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EXHIBIT 10.11
STANDARD FORM OFFICE LEASE
THIS LEASE is made as of the 2nd day of January, 1996, by and between
Landlord and Tenant.
W I T N E S S E T H:
1. Terms and Definitions.
For the purposes of this Lease, the following terms shall have the
following definitions and meanings:
(a) LANDLORD: HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP, a Delaware
limited partnership.
(b) LANDLORD'S ADDRESS:
Howard Hughes Corporation
1635 Village Center Circle
Suite 140
Las Vegas, Nevada 89134
Attn: Barbara Helgren
(c) TENANT: WILLIAMS-SONOMA, INC., a California corporation.
(d) TENANT'S ADDRESS: Copy to:
Williams-Sonoma, Inc. Irell & Manella
3250 Van Ness Avenue 1800 Avenue of the Stars, #900
San Francisco, California 94109 Los Angeles, California 90067
Attn: Mr. Patrick Connolly Attn: Sandra G. Kanengeiser, Esq.
(e) PREMISES ADDRESS: 10,000 Covington Cross Drive, Las Vegas, Nevada
(subject to confirmation upon receipt of a building permit for the
Improvements).
(f) PREMISES: Those certain premises defined in Subparagraph 2(a)
hereinbelow.
(g) APPROXIMATE RENTABLE SQUARE FEET WITHIN IMPROVEMENTS: 35,867.
(h) TERM: Ten (10) Lease Years, with three (3) five (5) year options to
extend.
(i) IMPROVEMENTS: Those improvements constructed by Landlord as set
forth in the Work Letter.
(j) ESTIMATED COMMENCEMENT DATE: August 1, 1996.
(k) COMMENCEMENT DATE: Subject to Tenant Delays, as defined in the Work
Letter Agreement, the date upon which the Improvements have been
substantially completed as determined by Landlord's architect or space
planner. The Improvements shall be deemed substantially completed upon (i)
completion of the Improvements other than the Punch List Items, (ii)
receipt of a Certificate of Occupancy or Temporary Certificate of Occupancy
(or its equivalent) for the Improvements and (iii) Tenant's receipt of
written notice from Landlord specifying the date upon which Landlord
projects that the Improvements will be substantially completed, which
notice
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shall be delivered by Landlord at least five (5) business days, but no more
than thirty (30) days, prior to the projected date for substantial
completion.
(l) ANNUAL BASIC RENT; MONTHLY BASIC RENT:
Lease Years Annual Basic Rent Monthly Basic Rent
1-5 $529,396.92 $44,116.41
6-10 $598,261.56 $49,855.13
(m) OPERATING EXPENSES ALLOWANCE: Operating Expenses for calendar year
1996. In the event the Landlord has not incurred Operating Expenses during
the entire 1996 calendar year, then Landlord will annualize those Operating
Expenses incurred during the partial calendar year in order to determine
the Operating Expenses Allowance.
(n) PERMITTED USE: Any use permitted by applicable law which is
consistent with other uses then existing within The Crossing Business
Center in Las Vegas, Nevada (the "PROJECT") and subject to Paragraph 8
below.
(o) BROKERS: CB Commercial Real Estate Services.
(p) LANDLORD'S CONSTRUCTION REPRESENTATIVE: Frank Beck.
(q) TENANT'S CONSTRUCTION REPRESENTATIVE: Susan Browne.
(r) LEASE YEAR: A period of twelve (12) consecutive months, the first
such period commencing on the Commencement Date and consecutive periods
beginning on each consecutive anniversary thereof.
(s) EXHIBITS: "A" through "G" inclusive, which Exhibits are attached to
this Lease and are incorporated herein by this reference.
2. Premises Leased.
(a) Initial Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the parcel of real property legally described
on Exhibit "A" attached hereto and outlined on the Site Plan attached
hereto as Exhibit "B", and all improvements from time to time located
thereon, including the Improvements to be constructed by Landlord as
described in the Work Letter Agreement attached hereto as Exhibit "C" (the
"PREMISES"), said Premises being agreed, for the purposes of this Lease, to
have the number of rentable square feet as designated in Subparagraph 1(g)
(subject to adjustment as provided in Exhibit "D" attached hereto). Upon
the Commencement Date, Landlord and Tenant shall compile a list of
incomplete and/or corrective Improvement items (collectively, "PUNCH LIST
ITEMS"), which items Landlord shall complete and/or correct promptly
thereafter and Landlord shall remain responsible for the completion and/or
correction of such items. In addition, Landlord shall be responsible, at
Landlord's sole cost and expense, for any latent defects in the
Improvements and for any other defects disclosed in writing by Tenant to
Landlord within the first year after the Commencement Date. Landlord shall
construct the Improvements in compliance with all laws in effect at the
time of construction.
The parties hereto agree that said letting and hiring is upon and
subject to the terms, covenants and conditions herein set forth and Tenant
covenants as a material part of the consideration for this Lease to keep
and perform each and all of said terms, covenants and conditions by it to
be kept and performed and that this Lease is made upon the condition of
such performance.
(b) Expansion Premises. Tenant shall have the option ("EXPANSION
OPTION") to cause Landlord to expand the Premises to accommodate an
additional 17,920 rentable square feet of improved space, together with
parking areas for an additional 135
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cars, in the location depicted on Exhibit "B" attached hereto and described
in Exhibit "A" attached hereto (the "EXPANSION PREMISES"). The Expansion
Option shall not, at Landlord's election, be exercisable if Tenant is in
default under Paragraph 25 of this Lease at the time Tenant attempts to
exercise the Expansion Option. The Expansion Option is personal to the
Tenant named in Subparagraph 1(c) ("ORIGINAL TENANT") or to any "Affiliate
Assignee" (as that term is defined in Paragraph 26 below) and may not be
exercised by any other person or entity. In order to exercise the Expansion
Option, Tenant must deliver written notice ("EXPANSION NOTICE") thereof to
Landlord prior to the expiration of the third (3rd) Lease Year. Upon
Tenant's timely exercise of the Expansion Option, Landlord shall cause the
construction of the Expansion Premises in accordance with the terms of the
Work Letter Agreement, except that: (i) the Preliminary Plans prepared
pursuant to Paragraph 2.2 of the Work Letter Agreement shall be based upon
the preliminary plans for the original Improvements; (ii) the Allowance
shall be the product of $25.00 per rentable square foot of the improvements
to be constructed for the Expansion Premises multiplied by a fraction, the
numerator of which is the number of months remaining in the initial Term
following the Estimated Commencement Date for the Expansion Premises, and
the denominator of which is one hundred twenty (120); (iii) the schedule
set forth in Paragraph 6 of the Work Letter Agreement will be modified as
mutually agreed by Landlord and Tenant in good faith as soon as reasonably
possible after the date of Landlord's receipt of the Expansion Notice and
(iv) Paragraph 7.2 of the Work Letter Agreement shall not apply to
construction of the Expansion Premises. Subject to applicable laws, the
Base Improvements provided by Landlord for the Expansion Premises shall be
substantially the same as the Base Improvements provided by Landlord for
the original Improvements. The Estimated Commencement Date for the
Expansion Premises will be twelve (12) months following the date of
Landlord's receipt of the Expansion Notice; provided, however, that upon
request from Tenant, Landlord shall use commercially reasonable efforts to
accelerate construction of improvements in the Expansion Premises. The
actual Commencement Date for Tenant's lease of the Expansion Premises will
be the date upon which the Expansion Premises has been substantially
completed as determined by Landlord's architect or space planner (as
substantial completion is defined in Subparagraph 1(k) above and subject to
acceleration for Tenant Delays). The Term of Tenant's lease of the
Expansion Premises shall be co-terminous with the Term of Tenant's lease of
the original Premises. Effective upon the Commencement Date for the
Expansion Premises, (i) the Expansion Premises shall become a portion of
the Premises for all purposes under this Lease, (ii) Annual Basic Rent
shall be increased by an amount equal to the product of the then-current
Annual Basic Rent (on a rentable square foot basis) multiplied by the
rentable square footage contained in the improvements to be constructed for
the Expansion Premises and (iii) the Operating Expenses Allowance shall be
increased by an amount equal to the product of the Operating Expenses
Allowance (on a rentable square foot basis) multiplied by the rentable
square footage contained in the improvements to be constructed for the
Expansion Premises.
(c) Service Facilities. Landlord reserves the right, and Tenant shall
have no right, of access to the Service Facilities, as defined in
Subparagraph 14(a)(ii).
3. Term.
(a) Initial Term. The Term of this Lease shall be for the period
designated in Subparagraph 1(h) commencing on the Commencement Date, and
ending on the expiration of such period, unless such Term shall be sooner
terminated or extended as hereinafter provided. The Commencement Date and
the date upon which the Term of this Lease shall end shall be determined in
accordance with the provisions of Subparagraph 1(k) and said dates will be
specified in Landlord's Notice of Lease Term Dates ("NOTICE"), in the form
of Exhibit "E" attached hereto, and shall be served upon Tenant as provided
in Paragraph 9, after Landlord delivers or tenders possession of the
Premises to Tenant and Tenant has accepted possession of the Premises in
accordance with the terms of this Lease. The Notice shall be binding upon
Tenant unless Tenant objects to the Notice in writing, served upon Landlord
as provided for in Paragraph 9 hereof, within ten (10) business days of
Tenant's receipt of the Notice.
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(b) Options to Extend.
(i) Option Rights. Landlord hereby grants to Tenant three (3)
options ("EXTENSION OPTIONS") to extend the Lease Term for periods of five
(5) years each ("OPTION TERMS"). The Extension Option shall not, at
Landlord's election, be exercisable if Tenant is in default under Paragraph
25 of this Lease after expiration of applicable cure periods at the time
Tenant attempts to exercise the Extension Option or, following such
exercise, prior to the commencement of the Option Term. The Extension
Option is personal to the Original Tenant or any assignee of the Original
Tenant's entire interest in this Lease where such assignment is permitted
pursuant to Paragraph 26 below and may not be exercised by any other person
or entity. Provided Tenant has properly and timely exercised an Extension
Option, the then current Term shall be extended for the period specified
above, and all terms, covenants and conditions of this Lease shall remain
unmodified and in full force and effect except that Annual Basic Rent
payable by Tenant during the Option Term shall be adjusted as set forth in
Subparagraph 2(b)(ii). In no event shall Tenant be entitled to exercise the
second (2nd) Extension Option unless Tenant has properly and timely
exercised the first Extension Option and in no event shall Tenant be
entitled to exercise the third (3rd) Extension Option unless Tenant has
properly and timely exercised the first and second (2nd) Extension Options.
In no event shall Tenant be entitled to extend the Lease Term beyond the
third (3rd) Option Term.
(ii) Option Rent. The Annual Basic Rent payable by Tenant during
the Option Term (the "OPTION RENT") shall be one hundred percent (100%) of
the "Fair Market Rental Rate" for the Premises; however, the Annual Basic
Rent for the Option Term shall not be below the Annual Basic Rent payable
for the Lease Year immediately preceding the Option Term. The term "FAIR
MARKET RENTAL RATE" shall mean the annual amount that a willing,
non-equity, third-party tenant would pay and a willing, comparable landlord
would accept, on a non-renewal basis, at arm's length, for space
unencumbered by any other tenant's expansion rights, which space is
comparable to the Premises and similarly improved in projects of comparable
age, size and quality in Las Vegas, Nevada, including The Crossing Business
Center ("COMPARABLE PROJECTS"), giving appropriate consideration to
appropriate concessions and to all economic terms, such as annual rental
rates, escalation clauses (including type, such as net, base year or
expense stop), abatement provisions reflecting free rent, if any, parking
terms and availability, length of lease term, size and location of premises
being leased, and other generally acceptable terms and conditions for the
tenancy of the space in question (but without any deduction for the absence
of an obligation of the landlord to pay a brokerage commission if a
comparable transaction does not include such an obligation). The parties
agree that if Landlord is not obligated to pay a broker's commission in
connection with an Extension Option, that the Fair Market Rental Rate shall
reflect that Landlord will be entitled to retain fifty percent (50%) of the
savings resulting from the fact that no such commission (calculated at the
rate then generally paid for comparable transactions in Comparable
Projects) is paid and that Tenant is entitled to the remaining fifty
percent (50%) of the savings from the fact that no such commission is being
paid.
(iii) Exercise of Options. The Extension Options shall be exercised
by Tenant, if at all, only in the following manner: (A) Tenant shall
deliver written notice to Landlord not more than fifteen (15) months nor
less than eleven (11) months prior to the expiration of the initial Term
(or preceding Option Term, as applicable) stating that Tenant is interested
in exercising the Extension Option, (B) Landlord, after receipt of Tenant's
notice, shall deliver notice (the "OPTION RENT NOTICE") to Tenant within
forty-five (45) days after Landlord's receipt of such notice from Tenant
setting forth Landlord's initial determination of the Option Rent, which
shall be applicable to this Lease during the Option Term; and (C) if Tenant
wishes to exercise the Extension Option, Tenant shall, on or before the
date occurring thirty (30) days after Tenant's receipt of the Option Rent
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Notice, exercise the Extension Option by delivering written notice thereof
to Landlord, and upon, and concurrent with, such exercise, Tenant may, at
its option, object in writing to the Option Rent contained in the Option
Rent Notice, in which case the parties shall follow the procedure, and the
Option Rent shall be determined, as set forth in Subparagraph 2(b)(iv)
below.
(iv) Determination of Option Rent. In the event Tenant timely
objects in writing to the Option Rent initially determined by Landlord,
Landlord and Tenant shall attempt to agree upon the Option Rent using their
best good-faith efforts. If Landlord and Tenant fail to reach agreement
within forty-five (45) days following Tenant's objection to the Option Rent
(the "OUTSIDE AGREEMENT DATE"), then each party shall submit to the other
party a separate written determination of the Option Rent within five (5)
days after the Outside Agreement Date, and such determinations shall be
submitted to arbitration in accordance with clauses (A) through (G) below.
Failure of Tenant or Landlord to submit a written determination of the
Option Rent within such five (5) day period shall conclusively be deemed to
be the non-determining party's approval of the Option Rent submitted within
such five (5) day period by the other party.
(A) Each party shall, within ten (10) days following the
Outside Agreement Date, appoint a licensed, disinterested M.A.I.
Appraiser having substantial experience with comparable buildings in
Las Vegas, Nevada (a "QUALIFIED APPRAISER") and give written notice of
such appointment to the other. If either party fails to notify the
other of the appointment of its Qualified Appraiser within the time
period specified above, then the Qualified Appraiser appointed shall be
the sole appraiser to determine the Option Rent;
(B) In the event two (2) Qualified Appraisers are chosen as
herein provided, the Qualified Appraisers so chosen shall meet within
ten (10) business days after they are appointed as aforesaid, and, if
within ten (10) business days after such first meeting, the two (2)
Qualified Appraisers fail to come to a mutual determination as to the
appropriate Option Rent, they themselves shall appoint a third
Qualified Appraiser, who shall be a competent and disinterested person
with qualifications similar to those required of the first two (2)
Qualified Appraisers as herein provided. In the event the first two (2)
Qualified Appraisers fail to agree upon and select a third Qualified
Appraiser within ten (10) days after the expiration of said ten (10)
day period, the third Qualified Appraiser shall be selected by any
judge with authority under Nevada law and the parties shall not raise
any questions or objections as to such judge's full power,
jurisdiction, and authority to select said Qualified Appraiser;
(C) Within ten (10) days after appointment of the third
Qualified Appraiser, each of the three (3) Qualified Appraisers
selected shall state in writing his or her respective opinion as to the
appropriate Option Rent, supported by the reasons therefor with
counterpart copies to each party;
(D) The Qualified Appraisers shall arrange for a simultaneous
exchange of such determinations promptly. The opinion as to the Option
Rent which is the furthest from the middle value shall be excluded and
the Option Rent for purposes hereof shall be the average of the
remaining two (2) opinions and shall constitute the decision of the
Qualified Appraisers and be final and binding on Landlord and Tenant;
provided, however, that if both other opinions are equally distant in
opposite directions from the middle value, then the middle value shall
constitute the Option Rent. The Qualified Appraisers shall give written
notice to the parties stating their determination, and shall furnish to
each
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party a signed copy of such determination. The Qualified Appraisers
shall have no power to modify the provisions of this Lease.
(E) In the event of a failure, refusal or inability of any
Qualified Appraiser to act, a successor shall be appointed by the party
who originally appointed the Qualified Appraiser, but in the case of
the third Qualified Appraiser, the third Qualified Appraiser's
successor shall be appointed in the same manner as provided for
appointment of the third Qualified Appraiser. Each party shall pay the
fees and expenses of the party's own Qualified Appraiser and shall
share equally the fees and expenses of the third Qualified Appraiser
and all other expenses of the appraisal.
4. Possession.
Tenant agrees that in the event of the inability of Landlord to deliver
possession of the Premises to Tenant on the Estimated Commencement Date, this
Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for
any loss or damage resulting therefrom, except as expressly provided in
Paragraph 7.2 of Exhibit "C".
5. Annual Basic Rent.
Tenant agrees to pay Landlord as Annual Basic Rent for the Premises the
Annual Basic Rent designated in Subparagraph 1(l) in twelve (12) equal monthly
installments, each in advance on the first day of each and every calendar month
during the Term, except that the first full month's rent shall be paid upon the
execution hereof. In the event the Term of this Lease commences or ends on a day
other than the first day of a calendar month, then the rental for such periods
shall be prorated in the proportion that the number of days this Lease is in
effect during such periods bears to thirty (30), and such rental shall be paid
at the commencement of such periods. In addition to said Annual Basic Rent,
Tenant agrees to pay the amount of the rental adjustments as additional rent
when hereinafter provided in this Lease. Said Annual Basic Rent, additional
rent, and rental adjustments shall be paid to Landlord, without any prior demand
therefor and without any deduction or offset whatsoever (except as expressly
provided in this Lease), in lawful money of the United States of America, which
shall be legal tender at the time of payment, at the address of Landlord
designated in Subparagraph 1(b) or to such other person or at such other place
as Landlord may from time to time designate in writing. Further, all charges to
be paid by Tenant hereunder, including, without limitation, payments for
Operating Expenses and repairs shall be considered additional rent for the
purposes of this Lease, and the word "RENT" in this Lease shall include such
additional rent unless the context specifically or clearly implies that only the
Annual Basic Rent is referenced.
6. Rental Adjustment.
(a) For the purposes of this Subparagraph 6(a), the following terms are
defined as follows:
Operating Expenses Allowance. Operating Expenses Allowance shall mean
that portion of the Operating Expenses which Landlord has included in the
Annual Basic Rent and which amount is set forth in Subparagraph 1(m) above.
Operating Expenses. Operating Expenses shall consist of all direct
costs of operation and maintenance of the Premises, as determined by
standard accounting practices, consistently applied, including the
following costs by way of illustration, but not limitation: real property
taxes and assessments and any taxes or assessments hereafter imposed in
lieu thereof; rent taxes, gross receipt taxes (whether assessed against
Landlord or assessed against Tenant and collected by Landlord, or both);
relamping; the net cost and expense of insurance obtained by Landlord under
Paragraph 21(d) below (provided, however, that such insurance may be
obtained by Landlord for the entirety of The Crossing Business Center in
which case Landlord shall reasonably prorate the cost and expense of such
insurance to each separate building within The Crossing Business Center
project based upon square footage of either land or improvements); security
(but
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nothing contained herein shall be deemed to require Landlord to provide
security); labor; the cost (fully amortized over useful life in accordance
with generally accepted accounting principles together with interest at the
rate of Landlord's cost of borrowing unsecured funds, as of the date of
installation of the Improvements or commencement of the replacement or
repair, on the unamortized balance) of (a) any capital improvements made to
the Premises by the Landlord, with Tenant's consent, which are designed to
reduce other Operating Expenses by an amount at least equal to the
amortized cost of such improvement, or made to the Premises by Landlord to
comply with any governmental law or regulation that was not applicable to
the Improvements at the time they were constructed, or (b) replacement or
repair of any building equipment (but not repair or replacement of the
roof, any exterior or other load bearing walls or the foundation of the
Improvements) needed to operate the Premises at the same quality levels as
prior to the replacement or repair; costs incurred in the management of the
Premises (including without limitation supplies, wages and salaries of
employees used in the management, operation and maintenance of the
Premises, and payroll taxes and similar governmental charges with respect
thereto, management office rental (which shall be reasonably allocated to
all projects managed from such office) and a management fee not to exceed
four percent (4%) of Landlord's gross revenues from the Premises) but
Operating Expenses shall not include a parking management fee if Landlord
hires a third party to manage parking; supplies, materials, equipment,
tools, repair and maintenance of those portions of the Premises for which
Landlord is responsible to clean, repair and maintain pursuant to this
Lease, including the obligations of Landlord under Subparagraphs 15(b) and
18(a) (but not any costs attributable to repairs made by Landlord pursuant
to Paragraph 2(a)); rental of personal property used in maintenance; costs
and expenses of gardening and landscaping; maintenance of signs (other than
Tenant's signs); personal property taxes levied on or attributable to
personal property used in connection with the Premises; assessments against
the Premises pursuant to CC&Rs; and costs and expenses of repairs,
resurfacing, repairing, maintenance, painting, lighting, cleaning
(including cleaning of exterior windows), and similar items related to the
Premises (including, without limitation, the parking areas).
Notwithstanding anything to the contrary contained in this Lease or the
CC&Rs, in no event shall Operating Expenses include any costs related to
common areas of the Project. To the extent that the cost of any repairs or
maintenance (but not any start-up corrections attributable to new
construction) performed during the 1996 base year is covered by warranties
or guaranties, then for any period of time during the Term in which such
warranties or guaranties are not in effect, the cost of such repairs and
maintenance shall be included in the 1996 base year Operating Expenses for
purposes of computing Tenant's obligations under Paragraph 6(b) below. In
addition, if Landlord elects to carry a type of insurance as an Operating
Expense, and if such type of insurance was not carried during the 1996 base
year, then during such periods that such new type of insurance premiums are
so included in a comparison year, Operating Expenses for the 1996 base year
shall be deemed to be increased by the amount of the premium for comparable
coverage which would have been payable had the coverage been carried during
the 1996 base year. Further, the same treatment shall be applied to
material elements of Operating Expenses which are added voluntarily by
Landlord to Operating Expenses on or after January 1, 1997, and the
inclusion of such amounts in Operating Expenses for the 1996 base year
shall only include the amount Landlord would have incurred had such items
been included in Operating Expenses during the 1996 base year, with any
increases being an additional Operating Expense payable by Tenant pursuant
to Paragraph 6(b) below. Real property taxes for the 1996 base year shall
be calculated as if the initial Improvements were complete throughout the
entire year. Finally, Operating Expenses shall not include the following:
(i) bad debt expenses and interest, principal, points and fees on
debts (except in connection with the financing of items which may be
included in Operating Expenses) or amortization on any mortgage or
mortgages or any other debt instrument encumbering the Premises;
(ii) real estate brokers' leasing commissions;
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(iii) the cost of providing any service to the extent directly
paid by Tenant;
(iv) any costs expressly excluded from Operating Expenses
elsewhere in this Lease;
(v) costs of any items (including, but not limited to, costs
incurred by Landlord for the repair of damage to the Premises) to the
extent Landlord receives reimbursement from insurance proceeds or from a
third party, except that any commercially reasonable deductible amount
under any insurance policy shall be included within Operating Expenses;
(vi) costs of capital improvements, except those expressly set
forth in the definition of Operating Expenses above;
(vii) rentals and other related expenses for leasing equipment
(except when needed in connection with normal repairs and maintenance of
the Premises) which if purchased, rather than rented, would constitute a
capital improvement not includable in Operating Expenses pursuant to this
Lease;
(viii) depreciation, amortization and interest payments, except as
specifically included in Operating Expenses pursuant to the terms of this
Lease and except on materials, tools, supplies and vendor-type equipment
purchased by Landlord to enable Landlord to supply services Landlord might
otherwise contract for with a third party, where such depreciation,
amortization and interest payments would otherwise have been included in
the charge for such third party's services, all as determined in accordance
with generally accepted accounting principles, consistently applied, and
when depreciation or amortization is permitted or required, the item shall
be amortized over its reasonably anticipated useful life;
(ix) costs incurred by Landlord for alterations (including
structural additions), repairs (including, without limitation, capital
repairs resulting from casualty but including in Operating Expenses
insurance deductibles expended for such repairs), equipment and tools which
are of a capital nature and/or which are considered capital improvements or
replacements under generally accepted accounting principles, consistently
applied, except as specifically includable in Operating Expenses pursuant
to the terms of this Lease;
(x) Landlord's general corporate overhead and general and
administrative expenses;
(xi) advertising and promotional expenditures;
(xii) janitorial costs, electric power costs or other utility
costs to the extent Tenant pays such costs directly pursuant to Paragraph
18 below;
(xiii) tax penalties incurred as a result of Landlord's
negligence, inability or unwillingness to make payments or file returns
when due;
(xiv) costs arising from Landlord's charitable or political
contributions;
(xv) costs necessitated by or resulting from the negligence of
Landlord, or any of its agents, employees or independent contractors;
(xvi) any ground lease rental;
(xvii) all costs associated with any hazardous waste remediation;
(xviii) any reserves; and
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(xix) overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services for the
Premises (other than a management fee) to the extent the same exceeds the
cost of such goods and/or services generally charged by unaffiliated third
parties on a competitive basis.
As used herein, the term "REAL PROPERTY TAXES" shall include any form
of assessment, license fee, license tax, business license fee, commercial rental
tax, levy, charge, penalty, tax or similar imposition imposed by any authority
having the direct power to tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
or special assessment district thereof, as against any legal or equitable
interest of Landlord in the Premises, including, but not limited to, the
following:
(i) any tax on Landlord's "right" to rent or "right" to other
income from the Premises or as against Landlord's business of leasing the
Premises;
(ii) any assessment, tax, fee, levy or charge in substitution,
partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real estate tax, recognizing
that real property taxes shall also include any governmental assessments or
contributions towards a governmentally required cost/sharing agreement for
the purpose of augmenting or improving the quality of services and
amenities normally provided by governmental agencies, and it is the
intention of Tenant and Landlord that all such new and increased
assessments, taxes, fees, levies and charges be included within the
definition of "real property taxes" for the purposes of this Lease,
including, without limitation, those calculated to increase tax increments
to governmental agencies or to pay for such services as fire protection,
street, sidewalk and road maintenance, refuse removal or other governmental
services which may have been formerly provided without charge to property
owners or occupants;
(iii) any assessment, tax, fee, levy or charge allocable to or
measured by the area of the Premises or the rent payable hereunder,
including, without limitation, any gross income tax or excise tax levied by
the State, city or federal government, or any political subdivision
thereof, with respect to the receipt of such rent, or upon or with respect
to the possession, leasing, operating, management, maintenance, alteration,
repair, use or occupancy by Tenant of the Premises, or any portion thereof;
(iv) any assessment, tax, fee, levy or charge upon this
transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises (but not any
documents requested by Landlord);
(v) any assessment, fee, levy or charge by any governmental
agency related to any transportation plan, fund or system instituted within
the geographic area of which the Premises are a part (provided that all
assessments which may be paid in installments shall be included in
Operating Expenses under the assumption that such assessments are paid by
Landlord in the maximum number of installments permitted by law whether or
not such assessments are actually paid in installments); or
(vi) reasonable legal and other professional fees, costs and
disbursements incurred in connection with proceedings to contest, determine
or reduce real property taxes, but only to the extent of the reduction
reasonably anticipated by Landlord as a result of such proceedings.
Notwithstanding any provision of this Subparagraph 6(a) expressed or
implied to the contrary, "real property taxes" shall not include Landlord's
federal or state income, franchise, inheritance or estate taxes.
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(b) By the first day of March of each calendar year during the Term of
this Lease, or as soon thereafter as is reasonably possible (but in any event
prior to July 1) Landlord shall deliver to Tenant a statement, itemized on a
line item basis ("ESTIMATE STATEMENT"), wherein Landlord shall estimate the
Operating Expenses for the current calendar year, and the amount, if any, by
which the Operating Expenses are in excess of the Operating Expenses Allowance.
Provided, however, if Landlord determines that the Operating Expenses for such
current calendar year are greater than that set forth in the Estimate Statement,
then Landlord may deliver on the first day of June, September, or December, as
appropriate, a revised Estimate Statement and Tenant shall pay to Landlord,
within thirty (30) days of the delivery of such revised Estimate Statement, the
difference between such revised Estimate Statement and the original Estimate
Statement for the portion of the current calendar year which has then expired,
and Tenant shall pay during the balance of such current calendar year through
February of the succeeding calendar year a fraction of the balance of such
difference as would fully amortize such excess over the remaining months of the
then current calendar year through and including February of the succeeding
calendar year. If the Operating Expenses estimated in the Estimate Statement
exceed the Operating Expenses Allowance, then such excess amount shall be
divided into twelve (12) equal monthly installments and Tenant shall pay to
Landlord, concurrently with the regular monthly rent payment next due following
the receipt of such statement, an amount equal to one (1) monthly installment
multiplied by the number of months from January in the calendar year in which
said statement is submitted (or, from the calendar month of the Commencement
Date for the first year of the Term) to the month of such payment, both months
inclusive. Subsequent installments shall be paid concurrently with the regular
monthly rent payments for the balance of the calendar year and shall continue
until the next calendar year's Estimate Statement is rendered. By the first day
of March of each succeeding calendar year during the Term of this Lease or as
soon thereafter as is reasonably possible (but in any event prior to July 1),
Landlord shall deliver to Tenant a statement ("ACTUAL STATEMENT") wherein
Landlord shall state the actual Operating Expenses for the preceding calendar
year. If the Actual Statement reveals a greater increase in Operating Expenses
than was estimated by Landlord in the Estimate Statement delivered as provided
herein, then upon receipt of the Actual Statement from Landlord, Tenant shall
pay a lump sum equal to said total increase over the Operating Expenses
Allowance, less the total of the monthly installments of increases set forth on
the Estimate Statement which were paid in the previous calendar year. If, in any
calendar year, Operating Expenses are less than the preceding calendar year,
then upon receipt of Landlord's Actual Statement, any overpayment made by Tenant
on the monthly installment basis provided above shall be credited toward the
next monthly rent falling due and the monthly installment of Operating Expenses
to be paid pursuant to the then current Estimate Statement shall be adjusted to
reflect such lower expenses for the most recent calendar year, or if this Lease
has been terminated, such excess shall be credited against any amount which
Tenant owes Landlord pursuant to this Lease and, to the extent all amounts which
Tenant owes Landlord pursuant to this Lease have been paid, Landlord shall
promptly pay such excess to Tenant. Any delay or failure by Landlord in
delivering any estimate or statement pursuant to this Subparagraph 6(b) shall
not constitute a waiver of its right to require an increase in rent nor shall it
relieve Tenant of its obligations pursuant to this Subparagraph 6(b), except
that (i) the failure of Landlord to deliver to Tenant the Actual Statement for
any calendar year by that date which is two (2) years after the last day of such
calendar year shall preclude Landlord from enforcing its rights under this
Paragraph 6 against Tenant only with respect to those Operating Expenses for
which Landlord or Landlord's employees, agents or contractors (including,
without limitation, any person or entity that manages the Premises for Landlord)
was solely responsible for the determination and calculation thereof, and (ii)
Tenant shall not be obligated to make any payments based on such estimate or
statement until thirty (30) days after receipt of such estimate or statement.
Tenant or an independent certified public accountant (which accountant is a
member of a nationally or regionally recognized accounting firm) designated by
Tenant may, after reasonable notice to Landlord and at reasonable times, inspect
and photocopy Landlord's records relating to Operating Expenses at Landlord's
offices or wherever records are located, provided that Tenant is not then in
default after expiration of all applicable cure periods (or if Landlord contends
that Tenant is in default, no good faith dispute exists between Landlord and
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Tenant as to whether Tenant is in default) and provided further that Tenant and
such accountant shall, and each of them shall, use their commercially reasonable
efforts to cause their respective agents and employees to, maintain all
information contained in Landlord's records in strict confidence.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. In the
event Tenant shall dispute the amount set forth in the Actual Statement
described above in this Subparagraph 6(b), Tenant shall have the right not later
than eighteen (18) months following receipt of such Actual Statement to cause
Landlord's books and records with respect to the preceding calendar year to be
audited by a certified public accountant mutually acceptable to Landlord and
Tenant. The amounts payable under this Subparagraph 6(b) by Landlord to Tenant
or by Tenant to Landlord as the case may be shall be appropriately adjusted on
the basis of such audit plus interest from the date of payment until the date of
adjustment at the "Interest Rate". The term "INTEREST RATE" means the lesser of
(a) the "Prime Rate" or "Reference Rate" announced from time to time by Bank of
America (or such reasonable comparable national banking institution as is
selected by Landlord in the event Bank of America ceases to exist or to publish
a Prime Rate or Reference Rate), plus two percent (2%), or (b) the maximum rate
permitted by law. If such audit discloses a liability for further refund by
Landlord to Tenant in excess of five percent (5%) of the Operating Expenses for
any calendar year, the cost of such audit shall be borne by Landlord; otherwise
the cost of such audit shall be borne by Tenant. If Tenant shall not request an
audit in accordance with the provisions of this Subparagraph 6(b) within
eighteen (18) months of receipt of Landlord's Actual Statement, such Actual
Statement shall be conclusively binding upon Landlord and Tenant.
Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Operating Expenses for the year in which
this Lease terminates, Tenant shall pay, within thirty (30) days after receipt
of written notice, any increase due over the estimated expenses paid and
conversely any overpayment made in the event the estimated expenses paid exceed
actual expenses shall be credited against any amount which Tenant owes Landlord
pursuant to this Lease and, to the extent all amounts which Tenant owes Landlord
pursuant to this Lease have been paid, Landlord shall promptly refund such
overpayment to Tenant.
Notwithstanding anything contained in this Paragraph 6, Tenant shall
not be entitled to any credit or payment from Landlord in the event that
Operating Expenses are less than the Operating Expenses Allowance for any
calendar year.
7. Security Deposit.
Intentionally Omitted.
8. Use.
(a) Tenant shall use the Premises for the use specified in
Subparagraph 1(n), and shall not use or permit the Premises to be used for
any other purpose. Notwithstanding anything to the contrary contained
herein, in no event shall any portion of the Premises be used for gaming
purposes including, without limitation, slot machines or other gaming
equipment. Tenant shall not use or occupy the Premises in violation of such
Rules and Regulations as Landlord may from time to time reasonably adopt
for the safety, care and cleanliness of the Premises or The Crossing
Business Center, or of any recorded covenants, conditions and restrictions
("CC&RS") recorded as of the date of this Lease and affecting the Premises
or of any law or of the Certificate of Occupancy issued for the Premises,
and shall, upon five (5) days written notice from Landlord, discontinue any
use of the Premises which is in violation of any CC&Rs or is declared by
any governmental authority having jurisdiction to be a violation of any law
or of said Certificate of Occupancy. Landlord agrees that any Rules and
Regulations or CC&Rs added to the Premises after the date of this Lease, or
any modification to the existing Rules and Regulations or CC&Rs after the
date of this Lease, shall not increase Tenant's obligations under this
Lease nor decrease Tenant's rights under this Lease. Tenant shall not
install any radio or television antenna, loudspeaker or other device on the
roof or
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exterior walls of the Premises without Landlord's consent, which shall not
be unreasonably withheld. Subject to Landlord's repair obligations under
Paragraph 15(b) below, Tenant shall comply with any direction of any
governmental authority having jurisdiction which shall, by reason of the
nature of Tenant's use or occupancy of the Premises, impose any duty upon
Tenant or Landlord with respect to the Premises or with respect to the use
or occupation thereof. Tenant shall not do or permit to be done anything
which will invalidate or increase the cost of any fire, extended coverage
or any other insurance policy covering the Premises and/or property located
therein and shall comply with all rules, orders, regulations and
requirements of any applicable fire rating bureau or any other organization
performing a similar function, to the extent such rules, orders,
regulations and requirements apply to the interior of the Improvements.
Tenant shall promptly upon demand reimburse Landlord as additional rent for
any additional premium charged for such policy by reason of Tenant's
failure to comply with the provisions of this Paragraph 8. Tenant shall not
do or permit anything to be done in or about the Premises which will in any
way obstruct or interfere with the rights of other tenants or occupants of
The Crossing Business Center, or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or
about the Premises. Tenant shall not commit or suffer to be committed any
waste in or upon the Premises and shall keep the Premises in first class
repair and appearance, ordinary wear and tear excepted. Tenant shall not
place a load upon the Premises exceeding the average pounds of live load
per square foot of floor area specified for the Premises by Landlord's
architect, with the partitions to be considered part of the live load.
Landlord reserves the right to prescribe the weight and position of all
safes, files and heavy equipment which Tenant desires to place in the
Premises so as to distribute properly the weight thereof.
(b) Landlord represents and warrants to Tenant that (i) Tenant's
use of the Premises on a 24-hour per day, 7-day per week basis is not
prohibited by any document of record, (ii) easements recorded on the
Premises as of the date of this Lease shall not interfere with the
Improvements contemplated in Exhibit "C" and (iii) any easements
voluntarily added by Landlord to the Premises after the date of this Lease
shall not interfere with any Improvements in parking of Tenant. Landlord
shall defend, indemnify and hold Tenant harmless against and from any and
all costs, expenses, liabilities and claims arising from the breach of the
foregoing representations and warranties.
9. Payments and Notices.
(a) All rents and other sums payable by Tenant to Landlord
hereunder shall be paid to Landlord at the address designated by Landlord
in Subparagraph 1(b) above or at such other places as Landlord may
hereafter designate in writing. Any notice required or permitted to be
given hereunder must be in writing and may be given by personal delivery or
by mail, and if given by mail shall be deemed sufficiently given if sent by
registered or certified mail addressed to Tenant at the address designated
in Subparagraph 1(d) or to Landlord at both of the addressees designated in
Subparagraph 1(b). Either party may by written notice to the other specify
a different address for notice purposes. If more than one person or entity
constitutes the "Tenant" under this Lease, service of any notice upon any
one of said person or entities shall be deemed as service upon all of said
persons or entities.
(b) Tenant acknowledges that the late payment by Tenant to Landlord
of any sums due under this Lease will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such costs being extremely
difficult and impractical to fix. Such costs include, without limitation,
processing and accounting charges, and late charges that may be imposed on
Landlord by the terms of any encumbrance and note secured by any
encumbrance covering the Premises. Therefore, if any monthly installment of
Annual Basic Rent is not received by Landlord by the date when due, or if
Tenant fails to pay any other sum of money due hereunder and such failure
continues for ten (10) days after written notice thereof by Landlord,
Tenant shall pay to Landlord, as additional rent, the sum of five percent
(5%) of the overdue amount as a late charge.
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Such overdue amount shall also bear interest, as additional rent, at the
maximum rate permissible by law calculated, as appropriate, from the date
either (a) the monthly installment of Annual Basic Rent is due, or (b) ten
(10) days after receipt of said notice, until the date of payment to
Landlord. Landlord's acceptance of any late charge or interest shall not
constitute a waiver of Tenant's default with respect to the overdue amount
or prevent Landlord from exercising any of the other rights and remedies
available to Landlord under this Lease or any law now or hereafter in
effect.
10. Brokers.
The parties recognize that the brokers who negotiated this Lease are
the brokers whose names are stated in Subparagraph 1(o), and agree that Landlord
shall be solely responsible for the payment of brokerage commissions to said
brokers, and that Tenant shall not have responsibility therefor. As part of the
consideration for the granting of this Lease, each party represents and warrants
to the other that to such party's knowledge no other broker, agent or finder
negotiated or was instrumental in negotiating or consummating this Lease and
that such party knows of no other real estate broker, agent or finder who is, or
might be, entitled to a commission or compensation in connection with this
Lease. Any broker, agent or finder of either party whom such party has failed to
disclose herein shall be paid by the non-disclosing party. Each party shall hold
the other harmless from all damages and indemnify the other for all said damages
paid or incurred by the other resulting from any claims that may be asserted
against such party by any broker, agent or finder undisclosed herein.
11. Holding Over.
If Tenant holds over after the expiration or earlier termination of the
Term hereof without the express written consent of Landlord, Tenant shall become
a tenant at sufferance only, at a rental rate equal to one hundred fifty percent
(150%) of the Annual Basic Rent which would be applicable to the Premises upon
the date of such expiration (subject to adjustment as provided in Paragraph 6
hereof and prorated on a daily basis), and otherwise subject to the terms,
covenants and conditions herein specified, so far as applicable. Acceptance by
Landlord of rent after such expiration or earlier termination shall not
constitute a holdover hereunder or result in a renewal. The foregoing provisions
of this Paragraph 11 are in addition to and do not affect Landlord's right of
re-entry or any rights of Landlord hereunder or as otherwise provided by law. If
Tenant fails to surrender the Premises upon the expiration or earlier
termination of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability, including
without limitation, any claim made by any succeeding tenant founded on or
resulting from such failure to surrender.
12. Taxes on Tenant's Property.
Tenant shall be liable for and shall pay at least ten (10) days before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based upon such
increased assessments which Landlord shall have the right to do regardless of
the validity thereof, but only upon prior notice to Tenant and under proper
protest if requested by Tenant, Tenant shall upon demand repay to Landlord the
taxes levied against Landlord, or the proportion of such taxes resulting from
such increase in the assessment; provided that in any such event, at Tenant's
sole cost and expense, Tenant shall have the right, in the name of Landlord and
with Landlord's full cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of any such taxes so paid under protest, any
amount so recovered to belong to Tenant.
13. Condition of Premises.
Intentionally Omitted.
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14. Alterations.
The parties acknowledge that this Paragraph 14 shall apply only to
Changes made after the Commencement Date, that the design and construction of
the initial Improvements shall be governed by the Work Letter Agreement attached
hereto as Exhibit "C" and that this Paragraph 14 shall not apply to the design
and construction of the initial Improvements.
(a) Tenant may, at any time and from time to time during the Term
of this Lease but subject to Landlord's approval pursuant to Subparagraph
14(b), at its sole cost and expense, make alterations, additions,
installations, substitutions, improvements and decorations (hereinafter
collectively called "CHANGES") in and to the Premises, on the following
conditions, and providing such Changes will not result in a violation of or
require a change in the Certificate of Occupancy (or its equivalent)
applicable to the Premises:
(i) The outside appearance, character or permitted use of the
Premises shall not be affected, and no Changes shall weaken or impair
the structural strength or, in the reasonable opinion of Landlord,
lessen the value of the Premises or create the potential for unusual
expenses to be incurred upon the removal of Changes and the restoration
of the Premises upon the termination of this Lease.
(ii) The proper functioning of any of the mechanical,
electrical, sanitary and other service systems or installations of the
Premises ("SERVICE FACILITIES") shall not be adversely affected and
there shall be no construction which might interfere with Landlord's
free access to the Service Facilities or interfere with the moving of
Landlord's equipment to or from the enclosures containing the Service
Facilities.
(iii) In performing the work involved in making such Changes,
Tenant shall be bound by and observe all of the conditions and
covenants contained in this Paragraph 14.
(iv) All work shall be done at such times and in such manner
as Landlord from time to time may reasonably designate.
(v) Tenant shall not be permitted to install and make part of
the Premises any materials, fixtures or equipment which are subject to
liens, conditional sales contracts or chattel mortgages.
(vi) At the date upon which the Term of this Lease shall end,
or the date of any earlier termination of this Lease, Tenant shall on
Landlord's written request (which request must be made, if at all, at
the time of Landlord's consent to the Change) restore the Premises to
their condition prior to the making of any Changes permitted by this
Paragraph 14, reasonable wear and tear excepted.
Notwithstanding the foregoing, Tenant may make Changes which do not
affect the Service Facilities of the Improvements, the exterior appearance
of the Improvements, or structural aspects of the Improvements which cost
One Hundred Thousand Dollars ($100,000.00) or less ("COSMETIC CHANGES")
upon at least fifteen (15) days prior written notice to Landlord, but
without the necessity of obtaining Landlord's prior written consent
thereto.
(b) Before proceeding with any Change (exclusive of Cosmetic
Changes), Tenant shall submit to Landlord, for Landlord's written approval,
plans and specifications, including any applicable mechanical, electrical
and plumbing drawings, for the work to be done. Landlord's approval shall
not be unreasonably withheld. If Landlord shall disapprove of any of
Tenant's plans, Tenant shall be advised of the reasons for such
disapproval. In any event, Tenant agrees to pay to Landlord, as additional
rent, the actual and reasonable cost of Landlord's third party consultants
for review of such
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plans and specifications, immediately upon receipt of invoices either from
Landlord or such consultants. Any Change for which approval has been
received shall be performed in accordance with the approved plans and
specifications, and no amendments or additions to such plans and
specifications shall be made without the prior written consent of Landlord,
which consent shall not be unreasonably withheld. Following construction of
the work, Tenant shall prepare or cause to be prepared, at Tenant's
expense, a "record set" of as-built plans reflecting the actual
construction of the work.
(c) After Landlord's written approval has been sent to Tenant,
Tenant shall enter into an agreement for the performance of the work to be
done pursuant to this Paragraph 14 with a contractor reasonably approved by
Landlord. All subcontractors used by the contractor shall be subject to
Landlord's approval, which approval shall not be unreasonably withheld or
delayed. Tenant's contractors shall obtain on behalf of Tenant and at
Tenant's sole cost and expense, (i) all necessary governmental permits and
certificates for the commencement and prosecution of Tenant's Changes and
for final approval thereof upon completion, and (ii) for Changes reasonably
expected to cost in excess of One Hundred Thousand Dollars ($100,000.00), a
completion and lien indemnity bond, or other surety, satisfactory to
Landlord, for the Changes. In the event Tenant shall request any changes in
the work to be performed after the submission of the plans referred to in
this Paragraph 14, such changes shall be subject to the same approvals and
notices as the Changes initially submitted by Tenant.
(d) If Tenant requests Landlord to act as general contractor for
any Changes, and if Landlord agrees to so act as general contractor, Tenant
shall pay to Landlord for Landlord's services in connection with the work
performed pursuant to this Paragraph 14, a fee equal to fifteen percent
(15%) of the total cost of the Changes, and Landlord's reasonable overhead
related thereto. If Landlord does not perform as such general contractor,
in addition to the requirement that Tenant pay the actual and reasonable
cost of Landlord's third-party consultants as specified in Paragraph 14(b)
above, Tenant shall pay to Landlord, as additional rent, an hourly fee
reasonably determined by Landlord for any personnel of Landlord or its
affiliates who are involved in overseeing and/or reviewing Tenant's Change.
(e) All Changes and the performance thereof shall at all times
comply with (i) all laws, rules, orders, ordinances, directions,
regulations and requirements of all governmental authorities, agencies,
offices, departments, bureaus and boards having jurisdiction thereof, (ii)
all rules, orders, directions, regulations and requirements of any
applicable fire rating bureau, or of any similar insurance body or bodies,
and (iii) all rules and regulations of Landlord, and Tenant shall cause
Changes to be performed in compliance therewith and in good and first class
workmanlike manner, using materials and equipment at least equal in quality
to the original installations of the Premises. Changes shall be performed
in such manner as not to delay or impose any additional expense upon
Landlord in construction, maintenance or operation of the Premises, and
shall be performed by contractors or mechanics approved by Landlord
pursuant to this Paragraph 14, who shall coordinate their work in
cooperation with any other work being performed by Landlord with respect to
the Premises. Throughout the performance of Changes, Tenant, at its
expense, shall carry, or cause its contractors to carry, worker's
compensation insurance in statutory limits, and general liability insurance
for any occurrence in or about the Premises, of which Landlord and its
managing agent shall be named as additional parties insured, in such limits
as Landlord may reasonably prescribe. Such policies shall comply with
Paragraph 21(b) hereof.
(f) Tenant further covenants and agrees that any mechanic's lien
filed against the Premises for work claimed to have been done for, or
materials claimed to have been furnished to Tenant, will be discharged by
Tenant, by bond or otherwise, within thirty (30) days after the filing
thereof, at the cost and expense of Tenant. All permanently installed
alterations, decorations, additions or improvements upon the Premises, made
by either party, including (without limiting the generality of the
foregoing) all wallcovering, built-in cabinet work, paneling and the like,
shall, unless Landlord elects otherwise, become the property of Landlord,
and shall remain upon, and
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be surrendered with the Premises, as a part thereof, at the end of the Term
hereof, except that Landlord may by written notice to Tenant, given
concurrently with Landlord's consent to the Change, require Tenant to
remove all partitions, counters, railings and the like installed by Tenant,
and Tenant shall repair any damage to the Premises arising from such
removal and if Tenant fails to so remove such items at the end of the Term,
Tenant shall pay to the Landlord all of Landlord's costs of such removal
and repair.
(g) All articles of personal property and all business and trade
fixtures, machinery and equipment, furniture and movable partitions owned
by Tenant or installed by Tenant at its expense in the Premises shall be
and remain the property of Tenant and may be removed by Tenant at any time
during the lease Term, provided that Tenant shall repair any damage caused
by such removal. If Tenant shall fail to remove all of its effects from
said Premises upon termination of this Lease for any cause whatsoever,
Landlord may, at its option, remove the same in any manner that Landlord
shall choose, and store said effects without liability to Tenant for loss
thereof, and Tenant agrees to pay Landlord upon demand any and all expenses
incurred in such removal, including court costs and reasonable attorney's
fees and storage charges on such effects for any length of time that the
same shall be in Landlord's possession or Landlord may, at its option,
without notice, but subject to the rights of equipment lessors (where
Landlord has been notified of such rights) sell said effects, or any of the
same, at private sale and without legal process, for such price as Landlord
may obtain and apply the proceeds of such sale to any amounts due under
this Lease from Tenant to Landlord and to the expense incident to the
removal and sale of said effects.
(h) Nothing contained in this Paragraph 14 shall be deemed to
relieve Tenant of any duty, obligation or liability with respect to making
any repair, replacement or improvement or complying with any laws, order or
requirement of any government or other authority and nothing contained in
this Paragraph 14 shall be deemed or construed to impose upon Landlord any
obligation, responsibility or liability whatsoever, for the care,
supervision or repair of the Premises or any part thereof other than as
otherwise provided in this Lease.
15. Repairs.
(a) Subject to Subparagraph 15(b), Tenant shall, when and if needed
or whenever reasonably requested by Landlord to do so, at Tenant's sole
cost and expense, maintain and make all repairs to the Premises and every
part thereof, to keep, maintain and preserve the Premises in the same
condition as when received, excepting ordinary wear and tear. Any such
maintenance and repairs shall be performed by Landlord's designated
contractor, or by a contractor reasonably approved by Landlord, at Tenant's
option. Tenant shall upon the expiration or sooner termination of the Term
hereof surrender the Premises to Landlord in the same condition as when
received, reasonable wear and tear excepted. Except as provided elsewhere
in this Lease, Landlord shall have no obligation to alter, remodel,
improve, repair, decorate or paint the Premises or any part thereof, and
the parties hereto affirm that Landlord has made no representations to
Tenant respecting the condition of the Premises except as specifically
herein set forth.
(b) Anything contained in Subparagraph 15(a) above to the contrary
notwithstanding, Landlord shall, as an Operating Expense (to the extent
permitted by Paragraph 6 above and otherwise at Landlord's sole cost and
expense), repair and maintain in good condition those portions of the
Premises consisting of the "Base Improvements," as described in the Work
Letter Agreement, and all areas of the Premises located outside of the
Improvements (including, without limitation, parking areas), unless such
maintenance and repairs are caused in part or in whole by the neglect,
fault of or omission of any duty by Tenant, its agents, servants, employees
or invitees, in which case Tenant shall pay to Landlord as additional rent,
the reasonable cost of such maintenance and repairs. Landlord shall not be
liable for any failure to make any such repairs, or to perform any
maintenance unless such failure shall persist for an unreasonable time
(under the circumstances) after written notice of the need of such repairs
or maintenance is given to Landlord by Tenant and Landlord shall use
commercially reasonable efforts to
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minimize any interference or interruption in Tenant's business resulting
from any such repairs or maintenance. Landlord agrees not to make any
repairs within the Improvements during the months of November and December,
except where such repairs are required by law to be made at that time,
required by an emergency or otherwise requested by Tenant. Except as
provided in Paragraph 15(c) below and in Paragraph 22 and in Paragraph
25(e) hereof, there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or improvements in or
to any portion of the Premises or in or to fixtures, appurtenances and
equipment therein. Except as provided in Paragraph 15(c) below, Tenant
waives the right to make repairs at Landlord's expense under any law,
statute or ordinance now or hereafter in effect.
(c) If Tenant provides notice to Landlord of an event or
circumstance which requires the action of Landlord with respect to repairs
and/or maintenance as set forth in Paragraph 15(b) above, and Landlord
fails to provide such action as required by the terms of this Lease, then
Tenant may proceed to take the required action upon delivery of an
additional ten (10) business days notice (or immediately after notice in
the case of an emergency) to Landlord specifying that Tenant is taking such
required action, and if such action was required under the terms of this
Lease to be taken by Landlord, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and expenses in
taking such action plus interest at the Interest Rate. In the event Tenant
takes such action, and such work will affect the Service Facilities,
structural integrity of the Improvements or exterior appearance of the
Improvements, Tenant shall use only those contractors used by Landlord in
the Improvements for such work unless such contractors are unwilling or
unable to perform such work, in which event Tenant may utilize the services
of any other qualified contractor which normally and regularly performs
similar work in comparable first-class projects in Las Vegas, Nevada.
Further, if Landlord does not deliver a detailed written objection to
Tenant, within thirty (30) days after receipt of an invoice by Tenant of
its costs of taking action which Tenant claims should have been taken by
Landlord, and if such invoice from Tenant sets forth a reasonably
particularized breakdown of its costs and expenses in connection with
taking such action on behalf of Landlord, then Tenant shall be entitled to
deduct from Monthly Basic Rent payable by Tenant under this Lease, the
amount set forth in such invoice together with interest at the Interest
Rate. If, however, Landlord delivers to Tenant within thirty (30) days
after receipt of Tenant's invoice, a written objection to the payment of
such invoice, setting forth with reasonable particularity Landlord's
reasons for its claim that such action did not have to be taken by Landlord
pursuant to the terms of this Lease or that the charges are excessive (in
which case Landlord shall pay the amount it contends would not have been
excessive), then Tenant shall not be entitled to such deduction from Rent,
but as Tenant's sole remedy, Tenant may proceed to institute legal
proceedings against Landlord to collect the amount set forth in the subject
invoice. In the event Tenant prevails in such legal proceedings against
Landlord and receives a final judgment against Landlord, then Landlord
shall pay such judgment to Tenant within thirty (30) days of such judgment
being entered. If such judgment is not so paid when due, then Tenant shall
be entitled to deduct from Monthly Basic Rent next due and payable by
Tenant the amount of such final judgment, together with interest, at the
Interest Rate from the date of entry of such judgment until the date of
such deduction.
16. Liens.
Tenant shall not knowingly permit any mechanic's, materialmen's or
other liens to be filed against the real property of which the Premises form a
part nor against the Tenant's leasehold interest in the Premises. Landlord shall
have the right at all reasonable times to post and keep posted on the Premises
any notices which it deems necessary for protection from such liens. If any such
liens are filed and are not discharged by Tenant by bond or otherwise within
thirty (30) days after the filing thereof, Landlord may, without waiving its
rights and remedies based on such breach of Tenant and without releasing Tenant
from any of its obligations, cause such liens to be released by any means it
shall deem proper, including payment in satisfaction of the claim giving rise to
such lien. Tenant shall pay to Landlord at once, upon notice by
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Landlord, any sum paid by Landlord to remove such liens, together with interest
at the maximum rate per annum permitted by law from the date of such payment by
Landlord.
17. Entry by Landlord.
Subject to Landlord's agreement to minimize any disturbance of Tenant's
use of the Premises by exercise of the following rights, Landlord reserves and
shall at any and all times have the right to enter the Premises upon reasonable
notice to Tenant (except that no notice shall be required in the case of an
emergency) to inspect the same, to supply any service to be provided by Landlord
to Tenant hereunder, to submit said Premises to prospective purchasers
accompanied by Landlord or, during the last nine (9) months of the Term of this
Lease, to prospective tenants accompanied by Landlord, to post notices of
nonresponsibility, or to repair the Premises, all without being deemed guilty of
any eviction of Tenant, and may, in order to carry out such purposes, erect
scaffolding and other necessary structures where reasonably required by the
character of the work to be performed, provided that the business of Tenant
shall be interfered with as little as is reasonably practicable. Except as
expressly provided to the contrary in this Lease, Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby. For each of the aforesaid purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors
in, upon and about the Premises, excluding Tenant's vaults and safe, and
Landlord shall have the means which Landlord may deem proper to open said doors
in an emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord by any of said means, or otherwise, shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises or any portion thereof. It is understood and agreed that no provision
of this Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decoration except as otherwise expressly agreed herein to be
performed by Landlord. Landlord shall, in the exercise of its rights under this
Paragraph 17, use commercially reasonable efforts to minimize any disturbance of
Tenant's use and possession of the Premises and to provide as much notice to
Tenant as may be reasonably possible prior to any such exercise of Landlord's
rights under this Paragraph 17.
18. Utilities and Services.
(a) Cleaning and Maintenance. During the Term, Tenant shall, at its
own expense, keep all interior portions of the Premises in a neat and clean
condition, including, but not limited to, removal of debris and garbage
from the Premises with a refuse removal company reasonably approved by
Landlord and cleaning of all interior windows and window frames of the
Premises. Tenant shall separately contract at its sole expense for
janitorial services for all interior portions of the Premises with
reputable, bonded janitorial contractors in accordance with the maintenance
standards set forth in this Lease. Landlord shall keep the exterior
portions of the Premises in a neat and clean condition.
(b) Utilities. During the Term, Tenant shall provide in the
Premises at its own expense, water, gas, electricity, sewer, and other
necessary utilities and services, and Tenant shall make payment directly to
the entities providing such utilities and services. Landlord, at Landlord's
sole cost and expense, shall pay any fees necessary to bring utilities to
the Leased Premises for construction of the Base Improvements; provided,
however, that any utility fees incurred in connection with the Tenant
Improvements (including, without limitation, any sewer connection fees)
shall be a Work Cost charged to the Allowance.
(c) Interruption of Utilities. Tenant agrees that, except as
provided in Paragraph 15(c) above and Paragraph 19 and Paragraph 25(e)
below, Landlord shall not be liable for damages, by abatement of rent or
otherwise, for failure, delay, diminution or interruption of any utilities
or services for any reason, and such failure, delay, diminution or
interruption shall never be deemed to constitute an eviction or disturbance
of Tenant's use and possession of the Premises or relieve Tenant from
paying rent or performing any of its obligations under this Lease.
Furthermore, except as provided in Paragraph 19
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below, Landlord shall not be liable under any circumstances for a loss of,
or injury to, property or for any injury to, or interference with, Tenant's
business, including, without limitation, loss of profits, however
occurring, through or in connection with or incidental to any such failure,
delay, diminution or interruption of such utilities or services.
19. Indemnification.
Tenant hereby agrees to defend, indemnify and hold Landlord harmless
against and from any and all loss, cost, liability, damage or expense including,
but not limited to, penalties, fines, attorneys' fees and costs (collectively,
"CLAIMS") arising from Tenant's use of the Premises or the conduct of its
business or from any activity, work, or thing done, permitted or suffered by
Tenant, its agents, contractors, employees or invitees in or about the Premises.
Notwithstanding the foregoing, Tenant shall not be required to defend, indemnify
and hold Landlord harmless from any Claims to any person, property or entity to
the extent resulting from the negligence or willful misconduct of Landlord or
its agents, employees or licensees in connection with Landlord's activities at
the Premises (except for damage to the Tenant Improvements and Tenant's personal
property, trade fixtures, furniture and equipment in the Premises, to the extent
Tenant is required to obtain the requisite insurance coverage pursuant to this
Lease). The Claims for which Tenant is not required to defend, indemnify and
hold Landlord harmless pursuant to the immediately preceding sentence may be
referred to herein as "OVERRIDDEN CLAIMS." Landlord hereby indemnifies, agrees
to defend and holds Tenant harmless from any Overridden Claims, provided that
with respect to Base Improvements, because Landlord is required to maintain
insurance on the Base Improvements and Tenant compensates Landlord for such
insurance as part of Operating Expenses and because of the existence of waivers
of subrogation set forth in Paragraph 21(g) below, Landlord hereby indemnifies,
agrees to defend and holds Tenant harmless from any Claims to the Base
Improvements to the extent that such Claim is covered by such insurance, even if
resulting from the negligent acts, omissions or willful misconduct of Tenant or
those of its agents, employees or licenses. Similarly, since Tenant must carry
insurance pursuant to Paragraph 21(a) below to cover its personal property
within the Premises and the Tenant Improvements, Tenant hereby indemnifies and
holds Landlord harmless from any Claim to any property within the Improvements,
to the extent such Claim is covered by such insurance, even if resulting from
the negligent acts, omissions or willful misconduct of Landlord or those of its
agents, employees or licensees. In case any action or proceeding may be brought
against Landlord or Tenant by reason of any such Claim, Landlord or Tenant (as
the case may be) upon notice from the other hereby agrees to defend the same at
their expense by counsel reasonably approved in writing by the other.
20. Damage to Tenant's Property.
Except as provided elsewhere in this Lease to the contrary, Landlord or
its agents shall not be liable for any damage to property entrusted to employees
of Landlord or Landlord's manager, nor for loss of or damage to any property by
theft or otherwise, nor for any injury or damage to person or property resulting
from fire, explosion, falling plaster, steam, gas, electricity, water or rain
which may leak from any part of the Premises or from the pipes, appliances or
plumbing works therein or from the roof, street or sub-surface or from any other
place or resulting from dampness or any other patent or latent cause whatsoever.
Landlord or its agents shall not be liable for interference with the light or
other incorporeal hereditaments. Tenant shall give prompt notice to Landlord in
case of fire or accidents in the Premises or of defects therein or in the
fixtures or equipment located therein.
21. Insurance.
(a) Tenant at its sole cost and expense shall, during the entire
Term hereof, obtain, maintain and keep in full force and effect, the
following insurance:
(i) Property insurance including fire, extended coverage,
vandalism, malicious mischief and all risks coverage upon property of
every description and kind owned by Tenant and located in the Premises
or for which Tenant is legally liable or installed by or on behalf of
Tenant including, without limitation, leasehold improvements,
alterations, furniture, fixtures and any other
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personal property, in an amount not less than eighty percent (80%) of
the full replacement cost thereof.
(ii) A policy of Comprehensive Liability Insurance coverage to
include personal injury, broad form property damage,
premises/operations, owner's protective coverage, host liquor liability
insurance, blanket contractual liability, products and completed
operations liability and owned/non-owned auto liability, in limits not
less than Two Million Dollars ($2,000,000) inclusive. Such policy shall
name Landlord, Landlord's managing agent and Landlord's mortgagees as
additional insureds and shall contain the following provision:
"Such insurance as afforded by this policy for the benefit of
Landlord shall be primary as respects any claims, losses or
liabilities arising out of the use of the Premises by the
Tenant or by Tenant's operation and any insurance carried by
Landlord shall be excess and non-contributing."
(iii) Loss of income and extra expense insurance in such
amounts as will reimburse Tenant for direct or indirect loss of
earnings attributable to all perils commonly insured against by prudent
tenants or attributable to prevention of access to the Premises as a
result of such perils.
(iv) Any other form or forms of insurance as Tenant or
Landlord or the mortgagees of Landlord may reasonably require from time
to time in form, in amounts and for insurance risks against which a
prudent tenant would protect itself, but in no event shall (A) such
increased amounts of insurance or such other reasonable types of
insurance be in excess of that required by landlords of comparable
projects in Las Vegas, Nevada nor (B) Landlord require an increase in
the insurance limits described in this Paragraph (a) above during the
first five (5) years of the Term.
(b) All policies shall be taken out with insurers reasonably
acceptable to Landlord and in form satisfactory from time to time to
Landlord. Tenant agrees that certificates of insurance or, if required by
Landlord or the mortgagees of Landlord, certified copies of each such
insurance policy, will be delivered to Landlord as soon as practicable
after the placing of the required insurance, but in no event later than ten
(10) days after Tenant takes possession of all or any part of the Premises,
including possession taken under Paragraph 4 hereof. All policies shall
contain an undertaking by the insurers to notify Landlord and the
mortgagees of Landlord in writing not less than thirty (30) days prior to
any material change, reduction in coverage, cancellation, or other
termination thereof.
(c) In the event of damage to or destruction of the Premises
entitling either party to terminate this Lease pursuant to Paragraph 22
hereof, Tenant will immediately pay to Landlord all of Tenant's insurance
proceeds relating to leasehold improvements and alterations (but not to
Tenant's trade fixtures, equipment, furniture or other personal property)
in the Improvements.
(d) Landlord covenants and agrees that throughout the Term, it will
insure the Premises (including the Base Improvements, but excluding any
property with respect to which Tenant is obligated to insure pursuant to
the provisions of Subparagraph 21(a) above) against damage by fire and
standard extended coverage perils and public liability insurance in such
reasonable amounts (but not less than eighty percent (80%) of replacement
cost as to property insurance) with such reasonable deductibles as would be
carried by a prudent owner of a similar building in Las Vegas, Nevada.
Landlord may, but shall not be obligated to, take out and carry any other
form or forms of insurance as it or the mortgagees of Landlord may
reasonably determine advisable. Notwithstanding any contribution by Tenant
to the cost of insurance premiums with respect to the Premises, as provided
herein, Tenant acknowledges that it has no right to receive any proceeds
from any such insurance policies carried by Landlord, although Landlord
shall
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use such proceeds in the repair and reconstruction of the Premises unless
Landlord elects to terminate this Lease pursuant to Paragraph 22. Landlord
will not carry insurance of any kind on Tenant's furniture or furnishings
or on any equipment of Tenant under this Lease, and except as provided in
Paragraph 19 above, Landlord shall not be obligated to repair any damage
thereto or replace the same.
(e) Tenant shall promptly comply with all reasonable requirements
of the insurance authority or of any insurer now or hereafter in effect
relating to the Premises.
(f) If any insurance policy carried by Landlord, as provided by
Subparagraph 21(d) above, shall be canceled or cancellation shall be
threatened or the coverage thereunder reduced or threatened to be reduced,
in any way by reason of the use or occupation of the Premises or any part
thereof by Tenant or by any assignee or subtenant of Tenant or by anyone
permitted by Tenant to be upon the Premises and, if Tenant fails to remedy
the condition giving rise to cancellation, threatened cancellation or
reduction of coverage within forty-eight (48) hours after written notice
thereof, Landlord may, at its option enter upon the Premises and attempt to
remedy such condition and Tenant shall forthwith pay the cost thereof to
Landlord as additional rent. Landlord shall not be liable for any damage or
injury caused to any property of Tenant or of others located in the
Premises as a result of such entry. In the event that Landlord shall be
unable to remedy such condition, then Landlord shall have all of the
remedies provided for in this Lease in the event of a default by Tenant.
Notwithstanding the foregoing provisions of this Subparagraph 21(f), if
Tenant fails to remedy as aforesaid, Tenant shall be in default of its
obligations hereunder and Landlord shall have no obligation to attempt to
remedy such default.
(g) Any policy or policies of fire, extended coverage or similar
casualty insurance, which either party obtains in connection with the
Premises and the insurance required to be obtained by Tenant pursuant to
the provisions of Subparagraph 21(a)(iii) above shall include a clause or
endorsement denying the insurer any rights of subrogation against the other
party to the extent rights have been waived by the insured prior to the
occurrence of injury or loss. Landlord and Tenant waive any rights of
recovery against the other for injury or loss due to hazards covered by
insurance containing such a waiver of subrogation clause or endorsement to
the extent of the injury or loss covered thereby.
22. Damage or Destruction.
(a) (i) In the event the Premises are damaged by fire or other
perils covered by insurance required to be carried by Landlord under this
Lease and if the damage thereto is such that the Premises may be repaired,
reconstructed or restored within a period of two hundred seventy (270) days
from the date Landlord learns of the necessity for repairs as a result of
the damage, Landlord shall commence and proceed diligently with the work of
repair, reconstruction and restoration and this Lease shall continue in
full force and effect. If such work of repair, reconstruction and
restoration is such as to require a period longer than such two hundred
seventy (270) day period or if Paragraph 22(e) below applies, Landlord
either may elect to so repair, reconstruct or restore the Premises and this
Lease shall continue in full force and effect or Landlord may elect not to
repair, reconstruct or restore the Premises and this Lease shall in such
event terminate. Under any of the conditions of this Subparagraph 22(a),
Landlord shall give written notice ("DAMAGE NOTICE") to Tenant of its
intention within sixty (60) days from the date Landlord learns of the
necessity for repairs as a result of the damage. Upon the occurrence of any
damage to the Premises, Tenant shall assign to Landlord (or to any party
designated by Landlord) all insurance proceeds payable to Tenant under
Tenant's insurance for the leasehold improvements and alterations to the
extent required to repair the damage; provided, however, that if the cost
of such repair by Landlord exceeds the amount of insurance proceeds
received by Landlord from Tenant's insurance carrier, as assigned by
Tenant, the
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cost of such repairs shall be paid by Tenant to Landlord prior to
Landlord's repair of the damage. In the event Landlord elects not to
restore the Premises, this Lease shall be deemed to have terminated as
of the date of such destruction.
(ii) If Landlord does not elect to terminate this Lease
pursuant to Landlord's termination right as provided in Paragraph
22(a)(i) above, and the repairs cannot, in the reasonable opinion of
Landlord as stated in the Damage Notice, be completed within two
hundred seventy (270) days after being commenced (which 270-day period
shall not be subject to extension as a result of any Force Majeure),
Tenant may elect, no earlier than sixty (60) days after the date of
Tenant's receipt of the Damage Notice and not later than ninety (90)
days after the date of Tenant's receipt of the Damage Notice, to
terminate this Lease by written notice to Landlord effective as of the
date specified in the notice, which date shall not be more than sixty
(60) days after the date such notice is given by Tenant. Furthermore,
if neither Landlord nor Tenant have terminated this Lease, and the
repairs are not actually completed within such 270-day period, Tenant
shall have the right to terminate this Lease within five (5) business
days of the end of such period and thereafter during the first five (5)
business days of each calendar month following the end of such period
until such time as the repairs are complete, by notice to Landlord (the
"DAMAGE TERMINATION NOTICE"), effective as of a date set forth in the
Damage Termination Notice (the "DAMAGE TERMINATION DATE"), which Damage
Termination Date shall not be less than five (5) business days
following the end of such period or each such month, as the case may
be. Notwithstanding the foregoing, if Tenant delivers a Damage
Termination Notice to Landlord, then Landlord shall have the right to
suspend the occurrence of the Damage Termination Date for a period
ending thirty (30) days after the Damage Termination Date set forth in
the Damage Termination Notice by delivering to Tenant, within five (5)
business days of Landlord's receipt of the Damage Termination Notice, a
certificate of Landlord's contractor responsible for the repair of the
damage certifying that it is such contractor's good faith judgment that
the repairs shall be substantially completed within thirty (30) days
after the Damage Termination Date. If repairs shall be substantially
completed prior to the expiration of such thirty-day period, then the
Damage Termination Notice shall be of no force or effect, but if the
repairs shall not be substantially completed within such thirty-day
period, then this Lease shall terminate upon the expiration of such
thirty-day period. At any time, from time to time, after the date
occurring sixty (60) days after the date of the damage, Tenant may
request that Landlord inform Tenant of Landlord's reasonable opinion of
the date of completion of the repairs and Landlord shall respond to
such request within five (5) business days.
(b) Upon any termination of this Lease under any of the provisions
of this Paragraph 22, the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is
surrendered to Landlord except for items which have theretofore accrued and
are then unpaid.
(c) In the event of repair, reconstruction and restoration by
Landlord as herein provided, the rent provided to be paid under this Lease
shall be abated proportionately with the degree to which Tenant's use of
the Premises is impaired during the period of such repair, reconstruction
or restoration. Except as provided in Paragraph 19 to the contrary, Tenant
shall not be entitled to any compensation or damages for loss in the use of
the whole or any part of the Premises and/or any inconvenience or annoyance
occasioned by such damage, repair, reconstruction or restoration.
(d) Tenant shall not be released from any of its obligations under
this Lease except to the extent and upon the conditions expressly stated in
this Paragraph 22.
(e) In the event that damage is due to any cause other than fire or
other peril covered by extended coverage insurance or required to be
insured by Landlord under Paragraph 21(d) above, Landlord may elect to
terminate this Lease.
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(f) It is hereby understood that if Landlord is obligated to or
elects to repair or restore as herein provided, Landlord shall be obligated
to make repairs or restoration only of those portions of the Premises (i)
which were originally provided at Landlord's expense or (ii) which were
required to be insured by Landlord hereunder or (iii) for which Landlord
has received insurance proceeds from insurance required to be carried by
Tenant hereunder or (iv) which were damaged as a result of the negligence
or willful misconduct of Landlord or of its agents, contractors or
employees (provided that this Subparagraph (f) is not intended to, and
shall not, relieve Tenant's insurance carriers of their obligations, to the
extent such carriers are required to pay for the cost of repair of any such
damage), and the repair and restoration of all other items shall be the
obligation of Tenant.
(g) Notwithstanding anything to the contrary contained in this
Paragraph 22, Landlord shall not have any obligations whatsoever to repair,
reconstruct or restore the Premises when the damage resulting from any
casualty covered under this Paragraph 22 occurs during the last twelve (12)
months of the Term of this Lease or any Option Term unless Tenant
exercises, in accordance with Paragraph 3(b)(iii), an available Extension
Option to extend the then current Term for the upcoming Option Term on or
before the date which is sixty (60) days after the date of Tenant's receipt
of the Damage Notice.
(h) The provisions of this Lease, including this Paragraph 22,
constitute an express agreement between Landlord and Tenant with respect to
any and all damage to, or destruction of, all or any part of the Premises,
and any statute or regulation with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement
between the parties, and any other statute or regulation, now or hereafter
in effect, shall have no application to this Lease or any damage or
destruction to all or any part of the Premises.
23. Eminent Domain.
(a) In case the whole of the Premises, or such part thereof as
shall substantially interfere with Tenant's use and occupancy thereof
(including, without limitation, the parking areas of the Premises), shall
be taken for any public or quasi-public purpose by any lawful power or
authority by exercise of the right of appropriation, condemnation or
eminent domain, or sold to prevent such taking, Tenant shall have the right
to terminate this Lease effective as of the date possession is required to
be surrendered to said authority. Tenant shall not assert any claim against
Landlord or the taking authority for any compensation because of such
taking and, except as provided in this Paragraph 23(a) below, Landlord
shall be entitled to receive the entire amount of any award without
deduction for any estate or interest of Tenant. In the event the amount of
property or the type of estate taken shall not interfere with the conduct
of Tenant's business, Landlord shall be entitled to the entire amount of
the award without deduction for any estate or interest of Tenant and
Landlord shall promptly proceed to restore the Premises to substantially
their same condition prior to such partial taking, and a proportionate
allowance shall be made to Tenant for the rent corresponding to the time
during which, and to the part of the Premises of which, Tenant shall be so
deprived on account of such taking and restoration. Nothing contained in
this Paragraph shall be deemed to give Landlord any interest in any award
separately made to Tenant for the taking of personal property and trade
fixtures belonging to Tenant or for moving costs incurred by Tenant in
relocating Tenant's business or any other item Tenant is entitled to
recover under law or at equity provided that Landlord and Tenant shall each
be entitled to receive fifty percent (50%) of the "bonus value" of the
leasehold estate in connection therewith, which bonus value shall be equal
to the sum paid by the condemning authority as the award for compensation
for taking the leasehold created by this Lease.
(b) In the event of taking of the Premises or any part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and
rent shall not abate, and (ii) Tenant shall be entitled to receive for
itself such portion or portions of any award made for such use with respect
to the period of the taking which is within the
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Term, provided that if such taking shall remain in force at the expiration
or earlier termination of this Lease, Tenant shall then pay to Landlord a
sum equal to the reasonable cost of performing Tenant's obligations under
Paragraph 34 with respect to surrender of the Premises and upon such
payment shall be excused from such obligations. For purposes of this
Subparagraph 23(b), a temporary taking shall be defined as a taking for a
period of one hundred eighty (180) days or less.
24. Bankruptcy.
If Tenant shall file a petition in bankruptcy under federal bankruptcy
law as then in effect, or if Tenant is adjudicated a bankrupt in involuntary
bankruptcy proceedings and such adjudication shall not have been vacated within
thirty (30) days from the date thereof, or if a receiver or trustee be appointed
of Tenant's property and the order appointing such receiver or trustee not be
set aside or vacated within thirty (30) days after the entry thereof, or if
Tenant shall assign Tenant's estate or effects for the benefit of creditors, or
if this Lease shall otherwise by operation of law pass to any persons other than
Tenant, then and in any such event Landlord may, if Landlord so elects, with or
without notice of such election and with or without entry or action by Landlord,
forthwith terminate this Lease, and notwithstanding any other provisions of this
Lease, Landlord, in addition to any and all rights and remedies allowed by law
or equity, shall upon such termination be entitled to recover damages in the
amount provided in Subparagraph 25(b) below and neither Tenant nor any person
claiming through or under Tenant or by virtue of any statute or order of any
court shall be entitled to possession of the Premises but shall forthwith quit
and surrender the Premises to Landlord. Nothing herein contained shall limit or
prejudice the right of Landlord to prove and obtain as damages by reason of any
such termination an amount equal to the maximum allowed by any statute or rule
of law in effect at the time when, and governing the proceedings in which, such
damages are to be proved, whether or not such amount be greater, equal to, or
less than the amount of damages recoverable under the provisions of this
Paragraph 24.
25. Defaults and Remedies.
(a) After the passage in full of the cure periods described below,
the occurrence of any one or more of the following events shall constitute
a default hereunder by Tenant:
(i) The abandonment of the Premises by Tenant.
(ii) The failure by Tenant to make any payment of rent or
additional rent or any other payment required to be made by Tenant
hereunder, as and when due, where such failure shall continue for a
period of five (5) business days after written notice thereof from
Landlord to Tenant; provided however, that any such notice shall be in
lieu of, and not in addition to, any notice required under Nevada law.
(iii) The failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed
or performed by Tenant, other than as specified in Subparagraph
25(a)(i) or (ii) above, where such failure shall continue for a period
of thirty (30) days after written notice thereof from Landlord to
Tenant; provided, however, that any such notice shall be in lieu of and
not in addition to, any notice required under Nevada law; provided,
further, that if the nature of Tenant's default is such that more than
thirty (30) days are reasonably required for its cure, then Tenant
shall not be deemed to be in default if Tenant shall commence such cure
within said thirty (30) day period and thereafter diligently prosecutes
such cure to completion.
(iv) (1) The making by Tenant of any general assignment for
the benefit of creditors; (2) the filing by or against Tenant of a
petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days); (3) the appointment of a trustee or
receiver to take possession of substantially all of Tenant's assets
located
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at the Premises or of Tenant's interest in this Lease, where possession
is not restored to Tenant within sixty (60) days; or (4) the
attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this
Lease where such seizure is not discharged within sixty (60) days.
(b) In the event of any such default by Tenant, in addition to any
other remedies available to Landlord at law or in equity, including,
without limitation, Landlord's right to continue the Lease in effect after
Tenant's breach and abandonment and recover rent as it becomes due,
Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder. In the event that Landlord shall elect to so
terminate this Lease then Landlord may recover from Tenant:
(i) the worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably
avoided; plus
(iv) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom.
As used in Subparagraphs 25(b)(i) and (ii) above, the "worth at the
time of award" is computed by allowing interest at the maximum rate
permitted by law per annum. As used in Subparagraph 25(b)(iii) above, the
"worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(c) In the event of any such default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, to re-enter the
Premises and remove all persons and property from the Premises; such
property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant for such period of time as may be
required by applicable law after which time Landlord may dispose of such
property in accordance with applicable law. No re-entry or taking
possession of the Premises by Landlord pursuant to this Subparagraph 25(c)
shall be construed as an election to terminate this Lease unless a written
notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction.
(d) All rights, options and remedies of Landlord contained in this
Lease shall be construed and held to be cumulative, and no one of them
shall be exclusive of the other, and Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which
may be provided by law, whether or not stated in this Lease. No waiver of
any default of Tenant hereunder shall be implied from any acceptance by
Landlord of any rent or other payments due hereunder or any omission by
Landlord to take any action on account of such default if such default
persists or is repeated, and no express waiver shall affect defaults other
than as specified in said waiver. The consent or approval of Landlord to or
of any act by Tenant requiring Landlord's consent or approval shall not be
deemed to waive or render unnecessary Landlord's consent or approval to or
of any subsequent similar acts by Tenant.
(e) (i) Notwithstanding anything to the contrary set forth in this
Lease, Landlord shall not be in default in the performance of any
obligation
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required to be performed by Landlord pursuant to this Lease unless Landlord
fails to perform such obligation within thirty (30) days after the receipt
of notice from Tenant specifying in detail Landlord's failure to perform;
provided, however, if the nature of Landlord's obligation is such that more
than thirty (30) days are required for its performance, then Landlord shall
not be in default under this Lease if it shall commence such performance
within such thirty (30) day period and shall thereafter diligently pursue
the same to completion. Upon any such default by Landlord under this Lease,
Tenant may, except as otherwise specifically provided in this Lease to the
contrary, exercise any of its rights provided at law or in equity.
(ii) In the event that Tenant is prevented from using, and does not
use, the Improvements or any portion thereof, as a result of any repair,
maintenance or alteration performed by Landlord, or which Landlord failed
to perform, after the Commencement Date and required by the Lease, which
substantially interferes with Tenant's use of the Premises (an "ABATEMENT
EVENT"), then Tenant shall give Landlord notice of such Abatement Event,
and if such Abatement Event continues for five (5) consecutive days after
the giving of any such notice or ten (10) days after the giving of any such
notices in any twelve (12) month period (the "ELIGIBILITY PERIOD"), then
the Monthly Basic Rent and Tenant's obligation to pay any Operating
Expenses shall be abated or reduced, as the case may be, after expiration
of the Eligibility Period for such time that Tenant continues to be so
prevented from using, and does not use, the Premises or a portion thereof,
in the proportion that the rentable area of the portion of the Improvements
that Tenant is prevented from using, and does not use, bears to the total
rentable area of the Improvements; provided, however, in the event that
Tenant is prevented from using, and does not use, a portion of the
Improvements for a period of time in excess of the Eligibility Period and
the remaining portion of the Improvements is not sufficient to allow Tenant
to effectively conduct its business therein, and if Tenant does not conduct
its business from such remaining portion, then for such time after
expiration of the Eligibility Period during which Tenant is so prevented
from effectively conducting its business therein, the Monthly Basic Rent
and Tenant's obligation to pay for Operating Expenses shall be abated for
such time as Tenant continues to be so prevented from using, and does not
use, the Improvements. If, however, Tenant reoccupies any portion of the
Improvements during such period, the rent allocable to such reoccupied
portion, based on the proportion that the rentable area of such reoccupied
portion of the Improvements bears to the total rentable area of the
Improvements, shall be payable by Tenant from the date Tenant reoccupies
such portion of the Improvements. To the extent Tenant is entitled to
abatement without regard to the Eligibility Period, because of an event
described in Paragraphs 22 or 23 of this Lease, then the Eligibility Period
shall not be applicable.
26. Assignment and Subletting.
Tenant shall not voluntarily assign or encumber its interest in this
Lease or in the Premises, or sublease all or any part of the Premises, or allow
any other person or entity to occupy or use all or any part of the Premises,
without first obtaining Landlord's prior written consent, which shall not be
unreasonably withheld. Any assignment, encumbrance or sublease without
Landlord's prior written consent shall be voidable, at Landlord's election, and
shall constitute a default. For purposes hereof, in the event Tenant is a
partnership, a withdrawal or change of partners, or change of ownership of
partners, owning more than a fifty percent (50%) interest in the partnership, or
if Tenant is a closely held corporation (i.e., a corporation which is not
publicly traded), any transfer of fifty percent (50%) or more of its stock,
shall constitute a voluntary assignment and shall be subject to these
provisions. A change of partners owning less than fifty percent (50%) interest
in a partnership, or a transfer of less than fifty percent (50%) of a
corporation's stock, may also be deemed to constitute a voluntary assignment
subject to these provisions (but not where the corporation is publicly traded)
if it results in a change of control of the partnership or corporation. No
consent to an assignment, encumbrance, or sublease shall constitute a further
waiver of the provisions of this Paragraph. Tenant shall notify Landlord in
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writing of Tenant's intent to assign this Lease, or encumber, or sublease
Tenant's interest in the Premises, the name of the proposed assignee or
sublessee, information concerning the financial responsibility of the proposed
assignee or sublessee and the terms of the proposed assignment or subletting,
and Landlord shall, within fifteen (15) days of receipt of such written notice,
and additional information reasonably requested by Landlord concerning the
proposed assignee's or sublessee's financial responsibility, elect one of the
following:
(a) Consent to such proposed assignment, encumbrance or sublease;
or
(b) Refuse such consent, which refusal shall be on reasonable
grounds.
Without limiting Landlord's grounds for disapproval, Landlord's
disapproval shall be deemed reasonable if it is based on Landlord's analysis
that (x) the proposed assignee's or sublessee's credit, character and reputation
is not consistent with the quality of the Project or (y) the assignee or
sublessee's use and occupancy of the Premises will be inconsistent with
Subparagraph 1(n) and Paragraph 8 of the Lease. As a condition for granting its
consent to any assignment, encumbrance or sublease, Landlord may require that
the assignee or sublessee remit directly to Landlord, on a monthly basis, all
monies due to Landlord as provided in this Paragraph 26 below. In the event that
Landlord shall consent to an assignment or sublease under the provisions of this
Paragraph 26, Tenant shall pay Landlord's reasonable processing costs and
attorneys' fees incurred in giving such consent, not to exceed One Thousand Five
Hundred Dollars ($1,500.00) during the initial ten (10) year Term. If for any
proposed assignment or sublease Tenant receives rent or other consideration,
whether cash or any other form whatsoever, either initially or over the term of
the assignment or sublease, in excess of the rent called for hereunder, or, in
case of the sublease of a portion of the Premises, in excess of such rent fairly
allocable to such portion, after appropriate adjustments to assure that all
other payments called for hereunder are taken into account, and after deducting
any reasonable out-of-pocket costs incurred by Tenant in connection with such
assignment or sublease, Tenant shall pay to Landlord as additional rent
hereunder fifty percent (50%) of the excess value of each such payment of rent
or other consideration received by Tenant promptly after its receipt. Landlord's
waiver or consent to any assignment or subletting shall not relieve Tenant from
any obligation under this Lease. Occupancy of all or part of the Premises by
parent, subsidiary, or affiliated companies of Tenant shall not be deemed an
assignment or subletting. In addition, notwithstanding anything to the contrary
contained in this Lease, neither (i) an assignment of Tenant's interest under
this Lease to a transferee of all or substantially all of the assets of Tenant,
(ii) an assignment of Tenant's interest under this Lease to a transferee which
is the resulting entity of a merger, reorganization or consolidation of Tenant
with another entity, nor (iii) an assignment or subletting of all or a portion
of the Premises to an affiliate of Tenant (an entity which is controlled by,
controls or is under common control with Tenant), shall require Landlord's
consent nor shall result in an obligation of Tenant to share any consideration
from such transaction with Landlord, provided that Tenant notifies Landlord of
any such assignment or sublease and promptly supplies Landlord with any
documents or information reasonably requested by Landlord regarding such
transfer or transferee and that such assignment or sublease is not a subterfuge
by Tenant to avoid its obligations under this Lease. Any assignee of Tenant's
interest under this Lease for which Landlord's consent is not required as
provided in this Paragraph 26 above may be referred to herein as an "AFFILIATE
ASSIGNEE."
27. Quiet Enjoyment.
Landlord covenants and agrees with Tenant that upon Tenant paying the
rent required under this Lease and paying all other charges and performing all
of the covenants and provisions aforesaid on Tenant's part to be observed and
performed under this Lease, Tenant shall and may peaceably and quietly have,
hold and enjoy the Premises in accordance with this Lease, free from any person
claiming by, through or under Landlord.
28. Subordination.
Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, and at the election of
Landlord or any first mortgagee with a lien on the Premises or any ground lessor
with respect to the Premises, this Lease shall be subject and subordinate at all
times to: (a) all ground leases or underlying leases which may now
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exist or hereafter be executed affecting the Premises or the land upon which the
Premises are situated or both, (b) the lien of any mortgage or deed of trust
which may now exist or hereafter be executed in any amount for which the
Premises, land, ground leases or underlying leases, or Landlord's interest or
estate in any of said items is specified as security, and (c) any CC&Rs (as
defined in Paragraph 8) affecting the Premises provided that any CC&Rs added to
the Premises after the date of this Lease, or any modification to the existing
CC&Rs after the date of this Lease, shall not increase Tenant's obligations
under this Lease nor decrease Tenant's rights under this Lease. Notwithstanding
the foregoing, Landlord shall have the right to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such liens to
this Lease. Landlord hereby agrees to provide Tenant with commercially
reasonable non-disturbance and attornment agreements which expressly honor
provisions in this Lease concerning the application of insurance and
condemnation proceeds from any mortgage holders or deed of trust beneficiaries
who later come into existence at any time prior to expiration of the Term in
consideration of, and as a condition precedent to, Tenant's agreement to
subordinate its interest to such mortgage or deed of trust. In the event that
any ground lease or underlying lease terminates for any reason or any mortgage
or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made
for any reason, Tenant shall, if requested by the ground lessor, mortgagee or
beneficiary, as applicable, attorn to and become the Tenant of the successor in
interest to Landlord and in such event Tenant's right to possession of the
Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and all other amounts required to be paid to Landlord
pursuant to the terms hereof and observe and perform all of the provisions of
this Lease, unless this Lease is otherwise terminated pursuant to its terms.
Tenant hereby waives its rights under any current or future law which gives or
purports to give Tenant any right to terminate or otherwise adversely affect
this Lease and the obligations of Tenant hereunder in the event of any such
foreclosure proceeding or sale. Tenant covenants and agrees to execute and
deliver, upon demand by Landlord and in the form reasonably requested by
Landlord, any additional documents evidencing Tenant's agreement to attorn as
set forth in this Paragraph 28 and the priority or subordination of this Lease
with respect to any such CC&Rs, ground leases or underlying leases or the lien
of any such mortgage or deed of trust.
29. Estoppel Certificate.
Within ten (10) business days following any written request which
Landlord may make from time to time, Tenant shall execute and deliver to
Landlord a statement, in a form substantially similar to the form of Exhibit "F"
attached hereto, certifying: (i) the Commencement Date of this Lease; (ii) the
fact that this Lease is unmodified and in full force and effect (or, if there
have been modifications hereto, that this Lease is in full force and effect, as
modified, and stating the date and nature of such modifications); (iii) the date
to which the rental and other sums payable under this Lease have been paid; (iv)
the fact that, to Tenant's actual knowledge, there are no current defaults under
this Lease by either Landlord or Tenant except as specified in Tenant's
statement; and (v) such other matters reasonably requested by Landlord. Landlord
and Tenant intend that any statement delivered pursuant to this Paragraph 29 may
be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser
of the Premises or any interest therein, including Tenant's interest. In
connection with a proposed assignment or sublease by Tenant, or any other
transfer of substantially all of Tenant's assets or stock, Landlord hereby
agrees to provide to Tenant an estoppel certificate signed by Landlord,
containing the same types of information, and within the same period of time as
set forth in this Paragraph 29(a) above, with such changes as are reasonably
necessary to reflect that the estoppel certificate is being granted and signed
by Landlord to Tenant, rather than from Tenant to Landlord or a lender.
30. Building Planning.
Intentionally Omitted.
31. Rules and Regulations.
Tenant shall faithfully observe and comply with all reasonable rules
and regulations from time to time put into effect by Landlord as it deems
reasonably necessary or appropriate in its sole discretion (the "RULES AND
REGULATIONS"). Landlord shall apply any such Rules and Regulations on a
non-discriminatory basis and Landlord agrees that any such Rules
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and Regulations shall not deprive Tenant of rights expressly provided to Tenant
under this Lease nor increase any obligations of Tenant under this Lease.
32. Choice of Law.
This Lease shall be governed by and construed pursuant to the laws of
the State of Nevada.
33. Successors and Assigns.
Except as otherwise provided in this Lease, all of the covenants,
conditions and provisions of this Lease shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
34. Surrender of Premises.
The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Landlord, operate as an assignment to it of any or all subleases or
subtenancies. Upon the expiration or termination of this Lease, Tenant shall
peaceably surrender the Premises and all alterations and additions thereto
broom- clean, in good order, repair and condition, reasonable wear and tear
excepted, and shall comply with the provisions of Subparagraphs 14(g). The
delivery of keys to any employee of Landlord or to Landlord's agent or any
employee thereof shall not be sufficient to constitute a termination of this
Lease or a surrender of the Premises.
35. Professional Fees.
In the event that Landlord should bring suit for the possession of the
Premises, for the recovery of any sum due under this Lease, or because of the
breach of any provisions of this Lease, or for any other relief against Tenant
hereunder, or should either party bring suit against the other with respect to
matters arising from or growing out of this Lease, then all reasonable,
out-of-pocket costs and expenses, including without limitation, professional
fees such as appraisers', accountants' and attorneys' fees, incurred by the
prevailing party therein shall be paid by the other party.
36. Performance by Tenant.
Intentionally Omitted.
37. Mortgage and Senior Lessor Protection.
No act or failure to act on the part of Landlord which would entitle
Tenant under the terms of this Lease, or by law, to be relieved of Tenant's
obligations hereunder or to terminate this Lease, shall result in a release of
such obligations or a termination of this Lease unless (a) Tenant has given
notice by registered or certified mail to any beneficiary of a deed of trust or
mortgage covering the Premises and to the lessor under any master or ground
Lease covering the Premises or any interest therein whose identity and address
shall have been furnished to Tenant in writing, and (b) Tenant offers such
beneficiary, mortgagee or lessor a reasonable opportunity to cure the default,
which cure period shall not extend for more than sixty (60) days beyond the
thirty (30) day cure period provided to Landlord pursuant to Paragraph 25(e)(i)
above. However, this Paragraph 37 is not intended to, and shall not, extend any
of the time periods for rental abatement specified in Paragraph 25(e)(ii) above.
38. Definition of Landlord.
The term "Landlord" as used in this Lease, so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners, at the time in question, of the fee title to,
or a lessee's interest in a ground lease of, the Premises. In the event of any
transfer, assignment or other conveyance or transfers of any such title or
interest, and assumption of Landlord's obligations under this Lease by the
assignee/transferee, Landlord herein named (and in case of any subsequent
transfers or conveyances, the then grantor) shall be automatically freed and
relieved from and after the date
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of such transfer, assignment or conveyance of all liability as respects the
performance of any covenants or obligations on the part of Landlord contained in
this Lease thereafter to be performed and, without further agreement, the
transferee of such title or interest shall have assumed and agreed to observe
and perform any and all obligations of Landlord hereunder, during its ownership
of the Premises. Landlord may transfer its interest in the Premises without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed a
violation on Landlord's part of any of the terms and conditions of this Lease.
39. Waiver.
The failure of Landlord to seek redress for violation of, or to insist
upon strict performance of, any term, covenant or condition of this Lease or the
Rules and Regulations shall not be deemed a waiver of such violation or prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation, nor shall any custom or
practice which may become established between the parties in the administration
of the terms hereof be deemed a waiver of, or in any way affect, the right of
Landlord to insist upon the performance by Tenant in strict accordance with said
terms. The subsequent acceptance of rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, other than the failure of Tenant to pay the particular
rent so accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such rent.
40. Identification of Tenant.
Unless the provisions of Paragraph 54 hereinbelow are applicable to
this Lease, if more than one entity executes this Lease as Tenant, (a) each of
them is jointly and severally liable for the keeping, observing and performing
of all of the terms, covenants, conditions, provisions and agreement of this
Lease to be kept, observed and performed by Tenant, and (b) the term "Tenant" as
used in this Lease shall mean and include each of them jointly and severally and
the act of or notice from, or notice or refund to, or the signature of, any one
or more of them, with respect to the tenancy or this Lease, including, but not
limited to, any renewal, extension, expiration, termination or modification of
this Lease, shall be binding upon each and all of the entities executing this
Lease as Tenant with the same force and effect as if each and all of them had so
acted or so given or so received such notice or refund or so signed.
41. Parking and Transportation.
(a) Tenant shall have the right to use all parking areas located
upon the Premises, subject to such parking rules and regulations as
Landlord deems reasonably necessary or appropriate in its sole discretion
for the operation of said parking. Landlord may refuse to permit any person
who violates with unreasonable frequency the parking rules and regulations
to park in the parking areas, and any violation of the rules shall subject
the car to removal. Tenant agrees to use its best efforts to acquaint all
employees and visitors with the parking rules and regulations. Landlord
shall have no responsibility for damage to cars in the parking areas,
except as provided in Paragraph 19.
(b) Tenant agrees that it will cooperate in governmentally required
programs to reduce peak levels of commuter traffic. Such programs may begin
prior to the Commencement Date and may include, but shall not be limited
to, an annual survey of commuter practices; designation of an employee of
Tenant as a contact for transportation management purposes; assembly of
commuter information from Tenant's employees; carpools; vanpools and other
ridesharing programs; public and private transit programs; and flexible
work hours.
(c) Upon reasonable advance notice to Landlord, Landlord shall make
available to Tenant temporary parking areas containing no more than seven
(7) parking spaces for each one thousand (1,000) rentable square feet of
the Improvements (including the improvements constructed on the Expansion
Premises, if applicable) upon any undeveloped land owned by Landlord within
The Crossing Business Center that is suitable for providing temporary
parking. Any preparation of such undeveloped land for such parking shall be
subject to Landlord's reasonable approval and shall be at Tenant's
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sole cost and expense. Tenant's use of such temporary parking areas shall
not exceed forty-five (45) days during any calendar year. The temporary
parking areas will be deemed to constitute a portion of the Premises during
the period of Tenant's use thereof for purposes of Paragraph 19. If
Landlord no longer has undeveloped land within The Crossing Business Center
suitable for providing temporary parking, then any additional parking that
Tenant may need in excess of the parking available upon the Premises must
be satisfied by utilizing the public streets adjacent to the Premises.
Landlord makes no representation as to the availability of unimproved land
within The Crossing Business Center for temporary parking or the
availability of any parking on the adjacent public streets; however, if (i)
undeveloped land within The Crossing Business Center suitable for providing
temporary parking is not available and (ii) either (A) parking is
prohibited by law on the adjacent public streets during the period of
Tenant's temporary parking requirement or (B) Tenant reasonably determines
that six (6) parking spaces for each one thousand (1,000) rentable square
feet of the Improvements is not available on those portions of the adjacent
public streets designated on Exhibit "G" during the period of Tenant's
temporary parking requirement, Landlord shall provide Tenant with a
temporary parking area for such period at some other location within
reasonable proximity to the Premises and if a shuttle vehicle is required
in order to provide transportation for Tenant's employees to and from such
other parking location, Landlord shall promptly reimburse Tenant for the
cost of operating such shuttle vehicle during such temporary period. The
provisions of this Paragraph 41(c) shall apply only to the Original Tenant,
any Affiliate Assignee and any other assignee of Tenant's entire interest
in this Lease which is permitted pursuant to the provisions of Paragraph 26
above, but only where such other assignee does not have a need for
temporary parking requirements which are greater than those of the Original
Tenant.
(d) All parking provided to Tenant under this Paragraph 41 shall be
free of charge during the initial Term and during any Option Term, except
that Tenant shall be responsible for any tax or other governmental
assessment imposed on Tenant's parking.
42. Terms and Headings.
The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. Words used in any gender include other genders.
The Paragraph headings of this Lease are not a part of this Lease and shall have
no effect upon the construction or interpretation of any part hereof.
43. Examination of Lease.
Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for Lease, and it is not
effective as a Lease or otherwise until execution by and delivery to both
Landlord and Tenant.
44. Time.
Time is of the essence with respect to the performance of every
provision of this Lease in which time or performance is a factor.
45. Prior Agreement; Amendments.
This Lease contains all of the agreements of the parties hereto with
respect to any matter covered or mentioned in this Lease, and no prior agreement
or understanding, oral or written, express or implied, 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
hereto or their respective successors in interest. The parties acknowledge that
all prior agreements, representations and negotiations are deemed superseded by
the execution of this Lease to the extent they are not incorporated herein.
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46. Severability.
Any provision of this Lease which shall prove to be invalid, void or
illegal in no way affects, impairs or invalidates any other provision hereof,
and such other provisions shall remain in full force and effect.
47. Recording.
Neither Landlord nor Tenant shall record this Lease nor a short form
memorandum thereof without the consent of the other and if such recording
occurs, it shall be at the sole cost and expense of the party requesting the
recording, specifically including any documentary transfer taxes.
48. Limitation on Liability.
The obligations of Landlord under this Lease do not constitute personal
obligations of the individual partners, directors, officers or shareholders of
Landlord, and Tenant shall not seek recourse against the individual partners,
directors, officers or shareholders of Landlord or any of their personal assets
for satisfaction of any liability in respect to this Lease. Any liability of
Landlord under this Lease shall be limited to Landlord's interest in the
Premises, but in no event shall such interest be deemed to be less than One
Million One Hundred Twenty- Five Thousand Dollars ($1,125,000.00) for purposes
of this Paragraph 48.
49. Riders.
Clauses, plats, exhibits and riders, if any, affixed to this Lease are
a part hereof.
50. Signs.
Tenant shall not place any sign within any area of the Premises which
is visible from outside the Premises without Landlord's prior written consent.
Landlord's consent shall not be unreasonably withheld, provided that any such
signage shall comply with Landlord's standard graphics package for the Project
and no building-top signage shall be permitted. Landlord shall have the right to
remove any sign which has not been previously approved in writing.
51. Modification for Lender.
If in connection with obtaining construction, interim or permanent
financing for the Premises, the lender shall request reasonable modifications in
this Lease as a condition to such financing, Tenant will not unreasonably
withhold, delay or defer its consent thereto, provided that such modifications
do not increase the obligations of Tenant hereunder in any way and do not
adversely affect the leasehold interest hereby created or Tenant's rights
hereunder.
52. Accord and Satisfaction.
No payment by Tenant or receipt by Landlord of a lesser amount than the
rent payment herein stipulated shall be deemed to be other than on account of
the rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as rent be deemed an accord and satisfaction
and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance of such rent or pursue any other remedy provided in
this Lease. Tenant agrees that each of the foregoing covenants and agreements
shall be applicable to any covenant or agreement whether expressly contained in
this Lease or imposed by any statute or at common law.
53. Financial Statements.
If required in connection with a prospective sale or financing of the
Premises at any time during the term of this Lease, Tenant shall, upon thirty
(30) days prior written notice from Landlord, provide Landlord with a current
financial statement and financial statements of the two (2) years prior to the
current financial statement year. Such statements shall be prepared in
accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant. If Tenant is not publicly
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held, Landlord shall keep, and shall direct any prospective purchaser or lender
to keep, such financial statements confidential except to the extent disclosure
is required to any accountants or other consultants retained by Landlord or such
prospective purchaser or lender.
54. Tenant as Corporation.
If Tenant executes this Lease as a corporation, then Tenant represents
and warrants that the individuals executing this Lease on Tenant's behalf are
duly authorized to execute and deliver this Lease on its behalf in accordance
with a duly adopted resolution of the board of directors of Tenant, a copy of
which is to be delivered to Landlord upon request, and in accordance with the
By-Laws of Tenant.
55. No Partnership or Joint Venture.
Nothing in this Lease shall be deemed to constitute Landlord and Tenant
as partners or joint venturers. It is the express intent of the parties hereto
that their relationship with regard to this Lease be and remain that of landlord
and tenant.
56. Force Majeure.
Any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain services, labor, or materials or
reasonable substitutes therefor, governmental actions, civil commotions, fire or
other casualty, and other causes beyond the reasonable control of the party
obligated to perform (collectively, the "FORCE MAJEURE"), except with respect to
(i) the obligations imposed with regard to rent and other charges to be paid by
Tenant or any monetary obligations to be paid by Landlord pursuant to this
Lease, and (ii) Landlord's obligations to make timely payments of the Allowance
pursuant to the Work Letter Agreement, notwithstanding anything to the contrary
contained in this Lease, shall excuse the performance of such party for a period
equal to any such prevention, delay or stoppage and, therefore, if this Lease
specifies a time period for performance of an obligation of either party, that
time period shall be extended by the period of any delay in such party's
performance caused by a Force Majeure.
IN WITNESS WHEREOF, the parties have executed this Lease the day and
year first above written.
TENANT: LANDLORD:
WILLIAMS-SONOMA, INC., a California HOWARD HUGHES PROPERTIES,
corporation LIMITED PARTNERSHIP, a Delaware
limited partnership
By: _______________________________
Print Name:____________________ By: THE HOWARD HUGHES
Print Title:___________________ CORPORATION (formerly known
as Summa Corporation), a Delaware
corporation, its sole general partner
By: _________________________________
Print Name:______________________
Print Title:_____________________
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EXHIBIT "A"
LEGAL DESCRIPTION OF PREMISES
(To be attached)
EXHIBIT "A"
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EXHIBIT "A"
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EXHIBIT "A"
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EXHIBIT "A"
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EXHIBIT "A"
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EXHIBIT "A"
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EXHIBIT "B"
SITE PLAN
[Site Plan needs to depict the Premises
and the Expansion Premises]
EXHIBIT "B"
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EXHIBIT "C"
WORK LETTER AGREEMENT
This Work Letter Agreement supplements the Office Lease (the "LEASE")
dated concurrently herewith, by and between Landlord and Tenant, covering
certain premises described in the Lease (the "PREMISES"). All terms not defined
herein shall have the same meaning as set forth in the Lease.
1. Construction of Base Improvements and Tenant Improvements.
Landlord shall construct, through its designated contractor, the "BASE
IMPROVEMENTS" described on Schedule 1 attached hereto. In addition, Landlord
shall construct, through its designated contractor, all other portions of the
building to be occupied by Tenant pursuant to the Lease (collectively, the
"TENANT IMPROVEMENTS") in accordance with the Final Plans for the Tenant
Improvements approved by Landlord and Tenant pursuant to Paragraph 2 below. The
Base Improvements and Tenant Improvements are collectively referred to as the
"IMPROVEMENTS." All Improvements shall be constructed pursuant to this Work
Letter Agreement and shall be performed only by Landlord's designated
contractor.
2. Plans and Specifications for Improvements.
2.1 All plans and specifications, and approvals or disapprovals thereof
for the Tenant Improvements shall be submitted in accordance with the schedule
set forth in Paragraph 6 below.
2.2 Tenant shall retain an architect reasonably approved by Landlord to
prepare and deliver to Landlord for approval preliminary plans for the Tenant
Improvements based upon Tenant's Outline Specifications dated September 25, 1995
(the "PRELIMINARY PLANS"). If Landlord shall disapprove of any portion of the
Preliminary Plans, Landlord shall advise Tenant of such revisions, and reasons
therefor, as are reasonably required by Landlord for the purpose of obtaining
approval. Tenant shall then submit to Landlord, for Landlord's approval, a
redesign of the Preliminary Plans, incorporating the revisions required by
Landlord and such modifications thereof as are suggested by Tenant, said
modifications to be subsequently approved by Landlord prior to Tenant's
submission of Final Plans.
2.3 Tenant shall cause its architect to prepare from the approved
Preliminary Plans complete architectural plans, drawings and specifications for
the Tenant Improvements and, utilizing Landlord's designated mechanical,
electrical and structural engineers, complete engineered and cross coordinated
mechanical, electrical and structural working drawings for the Tenant
Improvements. Such complete plans, drawings and specifications are referred to
herein as the "FINAL PLANS". All items shown on the Final Plans other than the
Base Improvements shall be considered to be Tenant Improvements. Tenant shall
submit the Final Plans for the approval of Landlord in the same manner as
provided in Subparagraph 2.2 above for approval by Landlord of the Preliminary
Plans.
2.4 Tenant acknowledges that, unless specifically shown as Landlord's
responsibility on the Final Plans, the Improvements shall not include, and
Landlord shall not be responsible for, the design, construction or installation
of, various nonstructural items which Tenant may find desirable for the Premises
including, without limitation, furniture, trade fixtures, office equipment,
telephone, telecommunications and data equipment and systems, plantscaping,
artwork or cabling required in connection with any of these items and Tenant may
enter the Premises to install these items as provided in, and subject to,
Paragraph 5 below.
3. Allowance for Work and Work Cost.
3.1 Landlord shall construct the Base Improvements at Landlord's cost.
Tenant shall receive from Landlord an allowance (the "ALLOWANCE") of $896,675.00
(i.e., $25.00 per rentable square foot multiplied by 35,867 rentable square feet
of the Improvements), which
EXHIBIT "C"
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Allowance shall be used solely for Work Costs for the Tenant Improvements. All
Tenant Improvements, whether or not the cost thereof is covered by the
Allowance, shall become the property of Landlord upon expiration or earlier
termination of the Lease and shall remain on the Premises at all times during
the Term of this Lease. Tenant shall be entitled to no payment or rent reduction
for any part of the Allowance not used by Tenant. Tenant shall have the option,
exercisable by written notice to Landlord at any time prior to the time Tenant
would otherwise be required to pay any excess Work Costs to Landlord pursuant to
Paragraph 3.7 below, to increase the amount of the Allowance by up to Ten
Dollars ($10.00) per rentable square foot of the Improvements. If Tenant
exercises such option, the Monthly Basic Rent shall be increased by an amount
calculated to fully amortize the amount by which the Allowance is so increased,
based upon equal monthly payments of principal and interest, with interest
imputed at the rate of twelve percent (12%) per annum on the outstanding
principal balance, over a ten (10) year amortization period commencing as of the
Commencement Date (or, as to the Expansion Premises, over the period from the
commencement of Tenant's lease of the Expansion Premises until the expiration of
the initial ten (10) year initial Term).
3.2 As used herein, "WORK COSTS" mean (i) all out-of-pocket fees and
expenses incurred by Landlord in connection with the design and construction of
the Tenant Improvements, including, without limitation, architectural and
engineering fees for the preparation of the Preliminary Plans and Final Plans,
(ii) the actual contractor costs and charges for material and labor,
contractor's profit, overhead and general conditions incurred by Landlord in
having the Tenant Improvements constructed in accordance with the Final Plans,
(iii) Governmental agency plan check, permit and other fees and sales and use
taxes, (iv) testing and inspection costs, (v) any paint touch-up or repair work
necessary due to Tenant's move into the Premises, and (vi) all other reasonable
costs expended or to be expended by Landlord in the construction of the Tenant
Improvements.
3.3 As promptly as practicable following Tenant's approval of the Final
Plans, Landlord shall submit to Tenant a written estimate of the Work Costs for
the Tenant Improvements. Thereupon, Tenant shall either approve the estimate or
disapprove specific items and submit to Landlord proposed revisions of Final
Plans to reflect the deletion of and/or substitution for such disapproved items.
Any such deletions and/or substitutions to the Final Plans will be processed in
accordance with Subparagraphs 3.8 and 3.9 below. Upon Tenant's final written
approval of said estimate, such approved estimate to be referred to herein as
the "WORK COST STATEMENT", Landlord shall have the right to purchase special
materials requiring extended delivery time as set forth on the Final Plans and
to commence the construction of the items included in said Work Cost Statement
pursuant to Paragraph 4 hereof.
3.4 The contractor cost of improvements shall be the sum of the actual
cost to Landlord's contractor, plus a contractor's fee for profit, overhead and
general conditions. The fee for profit shall not exceed five point five percent
(5.5%) of all other items under the contract and overhead and general conditions
shall be allocated by Landlord to the Base Improvements and the Tenant
Improvements based upon their respective costs. Wherever practicable, Landlord
shall cause its contractor to obtain a minimum of three (3) bids.
3.5 If any amendment or supplement to the Final Plans shall require
changes in the Base Improvements, the increased cost of the Base Improvements
caused by such changes shall be charged as a Work Cost. The cost thereof shall
include all direct architectural and/or engineering fees and expenses in
connection therewith.
3.6 Landlord's written estimate of the Work Costs shall include a
reasonable contingency to allow for changes in the Tenant Improvements and/or
other unforeseen costs and expenses arising after Tenant's approval thereof.
3.7 In the event that the Work Cost Statement exceeds the Allowance (as
may be increased by Tenant pursuant to Paragraph 3.1 above), Tenant shall pay
fifty percent (50%) of the excess to Landlord within five (5) business days of
its delivery of final written approval of the Work Cost Statement. The remaining
fifty percent (50%) of any such excess shall be paid by Tenant to Landlord, as
additional rent, within five (5) business days after the Commencement Date.
EXHIBIT "C"
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3.8 In the event that changes to the Final Plans are requested by
Tenant and approved by Landlord or required by any governmental agency
subsequent to Landlord's approval thereof, the changes shall be incorporated
into the work by means of change order.
3.9 Any change orders to the approved Final Plans which are requested
by Tenant and approved by Landlord or required by any governmental agency shall
be forwarded to Landlord for approval and costing. Tenant shall be given a
written cost estimate for the completion of said change order which must be
approved and paid for by Tenant prior to the commencement of work; provided,
however, that Landlord shall pay the cost of the change to the extent of any
remaining Allowance (as may be increased as provided in Paragraph 3.1 above).
3.10 Except as provided in Paragraph 3.7 hereof, Tenant shall pay
Landlord all amounts due under this Work Letter Agreement within five (5)
business days of billing. Should Tenant reasonably dispute the amount of any
billing, Tenant shall make payment on all portions which are not disputed. Any
unpaid portions, whether undisputed or disputed on which Landlord ultimately
prevails, shall bear interest from the due date at the Interest Rate.
3.11 The parties acknowledge that the Allowance shall not be charged
for any costs required to correct any errors or omissions of Landlord or the
general contractor retained by Landlord or for any costs resulting from the
negligence or willful misconduct of Landlord or the general contractor retained
by Landlord.
4. Construction.
4.1 Following Tenant's approval of Landlord's Work Cost estimate,
Tenant's payment of any amount by which such estimate exceeds the Allowance (as
provided in, and subject to, Paragraph 3.7 above) and receipt by Landlord of all
relevant governmental agency approvals and permits, Landlord shall cause its
general contractor to commence the construction of the Improvements. Landlord
and/or such general contractor shall have the right to cause all or any portion
of such work to be performed by one or more subcontractors. Landlord shall
furnish Tenant with a schedule setting forth the projected completion dates
therefor and showing the deadlines for any actions required to be taken by
Tenant during such construction, and Landlord may from time to time during the
prosecution of the Improvements modify or amend such schedule due to delays
encountered by Landlord; provided, however, that this sentence is not intended
to, and shall not, supersede Paragraphs 7.2 and 7.3 below. Landlord shall
endeavor to meet such schedule (as the same may be modified or amended). Except
as provided in Paragraphs 7.2 and 7.3 below, Landlord shall not be liable for
any direct or indirect damages as a result of delays in construction.
4.2 If Tenant shall request any change in the Final Plans ("CHANGE
ORDER"), Tenant shall cause the architect to prepare and submit to Landlord a
revised set of the Final Plans prepared in accordance with Subparagraph 2.3
above, for Landlord's approval. Any approved Change Orders shall initiate a new
written estimate of Work Costs which must be approved by Tenant pursuant to the
procedures set forth in Subparagraph 3.3 above. In order to account for
Landlord's administrative services, Landlord shall be entitled to add an
administrative charge to the Work Cost in an amount equal to five percent (5%)
of any additional costs resulting from a Change Order in excess of Fifty
Thousand Dollars ($50,000.00). No such fee shall be charged for Change Orders of
less than Fifty Thousand Dollars ($50,000.00). Any delay in the construction of
Improvements as a result of any Change Orders requested by Tenant shall be a
Tenant Delay (as defined in Paragraph 7 below).
4.3 In connection with the construction of the Improvements, each
party shall be entitled to rely upon the other party's construction
representative who shall be as follows: Landlord's Construction Representative:
Frank Beck, Tenant's Construction Representative: Susan Brown. Each respective
construction representative shall have the authority to make binding commitments
relative to the Improvements on behalf of the party appointing such construction
representative. All inquiries of Tenant pertaining to construction of the
Improvements shall be directed in writing to Landlord's Construction
Representative. A party may designate a substitute construction representative
by giving written notice to the other party
EXHIBIT "C"
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at any time. Any representatives of Tenant who desire to visit the Premises
during construction of the Improvements must obtain the prior consent of
Landlord and the general contractor.
5. Decorating by Tenant.
Landlord shall make the Premises reasonably available to Tenant during
the last thirty (30) days of construction of the Improvements for the purpose of
decorating, furnishing and moving into the Premises and installation of Tenant's
telephone system and cabling. Such early entry by Tenant shall be subject to
scheduling by Landlord and such rules and regulations as Landlord may establish
in order to minimize any interference in Landlord's completion of the
Improvements. If at any time such entry shall cause or threaten a delay in the
construction of the Improvements, Landlord may terminate Tenant's right to such
early entry. Prior to Tenant's entry, Tenant shall deliver evidence to Landlord
that Tenant has obtained the insurance required under Paragraph 21 of the Lease.
Tenant shall be responsible for any damage to the Improvements caused by
Tenant's entry.
6. Schedule.
Preparation and approval of the Preliminary Plans, Final Plans and the
Work Cost Statement shall proceed as indicated below.
Action Responsibility Due Date
------ -------------- --------
(i) Submission and approval of the Landlord and Tenant To be prepared by
Preliminary Plans Tenant's architect and
approved by Landlord
and Tenant based upon
regularly scheduled
meetings during
January, 1996.
(ii) Submission of Final Plans to Tenant January 31, 1996
Landlord
(iii) Delivery of written notice Landlord Three (3) business days
approving or disapproving Final after (ii)
Plans
(iv) Submission, if necessary, of Tenant Five (5) business days
redesign of Final Plans after (iii)
(v) Delivery of written notice of final Landlord Three (3) business days
approval of Final Plans (if (iv) is after (iv)
necessary)
(vi) Submission of Work Cost estimate Landlord Two (2) business days
to Tenant after Landlord's
approval of Final Plans
(vii) Delivery of written notice of final Tenant Two (2) business days
approval of Work Cost Statement after (vi)
7. Delays.
7.1 Notwithstanding the Estimated Commencement Date provided in
Subparagraph 1(j) of the Lease, Tenant's obligation for the payment of rent as
defined within the Lease shall not commence until the actual Commencement Date
as defined in Subparagraph 1(k) of the Lease; provided, however, that if
Landlord shall be delayed in substantially completing the Improvements as a
result of any of the following ("TENANT DELAYS"):
EXHIBIT "C"
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(i) Tenant's failure to complete any action item which is the
responsibility of Tenant on or before the due date specified in Paragraph 6
above, or
(ii) Tenant's changes to Final Plans after the final submission
date in Subparagraph 6(vii) above, or Tenant's approval thereof, whichever
is earlier, or
(iii) Any delay caused by Tenant's entry pursuant to Paragraph 5,
or
(iv) Any delay of Tenant in making payment to Landlord for
Tenant's share of Work Cost as provided in Subparagraph 3.7 above, or
(v) Any other delay caused by Tenant,
then the Term of the Lease shall nevertheless commence and the Commencement Date
shall be the date it would have been had the delay not occurred.
7.2 The term "OUTSIDE DATE" shall mean August 1, 1996; provided,
however, that such August 1, 1996 date shall be extended on a day-for-day basis
to the extent that Landlord is delayed in substantially completing the
Improvements as a result of any Tenant Delays and/or Force Majeure. In the event
that the Commencement Date does not occur on or before the Outside Date (as so
extended), then (i) Tenant's obligation to pay Monthly Basic Rent shall not
commence until the Commencement Date, (ii) for each day after the Outside Date
(as so extended) in which the Commencement Date has not occurred, (a) Tenant's
first obligations to pay Monthly Basic Rent shall be abated for two days and (b)
the date of expiration of the initial Term shall be extended for two (2) days.
By way of example only, and not as limitation upon the foregoing, if there are
ten (10) days of Force Majeure delays and five (5) days of Tenant Delays and if
the Commencement Date occurs on August 20, 1996, then the Outside Date shall be
August 15, 1996, Tenant's obligation to pay Monthly Basic Rent shall be abated
until August 30, 1996 and the initial Term shall expire on August 30, 2006.
7.3 The term "OUTSIDE TRAINING DATE" shall mean September 1, 1996;
provided, however, that such September 1, 1996 date shall be extended on a
day-for-day basis to the extent that Landlord is delayed in substantially
completing the Improvements as a result of any Tenant Delays and/or Force
Majeure. In the event that the Commencement Date does not occur on or before the
Outside Training Date (as so extended), then in addition to Tenant's rights
under Paragraph 7.2 above, (i) Landlord shall reimburse Tenant, within thirty
(30) days after Landlord's receipt of a reasonably particularized invoice and
other evidence of payment reasonably requested by Landlord, for the excess
("TRAINING EXCESS") of any actual, out-of-pocket costs incurred by Tenant in
order to train Tenant's employees who will be working from the Premises as of
the Commencement Date over and above the amount of actual, out-of-pocket
expenses Tenant would have incurred in order to train such employees had the
Commencement Date occurred on or before the Outside Training Date (as so
extended), and (ii) the date of expiration of the Initial Term shall be extended
(in addition to the extension described in Subparagraph 7.2(ii)(b) above) for a
sufficient number of days so that the Monthly Basic Rent paid by Tenant for the
Premises during such extension shall be equivalent to the amount of the Training
Excess so paid by Landlord.
EXHIBIT "C"
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TENANT: LANDLORD:
WILLIAMS-SONOMA, INC., a California HOWARD HUGHES PROPERTIES,
corporation LIMITED PARTNERSHIP, a Delaware
limited partnership
By: _______________________________
Print Name:____________________ By: THE HOWARD HUGHES
Print Title:___________________ CORPORATION (formerly known
as Summa Corporation), a Delaware
corporation, its sole general partner
By: _________________________________
Print Name:
Print Title:
EXHIBIT "C"
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SCHEDULE 1
DESCRIPTION OF BASE IMPROVEMENTS
The following is a description of Base Improvements for the Premises. Any items
not specifically identified are intended to be included with the Tenant
Improvements. Reference the attached plans and elevations which approximate the
contemplated base building design.
Sitework
- Parking will be provided for approximately 245 cars. Paving sections
will be installed as recommended in the geotechnical report.
- Handicapped parking will be provided adjacent to the main entrance.
- Utilities will be brought to the building with all necessary fees paid
to obtain a TCO for the base building. Sewer connection fees are paid
when fixtures are designed and installed. Sewer connection fees will be
paid as part of the Tenant Improvements.
- A secondary source for telephone was requested by Tenant and the second
service will be installed with the Base Improvements but paid for as
part of the Tenant Improvements.
- The emergency generator will be sized and accounted for with the Tenant
Improvements. Allowances will be made with the Base Improvements to
support the generator location at the northwest corner of Phase I. All
costs to support the generator are part of the Tenant Improvements.
- Site lighting shall meet code with a minimum 1 fc in the parking lot
area.
- The transformer will be located unscreened adjacent to the generator.
- A concrete patio and adjacent landscaped area will be located at the
rear of the building.
- A monument sign meeting Summerlin guidelines will be designed and
installed at a single location at the building entrance.
Base Building
- The structure is to be tilt-up concrete panels with glass area as shown
on the attached elevations.
- The roof system will be an unpainted wood panelized system with 16'
clear to the bottom of the trusses. Roofing will be a 4-ply built-up
roof with 3-1/2" of rigid insulation to eliminate batt insulation in
the space.
- The roof system will be designed to support 5 ton units throughout the
building.
- Roof insulation will be designed to meet the Energy Guide requirements
and to meet the local design standards. The roof insulation is
anticipated to be rigid insulation. Wall insulation will be installed
as a part of the Tenant Improvements. This will accommodate the need to
install facilities in the exterior walls.
- Window coverings will be designed and installed with the Tenant
Improvements.
- 4' x 8' skylights will be installed throughout the call center.
- A canopy will be provided at the main entrance.
- Other than bringing primary service into the building, no in-slab
facilities have been identified for Tenant Improvements.
SCHEDULE 1
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EXHIBIT "D"
RENTABLE SQUARE FEET
1. The term "RENTABLE SQUARE FEET" of the Improvements as used in the
Lease shall be deemed to mean the Construction Area of the Improvements as
determined in accordance with the Method for Measuring Floor Area in Office
Buildings, ANSI Z65.1-1980 (the "BOMA STANDARD").
2. For purposes of establishing the initial Annual Basic Rent and
Monthly Basic Rent as shown in Paragraph 1 of the Lease and the amount of the
Allowance, the number of rentable square feet of the Improvements is deemed to
be as set forth in Subparagraph 1(g) of the Lease. Within ninety (90) days
following the Commencement Date, Landlord's architect will redetermine the
actual number of rentable square feet of the Improvements, based upon the
criteria set forth in Paragraph 1 above, and thereupon Annual Basic Rent,
Monthly Basic Rent and the Allowance shall be retroactively adjusted
accordingly.
EXHIBIT "D"
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EXHIBIT "E"
SAMPLE FORM OF
NOTICE OF LEASE TERM DATES
TO:________________________ Date: _________________
Re: Lease dated __________________________, 19__ between HOWARD HUGHES
PROPERTIES, LIMITED PARTNERSHIP, a Delaware limited partnership, Landlord, and
WILLIAMS-SONOMA, INC., a California corporation, Tenant, concerning Premises
located at __________ Covington Cross Drive, Las Vegas, Nevada ____________.
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm
as follows:
1. That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the subject Lease.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject Lease, the Term of said
Lease shall commence as of __________ for a term of ten (10), ending on
___________________, with one (1) option to extend for five (5) years.
3. That in accordance with the subject Lease, rental commenced to
accrue on_________________________.
4. If the commencement date of the subject Lease is other than the
first day of the month, the first billing will contain a pro rata adjustment.
Each billing thereafter, with the exception of the final billing, shall be for
the full amount of the monthly installment as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and
every month during the term of said Lease. Your rent checks should be made
payable to __________________________________ at ____________________________.
AGREED AND ACCEPTED
TENANT: LANDLORD:
WILLIAMS-SONOMA, INC., a California HOWARD HUGHES PROPERTIES,
corporation LIMITED PARTNERSHIP, a Delaware
limited partnership
By: _______________________________
Print Name:____________________ By: THE HOWARD HUGHES
Print Title:___________________ CORPORATION (formerly known
as Summa Corporation), a Delaware
corporation, its sole general partner
By: _________________________________
Print Name:______________________
Print Title:_____________________
EXHIBIT "E"
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EXHIBIT "F"
SAMPLE FORM OF ESTOPPEL CERTIFICATE
The undersigned, HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP, a
Delaware limited partnership ("LANDLORD"), with a mailing address c/o
___________________________________, _______________________________, and
WILLIAMS-SONOMA, INC., a California corporation ("TENANT"), hereby certify to
_____________________________________, a _________________________________ as
follows:
1. Attached hereto is a true, correct and complete copy of that
certain lease dated __________, 19__ between Landlord and Tenant (the "LEASE"),
which demises premises located at _________________________________. The Lease
is now in full force and effect and has not been amended, modified or
supplemented, except as set forth in paragraph 4 below.
2. The term of the Lease commenced on __________, 19__.
3. The term of the Lease shall expire on __________, 19__.
4. The Lease has: (Initial one)
( ) not been amended, modified, supplemented, extended, renewed or
assigned.
( ) been amended, modified, supplemented, extended, renewed or assigned
by the following described agreements, copies of which are attached hereto:_____
_______________________________________________________________________________.
5. Tenant is now in possession of said premises.
6. Tenant and Landlord acknowledge that the Lease will be assigned to
__________________________ and no modification, adjustment, revision or
cancellation of the lease or amendments thereto shall be effective unless
written consent by _____________________ is obtained, and that until further
notice, payments under the Lease may continue as heretofore.
7. The amount of fixed monthly rent is $_______________.
8. The amount of security deposits (if any) is $____________. No other
security deposits have been made.
9. Tenant is paying the full lease rental, which has been paid in full
as of the date hereof. No rent under the Lease has been paid more than thirty
(30) days in advance of its due date.
10. All known work required to be performed by Landlord under the Lease
has been completed.
11. To Tenant's actual knowledge, there are no defaults on the part of
the Landlord or Tenant under the Lease.
12. To Tenant's actual knowledge, Tenant has no defense as to its
obligations under the Lease and claims no set-off or counterclaim against
Landlord.
13. Tenant has no right to any concession (rental or otherwise) or
similar compensation in connection with renting the space it occupies except as
provided in the Lease.
All provisions of the Lease and amendments thereto (if any) referred to
above are hereby ratified.
EXHIBIT "F"
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51
The foregoing certification is made with the knowledge that ___________
_______________ is about to fund a loan to Landlord or purchase the demised
premises from Landlord, and that ________________________ is relying upon the
representations herein made in connection with such transaction.
DATED: ______________, 19__
TENANT: LANDLORD:
WILLIAMS-SONOMA, INC., a California HOWARD HUGHES PROPERTIES,
corporation LIMITED PARTNERSHIP, a Delaware
limited partnership
By: _______________________________
Print Name:____________________ By: THE HOWARD HUGHES
Print Title:___________________ CORPORATION (formerly known
as Summa Corporation), a Delaware
corporation, its sole general partner
By: _________________________________
Print Name:______________________
Print Title:_____________________
EXHIBIT "F"
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52
EXHIBIT "G"
PUBLIC STREET PARKING AREAS
EXHIBIT "G"
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53
STANDARD FORM LEASE
BY AND BETWEEN
HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP
"LANDLORD"
AND
WILLIAMS-SONOMA, INC.,
A CALIFORNIA CORPORATION
"TENANT"
54
TABLE OF CONTENTS
PARAGRAPH PAGE
- --------- ----
1. Terms and Definitions.......................................... 1
2. Premises Leased................................................ 2
3. Term........................................................... 3
4. Possession..................................................... 6
5. Annual Basic Rent.............................................. 6
6. Rental Adjustment.............................................. 6
7. Security Deposit............................................... 11
8. Use............................................................ 11
9. Payments and Notices........................................... 12
10. Brokers........................................................ 13
11. Holding Over................................................... 13
12. Taxes on Tenant's Property..................................... 13
13. Condition of Premises.......................................... 13
14. Alterations.................................................... 14
15. Repairs........................................................ 16
16. Liens.......................................................... 17
17. Entry by Landlord.............................................. 18
18. Utilities and Services......................................... 18
19. Indemnification................................................ 19
20. Damage to Tenant's Property.................................... 19
21. Insurance...................................................... 19
22. Damage or Destruction.......................................... 21
23. Eminent Domain................................................. 23
24. Bankruptcy..................................................... 24
25. Defaults and Remedies.......................................... 24
26. Assignment and Subletting...................................... 26
27. Quiet Enjoyment................................................ 27
28. Subordination.................................................. 27
29. Estoppel Certificate........................................... 28
30. Building Planning.............................................. 28
31. Rules and Regulations.......................................... 28
32. Choice of Law.................................................. 29
33. Successors and Assigns......................................... 29
34. Surrender of Premises.......................................... 29
35. Professional Fees.............................................. 29
36. Performance by Tenant.......................................... 29
37. Mortgage and Senior Lessor Protection.......................... 29
38. Definition of Landlord......................................... 29
39. Waiver......................................................... 30
40. Identification of Tenant....................................... 30
41. Parking and Transportation..................................... 30
42. Terms and Headings............................................. 31
43. Examination of Lease........................................... 31
44. Time........................................................... 31
45. Prior Agreement; Amendments.................................... 31
46. Severability................................................... 32
47. Recording...................................................... 32
48. Limitation on Liability........................................ 32
49. Riders......................................................... 32
50. Signs.......................................................... 32
51. Modification for Lender........................................ 32
52. Accord and Satisfaction........................................ 32
53. Financial Statements........................................... 32
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54. Tenant as Corporation.......................................... 33
55. No Partnership or Joint Venture................................ 33
56. Force Majeure.................................................. 33
Principal Reference
Exhibit in Paragraph
- ------- ------------
"A" Legal Description of Premises 2(a)
"B" Site Plan Showing Initial Premises and Expansion 2(a)
Premises
"C" Work Letter Agreement 2(a)
"D" Rentable Square Feet 2(a)
"E" Sample Form of Notice of Lease Term Dates 13
"F" Sample Form of Tenant Estoppel Certificate 29
"G" Public Street Parking Areas 41
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INDEX OF DEFINED TERMS
DEFINED TERM PAGE
- ------------ ----
Abatement Event.............................................................25
Actual Statement............................................................10
Affiliate Assignee..........................................................27
Allowance............................................................Exhibit C
Annual Basic Rent; Monthly Basic Rent........................................2
Approximate Rentable Square Feet within Improvements.........................1
Base Improvements....................................................Exhibit C
BOMA Standard........................................................Exhibit D
Brokers......................................................................2
CC&Rs.......................................................................11
Change Order.........................................................Exhibit C
Changes.....................................................................13
Claims......................................................................18
Commencement Date............................................................1
Comparable Projects..........................................................4
Cosmetic Changes............................................................14
Damage Notice...............................................................21
Damage Termination Date.....................................................21
Damage Termination Notice...................................................21
Eligibility Period..........................................................25
Estimate Statement...........................................................9
Estimated Commencement Date..................................................1
Exhibits.....................................................................2
Expansion Notice.............................................................3
Expansion Option.............................................................2
Expansion Premises...........................................................2
Extension Options............................................................3
Fair Market Rental Rate......................................................4
Final Plans..........................................................Exhibit C
Force Majeure...............................................................32
Improvements.................................................................1
Interest Rate...............................................................10
Landlord.....................................................................1
Landlord's Address...........................................................1
Landlord's Construction Representative.......................................2
Lease Year...................................................................2
Notice.......................................................................3
Operating Expenses Allowance.................................................2
Option Rent..................................................................4
Option Rent Notice...........................................................4
Option Terms.................................................................4
Original Tenant..............................................................3
Outside Agreement Date.......................................................5
Outside Date.................................................................5
Outside Training Date........................................................5
Overridden Claims...........................................................18
Permitted Use................................................................2
Preliminary Plans....................................................Exhibit C
Premises.....................................................................1
Premises Address.............................................................1
Project......................................................................2
Punch List Items.............................................................2
Qualified Appraiser..........................................................5
real property taxes..........................................................8
rentable square feet.................................................Exhibit D
Rules and Regulations.......................................................28
Service Facilities..........................................................14
Tenant.......................................................................1
Tenant Delays........................................................Exhibit C
Tenant Improvements..................................................Exhibit C
Tenant's Address.............................................................1
Tenant's Construction Representative.........................................2
Term.........................................................................1
Training Excess..............................................................5
Work Cost Statement..................................................Exhibit C
Work Costs...........................................................Exhibit C
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