Improvements are fully completed and accepted
by Landlord, except for any Products and Completed Operation Coverage insurance
required by Landlord, which is to be maintained for ten (10) years following
completion of the work and acceptance by Landlord and Tenant. All policies
carried under this Section 4.2.2.4 shall insure Landlord and Tenant, as their
interests may appear, as well as Contractor and Tenant's Agents. All insurance,
except Workers' Compensation, maintained by Tenant's Agents shall preclude
subrogation claims by the insurer against anyone insured thereunder. Such
insurance shall provide that it is primary insurance as respects the owner and
that any other insurance maintained by owner is excess and noncontributing with
the insurance required hereunder. The requirements for the foregoing insurance
shall not derogate from the provisions for indemnification of Landlord by Tenant
under Section 4.2.2.2 of this Tenant Work Letter.
4.2.3 Governmental Compliance. The Tenant Improvements shall comply
in all respects with the following: (i) the Code and other state, federal, city
or quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) Project material manufacturer's specifications.
4.2.4 Inspection by Landlord. Landlord shall have the right to
inspect the Tenant Improvements at all times, provided however, that Landlord's
failure to inspect the Tenant Improvements shall in no event constitute a waiver
of any of Landlord's rights hereunder nor shall Landlord's inspection of the
Tenant Improvements constitute Landlord's approval of the same. Should Landlord
disapprove any portion of the Tenant Improvements, Landlord shall notify Tenant
in writing of such disapproval and shall specify the items disapproved. Any
defects or deviations in, and/or disapproval by Landlord of, the Tenant
Improvements shall be rectified by Tenant at no expense to Landlord, provided
however, that in the event Landlord determines that a defect or deviation exists
or disapproves of any matter in connection with any portion of the Tenant
Improvements and such defect, deviation or matter might adversely affect the
mechanical, electrical, plumbing, heating, ventilating and air conditioning or
life-safety systems of the Project, the structure or exterior appearance of the
Project or any other tenant's use of such other tenant's leased premises,
Landlord may, take such action as Landlord deems necessary, at Tenant's expense
and without incurring any liability on Landlord's part, to correct any such
defect, deviation and/or matter, including, without limitation, causing the
cessation of performance of the construction of the Tenant Improvements until
such time as the defect, deviation and/or matter is corrected to Landlord's
satisfaction.
4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant
and Landlord shall hold meetings as required at a reasonable time, with the
Architect and the Contractor regarding the progress of the preparation of
Construction Drawings and the construction of the Tenant Improvements, which
meetings shall be held at a location designated by the partners, and Landlord
and/or its agents shall receive prior notice of, and shall have the right to
attend, all such meetings, and, upon Landlord's request, certain of Tenant's
Agents
55
shall attend such meetings. One such meeting each month shall include the review
of Contractor's current request for payment.
4.3 Notice of Completion; Copy of "As Built" Plans. Within ten (10) days
after completion of construction of the Tenant Improvements, Tenant shall cause
a Notice of Completion to be recorded in the office of the Recorder of the
County of Los Angeles in accordance with Section 3093 of the Civil Code of the
State of California or any successor statute, and shall furnish a copy thereof
to Landlord upon such recordation. If Tenant fails to do so, Landlord may
execute and file the same on behalf of Tenant as Tenant's agent for such
purpose, at Tenant's sole cost and expense. At the conclusion of construction,
(i) Tenant shall cause the Architect and Contractor (A) to update the Approved
Working Drawings as necessary to reflect all changes made to the Approved
Working Drawings during the course of construction, (B) to certify to the best
of their knowledge that the "record-set" of as-built drawings are true and
correct, which certification shall survive the expiration or termination of this
Lease, and (C) to deliver to Landlord two (2) sets of copies of such as-built
drawings within ninety (90) days following issuance of a certificate of
occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of
all warranties, guaranties, and operating manuals and information relating to
the improvements, equipment, and systems in the Premises.
SECTION 5
MISCELLANEOUS
5.1 Tenant's Representative. Tenant has designated Bill Bergovoy as its
sole representative with respect to the matters set forth in this Tenant Work
Letter, who shall have full authority and responsibility to act on behalf of the
Tenant as required in this Tenant Work Letter.
5.2 Landlord's Representative. Landlord has designated Brooke Rege with
respect to the matters set forth in this Tenant Work Letter, who, until further
notice to Tenant, shall have full authority and responsibility to act on behalf
of the Landlord as required in this Tenant Work Letter.
5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. If any item requiring approval is timely disapproved by Landlord,
the procedure for preparation of the document and approval thereof shall be
repeated until the document is approved by Landlord.
5.4 Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an event of default as described in the Lease or
this Tenant Work Letter has occurred at any time on or before the Substantial
Completion of the Premises, then (i) in addition to all other rights and
remedies granted to Landlord pursuant to this Lease, Landlord shall have the
right to withhold payment of all or any portion of the Tenant Improvement
Allowance and/or Landlord may cause Contractor to cease the construction of the
Premises (in which case, Tenant shall be responsible for any delay in the
substantial completion of the Premises caused by such work stoppage), and (ii)
all other obligations of Landlord under the terms of this Tenant Work Letter
shall be forgiven until such time as such default is cured pursuant to the terms
of this Lease (in which case, Tenant shall be responsible for any delay in the
substantial completion of the Premises caused by such inaction by Landlord).
56
5.5 Additional Services. If the construction of the Tenant Improvements
shall require that additional services or facilities (including, but not limited
to, hoisting, cleanup or other cleaning services, trash removal, field
supervision, or ordering of materials) be provided by Landlord, then Tenant
shall pay Landlord for such items at Landlord's cost or at a reasonable charge
if the item involves time of Landlord's personnel only.
5.6 Construction Defects. Landlord shall have no responsibility for the
Tenant Improvements and Tenant will remedy, at Tenant's own expense, and be
responsible for any and all defects in the Tenant Improvements that may appear
during or after the completion thereof whether the same shall affect the Tenant
Improvements in particular or any parts of the Premises in general. Tenant shall
indemnify, hold harmless and reimburse Landlord for any costs or expenses
incurred by Landlord by reason of any defect in any portion of the Tenant
Improvements constructed by Tenant or Tenant's contractor or subcontractors, or
by reason of inadequate cleanup following completion of the Tenant Improvements.
5.7 Coordination of Labor. All of Tenant's contractors, subcontractors,
employees, servants and agents must work in harmony with and shall not interfere
with any labor employed by Landlord, or Landlord's contractors or by any other
tenant or its contractors with respect to any portion of the Project.
5.8 Work in Adjacent Areas. Any work to be performed in areas adjacent to
the Premises shall be performed only after obtaining Landlord's express written
permission, which shall not be unreasonably withheld, conditioned or delayed,
and shall be done only if an agent or employee of Landlord is present; Tenant
will reimburse Landlord for the expense of any such employee or agent.
5.9 HVAC Systems. Tenant agrees to be entirely responsible for the
maintenance or the balancing of any heating, ventilating or air conditioning
system installed by Tenant and/or maintenance of the electrical or plumbing work
installed by Tenant and/or for maintenance of lighting fixtures, partitions,
doors, hardware or any other installations made by Tenant.
5.10 Approval of Plans. Landlord will not check Tenant drawings for
building code compliance. Approval of the Construction Drawings by Landlord is
not a representation that the drawings are in compliance with the requirements
of governing authorities, and it shall be Tenant's responsibility to meet and
comply with all federal, state, and local code requirements. Approval of the
Construction Drawings does not constitute assumption of responsibility by
Landlord or its architect for their accuracy, sufficiency or efficiency, and
Tenant shall be solely responsible for such matters.
5.11 Books and Records. At its option, Landlord, at any time within two
(2) years after final disbursement of the Tenant Improvement Allowance to
Tenant, and upon at least ten (10) days prior written notice to Tenant, may
cause an audit to be made of Tenant's books and records relating to Tenant's
expenditures in connection with the construction of the Tenant Improvements.
Tenant shall maintain complete and accurate books and records in accordance with
generally accepted accounting principles of these expenditures for at least two
(2) years. Tenant shall make available to Landlord's auditor at the Premises
within ten (10) business days following Landlord's notice requiring the audit,
all books and records maintained by Tenant
57
pertaining to the construction and completion of the Tenant Improvements. In
addition to all other remedies which Landlord may have pursuant to the Lease,
Landlord may recover from Tenant the reasonable cost of its audit if the audit
discloses that Tenant falsely reported to Landlord expenditures which were not
in fact made or falsely reported a material amount of any expenditure or the
aggregate expenditures.
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EXHIBIT D TO LEASE
FORM OF MEMORANDUM OF COMMENCEMENT DATE
_________________, as Landlord, and _______________________________as Tenant,
executed that certain Lease dated as of ________________________, 2000 (the
"Lease").
The Lease contemplates that upon satisfaction of certain conditions Landlord and
Tenant will agree and stipulate as to certain provisions of the Lease. All such
conditions precedent to that stipulation have been satisfied.
Landlord and Tenant agree as follows:
1. The Commencement Date of the Lease is ______________________________.
2. The Termination Date of the Lease is ___________________________________.
3. The Premises consist of ____________________________ rentable square feet.
4. Base Rent is as follows:
____________________ THROUGH _________________; $__________ PER MONTH
____________________ THROUGH _________________; $__________ PER MONTH
____________________ THROUGH _________________; $__________ PER MONTH
____________________ THROUGH _________________; $__________ PER MONTH
5. Tenant's Pro Rata Share is ________________ percent (_________%).
IN WITNESS WHEREOF, the parties have caused this Memorandum to be duly executed
as of ______________, 2000.
LANDLORD: TENANT:
- - --------- -------
BY: BY:
NAME: NAME:
ITS: ITS:
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EXHIBIT E TO LEASE
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building or Land
without the prior written consent of the Landlord. Landlord shall have the right
to remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on doors
and walls shall be printed, painted, affixed or inscribed at the expense of
Tenant by a person chosen by Landlord.
2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection with
any window or door of the Premises, Tenant shall immediately discontinue such
use. No awning shall be permitted on any part of the Premises. Tenant shall not
place anything against or near glass partitions or doors or windows which may
appear unsightly from outside the Premises.
3. Tenant shall not obstruct any sidewalk, halls, passages, exits, entrances,
elevators, escalators, or stairways of the Building. The halls, passages, exits,
entrances, elevators, escalators and stairways are not open to the general
public. Landlord shall in all cases retain the right to control and prevent
access to such areas of all persons whose presence in the judgment of Landlord
would be prejudicial to the safety, character, reputation and interest of the
Land, Building and the Project's tenants; provided that, nothing in this Lease
contained shall be construed to prevent such access to persons with whom any
Tenant normally deals in the ordinary course of its business, unless such
persons are engaged in illegal activities. Tenant shall not go upon the roof of
the Building.
4. The directory of the Building will be provided exclusively for the display of
the name and location of tenants only, and Landlord reserves the right to
exclude any other names therefrom.
5. All cleaning and janitorial services for the Premises shall be provided
exclusively by Tenant, at Tenant's sole cost. Tenant shall not cause any
unnecessary labor by carelessness or indifference to the good order and
cleanliness of the Premises. Landlord shall not in any way be responsible to any
Tenant for any loss of property on the Premises, however occurring, or for any
damage to any Tenant's property by the janitor or any other person.
6. Landlord will furnish Tenant, free of charge, two (2) keys to each door lock
in the Premises. Landlord may make a reasonable charge for any additional keys.
Tenant shall not make or have made additional keys, and Tenant shall not alter
any lock or install a new additional lock or bolt on any door of its Premises.
Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys
of all doors which have been furnished to Tenant, and in the event of loss of
any keys so furnished, shall pay Landlord therefor.
7. If Tenant requires telegraphic, telephonic, computer circuits, burglar alarm
or similar services, it shall first obtain, and comply with, Landlord's
instructions for their installation, and shall pay the entire cost of such
installation(s).
8. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by Governmental
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Requirements. Landlord shall have the right to prescribe the weight, size and
position of all equipment, materials, furniture or other property brought into
the Building. Heavy objects shall, if considered necessary by Landlord, stand on
such platforms as determined by Landlord to be necessary to properly distribute
the weight. Business machines and mechanical equipment belonging to Tenant,
which cause noise or vibration that may be transmitted to the structure of the
Building or to any space in the Building or to any other tenant in the Building,
shall be placed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration. The
persons employed to move such equipment in or out of the Building must be
acceptable to Landlord. Landlord will not be responsible for loss of, or damage
to, any such equipment or other property from any cause (except the gross
negligence or willful misconduct of Landlord), and all damage done to the
Building by maintaining or moving such equipment or other property shall be
repaired at the expense of Tenant.
9. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited quantities
permitted by the Lease. Tenant shall not use or permit to be used in the
Premises any foul or noxious gas or substance, or permit or allow the Premises
to be occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Project by reason of noise, odors or vibrations nor shall
Tenant bring into or keep in or about the Premises any birds or animals, except
seeing eye-dogs for the blind.
10. Tenant agrees to cooperate fully to assure the most effective operation of
the heating and air-conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice.
11. Landlord reserves the right to change the name and street address of the
Building and/or Project.
12. Landlord reserves the right to exclude from the Building and/or Project
between the hours of 6 p.m. and 7 a.m. the following day, or such other hours as
may be established from time to time by Landlord, and on Sundays and legal
holidays, any person unless that person is known to the person or employee in
charge of the Building and has a pass or is properly identified. Tenant shall be
responsible for all persons for whom it requests passes and shall be liable to
Landlord for all acts of such persons. Landlord shall not be liable for damages
for any error with regard to the admission to or exclusion from the Building
and/or Project of any person. Landlord reserves the right to prevent access to
the Building in case of invasion, mob, riot, public excitement or other
commotion by closing the doors or by other appropriate action.
13. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and electricity, gas or air outlets
before Tenant and its employees leave the Premises. Tenant shall be responsible
for any damage or injuries sustained by other tenants or occupants of the
Building and/or Project or by Landlord for noncompliance with this rule.
14. Tenant shall not obtain for use on the Premises ice, drinking water, food,
beverage, towel or other similar services, except at such hours and under such
regulations as may be fixed by Landlord.
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15. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be deposited in them. The
expenses of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by Tenant if it or its employees or invitees shall have
caused it.
16. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to the
general public in or on the Premises. Tenant shall not make any room-to-room
solicitation of business from other tenants in the Building or Project. Tenant
shall not use the Premises for any business or activity other than that
specifically provided for in the Lease.
17. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.
18. Tenant shall not mark, drive nails, screws or drill into the partitions,
woodwork or plaster or in any way deface the Premises. Landlord reserves the
right to direct electricians as to where and how telephone and telegraph wires
are to be introduced to the Premises. Tenant shall not cut or bore holes for
wires. Tenant shall not affix any floor covering to the floor of the Premises in
any manner except as approved by Landlord. Tenant shall repair any damage
resulting from noncompliance with this rule.
19. Tenant shall not install, maintain or operate upon the Premises any vending
machine without the written consent of Landlord.
20. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Project or Land are prohibited, and Tenant shall
cooperate to prevent the same.
21. Landlord reserves the right to exclude or expel from the Building, Project
and Land any person who, in Landlord's judgment, is intoxicated, under the
influence of liquor or drugs or in violation of any of these Rules and
Regulations.
22. Tenant shall store all of its trash and garbage within the Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage disposal.
All garbage and refuse disposal shall be made in accordance with directions
issued from time to time by Landlord.
23. The Premises shall not be used for lodging or any improper or immoral or
objectionable purpose. No cooking shall be done or permitted by Tenant, except
that use by Tenant of Underwriters' Laboratory approved equipment for microwave
cooking, brewing coffee, tea, hot chocolate and similar beverages shall be
permitted; provided that, such equipment and its use is in accordance with all
Governmental Requirements.
24. Tenant shall not use in the Premises or in the public halls of the Building
or Project any hand truck except those equipped with rubber tires and side
guards or such other material-
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handling equipment as Landlord may approve. Tenant shall not bring any other
vehicles of any kind into the Building.
25. Without the prior written consent of Landlord, Tenant shall not use the name
of the Building or Project in connection with or in promoting or advertising the
business of Tenant except as Tenant's address.
26. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
27. Tenant assumes any and all responsibility for protecting the Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
28. The requirements of Tenant will be attended to only upon appropriate
application to the Manager of the Building by an authorized individual.
Employees of Landlord are not required to perform any work or do anything
outside of their regular duties unless under special instructions from Landlord,
and no employee of Landlord is required to admit Tenant to any space other than
the Premises without specific instructions from Landlord.
29. Tenant shall not park its vehicles in any parking areas designated by
Landlord as areas for parking by visitors to the Building or Project or Land.
Tenant shall not leave vehicles in the parking areas overnight nor park any
vehicles in the Building or Project parking areas other than automobiles,
motorcycles, motor driven or nonmotor driven bicycles or four-wheeled trucks.
30. Landlord shall enforce the Rules and Regulations in a non-discriminatory
manner throughout the Project. Landlord may waive any one or more of these Rules
and Regulations for the benefit of Tenant or any other tenant, but no such
waiver by Landlord shall be construed as a waiver of such Rules and Regulations
in favor of any other person, nor prevent Landlord from thereafter revoking such
waiver and enforcing any such Rules and Regulations against any or all of the
tenants of the Project.
31. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the covenants and conditions
of any lease of premises in the Project. If any provision of these Rules and
Regulations conflicts with any provision of the Lease, the terms of the Lease
shall prevail.
32. Landlord reserves the right to make such other and reasonable Rules and
Regulations as, in its judgment, may from time to time be needed for safety and
security, the care and cleanliness of the Building, Project and Land and the
preservation of good order in the Building and Project. Tenant agrees to abide
by all the Rules and Regulations stated in this exhibit and any additional rules
and regulations which are so made by Landlord.
33. Tenant shall be responsible for the observance of all of the foregoing rules
by Tenant and Tenant's Agents.
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