EXHIBIT 10.1
STANDARD OFFICE LEASE
BY AND BETWEEN
ARDEN REALTY FINANCE PARTNERSHIP, L.P.,
a California limited partnership,
AS LANDLORD,
AND
JAMES J. JOSEPH, AS CHAPTER 11 TRUSTEE FOR
PERFORMANCE CAPITAL MANAGEMENT, INC.,
a California corporation,
AS TENANT
SUITE 400
ANAHEIM CITY CENTRE
TABLE OF CONTENTS
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PAGES
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ARTICLE 1 Basic Lease Provisions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 Term/Premises. . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Basic Rental . . . . . . . . . . . . . . . . . . . . . . 3
(b) Increase in Direct Costs . . . . . . . . . . . . . . . . 3
(c) Definitions . . . . . . . . . . . . . . . . . . . . . . 3
(d) Determination of Payment . . . . . . . . . . . . . . . . 4
ARTICLE 4 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 5 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 6 Personal Property Taxes. . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 7 Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 8 Condition of Premises. . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 9 Repairs and Alterations. . . . . . . . . . . . . . . . . . . . . 7
(a) Landlord's Obligation. . . . . . . . . . . . . . . . . . 7
(b) Tenant's Obligation. . . . . . . . . . . . . . . . . . . 8
(c) Alterations. . . . . . . . . . . . . . . . . . . . . . . 8
(d) Insurance Liens. . . . . . . . . . . . . . . . . . . . . 8
(e) Costs and Fees; Removal. . . . . . . . . . . . . . . . . 8
ARTICLE 10 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 11 Project Services. . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Basic Services. . . . . . . . . . . . . . . . . . . . . 9
(b) Excess Usage. . . . . . . . . . . . . . . . . . . . . . 9
(c) Additional Electrical Services. . . . . . . . . . . . . 9
(d) HVAC Balance. . . . . . . . . . . . . . . . . . . . . .10
(e) Telecommunications. . . . . . . . . . . . . . . . . . .10
(f) After-Hours Use . . . . . . . . . . . . . . . . . . . .10
(g) Reasonable Charges . . . . . . . . . . . . . . . . . .10
ARTICLE 12 Rights of Landlord. . . . . . . . . . . . . . . . . . . . . . .10
(a) Right of Entry. . . . . . . . . . . . . . . . . . . . .10
(b) Maintenance Work. . . . . . . . . . . . . . . . . . . .11
(c) Rooftop . . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE 13 Indemnity; Exemption of Landlord from Liability . . . . . . . .11
(a) Indemnity . . . . . . . . . . . . . . . . . . . . . . .11
(b) Exemption of Landlord from Liability. . . . . . . . . .11
(c) Security . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE 14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(a) Tenant's Insurance. . . . . . . . . . . . . . . . . . .12
(b) Form of Policies . . . . . . . . . . . . . . . . . . .12
(c) Landlord's Insurance . . . . . . . . . . . . . . . . .12
(d) Waiver of Subrogation . . . . . . . . . . . . . . . . .13
(e) Compliance with Law . . . . . . . . . . . . . . . . . .13
ARTICLE 15 Assignment and Subletting . . . . . . . . . . . . . . . . . . .13
ARTICLE 16 Damage or Destruction . . . . . . . . . . . . . . . . . . . . .15
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ARTICLE 17 Subordination . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE 18 Eminent Domain. . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE 19 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE 20 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE 21 Transfer of Landlord's Interest . . . . . . . . . . . . . . . .19
ARTICLE 22 Broker. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE 23 Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE 24 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 25 Estoppel Certificate . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 26 Liability Of Landlord . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 27 Inability To Perform. . . . . . . . . . . . . . . . . . . . . .21
ARTICLE 28 Hazardous Waste . . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLE 29 Surrender of Premises; Removal of Property. . . . . . . . . . .22
ARTICLE 30 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . .23
(a) Severability; Entire Agreement . . . . . . . . . . .23
(b) Attorneys' Fees; Waiver of Jury Trial. . . . . . . .23
(c) Time of Essence. . . . . . . . . . . . . . . . . . .24
(d) Headings; Joint and Several. . . . . . . . . . . . .24
(e) Reserved Area. . . . . . . . . . . . . . . . . . . .24
(f) No Option. . . . . . . . . . . . . . . . . . . . . .24
(g) Use of Project Name; Improvements. . . . . . . . . .24
(h) Rules and Regulations. . . . . . . . . . . . . . . .24
(i) Quiet Possession . . . . . . . . . . . . . . . . . .24
(j) Rent . . . . . . . . . . . . . . . . . . . . . . . .24
(k) Successors and Assigns . . . . . . . . . . . . . . .25
(1) Notices. . . . . . . . . . . . . . . . . . . . . . .25
(m) Persistent Delinquencies . . . . . . . . . . . . . .25
(n) Right of Landlord to Perform . . . . . . . . . . . .25
(o) Access, Changes in Project, Facilities, Name . . . .25
(p) Signing Authority. . . . . . . . . . . . . . . . . .25
(q) Identification of Tenant . . . . . . . . . . . . . .26
(r) Intentionally Omitted. . . . . . . . . . . . . . . .26
(s) Survival of Obligations. . . . . . . . . . . . . . .27
(t) Confidentiality . . . . . . . . . . . . . . . . . .27
(u) Governing Law . . . . . . . . . . . . . . . . . . .27
(v) Storage Space . . . . . . . . . . . . . . . . . . .27
(w) Exhibits . . . . . . . . . . . . . . . . . . . . . .27
(x) Independent Covenants . . . . . . . . . . . . . . .28
(y) Counterparts . . . . . . . . . . . . . . . . . . . .28
ARTICLE 31 Option to Extend. . . . . . . . . . . . . . . . . . . . . . . .29
(a) Option Rent . . . . . . . . . . . . . . . . . . . .29
(b) Exercise of Options. . . . . . . . . . . . . . . . .29
ARTICLE 32 Right of First Offer . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 33 Signage. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Exhibit "A" Premises
Exhibit "B" Rules and Regulations
Exhibit "C" Notice of Lease Term Dates and Tenant's Proportionate Share
Exhibit "D" Tenant Work Letter
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INDEX OF DEFINED TERMS
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DEFINED TERMS PAGE
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Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Approved Working Drawings . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Architect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Base Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Base, Shell and Core. . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Basic Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Construction Drawings . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Contractor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Cost Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Cost Proposal Delivery Date . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Direct Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Economic Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Estimate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Estimate Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Estimated Excess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Excess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Final Space Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Final Working Drawings. . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
First Month's Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
First Offer Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
First Offer Space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Hazardous Material. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Improvement Allowance . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Improvement Allowance Items . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Interest Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Landlord. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Landlord Coordination Fee . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Lease Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Market Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Operating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Option Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Option Rent Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Option Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Original Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Over-Allowance Amount . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Parking Passes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Partnership Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Permitted Use.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Real Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Square Footage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Standard Improvement Package. . . . . . . . . . . . . . . . . . . . . .Exhibit D
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Substantial Completion. . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Superior Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Superior Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Tax Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Tenant Delays . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Tenant Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
iii
Tenant's Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Tenant's Proportionate Share . . . . . . . . . . . . . . . . . . . . . . . . .1
Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Time Deadlines . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exhibit D
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Transfer Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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STANDARD OFFICE LEASE
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This Standard Office Lease ("LEASE") is made and entered into as of this 24th
day of October, 2001, by and between ARDEN REALTY FINANCE PARTNERSHIP, L.P., a
California limited partnership ("LANDLORD"), and JAMES J. JOSEPH AS CHAPTER 11
TRUSTEE FOR PERFORMANCE CAPITAL MANAGEMENT, INC., a California corporation
("TENANT").
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises described as Suite No. 400, as designated on the plan attached hereto
and incorporated herein as Exhibit "A" ("PREMISES"), of the project ("Project")
whose address is 222 South Harbor Drive, Anaheim, California, for the Term and
upon the terms and conditions hereinafter set forth, and Landlord and Tenant
hereby agree as follows:
ARTICLE 1
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BASIC LEASE PROVISIONS
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A. TERM: Five (5) years.
COMMENCEMENT DATE: The earliest of (i) the date Tenant first
Commences to conduct business in the Premises, or
(ii) the date of Substantial Completion of
Improvements in the Premises, but in no event
earlier than November 29, 2001.
BASIC RENTAL COMMENCEMENT December 1, 2001; provided that Substantial
DATE: Completion of the Improvements has occurred.
EXPIRATION DATE: The date immediately preceding the fifth (5th)
anniversary of the Commencement Date; provided,
however, that if the Commencement Date is a date
other than the first day of a month, the Expiration
Date shall be the last day of the month which is
sixty (60) months after the month in which the
Commencement Date falls, unless extended or earlier
terminated pursuant to this Lease.
B. SQUARE FOOTAGE: 13,988 rentable square feet.
C. BASIC RENTAL:
Lease Year Annual Monthly Monthly Basic Rental
- ---------- Basic Rental Basic Rental Per Rentable Square Foot
------------- ------------- -------------------------
One $ 268,569.60 $ 22,380.80 $ 1.60
Two $ 276,962.40 $ 23,080.20 $ 1.65
Three $ 285,355.20 $ 23,779.60 $ 1.70
Four $ 293,748.00 $ 24,479.00 $ 1.75
Five $ 302,140.80 $ 25,178.40 $ 1.80
D. BASE YEAR: 2002.
E. TENANT'S PROPORTIONATE SHARE: 7.98%
F. SECURITY DEPOSIT: A security deposit of $50,356.80 shall be due and
Payable by Tenant to Landlord upon Tenant's
execution of this Lease.
G. PERMITTED USE: General office use, including collection through
telephone and other electronic media of delinquent
credit card debt.
H. BROKERS: First Property Realty Corporation.
I. PARKING PASSES: Tenant shall rent one hundred ten (110) unreserved
parking passes and ten (10) reserved parking
passes at the Building's parking facility, at the
rate provided in Article 23 hereof.
J. INITIAL INSTALLMENT OF BASIC The first full month's Basic Rental of $22,380.80
RENTAL: shall be due and payable by Tenant to Landlord
upon Tenant's execution of this Lease.
K. IMPROVEMENT WORK: Promptly after full execution and delivery of this
Lease by Landlord and Tenant, Landlord shall, at
Landlord's expense, cause the work to be performed
in the Premises using Project-standard materials
(the "IMPROVEMENT WORK"), thoroughly clean the
Premises. In addition, Tenant Improvements in the
Premises shall be installed and constructed in
accordance with the terms of the Tenant Work
Letter attached hereto as Exhibit "D" and made a
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part hereof. Except as specifically set forth in
this Lease, Tenant hereby agrees to accept the
Premises in its "as-is" condition and Tenant
hereby acknowledges that Landlord has made no
representation or warranty regarding the condition
of the Premises.
L.. CONTINGENCY: This Lease shall be contingent upon Landlord
executing a Termination Agreement with First World
Communications ("FIRST WORLD") with respect to the
termination of First World's tenancy in the
Premises. If, for any reason, Landlord does not
enter into such Termination Agreement with First
World on or before October 31, 2001, this Lease
shall be voidable by Landlord upon written notice
to Tenant. In addition, this Lease is contingent
upon Landlord delivering to Tenant a Bill of
Sale for all furniture, fixtures and equipment
presently located in the Premises and owned by
Landlord, free and clear of all encumbrances, for
the additional consideration to be paid by Tenant
of Thirty-Five Thousand and NO/100 Dollars
($35,000.00).
ARTICLE 2
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TERM/PREMISES
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The Term of this Lease shall commence on the Commencement Date as set forth
in Article l.A. of the Basic Lease Provisions and shall end on the Expiration
Date set forth in Article l.A. of the Basic Lease Provisions. For purposes of
this Lease, the term "LEASE YEAR" shall mean each consecutive twelve (12) month
period during the Lease Term, with the first Lease Year commencing on the
Commencement Date; however, (a) if the Commencement Date falls on a day other
than the first day of a calendar month, the first Lease Year shall end on the
last day of the eleventh (llth) month after the Commencement Date and the second
(2nd) and each succeeding Lease Year shall commence on the first day of the next
calendar month, and (b) the last Lease Year shall end on the Expiration Date. If
Landlord does not deliver possession of the Premises to Tenant on or before the
anticipated Commencement Date (as set forth in Article l.A, above), Landlord
shall not be subject to any liability for its failure to do so, and such failure
shall not affect the validity of this Lease nor the obligations of Tenant
hereunder. Landlord and Tenant hereby stipulate that the Premises contains the
number of square feet specified in Article l.B. of the Basic Lease Provisions,
except that the rentable and usable square feet of the Premises and the Project
are subject to verification from time to time by Landlord's architect/space
planner. In the event that
-2-
Landlord's architect/space planner determines that the amounts thereof shall be
different from those set forth in this Lease, all amounts, percentages and
figures appearing or referred to in this Lease based upon such incorrect amount
(including, without limitation, the amount of the Basic Rental, Tenant's
Proportionate Share, and the "Improvement Allowance", as that term is defined in
Section 2 of the Tenant Work Letter) shall be modified in accordance with such
determination. If such determination is made, it will be confirmed in writing by
Landlord to Tenant. Landlord may deliver to Tenant a Commencement Letter in a
form substantially similar to that attached hereto as Exhibit "C", which Tenant
shall execute and return to Landlord within five (5) days of receipt thereof.
Failure of Tenant to timely execute and deliver the Commencement Letter shall
constitute an acknowledgment by Tenant that the statements included in such
notice are true and correct, without exception.
ARTICLE 3
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RENTAL
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(a) Basic Rental. Tenant agrees to pay to Landlord during the Term
-------------
hereof, at Landlord's office or to such other person or at such other place as
directed from time to time by written notice to Tenant from Landlord, the
initial monthly and annual sums as set forth in Article l.C of the Basic Lease
Provisions, payable in advance on the first day of each calendar month, without
demand, setoff or deduction, and in the event this Lease commences or the date
of expiration of this Lease occurs other than on the first day or last day of a
calendar month, the rent for such month shall be prorated. Notwithstanding the
foregoing, the first full month's Basic Rental shall be paid to Landlord in
accordance with Article 1.J. of the Basic Lease Provisions.
(b) Increase in Direct Costs. The term "BASE YEAR" means the calendar
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year set forth in Article 1.D. of the Basic Lease Provisions. If, in any
calendar year during the Term of this Lease, the "Direct Costs" (as hereinafter
defined) paid or incurred by Landlord shall be higher than the Direct Costs for
the Base Year, Tenant shall pay an additional sum for each such subsequent
calendar year equal to the product of the amount set forth in Article 1.E. of
the Basic Lease Provisions multiplied by such increased amount of Direct Costs.
In the event either the Premises and/or the Project is expanded or reduced, then
Tenant's Proportionate Share shall be appropriately if adjusted, and as to the
calendar year in which such change occurs, Tenant's Proportionate Share for such
calendar year shall be determined on the basis of the number of days during that
particular calendar year that such Tenant's Proportionate Share was in effect.
In the event this Lease shall terminate on any date other than the last day of a
calendar year, the additional sum payable hereunder by Tenant during the
calendar year in which this Lease terminates shall be prorated on the basis of
the relationship which the number of days which have elapsed from the
commencement of said calendar year to and including said date on which this
Lease terminates bears to three hundred sixty five (365). Any and all amounts
due and payable by Tenant pursuant to this Lease (other than Basic Rental) shall
be deemed "ADDITIONAL RENT" and Landlord shall be entitled to exercise the same
rights and remedies upon default in these payments as Landlord is entitled to
exercise with respect to defaults in monthly Basic Rental payments.
(c) Definitions. As used herein the term "DIRECT COSTS" shall mean the
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sum of the following:
(i) "TAX COSTS", which shall mean any and all real estate taxes and
other similar charges on real property or improvements, assessments, water and
sewer charges, and all other charges assessed, reassessed or levied upon the
Project and appurtenances thereto and the parking or other facilities thereof,
or the real property thereunder (collectively the "REAL PROPERTY") or
attributable thereto or on the rents, issues, profits or income received or
derived therefrom which are assessed, reassessed or levied by the United States,
the State of California or any local government authority or agency or any
political subdivision thereof, and shall include Landlord's reasonable legal
fees, costs and disbursements incurred in connection with proceedings for
reduction of Tax Costs or any part thereof; provided, however, if at any time
after the date of this Lease the methods of taxation now prevailing shall be
altered so that in lieu of or as a supplement to or a substitute for the whole
or any part of any Tax Costs, there shall be assessed, reassessed or levied (a)
a tax, assessment, reassessment, levy, imposition or charge wholly or partially
as a net income, capital or franchise levy or otherwise on the rents, issues,
profits or income derived therefrom, or (b) a tax, assessment, reassessment,
levy (including but not limited to any municipal, state or federal levy),
imposition or charge measured by or based in whole or in part upon the Real
Property and imposed upon Landlord, or (c) a license fee measured by the rent
payable under this
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Lease, then all such taxes, assessments, reassessments or levies or the part
thereof so measured or based, shall be deemed to be included in the term "Direct
Costs." In no event shall Tax Costs included in Direct Costs for any year
subsequent to the Base Year be less than the amount of Tax Costs included in
Direct Costs for the Base Year. In addition, when calculating Tax Costs for the
Base Year, special assessments shall only be deemed included in Tax Costs for
the Base Year to the extent that such special assessments are included in Tax
Costs for the applicable subsequent calendar year during the Term.
(ii) "OPERATING COSTS", which shall mean all costs and expenses
incurred by Landlord in connection with the maintenance, operation, replacement,
ownership and repair of the Project, the equipment, the intrabuilding cabling
and wiring, adjacent walks, malls and landscaped and common areas and the
parking structure, areas and facilities of the Project, including, but not
limited to, salaries, wages, medical, surgical and general welfare benefits and
pension payments, payroll taxes, fringe benefits, employment taxes, workers'
compensation, uniforms and dry cleaning thereof for all persons who perform
duties connected with the operation, maintenance and repair of the Project, its
equipment, the intrabuilding cabling and wiring and the adjacent walks and
landscaped areas, including janitorial, gardening, security, parking, operating
engineer, elevator, painting, plumbing, electrical, carpentry, heating,
ventilation, air conditioning, window washing, hired services, a reasonable
allowance for depreciation of the cost of acquiring or the rental expense of
personal property used in the maintenance, operation and repair of the Project,
accountant's fees incurred in the preparation of rent adjustment statements,
legal fees, real estate tax consulting fees, personal property taxes on property
used in the maintenance and operation of the Project, fees, costs, expenses or
dues payable pursuant to the terms of any covenants, conditions or restrictions
or owners' association pertaining to the Project, capital expenditures incurred
to effect economies of operation of, or stability of services to, the Project
and capital expenditures required by government regulations, laws, or ordinances
including, but not limited to the Americans with Disabilities Act; costs
incurred (capital or otherwise) on a regular recurring basis every three (3) or
more years for certain maintenance projects (e.g., parking lot slurry coat or
replacement of lobby and elevator cab carpeting); the cost of all charges for
electricity, gas, water and other utilities furnished to the Project, including
any taxes thereon; the cost of all charges for fire and extended coverage,
liability and all other insurance in connection with the Project carried by
Landlord; the cost of all building and cleaning supplies and materials; the cost
of all charges for cleaning, maintenance and service contracts and other
services with independent contractors and administration fees; a property
management fee (which fee may be imputed if Landlord has internalized management
or otherwise acts as its own property manager) and license, permit and
inspection fees relating to the Project. In the event, during any calendar year,
the Project is less than ninety-five percent (95%) occupied at all times,
Operating Costs shall be adjusted to reflect the Operating Costs of the Project
as though ninety-five percent (95%) were occupied at all times, and the increase
or decrease in the sums owed hereunder shall be based upon such Operating Costs
as so adjusted. In no event shall costs for any item of utilities included in
Direct Costs for any year subsequent to the Base Year be less than the amount
included in Direct Costs for the Base Year for such utility item.
Notwithstanding anything to the contrary set forth in this Article 3, when
calculating Operating Costs for the Base Year, Operating Costs shall exclude (a)
market-wide labor-rate increases due to extraordinary circumstances including,
but not limited to, boycotts and strikes, (b) utility rate increases due to
extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages, and (c) amortization of any
capital items including, but not limited to, capital improvements, capital
repairs and capital replacements (including such amortized costs where the
actual improvement, repair or replacement was made in prior years).
(d) Determination of Payment.
--------------------------
(i) If for any calendar year ending or commencing within the Term,
Tenant's Proportionate Share of Direct Costs for such calendar year exceeds
Tenant's Proportionate Share of Direct Costs for the Base Year, then Tenant
shall pay to Landlord, in the manner set forth in Sections 3(d)(ii) and (iii),
below, and as Additional Rent, an amount equal to the excess (the "EXCESS").
(ii) Landlord shall give Tenant a yearly expense estimate statement
(the "ESTIMATE STATEMENT") which shall set forth Landlord's reasonable estimate
(the "ESTIMATE") of what the total amount of Direct Costs for the then-current
calendar year shall be and the estimated Excess (the "ESTIMATED EXCESS") as
calculated by comparing Tenant's Proportionate Share of Direct Costs for such
calendar year, which shall be based upon the Estimate, to Tenant's Proportionate
Share of Direct Costs for the Base Year. The failure of Landlord to timely
furnish the
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Estimate Statement for any calendar year shall not preclude Landlord from
subsequently enforcing its rights to collect any Estimated Excess under this
Article 3, once such Estimated Excess has been determined by Landlord. If
pursuant to the Estimate Statement an Estimated Excess is calculated for the
then-current calendar year, Tenant shall pay, with its next installment of
monthly Basic Rental due, a fraction of the Estimated Excess for the
then-current calendar year (reduced by any amounts paid pursuant to the last
sentence of this Section 3(d)(ii)). Such fraction shall have as its numerator
the number of months which have elapsed in such current calendar year to the
month of such payment, both months inclusive, and shall have twelve (12) as its
denominator. Until a new Estimate Statement is furnished, Tenant shall pay
monthly, with the monthly Basic Rental installments, an amount equal to
one-twelfth (1/12) of the total Estimated Excess set forth in the previous
Estimate Statement delivered by Landlord to Tenant.
(iii) In addition, Landlord shall endeavor to give to Tenant as soon
as reasonably practicable following the end of each calendar year, a statement
(the "Statement") which shall state the Direct Costs incurred or accrued for
such preceding calendar year, and which shall indicate the amount, if any, of
the Excess. Upon receipt of the Statement for each calendar year during the
Term, if amounts paid by Tenant as Estimated Excess are less than the actual
Excess as specified on the Statement, Tenant shall pay, with its next
installment of monthly Basic Rental due, the full amount of the Excess for such
calendar year, less the amounts, if any, paid during such calendar year as
Estimated Excess. If, however, the Statement indicates that amounts paid by
Tenant as Estimated Excess are greater than the actual Excess as specified on
the Statement, such overpayment shall be credited against Tenant's next
installments of Estimated Excess. The failure of Landlord to timely furnish the
Statement for any calendar year shall not prejudice Landlord from enforcing its
rights under this Article 3, once such Statement has been delivered. Even though
the Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant's Proportionate Share of the Direct Costs for
the calendar year in which this Lease terminates, if an Excess is present,
Tenant shall immediately pay to Landlord an amount as calculated pursuant to the
provisions of this Article 3(d). The provisions of this Section 3(d)(iii) shall
survive the expiration or earlier termination of the Term.
(iv) If the Project is a part of a multi-building development, those
Direct Costs attributable to such development as a whole (and not attributable
solely to any individual building therein) shall be allocated by Landlord to the
Project and to the other buildings within such development on an equitable
basis.
Provided that Tenant and its agents do not unreasonably interfere with
Landlord's work in the Premises, Landlord shall allow Tenant access to the
Premises for a consecutive forty-eight (48) hour period, at no charge to Tenant,
for the purpose of Tenant installing furniture and equipment (including
telephones and computers) in the Premises, prior to the occurrence of the
Commencement Date. Prior to Tenant's entry into the Premises as permitted by the
terms of this Article 3, Tenant shall submit a schedule to Landlord (and
Landlord's contractor, if so requested by Landlord), for their approval, which
schedule shall detail the timing and purpose of Tenant's entry. Tenant shall
hold Landlord harmless from and indemnify, protect and defend Landlord against
any loss or damage to the Project or the Premises and against injury to any
persons caused by Tenant's actions pursuant to this Article 3.
ARTICLE 4
---------
SECURITY DEPOSIT
----------------
Tenant shall deposit with Landlord the sum set forth in Article 1.F. of the
Basic Lease Provisions as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. If Tenant breaches any
provision of this Lease, including but not limited to the payment of rent,
Landlord may use all or any part of this security deposit for the payment of any
rent or any other sums in default, or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant's default. If any
portion of said deposit is so used or applied, Tenant shall, within five (5)
days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its full amount. Tenant agrees
that Landlord shall not be required to keep the security deposit in trust,
segregate it or keep it separate from Landlord's general funds, but Landlord may
commingle the security deposit with its general funds and Tenant shall not be
entitled to interest on such deposit. At the expiration of the Lease Term, and
provided there exists no default by Tenant hereunder, the security deposit or
any balance thereof shall be returned to Tenant (or, at Landlord's option, to
Tenant's "Transferee," as such term
-5-
is defined in Article 15 below), provided that subsequent to the expiration of
this Lease, Landlord may retain from said security deposit (i) an amount
reasonably estimated by Landlord to cover potential Direct Cost reconciliation
payments due with respect to the calendar year in which this Lease terminates or
expires (such amount so retained shall not, in any event, exceed ten percent
(10%) of estimated Direct Cost payments due from Tenant for such calendar year
through the date of expiration or earlier termination of this Lease and any
amounts so retained and not applied to such reconciliation shall be returned to
Tenant within thirty (30) days after Landlord's delivery of the Statement for
such calendar year), (ii) any and all amounts reasonably estimated by Landlord
to cover the anticipated costs to be incurred by Landlord to remove any signage
provided to Tenant under this Lease, to remove cabling and other items required
to be removed by Tenant under Article 29 (b) below and to repair any damage
caused by such removal (in which case any excess amount so retained by Landlord
shall be returned to Tenant within thirty (30) days after such removal and
repair), and (iii) any and all amounts permitted by law or this Article 4.
Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code and all other provisions of law, now or hereafter in effect, which provide
that Landlord may claim from a security deposit only those sums reasonably
necessary to remedy defaults in the payment of rent, to repair damage caused by
Tenant or to clean the Premises, it being agreed that Landlord may, in addition,
claim those sums specified in this Article 4 above and/or those sums reasonably
necessary to compensate Landlord for any other loss or damage, foreseeable or
unforeseeable, caused by the acts or omissions of Tenant or any officer,
employee, agent, contractor or invitee of Tenant.
ARTICLE 5
---------
HOLDING OVER
------------
Should Tenant, without Landlord's written consent, hold over after
termination of this Lease, Tenant shall become a tenant at sufferance upon each
and all of the terms herein provided as may be applicable to such a tenancy and
any such holding over shall not constitute an extension of this Lease. During
such holding over, Tenant shall pay in advance, monthly, Basic Rental at a rate
equal to three times the rate in effect for the last month of the Term of this
Lease or three times Landlord's then asking rate for comparable space in the
Project, whichever is greater, in addition to, and not in lieu of, all other
payments required to be made by Tenant hereunder including but not limited to
Tenant's Proportionate Share of any increase in Direct Costs. Nothing contained
in this Article 5 shall be construed as consent by Landlord to any holding over
of the Premises by Tenant, and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration or earlier termination of the Term. If Tenant fails to
surrender the Premises upon the expiration or termination of this Lease, Tenant
agrees to indemnify, defend and hold Landlord harmless from all costs, loss,
expense or liability, including without limitation, claims made by any
succeeding tenant and real estate brokers claims and attorney's fees and costs.
ARTICLE 6
---------
PERSONAL PROPERTY TAXES
-----------------------
Tenant shall pay, prior to delinquency, all taxes assessed against or
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant located in the Premises. In the event any or all of Tenant's
trade fixtures, furnishings, equipment and other personal property shall be
assessed and taxed with property of Landlord, or if the cost or value of any
leasehold improvements in the Premises exceeds the cost or value of a
Project-standard buildout as determined by Landlord and, as a result, real
property taxes for the Project are increased, Tenant shall pay to Landlord,
within ten (10) days after delivery to Tenant by Landlord of a written statement
setting forth such amount, the amount of such taxes applicable to Tenant's
property or above-standard improvements. Tenant shall assume and pay to Landlord
at the time Basic Rental next becomes due (or if assessed after the expiration
of the Term, then within ten (10) days), any excise, sales, use, rent,
occupancy, garage, parking, gross receipts or other taxes (other than net income
taxes) which may be imposed on or on account of the letting of the Premises or
the payment of Basic Rental or any other sums due or payable hereunder, and
which Landlord may be required to pay or collect under any law now in effect or
hereafter enacted. Tenant shall pay directly to the party or entity entitled
thereto all business license fees, gross receipts taxes and similar taxes and
impositions which may from time to time be assessed against or levied upon
Tenant, as and when the same become due and before delinquency. Notwithstanding
anything to the contrary contained
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herein, any sums payable by Tenant under this Article 6 shall not be included in
the computation of "Tax Costs."
ARTICLE 7
---------
USE
---
Tenant shall use and occupy the Premises only for the use set forth in
Article 1.G. of the Basic Lease Provisions and shall not use or occupy the
Premises or permit the same to be used or occupied for any other purpose without
the prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion, and Tenant agrees that it will use the
Premises in such a manner so as not to interfere with or infringe upon the
rights of other tenants or occupants in the Project. Tenant shall, at its sole
cost and expense, promptly comply with all laws, statutes, ordinances,
governmental regulations or requirements now in force or which may hereafter be
in force relating to or affecting (i) the condition, use or occupancy of the
Premises or the Project (excluding structural changes to the Project not related
to Tenant's particular use of the Premises), and (ii) improvements installed or
constructed in the Premises by or for the benefit of Tenant. Tenant shall not
permit more than six (6) people per one thousand (1,000) rentable square feet of
the Premises to occupy the Premises at any time. Tenant shall not do or permit
to be done anything which would invalidate or increase the cost of any fire and
extended coverage insurance policy covering the Project and/or the property
located therein and Tenant shall comply with all rules, orders, regulations and
requirements of any organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance underwriters, and
Tenant shall promptly upon demand reimburse Landlord for any additional premium
charges for any such insurance policy assessed or increased by reason of
Tenant's failure to comply with the provisions of this Article.
ARTICLE 8
---------
CONDITION OF PREMISES
---------------------
Tenant hereby agrees that the Premises shall be taken "as is", "with all
faults", "without any representations or warranties", and Tenant hereby agrees
and warrants that it has investigated and inspected the condition of the
Premises and the suitability of same for Tenant's purposes, and Tenant does
hereby waive and disclaim any objection to, cause of action based upon, or claim
that its obligations hereunder should be reduced or limited because of the
condition of the Premises or the Project or the suitability of same for Tenant's
purposes. Tenant acknowledges that neither Landlord nor any agent nor any
employee of Landlord has made any representations or warranty with respect to
the Premises or the Project or with respect to the suitability of either for the
conduct of Tenant's business and Tenant expressly warrants and represents that
Tenant has relied solely on its own investigation and inspection of the Premises
and the Project in its decision to enter into this Lease and let the Premises in
the above-described condition. The existing leasehold improvements in the
Premises as of the date of this Lease, together with Landlord's work pursuant to
the first sentence of this Article 8, may be collectively referred to herein as
the "TENANT IMPROVEMENTS." The Premises shall be initially improved as provided
in, and subject to, the Tenant Work Letter attached hereto as Exhibit "D" and
-----------
made a part hereof. The existing leasehold improvements in the Premises as of
the date of this Lease, together with the Improvements (as defined in the Tenant
Work Letter) may be collectively referred to herein as the "Tenant
Improvements." The taking of possession of the Premises by Tenant shall
conclusively establish that the Premises and the Project were at such time in
satisfactory condition. Tenant hereby waives subsection 1 of Section 1932 and
Sections 1941 and 1942 of the Civil Code of California or any successor
provision of law.
ARTICLE 9
---------
REPAIRS AND ALTERATIONS
-----------------------
(a) Landlord's Obligation. Landlord shall maintain the structural
----------------------
portions of the Project, including the foundation, floor/ceiling slabs, roof,
curtain wall, exterior glass, columns, beams, shafts, stairs, stairwells,
elevator cabs and common areas, and shall also maintain and repair the base
building mechanical, electrical, life safety, plumbing, sprinkler systems and
heating, ventilating and air-conditioning systems (provided, however, that
Landlord's obligation with respect to any such systems shall be to repair and
maintain those portions of the systems located in the core
-7-
of the Project or in other areas outside of the Premises, but Tenant shall be
responsible to repair and maintain any distribution of such systems throughout
the Premises).
(b) Tenant's Obligation. Except as expressly provided as Landlord's
--------------------
obligation in this Article 9, Tenant shall keep the Premises in good condition
and repair. All damage or injury to the Premises or the Project resulting from
the act or negligence of Tenant, its employees, agents or visitors, guests,
invitees or licensees, or by the use of the Premises, shall be promptly repaired
by Tenant at its sole cost and expense, to the satisfaction of Landlord;
provided, however, that for damage to the Project as a result of casualty or for
any repairs that may impact the mechanical, electrical, plumbing, heating,
ventilation or air-conditioning systems of the Project, Landlord shall have the
right (but not the obligation) to select the contractor and oversee all such
repairs. Landlord may make any repairs which are not promptly made by Tenant
after Tenant's receipt of written notice and the reasonable opportunity of
Tenant to make said repair within five (5) business days from receipt of said
written notice, and charge Tenant for the cost thereof, which cost shall be paid
by Tenant within five (5) days from invoice from Landlord. Tenant shall be
responsible for the design and function of all non-standard improvements of the
Premises, whether or not installed by Landlord at Tenant's request. Tenant
waives all rights to make repairs at the expense of Landlord, or to deduct the
cost thereof from the rent.
(c) Alterations. Tenant shall make no alterations, installations,
------------
changes or additions in or to the Premises or the Project (collectively,
"ALTERATIONS") without Landlord's prior written consent. Any Alterations
approved by Landlord must be performed in accordance with the terms hereof,
using only contractors or mechanics approved by Landlord in writing and upon the
approval by Landlord in writing of fully detailed and dimensioned plans and
specifications pertaining to the Alterations in question, to be prepared and
submitted by Tenant at its sole cost and expense. Tenant shall at its sole cost
and expense obtain all necessary approvals and permits pertaining to any
Alterations approved by Landlord. Tenant shall cause all Alterations to be
performed in a good and workmanlike manner, in conformance with all applicable
federal, state, county and municipal laws, rules and regulations, pursuant to a
valid building permit, and in conformance with Landlord's construction rules and
regulations. If Landlord, in approving any Alterations, specifies a commencement
date therefor, Tenant shall not commence any work with respect to such
Alterations prior to such date. Tenant hereby agrees to indemnify, defend, and
hold Landlord free and harmless from all liens and claims of lien, and all other
liability, claims and demands arising out of any work done or material supplied
to the Premises by or at the request of Tenant in connection with any
Alterations.
(d) Insurance; Liens. Prior to the commencement of any Alterations,
-----------------
Tenant shall provide Landlord with evidence that Tenant carries "Builder's All
Risk" insurance in an amount approved by Landlord covering the construction of
such Alterations, and such other insurance as Landlord may reasonably require,
it being understood that all such Alterations shall be insured by Tenant
pursuant to Article 14 of this Lease immediately upon completion thereof. In
addition, Landlord may, in its discretion, require Tenant to obtain a lien and
completion bond or some alternate form of security satisfactory to Landlord in
an amount sufficient to ensure the lien free completion of such Alterations and
naming Landlord as a co-obligee.
(e) Costs and Fees; Removal. If permitted Alterations are made, they
--------------------------
shall be made at Tenant's sole cost and expense and shall be and become the
property of Landlord, except that Landlord may, by written notice to Tenant
given prior to the end of the Term, require Tenant at Tenant's expense to remove
all partitions, counters, railings, cabling and other Alterations installed by
Tenant, and to repair any damage to the Premises and the Project caused by such
removal. Any and all costs attributable to or related to the applicable building
codes of the city in which the Project is located (or any other authority having
jurisdiction over the Project) arising from Tenant's plans, specifications,
improvements, Alterations or otherwise shall be paid by Tenant at its sole cost
and expense. With regard to repairs, Alterations or any other work arising from
or related to this Article 9, Landlord shall be entitled to receive an
administrative/coordination fee (which fee shall vary depending upon whether or
not Tenant orders the work directly from Landlord) sufficient to compensate
Landlord for all overhead, general conditions, fees and other costs and expenses
arising from Landlord's involvement with such work. The construction of initial
improvements to the Premises shall be governed by the terms of the Tenant Work
Letter and not the terms of this Article 9.
-8-
ARTICLE 10
----------
LIENS
-----
Tenant shall keep the Premises and the Project free from any mechanics'
liens, vendors liens or any other liens arising out of any work performed,
materials furnished or obligations incurred by Tenant, and Tenant agrees to
defend, indemnify and hold Landlord harmless from and against any such lien or
claim or action thereon, together with costs of suit and reasonable attorneys'
fees and costs incurred by Landlord in connection with any such claim or action.
Before commencing any work of alteration, addition or improvement to the
Premises, Tenant shall give Landlord at least ten (10) business days' written
notice of the proposed commencement of such work (to afford Landlord an
opportunity to post appropriate notices of non-responsibility). In the event
that there shall be recorded against the Premises or the Project or the property
of which the Premises is a part any claim or lien arising out of any such work
performed, materials furnished or obligations incurred by Tenant and such claim
or lien shall not be removed or discharged within ten (10) days of filing,
Landlord shall have the right but not the obligation to pay and discharge said
lien without regard to whether such lien shall be lawful or correct, or to
require that Tenant promptly deposit with Landlord in cash, lawful money of the
United States, one hundred fifty percent (150%) of the amount of such claim,
which sum may be retained by Landlord until such claim shall have been removed
of record or until judgment shall have been rendered on such claim and such
judgment shall have become final, at which time Landlord shall have the right to
apply such deposit in discharge of the judgment on said claim and any costs,
including attorneys' fees and costs incurred by Landlord, and shall remit the
balance thereof to Tenant.
ARTICLE 11
----------
PROJECT SERVICES
----------------
(a) Basic Services. Landlord agrees to furnish to the Premises, at a
---------------
cost to be included in Operating Costs, from 8:00 a.m. to 7:00 p.m. Mondays
through Fridays and 8:00 a.m. to 2:00 p.m. on Saturdays, excepting local and
national holidays, air conditioning and heat all in such reasonable quantities
as in the judgment of Landlord is reasonably necessary for the comfortable
occupancy of the Premises. In addition, Landlord shall provide electric current
for normal lighting and normal office machines, elevator service and water on
the same floor as the Premises for lavatory and drinking purposes in such
reasonable quantities as in the judgment of Landlord is reasonably necessary for
general office use and in compliance with applicable codes. However, Tenant's
computer room electrical system shall be separated from the Premises on a
sub-panel, and the electricity shall be separately metered and paid for by
Tenant. Janitorial and maintenance services shall be furnished five (5) days per
week, excepting local and national holidays. Tenant shall comply with all rules
and regulations which Landlord may establish for the proper functioning and
protection of the common area air conditioning, heating, elevator, electrical,
intrabuilding cabling and wiring and plumbing systems. Landlord shall not be
liable for, and there shall be no rent abatement as a result of, any stoppage,
reduction or interruption of any such services caused by governmental rules,
regulations or ordinances, riot, strike, labor disputes, breakdowns, accidents,
necessary repairs or other cause. Except as specifically provided in this
Article 11, Tenant agrees to pay for all utilities and other services utilized
by Tenant and any additional building services furnished to Tenant which are not
uniformly furnished to all tenants of the Project, at the rate generally charged
by Landlord to tenants of the Project for such utilities or services.
(b) Excess Usage. Tenant will not, without the prior written consent
-------------
of Landlord, use any apparatus or device in the Premises which will in any way
increase the amount of electricity or water usually furnished or supplied for
use of the Premises as general office space; nor connect any apparatus, machine
or device with water pipes or electric current (except through existing
electrical outlets in the Premises), for the purpose of using electric current
or water.
(c) Additional Electrical Service. If Tenant shall require electric
-------------------------------
current in excess of that which Landlord is obligated to furnish under Article
11(a) above, Tenant shall first obtain the written consent of Landlord, which
Landlord may refuse in its sole and absolute discretion. Additionally, Landlord
may cause an electric current meter or submeter to be installed in or about the
Premises to measure the amount of any such excess electric current consumed by
Tenant in the Premises. The cost of any such meter and of installation,
maintenance and repair thereof shall be paid for by Tenant and Tenant agrees to
pay to Landlord, promptly upon demand therefor by Landlord, for all such excess
electric current consumed by any such use as shown by said meter at
-9-
the rates charged for such service by the city in which the Project is located
or the local public utility, as the case maybe, furnishing the same, plus any
additional expense incurred by Landlord in keeping account of the electric
current so consumed.
(d) HVAC Balance. If any lights, machines or equipment (including but
-------------
not limited to computers and computer systems and appurtenances) are used by
Tenant in the Premises which materially affect the temperature otherwise
maintained by the air conditioning system, or generate substantially more heat
in the Premises than would be generated by the building standard lights and
usual office equipment, Landlord shall have the right to install any machinery
and equipment which Landlord reasonably deems necessary to restore temperature
balance, including but not limited to modifications to the standard air
conditioning equipment, and the cost thereof, including the cost of installation
and any additional cost of operation and maintenance occasioned thereby, shall
be paid by Tenant to Landlord upon demand by Landlord.
(e) Telecommunications. Upon request from Tenant from time to time,
------------------
Landlord will provide Tenant with a listing of telecommunications and media
service providers serving the Project, and Tenant shall have the right to
contract directly with the providers of its choice. If Tenant wishes to contract
with or obtain service from any provider which does not currently serve the
Project or wishes to obtain from an existing carrier services which will require
the installation of additional equipment, such provider must, prior to providing
service, enter into a written agreement with Landlord setting forth the terms
and conditions of the access to be granted to such provider. In considering the
installation of any new or additional telecommunications cabling or equipment at
the Project, Landlord will consider all relevant factors in a reasonable and
non-discriminatory manner, including, without limitation, the existing
availability of services at the Project, the impact of the proposed
installations upon the Project and its operations and the available space and
capacity for the proposed installations. Landlord may also consider whether the
proposed service may result in interference with or interruption of other
services at the Project or the business operations of other tenants or occupants
of the Project. In no event shall Landlord be obligated to incur any costs or
liabilities in connection with the installation or delivery of telecommunication
services or facilities at the Project. All such installations shall be subject
to Landlord's prior approval and shall be performed in accordance with the terms
of Article 9. If Landlord approves the proposed installations in accordance with
the foregoing, Landlord will deliver its standard form agreement upon request
and will use commercially reasonable efforts to promptly enter into an agreement
on reasonable and non-discriminatory terms with a qualified, licensed and
reputable carrier confirming the terms of installation and operation of
telecommunications equipment consistent with the foregoing.
(f) After-Hours Use. If Tenant requires heating, ventilation and/or
----------------
air conditioning during times other than the times provided in Article 11(a)
above, Tenant shall give Landlord such advance notice as Landlord shall
reasonably require and shall pay Landlord's standard charge for such after-hours
use, which change is currently Thirty-Five and NO/100 ($35.00) per hour.
(g) Reasonable Charges. Landlord may impose a reasonable charge for any
------------------
utilities or services (other than electric current and heating, ventilation
and/or air conditioning which shall be governed by Articles 11(c) and (f) above)
utilized by Tenant in excess of the amount or type that Landlord reasonably
determines is typical for general office use.
(h) 24-Hour Access. Subject to Landlord's security requirements and
---------------
Articles 16 and 18 below, Tenant shall have access to the Premises twenty-four
(24) hours per day, seven (7) days per week throughout the Lease Term.
ARTICLE 12
----------
RIGHTS OF LANDLORD
------------------
(a) Right of Entry. Landlord and its agents shall have the right to
----------------
enter the Premises at all reasonable times for the purpose of cleaning the
Premises, examining or inspecting the same, serving or posting and keeping
posted thereon notices as provided by law, or which Landlord deems necessary for
the protection of Landlord or the Project, showing the same to prospective
tenants, lenders or purchasers of the Project, in the case of an emergency, and
for making such alterations, repairs, improvements or additions to the Premises
or to the Project as Landlord may deem
-10-
necessary or desirable. If Tenant shall not be personally present to open and
permit an entry into the Premises at any time when such an entry by Landlord is
necessary or permitted hereunder, Landlord may enter by means of a master key,
or may forcibly enter in the case of an emergency, in each event without
liability to Tenant and without affecting this Lease.
(b) Maintenance Work. Landlord reserves the right from time to time,
-----------------
but subject to payment by and/or reimbursement from Tenant as otherwise provided
herein: (i) to install, use, maintain, repair, replace, relocate and control for
service to the Premises and/or other parts of the Project pipes, ducts,
conduits, wires, cabling, appurtenant fixtures, equipment spaces and mechanical
systems, wherever located in the Premises or the Project, (ii) to alter, close
or relocate any facility in the Premises or the common areas or otherwise
conduct any of the above activities for the purpose of complying with a general
plan for fire/life safety for the Project or otherwise, and (iii) to comply with
any federal, state or local law, rule or order. Landlord shall attempt to
perform any such work with the least inconvenience to Tenant as is reasonably
practicable, but in no event shall Tenant be permitted to withhold or reduce
Basic Rental or other charges due hereunder as a result of same, make any claim
for constructive eviction or otherwise make any claim against Landlord for
interruption or interference with Tenant's business and/or operations.
(c) Rooftop. If Tenant desires to use the rooftop of the Project for
-------
any purpose, including the installation of communication equipment to be used
from the Premises, such rights will be granted in Landlord's sole discretion and
Tenant must negotiate the terms of any rooftop access with Landlord or the
rooftop management company or lessee holding rights to the rooftop from time to
time. Any rooftop access granted to Tenant will be at prevailing rates and
will be governed by the terms of a separate written agreement or an amendment to
this Lease.
ARTICLE 13
----------
INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY
-----------------------------------------------
(a) Indemnity. Tenant shall indemnify, defend and hold Landlord and
---------
Landlord's partners, members, affiliates, agents, directors, employees and
contractors (collectively, "LANDLORD PARTIES") harmless from any and all claims
arising from Tenant's use of the Premises or the Project including Tenant's
Signage rights set forth in Article 32 or from the conduct of its business or
from any activity, work or thing which may be permitted or suffered by Tenant in
or about the Premises or the Project and shall further indemnify, defend and
hold Landlord and the Landlord Parties harmless from and against any and all
claims arising from any breach or default in the performance of any obligation
on Tenant's part to be performed under this Lease or arising from any negligence
or willful misconduct of Tenant or any of its agents, contractors, employees or
invitees, patrons, customers or members in or about the Project and from any and
all costs, attorneys' fees and costs, expenses and liabilities incurred in the
defense of any claim or any action or proceeding brought thereon, including
negotiations in connection therewith. Tenant hereby assumes all risk of damage
to property or injury to persons in or about the Premises from any cause, and
Tenant hereby waives all claims in respect thereof against Landlord and the
Landlord Parties, excepting where the damage is caused solely by the gross
negligence or willful misconduct of Landlord or the Landlord Parties.
(b) Exemption of Landlord from Liability. Landlord and the Landlord
----------------------------------------
Parties shall not be liable for injury to Tenant's business, or loss of income
therefrom, however occurring (including, without limitation, from any failure or
interruption of services or utilities), or, except in connection with damage or
injury resulting from the gross negligence or willful misconduct of Landlord or
the Landlord Parties, for damage that may be sustained by the person, goods,
wares, merchandise or property of Tenant, its employees, invitees, customers,
agents, or contractors, or any other person in, on or about the Premises
directly or indirectly caused by or resulting from any cause whatsoever,
including, but not limited to, fire, steam, electricity, gas, water, or rain
which may leak or flow from or into any part of the Premises, or from the
breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, light fixtures, or mechanical or
electrical systems, or from intrabuilding cabling or wiring, whether such damage
or injury results from conditions arising upon the Premises or upon other
portions of the Project or from other sources or places and regardless of
whether the cause of such damage or injury or the means of repairing the same is
inaccessible to Tenant. Landlord and the Landlord Parties shall not be liable to
Tenant for any damages arising from any willful or negligent action or inaction
of any other tenant of the Project.
-11-
(c) Security. Tenant acknowledges that Landlord's election whether or
--------
not to provide any type of mechanical surveillance or security personnel
whatsoever in the Project is solely within Landlord's discretion; Landlord and
the Landlord Parties shall have no liability in connection with the provision,
or lack, of such services, and Tenant hereby agrees to hold Landlord and the
Landlord Parties harmless with regard to any such potential claim. Landlord and
the Landlord Parties shall not be liable for losses due to theft, vandalism, or
like causes. Tenant shall defend, indemnify, and hold Landlord and the Landlord
Parties harmless from any such claims made by any employee, licensee, invitee,
contractor, agent or other person whose presence in, on or about the Premises or
the Project is attendant to the business of Tenant.
ARTICLE 14
----------
INSURANCE
---------
(a) Tenant's Insurance. Tenant, shall at all times during the Term of
------------------
this Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage: (i) Commercial General Liability Insurance,
written on an occurrence basis, with a combined single limit for bodily injury
and property damages of not less than Two Million Dollars ($2,000,000) per
occurrence and Three Million Dollars ($3,000,000) in the annual aggregate,
including products liability coverage if applicable, owners and contractors
protective coverage, blanket contractual coverage including both oral and
written contracts, and personal injury coverage, covering the insuring
provisions of this Lease and the performance of Tenant of the indemnity and
exemption of Landlord from liability agreements set forth in Article 13 hereof;
(ii) a policy of standard fire, extended coverage and special extended coverage
insurance (all risks), including a vandalism and malicious mischief endorsement,
sprinkler leakage coverage and earthquake sprinkler leakage where sprinklers are
provided in an amount equal to the full replacement value new without deduction
for depreciation of all (A) Tenant Improvements, Alterations, fixtures and other
improvements in the Premises, including but not limited to all mechanical,
plumbing, heating, ventilating, air conditioning, electrical, telecommunication
and other equipment, systems and facilities, and (B) trade fixtures, furniture,
equipment and other personal property installed by or at the expense of Tenant;
(iii) Worker's Compensation coverage as required by law; and (iv) business
interruption, loss of income and extra expense insurance covering any failure or
interruption of Tenant's business equipment {including, without limitation,
telecommunications equipment) and covering all other perils, failures or
interruptions sufficient to cover a period of interruption of not less than
twelve (12) months. Tenant shall carry and maintain during the entire Lease
Term (including any option periods, if applicable), at Tenant's sole cost and
expense, increased amounts of the insurance required to be carried by Tenant
pursuant to this Article 14 and such other reasonable types of insurance
coverage and in such reasonable amounts covering the Premises and Tenant's
operations therein, as may be reasonably required by Landlord.
(b) Form of Policies. The aforementioned minimum limits of policies
------------------
and Tenant's procurement and maintenance thereof shall in no event limit the
liability of Tenant hereunder. The Commercial General Liability Insurance policy
shall name Landlord, Landlord's property manager, Landlord's lender(s) and such
other persons or firms as Landlord specifies from time to time, as additional
insureds with an appropriate endorsement to the policy(s). All such insurance
policies carried by Tenant shall be with companies having a rating of not less
than A-VIII in Best's Insurance Guide. Tenant shall furnish to Landlord, from
the insurance companies, or cause the insurance companies to furnish,
certificates of coverage. No such policy shall be cancelable or subject to
reduction of coverage or other modification or cancellation except after thirty
(30) days prior written notice to Landlord by the insurer. All such policies
shall be endorsed to agree that Tenant's policy is primary and that any
insurance carried by Landlord is excess and not contributing with any Tenant
insurance requirement hereunder. Tenant shall, at least twenty (20) days prior
to the expiration of such policies, furnish Landlord with renewals or binders.
Tenant agrees that if Tenant does not take out and maintain such insurance or
furnish Landlord with renewals or binders, Landlord may (but shall not be
required to) procure said insurance on Tenant's behalf and charge Tenant the
cost thereof, which amount shall be payable by Tenant upon demand with interest
(at the rate set forth in Section 20(e) below) from the date such sums are
extended. Tenant shall have the right to provide such insurance coverage
pursuant to blanket policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required by this
Lease.
(c) Landlord's Insurance. Landlord may, as a cost to be included in
---------------------
Operating Costs, procure and maintain at all times during the Term of this
Lease, a policy or policies of insurance
-12-
covering loss or damage to the Project in the amount of the full replacement
costs without deduction for depreciation thereof, providing protection against
all perils included within the classification of fire and extended coverage,
vandalism coverage and malicious mischief, sprinkler leakage, water damage, and
special extended coverage on the building. Additionally, Landlord may carry: (i)
Bodily Injury and Property Damage Liability Insurance and/or Excess Liability
Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii)
Rental Income Insurance; and (iv) any other forms of insurance Landlord may deem
appropriate or any lender may require. The costs of all insurance carried by
Landlord shall be included in Operating Costs.
(d) Waiver of Subrogation. Landlord and Tenant each agree to require
-----------------------
their respective insurers issuing the insurance described in Sections 14(a)(ii),
14(a)(iv) and the first sentence of Section 14(c), waive any rights of
subrogation that such companies may have against the other party. Tenant hereby
waives any right that Tenant may have against Landlord and Landlord hereby
waives any right that Landlord may have against Tenant as a result of any loss
or damage to the extent such loss or damage is insurable under such policies.
(e) Compliance with Law. Tenant agrees that it will not, at any time,
---------------------
during the Term of this Lease, carry any stock of goods or do anything in or
about the Premises that will in any way tend to increase the insurance rates
upon the Project. Tenant agrees to pay Landlord forthwith upon demand the amount
of any increase in premiums for insurance that may be carried during the Term of
this Lease, or the amount of insurance to be carried by Landlord on the Project
resulting from the foregoing, or from Tenant doing any act in or about the
Premises that does so increase the insurance rates, whether or not Landlord
shall have consented to such act on the part of Tenant. If Tenant installs upon
the Premises any electrical equipment which causes an overload of electrical
lines of the Premises, Tenant shall at its own cost and expense, in accordance
with all other Lease provisions (specifically including, but not limited to, the
provisions of Article 9, 10 and 11 hereof), make whatever changes are necessary
to comply with requirements of the insurance underwriters and any governmental
authority having jurisdiction thereover, but nothing herein contained shall be
deemed to constitute Landlord's consent to such overloading. Tenant shall, at
its own expense, comply with all insurance requirements applicable to the
Premises including without limitation, the installation of fire extinguishers or
an automatic dry chemical extinguishing system.
ARTICLE 15
----------
ASSIGNMENT ANP SUBLETTING
-------------------------
Tenant shall have no power to, either voluntarily, involuntarily, by
operation of law or otherwise, sell, assign, transfer or hypothecate this Lease,
or sublet the Premises or any part thereof, or permit the Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's employees
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. If Tenant is a corporation, unincorporated association,
partnership or limited liability company, the sale, assignment, transfer or
hypothecation of any class of stock or other ownership interest in such
corporation, association, partnership or limited liability company in excess of
twenty-five percent (25%) in the aggregate shall be deemed a "Transfer" within
the meaning and provisions of this Article 15. Tenant may transfer its interest
pursuant to this Lease only upon the following express conditions, which
conditions are agreed by Landlord and Tenant to be reasonable:
(a) That the proposed "Transferee" (as hereafter defined) shall be
subject to the prior written consent of Landlord, which consent will not be
unreasonably withheld but, without limiting the generality of the foregoing, it
shall be reasonable for Landlord to deny such consent if:
(i) The use to be made of the Premises by the proposed Transferee is
(a) not generally consistent with the character and nature of all other
tenancies in the Project, or (b) a use which conflicts with any so-called
"exclusive" then to favor of, or for any use which might reasonably be expected
to diminish the rent payable pursuant to any percentage rent lease with another
tenant of the Project or any other buildings which are in the same complex as
the Project, or (c) a use which would be prohibited by any other portion of this
Lease (including but not limited to any Rules and Regulations then in effect);
(ii) The financial responsibility of the proposed Transferee is not
reasonably satisfactory to Landlord or in any event not at least equal to those
which were possessed by Tenant as of the date of execution of this Lease;
-13-
(iii) The proposed Transferee is either a governmental agency or
instrumentality thereof;
(iv) Either the proposed Transferee or any person or entity which
directly or indirectly controls, is controlled by or is under common control
with the proposed Transferee (A) occupies space in the Project at the time of
the request for consent, or (B) is negotiating with Landlord or has negotiated
with Landlord during the six (6) month period immediately preceding the date of
the proposed Transfer, to lease space in the Project; or
(v) The rent charged by Tenant to such Transferee during the term of
such Transfer, calculated using a present value analysis, is less than the rent
being quoted by Landlord at the time of such Transfer for comparable space in
the Project for a comparable term, calculated using a present value analysis.
(b) Upon Tenant's submission of a request for Landlord's consent to any
such Transfer, Tenant shall pay to Landlord Landlord's then standard processing
fee and reasonable attorneys' fees and costs incurred in connection with the
proposed Transfer, which the parties hereby stipulate to be $3,000.00, unless
Landlord provides to Tenant evidence that Landlord has incurred greater costs in
connection with the proposed Transfer;
(c) That the proposed Transferee shall execute an agreement pursuant
to which it shall agree to perform faithfully and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease applicable to
that portion of the Premises so transferred; and
(d) That an executed duplicate original of said assignment and
assumption agreement or other transfer on a form reasonably approved by
Landlord, shall be delivered to Landlord within five (5) days after the
execution thereof, and that such transfer shall not be binding upon Landlord
until the delivery thereof to Landlord and the execution and delivery of
Landlord's consent thereto. It shall be a condition to Landlord's consent to any
subleasing, assignment or other transfer of part or all of Tenant's interest in
the Premises {a "TRANSFER") that (i) upon Landlord's consent to any Transfer,
Tenant shall pay and continue to pay fifty percent (50%) of any "Transfer
Premium" (defined below), received by Tenant from the transferee; (ii) any
sublessee of part or all of Tenant's interest in the Premises shall agree that
in the event Landlord gives such sublessee notice that Tenant is in default
under this Lease, such sublessee shall thereafter make all sublease or other
payments directly to Landlord, which will be received by Landlord without any
liability whether to honor the sublease or otherwise (except to credit such
payments against sums due under this Lease), and any sublessee shall agree to
attorn to Landlord or its successors and assigns at their request should this
Lease be terminated for any reason, except that in no event shall Landlord or
its successors or assigns be obligated to accept such attornment; (iii) any such
Transfer and consent shall be effected on forms supplied by Landlord and/or its
legal counsel; (iv) Landlord may require that Tenant not then be in default
hereunder in any respect; and (v) Tenant or the proposed subtenant or assignee
(collectively, "TRANSFEREE") shall agree to pay Landlord, upon demand, as
Additional Rent, a sum equal to the additional costs, if any, incurred by
Landlord for maintenance and repair as a result of any change in the nature of
occupancy caused by such subletting or assignment. "TRANSFER PREMIUM" shall
mean all rent, Additional Rent or other consideration payable by a Transferee in
connection with a Transfer in excess of the Basic Rental and Direct Costs
payable by Tenant under this Lease during the term of the Transfer and if such
Transfer is for less than all of the Premises, the Transfer Premium shall be
calculated on a rentable square foot basis. "Transfer Premium" shall also
include, but not be limited to, key money, bonus money or other cash
consideration paid by a Transferee to Tenant in connection with such Transfer,
and any payment in excess of fair market value for services rendered by Tenant
to the Transferee and any payment in excess of fair market value for assets,
fixtures, inventory, equipment, or furniture transferred by Tenant to the
Transferee in connection with such Transfer. Any Transfer of this Lease which
is not in compliance with the provisions of this Article 15 shall be voidable by
written notice from Landlord and shall, at the option of Landlord, terminate
this Lease. In no event shall the consent by Landlord to any Transfer be
construed as relieving Tenant or any Transferee from obtaining the express
written consent of Landlord to any further Transfer, or as releasing Tenant from
any liability or obligation hereunder whether or not then accrued and Tenant
shall continue to be fully liable therefor. No collection or acceptance of rent
by Landlord from any person other than Tenant shall be deemed a waiver of any
provision of this Article 15 or the acceptance of any Transferee hereunder, or a
release of Tenant (or of any Transferee of Tenant). Notwithstanding anything to
the contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent under this Article 15
or otherwise has breached or
-14-
acted unreasonably under this Article 15, their sole remedies shall be a
declaratory judgment and an injunction for the relief sought without any
monetary damages, and Tenant hereby waives all other remedies, including,
without limitation, any right at law or equity to terminate this Lease, on its
own behalf and, to the extent permitted under all applicable laws, on behalf of
the proposed Transferee.
Notwithstanding anything to the contrary contained in this Article 15,
Landlord shall have the option, by giving written notice to Tenant within thirty
(30) days after Landlord's receipt of a request for consent to a proposed
Transfer, to terminate this Lease as to the portion of the Premises that is the
subject of the proposed Transfer. If this Lease is so terminated with respect to
less than the entire Premises, the Basic Rental and Tenant's Proportionate Share
shall be prorated based on the number of rentable square feet retained by Tenant
as compared to the total number of rentable square feet previously contained in
the Premises, and this Lease as so amended shall continue thereafter in full
force and effect, and upon the request of either party, the parties shall
execute written confirmation of the same.
It is acknowledged by Landlord, that Tenant has advised Landlord that
Tenant is a debtor in a Chapter 11 reorganization and that it is contemplated
that pursuant to a plan of reorganization, the hearing on confirmation being set
for December 21, 2001, that on or about the first week of January 2002, or
shortly thereafter, all property, including Tenant's rights under this Lease,
that be assigned to Performance Capital Management, LLC ("PCMLLC"), a limited
liability company to be formed pursuant to said plan of reorganization. By
reason thereof and notwithstanding anything to the contrary in this Article 15,
including such rights as Landlord may have to terminate this Lease upon some
other assignment of transfer, Tenant shall be and is authorized to assign its
rights hereunder to PCMLLC without further request or consent from Landlord.
Within fifteen (15) days of the transfer of the property of Tenant to PCMLLC
taking place, PCMLLC shall provide to Landlord notice of the date of such
transfer. Upon such transfer, James J. Joseph and Performance Capital
Management, Inc. shall be relieved of any and all liabilities under this Lease
arising from and after the transfer date. Furthermore, PCMLLC, for the purposes
of Articles 31 and 32, shall be considered the "Original Tenant".
ARTICLE 16
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DAMAGE OR DESTRUCTION
---------------------
If the Project is damaged by fire or other insured casualty and the
insurance proceeds have been made available therefor by the holder or holders of
any mortgages or deeds of trust covering the Premises or the Project, the damage
shall be repaired by Landlord to the extent such insurance proceeds are
available therefor and provided such repairs can, in Landlord's sole opinion, be
completed within two hundred seventy (270) days after the necessity for repairs
as a result of such damage becomes known to Landlord, without the payment of
overtime or other premiums, and until such repairs are completed rent shall be
abated in proportion to the part of the Premises which is unusable by Tenant in
the conduct of its business (but there shall be no abatement of rent by reason
of any portion of the Premises being unusable for a period equal to one (1) day
or less). However, if the damage is due to the fault or neglect of Tenant, its
employees, agents, contractors, guests, invitees and the like, there shall be no
abatement of rent, unless and to the extent Landlord receives rental income
insurance proceeds. 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 Section 14(a)(ii)(A) above; provided, however,
that if the cost of repair of improvements within the Premises by Landlord
exceeds the amount of insurance proceeds received by Landlord from Tenant's
insurance carrier, as so assigned by Tenant, such excess costs shall be paid by
Tenant to Landlord prior to Landlord's repair of such damage. If repairs cannot,
in Landlord's opinion, be completed within two hundred seventy (270) days after
the necessity for repairs as a result of such damage becomes known to Landlord
without the payment of overtime or other premiums, Landlord may, at its option,
either (i) make such repairs in a reasonable time and in such event this Lease
shall continue in effect and the rent shall be abated, if at all, in the manner
provided in this Article 16, or (ii) elect not to effect such repairs and
instead terminate this Lease, by notifying Tenant in writing of such termination
within sixty (60) days after Landlord learns of the necessity for repairs as a
result of damage, such notice to include a termination date giving Tenant sixty
(60) days to vacate the Premises. In addition, Landlord may elect to terminate
this Lease if the Project shall be damaged by fire or other casualty or cause,
whether or not the Premises are affected, if the damage is not fully covered,
except for deductible amounts, by Landlord's insurance policies. Finally, if the
Premises or the Project is damaged to any substantial extent
-15-
during the last twelve (12) months of the Term, then notwithstanding anything
contained in this Article 16 to the contrary, Landlord shall have the option to
terminate this Lease by giving written notice to Tenant of the exercise of such
option within sixty (60) days after Landlord learns of the necessity for repairs
as the result of such damage. A total destruction of the Project shall
automatically terminate this Lease. Except as provided in this Article 16, there
shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interference with Tenant's business or property arising from such
damage or destruction or the making of any repairs, alterations or improvements
in or to any portion of the Project or the Premises or in or to fixtures,
appurtenances and equipment therein. Tenant understands that Landlord will not
carry insurance of any kind on Tenant's furniture, furnishings, trade fixtures
or equipment, and that Landlord shall not be obligated to repair any damage
thereto or replace the same. Tenant acknowledges that Tenant shall have no right
to any proceeds of insurance carried by Landlord relating to property damage.
With respect to any damage which Landlord is obligated to repair or elects to
repair, Tenant, as a material inducement to Landlord entering into this Lease,
irrevocably waives and releases its rights under the provisions of Sections 1932
and 1933 of the California Civil Code.
ARTICLE 17
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SUBORDINATION
-------------
This Lease is subject and subordinate to all ground or underlying leases,
mortgages and deeds of trust which affect the property or the Project, including
all renewals, modifications, consolidations, replacements and extensions
thereof; provided, however, if the lessor under any such lease or the holder or
holders of any such mortgage or deed of trust shall advise Landlord that they
desire or require this Lease to be prior and superior thereto, upon written
request of Landlord to Tenant, Tenant agrees to promptly execute, acknowledge
and deliver any and all documents or instruments which Landlord or such lessor,
holder or holders deem necessary or desirable for purposes thereof. Landlord
shall have the right to cause this Lease to be and become and remain subject and
subordinate to any and all ground or underlying leases, mortgages or deeds of
trust which may hereafter be executed covering the Premises, the Project or the
property or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof; provided, however, that Landlord obtains from the lender or other party
in question a written undertaking in favor of Tenant to the effect that such
lender or other party will not disturb Tenant's right of possession under this
Lease if Tenant is not then or thereafter in breach of any covenant or provision
of this Lease. Tenant agrees, within ten (10) days after Landlord's written
request therefor, to execute, acknowledge and deliver upon request any and all
documents or instruments requested by Landlord or necessary or proper to assure
the subordination of this Lease to any such mortgages, deed of trust, or
leasehold estates. Tenant agrees that in the event any proceedings are brought
for the foreclosure of any mortgage or deed of trust or any deed in lieu
thereof, to attorn to the purchaser or any successors thereto upon any such
foreclosure sale or deed in lieu thereof as so requested to do so by such
purchaser and to recognize such purchaser as the lessor under this Lease; Tenant
shall, within five (5) days after request execute such further instruments or
assurances as such purchaser may reasonably deem necessary to evidence or
confirm such attornment. Tenant agrees to provide copies of any notices of
Landlord's default under this Lease to any mortgagee or deed of trust
beneficiary whose address has been provided to Tenant and Tenant shall provide
such mortgagee or deed of trust beneficiary a commercially reasonable time after
receipt of such notice within which to cure any such default. Tenant waives the
provisions of any current or future statute, rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the obligations of the Tenant hereunder in the event of
any foreclosure proceeding or sale.
ARTICLE 18
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EMINENT DOMAIN
--------------
If the whole of the Premises or the Project or so much thereof as to render
the balance unusable by Tenant shall be taken under power of eminent domain, or
is sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such condemnation, or as of the date possession is
taken by the condemning authority, at Landlord's option. No award for any
partial or entire taking shall be apportioned, and Tenant hereby assigns to
Landlord any award which may be made in such taking or condemnation, together
with any and all
-16-
rights of Tenant now or hereafter arising in or to the same or any part thereof;
provided, however, that nothing contained herein shall be deemed to give
Landlord any interest in or to require Tenant to assign to Landlord any award
made to Tenant for the taking of personal property and trade fixtures belonging
to Tenant and removable by Tenant at the expiration of the Term hereof as
provided hereunder or for the interruption of, or damage to, Tenant's business.
In the event of a partial taking described in this Article 18, or a
sale, transfer or conveyance in lieu thereof, which does not result in a
termination of this Lease, the rent shall be apportioned according to the ratio
that the part of the Premises remaining useable by Tenant bears to the total
area of the Premises. Tenant hereby waives any and all rights it might otherwise
have pursuant to Section 1265.130 of the California Code of Civil Procedure.
ARTICLE 19
----------
DEFAULT
-------
Each of the following acts or omissions of Tenant or of any guarantor of
Tenant's performance hereunder, or occurrences, shall constitute an "EVENT OF
DEFAULT":
(a) Failure or refusal to pay Basic Rental, Additional Rent or any
other amount to be paid by Tenant to Landlord hereunder within three (3)
calendar days after notice that the same is due or payable hereunder, said three
(3) day period shall be in lieu of, and not in addition to, the notice
requirements of Section 1161 of the California Code of Civil Procedure or any
similar or successor law;
(b) Except where a specific time period is otherwise set forth for
Tenant's performance in this Lease, in which event the failure to perform by
Tenant within such time period shall be a default under this Article 19(b), and
except as set forth in items (a) above and (c) through and including (g) below,
failure to perform or observe any other covenant or condition of this Lease to
be performed or observed within thirty (30) days following written notice to
Tenant of such failure. Such thirty (30) day notice shall be in lieu of, and not
in addition to, any required under Section 1161 of the California Code of Civil
Procedure or any similar or successor law;
(c) Abandonment or vacating or failure to accept tender of possession
of the Premises or any significant portion thereof;
(d) The taking in execution or by similar process or law (other than by
eminent domain) of the estate hereby created;
(e) Intentionally Omitted. (f) Tenant's failure to cause to be
released any mechanics liens filed against the Premises or the Project within
twenty (20) days after the date the same shall have been filed or recorded; or
(g) Tenant's failure to observe or perform according to the provisions
of Articles 7, 17 or 25 within two (2) business days after notice from Landlord.
All defaults by Tenant of any covenant or condition of this Lease shall be
deemed by the parties hereto to be material.
ARTICLE 20
----------
REMEDIES
--------
(a) Upon the occurrence of an Event of Default under this Lease as
provided in Article 19 hereof, Landlord may exercise all of its remedies as may
be permitted by law, including but not limited to the remedy provided by Section
1951.4 of the California Civil Code, and including without limitation,
terminating this Lease, reentering the Premises and removing all persons and
property therefrom, which property may be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects
to terminate this Lease, Landlord shall be entitled to recover from Tenant the
aggregate of all amounts permitted by law, including but not limited to (i) the
worth at the time of award of the amount 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
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balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves could have been 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,
specifically including but not limited to, tenant improvement expenses,
brokerage commissions and advertising expenses incurred, expenses of remodeling
the Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and (v)
at Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law. The term
"rent" as used in this Article 20(a) shall be deemed to be and to mean all sums
of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others. As used in items (i) and (ii), above,
the "worth at the time of award" shall be computed by allowing interest at the
rate set forth in item (e), below, but in no case greater than the maximum
amount of such interest permitted by law. As used in item (iii), above, the
"worth at the time of award" shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
(b) Nothing in this Article 20 shall be deemed to affect Landlord's
right to indemnification for liability or liabilities arising prior to the
termination of this Lease for personal injuries or property damage under the
indemnification clause or clauses contained in this Lease.
(c) Notwithstanding anything to the contrary set forth herein,
Landlord's re-entry to perform acts of maintenance or preservation of or in
connection with efforts to relet the Premises or any portion thereof, or the
appointment of a receiver upon Landlord's initiative to protect Landlord's
interest under this Lease shall not terminate Tenant's right to possession of
the Premises or any portion thereof and, until Landlord does elect to terminate
this Lease, this Lease shall continue in full force and effect and Landlord may
enforce all of Landlord's rights and remedies hereunder including, without
limitation, the remedy described in California Civil Code Section 1951.4 (lessor
may continue lease in effect after lessee's breach and abandonment and recover
rent as it becomes due, if Lessee has the right to sublet or assign, subject
only to reasonable limitations). Accordingly, if Landlord does not elect to
terminate this Lease on account of any default by Tenant, Landlord may, from
time to tune, without terminating this Lease, enforce all of its rights and
remedies under this Lease, including the right to recover all rent as it becomes
due.
(d) All rights, powers and remedies of Landlord hereunder and under any
other agreement now or hereafter in force between Landlord and Tenant shall be
cumulative and not alternative and shall be in addition to all rights, powers
and remedies given to Landlord by law, and the exercise of one or more rights or
remedies shall not impair Landlord's right to exercise any other right or
remedy.
(e) Any amount due from Tenant to Landlord hereunder which is not paid
when due shall bear interest at the lower of eighteen percent (18%) per annum or
the maximum lawful rate of interest from the due date until paid, unless
otherwise specifically provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease. In addition to such
interest: (i) if Basic Rental is not paid on or before the fifth (5th) day of
the calendar month for which the same is due, a late charge equal to ten
percent (10%) of the amount overdue or $100, whichever is greater, shall be
immediately due and owing and shall accrue for each calendar month or part
thereof until such rental, including the late charge, is paid in full, which
late charge Tenant hereby agrees is a reasonable estimate of the damages
Landlord shall suffer as a result of Tenant's late payment and (ii) an
additional charge of $25 shall be assessed for any check given to Landlord by or
on behalf of Tenant which is not honored by the drawee thereof; which damages
include Landlord's additional administrative and other costs associated with
such late payment and unsatisfied checks and the parties agree that it would be
impracticable or extremely difficult to fix Landlord's actual damage in such
event. Such charges for interest and late payments and unsatisfied checks are
separate and cumulative and are in addition to and shall not diminish or
represent a substitute for any or all of Landlord's rights or remedies under any
other provision of this Lease.
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ARTICLE 21
----------
TRANSFER OF LANDLORD'S INTEREST
-------------------------------
In the event of any transfer or termination of Landlord's interest in the
Premises or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu
of foreclosure or otherwise whether voluntary or involuntary, Landlord shall be
automatically relieved of any and all obligations and liabilities on the part of
Landlord from and after the date of such transfer or termination, including
furthermore without limitation, the obligation of Landlord under Article 4 and
California Civil Code 1950.7 above to return the security deposit, provided said
security deposit is transferred to said transferee. Tenant agrees to attorn to
the transferee upon any such transfer and to recognize such transferee as the
lessor under this Lease and Tenant shall, within five (5) days after request,
execute such further instruments or assurances as such transferee may reasonably
deem necessary to evidence or confirm such attornment.
ARTICLE 22
----------
BROKER
------
In connection with this Lease, Tenant warrants and represents that it has
had dealings only with firm(s) set forth in Article 1.H. of the Basic Lease
Provisions and that it knows of no other person or entity who is or might be
entitled to a commission, finder's fee or other like payment in connection
herewith and does hereby indemnify and agree to hold Landlord, its agents,
members, partners, representatives, officers, affiliates, shareholders,
employees, successors and assigns harmless from and against any and all loss,
liability and expenses that Landlord may incur should such warranty and
representation prove incorrect, inaccurate or false.
ARTICLE 23
----------
PARKING
-------
Tenant shall rent from Landlord, commencing on the Commencement Date, the
number of parking passes set forth in Section 1(I) of the Basic Lease
Provisions, which parking passes shall pertain to the Project parking facility.
Tenant shall pay to Landlord for automobile parking passes the prevailing rate
charged from time to time at the location of such parking passes. Currently, the
charge for such parking passes is One Thousand Six Hundred and NO/100
($1,600.00) per month. In addition, Tenant shall be responsible for the full
amount of any taxes imposed by any governmental authority in connection with the
renting of such parking passes by Tenant or the use of the parking facility by
Tenant. Additional unreserved parking passes may be rented by Tenant, subject to
availability (as determined by Landlord in its sole discretion), on a monthly
basis, at the then prevailing rental rate for such parking passes. Tenant's
continued right to use the parking passes is conditioned upon Tenant abiding by
all rules and regulations which are prescribed from time to time for the orderly
operation and use of the parking facility where the parking passes are located,
including any sticker or other identification system established by Landlord,
Tenant's cooperation in seeing that Tenant's employees and visitors also comply
with such rules and regulations, and Tenant not being in default under this
Lease. Landlord specifically reserves the right to change the size,
configuration, design, layout and all other aspects of the Project parking
facility at any time and Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of rent
under this Lease, from time to time, close-off or restrict access to the Project
parking facility for purposes of permitting or facilitating any such
construction, alteration or improvements. Landlord may, from time, to time,
relocate any reserved parking spaces (if any) rented by Tenant to another
location in the Project parking facility. Landlord may delegate its
responsibilities hereunder to a parking operator or a lessee of the parking
facility in which case such parking operator or lessee shall have all the rights
of control attributed hereby to the Landlord. The parking passes rented by
Tenant pursuant to this Article 23 are provided to Tenant solely for use by
Tenant's own personnel and such passes may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Landlord's prior approval.
Tenant may validate visitor parking by such method or methods as the Landlord
may establish, at the validation rate from time to time generally applicable to
visitor parking.
-19-
ARTICLE 24
----------
WAIVER
------
No waiver by Landlord of any provision of this Lease shall be deemed to be
a waiver of any other provision hereof or of any subsequent breach by Tenant of
the same or any other provision. No provision of this Lease may be waived by
Landlord, except by an instrument in writing executed by Landlord. Landlord's
consent to or approval of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to render unnecessary the obtaining of Landlord's
consent to or approval of any subsequent act of Tenant, whether or not similar
to the act so consented to or approved. No act or thing done by Landlord or
Landlord's agents during the Term of this Lease shall be deemed an acceptance of
a surrender of the Premises, and no agreement to accept such surrender shall be
valid unless in writing and signed by Landlord. 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. Any payment by Tenant or receipt by Landlord of an amount less than the
total amount then due hereunder shall be deemed to be in partial payment only
thereof and not a waiver of the balance due or an accord and satisfaction,
notwithstanding any statement or endorsement to the contrary on any check or any
other instrument delivered concurrently therewith or in reference thereto.
Accordingly, Landlord may accept any such amount and negotiate any such check
without prejudice to Landlord's right to recover all balances due and owing and
to pursue its other rights against Tenant under this Lease, regardless of
whether Landlord makes any notation on such instrument of payment or otherwise
notifies Tenant that such acceptance or negotiation is without prejudice to
Landlord's rights.
ARTICLE 25
----------
ESTOPPEL CERTIFICATE
--------------------
Tenant shall, at any time and from time to time, upon not less than ten
(10) days' prior written notice from Landlord, execute, acknowledge and deliver
to Landlord a statement in writing certifying the following information, (but
not limited to the following information in the event further information is
requested by Landlord): (i) that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as modified, is in full force and effect); (ii) the dates to
which the rental and other charges are paid in advance, if any; (iii) the amount
of Tenant's security deposit, if any; and (iv) acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
and no events or conditions then in existence which, with the passage of time or
notice or both, would constitute a default on the part of Landlord hereunder, or
specifying such defaults, events or conditions, if any are claimed. It is
expressly understood and agreed that any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Real
Property. Tenant's failure to deliver such statement within such time shall
constitute an admission by Tenant that all statements contained therein are true
and correct. Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact and in Tenant's name, place and stead to execute any and all
documents described in this Article 25 if Tenant fails to do so within the
specified time period.
ARTICLE 26
----------
LIABILITY OF LANDLORD
---------------------
Notwithstanding anything in this Lease to the contrary, any remedy of
Tenant for the collection of a judgment (or other judicial process) requiring
the payment of money by Landlord in the event of any default by Landlord
hereunder or any claim, cause of action or obligation, contractual, statutory or
otherwise by Tenant against Landlord or the Landlord Parties concerning, arising
out of or relating to any matter relating to this Lease and all of the covenants
and conditions or any obligations, contractual, statutory, or otherwise set
forth herein, shall be limited solely and exclusively to an amount which is
equal to the lesser of (i) the interest of Landlord in and to the Project, and
(ii) the interest Landlord would have in the Project if the Project were
encumbered by third party debt in an amount equal to ninety percent (90%) of the
then current value of the Project (as such value is reasonably determined by
Landlord). No other property or assets of Landlord or any Landlord Party shall
be subject to levy, execution or other enforcement procedure for the
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satisfaction of Tenant's remedies under or with respect to this Lease,
Landlord's obligations to Tenant, whether contractual, statutory or otherwise,
the relationship of Landlord and Tenant hereunder, or Tenant's use or occupancy
of the Premises.
ARTICLE 27
----------
INABILITY TO PERFORM
--------------------
This Lease and the obligations of Tenant hereunder shall not be affected or
impaired because Landlord is unable to fulfill any of its obligations hereunder
or is delayed in doing so, if such inability or delay is caused by reason of any
prevention, delay, stoppage due to strikes, lockouts, acts of God, or any other
cause previously, or at such time, beyond the reasonable control or anticipation
of Landlord (collectively, a "FORCE MAJEURE") and Landlord's obligations under
this Lease shall be forgiven and suspended by any such Force Majeure.
ARTICLE 28
----------
HAZARDOUS WASTE
---------------
(a) Tenant shall not cause or permit any Hazardous Material (as defined
in Article 28(d) below) to be brought, kept or used in or about the Project by
Tenant, its agents, employees, contractors, or invitees. Tenant indemnifies
Landlord and the Landlord Parties from and against any breach by Tenant of the
obligations stated in the preceding sentence, and agrees to defend and hold
Landlord and the Landlord Parties harmless from and against any and all claims,
judgments, damages, penalties, fines, costs, liabilities, or losses (including,
without limitation, diminution in value of the Project, damages for the loss or
restriction or use of rentable or usable space or of any amenity of the Project,
damages arising from any adverse impact or marketing of space in the Project,
and sums paid in settlement of claims, attorneys' fees and costs, consultant
fees, and expert fees) which arise during or after the Term of this Lease as a
result of such breach. This indemnification of Landlord and the Landlord
Parties by Tenant includes, without limitation, costs incurred in connection
with any investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state, or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Project. Without limiting the foregoing, if the
presence of any Hazardous Material on the Project caused or permitted by Tenant
results in any contamination of the Project, then subject to the provisions of
Articles 9, 10 and 11 hereof, Tenant shall promptly take all actions at its sole
expense as are necessary to return the Project to the condition existing prior
to the introduction of any such Hazardous Material and the contractors to be
used by Tenant for such work must be approved by Landlord, which approval shall
not be unreasonably withheld so long as such actions would not potentially have
any material adverse long-term or short-term effect on the Project and so long
as such actions do not materially interfere with the use and enjoyment of the
Project by the other tenants thereof; provided however, Landlord shall also have
the right, by written notice to Tenant, to directly undertake any such
mitigation efforts with regard to Hazardous Materials in or about the Project
due to Tenant's breach of its obligations pursuant to this Section 28(a), and to
charge Tenant, as Additional Rent, for the costs thereof.
(b) Landlord and Tenant acknowledge that Landlord may become legally
liable for the costs of complying with Laws (as defined in Article 28(e) below)
relating to Hazardous Material which are not the responsibility of Landlord or
the responsibility of Tenant, including the following: (i) Hazardous Material
present in the soil or ground water on the Project of which Landlord has no
knowledge as of the effective date of this Lease; (ii) a change in Laws which
relate to Hazardous Material which make that Hazardous Material which is present
on the Real Property as of the effective date of this Lease, whether known or
unknown to Landlord, a violation of such new Laws; (iii) Hazardous Material that
migrates, flows, percolates, diffuses, or in any way moves on to, or under, the
Project after the effective date of this Lease; or Hazardous Material present on
or under the Project as a result of any discharge, dumping or spilling (whether
accidental or otherwise) on the Project by other lessees of the Project or their
agents, employees, contractors, or invitees, or by others. Accordingly,
Landlord and Tenant agree that the cost of complying with Laws relating to
Hazardous Material on the Project for which Landlord is legally liable and
which are paid or incurred by Landlord shall be an Operating Cost (and Tenant
shall pay Tenant's Proportionate Share thereof in accordance with Article 3)
unless the cost of such compliance as between Landlord and Tenant, is made the
responsibility of Tenant pursuant to Article 28(a) above. To the extent any such
Operating Cost relating to Hazardous Material is subsequently recovered or
-21-
reimbursed through insurance, or recovery from responsible third parties or
other action, Tenant shall be entitled to a proportionate reimbursement to the
extent it has paid its share of such Operating Cost to which such recovery or
reimbursement relates.
(c) It shall not be unreasonable for Landlord to withhold its consent
to any proposed Transfer if (i) the proposed transferee's anticipated use of the
Premises involves the generation, storage, use, treatment, or disposal of
Hazardous Material; (ii) the proposed Transferee has been required by any prior
landlord, lender, or governmental authority to take remedial action in
connection with Hazardous Material contaminating a property if the contamination
resulted from such Transferee's actions or use of the property in question; or
(iii) the proposed Transferee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
Hazardous Material.
(d) As used herein, the term "HAZARDOUS MATERIAL" means any hazardous
or toxic substance, material, or waste which is or becomes regulated by any
local governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
material or substance which is (i) defined as "Hazardous Waste," "Extremely
Hazardous Waste," or "Restricted Hazardous Waste" under Sections 25115, 25117 or
25122.7, or listed pursuant to Section 25140, of the California Health and
Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii)
defined as a "Hazardous Substance" under Section 25316 of the California Health
and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous
Substance Account Act), (iii) defined as a "Hazardous Material," "Hazardous
Substance," or "Hazardous Waste" under Section 25501 of the California Health
and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "Hazardous Substance" under Section
25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos,
(vii) listed under Article 9 or defined as Hazardous or extremely hazardous
pursuant to Article 11 of Title 22 of the California Administrative Code,
Division 4, Chapter 20, (viii) designated as a "Hazardous Substance" pursuant to
Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Sec. 1317),
(ix) defined as a "Hazardous Waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et seq. (42 U.S.C.
Sec. 6903), or (x) defined as a "Hazardous Substance" pursuant to Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Sec. 9601 et seq. (42 U.S.C. Sec. 9601).
(e) As used herein, the term "LAWS" means any applicable federal, state
or local law, ordinance, or regulation relating to any Hazardous Material
affecting the Project, including, without limitation, the laws, ordinances, and
regulations referred to in Article 28(d) above.
ARTICLE 29
----------
SURRENDER OF PREMISES; REMOVAL OF PROPERTY
------------------------------------------
(a) The voluntary or other surrender of this Lease by Tenant to
Landlord, or a mutual termination hereof, 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 affecting the Premises.
(b) Upon the expiration of the Term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in good order and condition, reasonable wear and tear and
repairs which are Landlord's obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, all furniture, equipment, business and trade fixtures, free-standing
cabinet work, moveable partitioning, telephone and date cabling and other
articles of personal property owned by Tenant or installed or placed by Tenant
at its own expense in the Premises, and all similar articles of any other
persons claiming under Tenant (unless Landlord exercises its option to have any
subleases or subtenancies assigned to it), and Tenant shall repair all damage to
the Premises resulting from the removal of such items from the Premises.
(c) Whenever Landlord shall reenter the Premises as provided in Article
12 hereof, or as otherwise provided in this Lease, any property of Tenant not
removed by Tenant upon the expiration of the Term of this Lease (or within
forty-eight (48) hours after a termination by reason of Tenant's default), as
provided in this Lease, shall be considered abandoned and Landlord may remove
any or all of such items and dispose of the same in any manner or store the same
in a public
-22-
warehouse or elsewhere for the account and at the expense and risk of Tenant,
and if Tenant shall fail to pay the cost of storing any such property after it
has been stored for a period of thirty (30) days or more, Landlord may sell any
or all of such property at public or private sale, in such manner and at such
times and places as Landlord, in its sole discretion, may deem proper, without
notice to or demand upon Tenant, for the payment of all or any part of such
charges or the removal of any such property, and shall apply the proceeds of
such sale as follows: first, to the cost and expense of such sale, including
reasonable attorneys' fees and costs for services rendered; second, to the
payment of the cost of or charges for storing any such properly; third, to the
payment of any other sums of money which may then or thereafter be due to
Landlord from Tenant under any of the terms hereof; and fourth, the balance, if
any, to Tenant.
(d) All fixtures, equipment, leasehold improvements, Alterations and/or
appurtenances attached to or built into the Premises prior to or during the
Term, whether by Landlord or Tenant and whether at the expense of Landlord or
Tenant, or of both, shall be and remain part of the Premises and shall not be
removed by Tenant at the end of the Term unless otherwise expressly provided for
in this Lease or unless such removal is required by Landlord. Such fixtures,
equipment, leasehold improvements, Alterations, additions, improvements and/or
appurtenances shall include but not be limited to: all floor coverings, drapes,
paneling, built-in cabinetry, molding, doors, vaults (including vault doors),
plumbing systems, security systems, electrical systems, lighting systems,
silencing equipment, communication systems, all fixtures and outlets for the
systems mentioned above and for all telephone, radio, telegraph and television
purposes, and any special flooring or ceiling installations.
ARTICLE 30
----------
MISCELLANEOUS
-------------
(a) SEVERABILITY; ENTIRE AGREEMENT. ANY PROVISION OF THIS LEASE
--------------------------------
WHICH SHALL PROVE TO BE INVALID, VOID, OR ILLEGAL SHALL IN NO WAY AFFECT, IMPAIR
OR INVALIDATE ANY OTHER PROVISION HEREOF AND SUCH OTHER PROVISIONS SHALL REMAIN
IN FULL FORCE AND EFFECT. THIS LEASE AND THE EXHIBITS AND ANY ADDENDUM ATTACHED
HERETO CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH REGARD TO
TENANT'S OCCUPANCY OR USE OF ALL OR ANY PORTION OF THE PROJECT, AND NO PRIOR
AGREEMENT OR UNDERSTANDING PERTAINING TO ANY SUCH MATTER SHALL BE EFFECTIVE FOR
ANY PURPOSE. NO PROVISION OF THIS LEASE MAY BE AMENDED OR SUPPLEMENTED EXCEPT BY
AN AGREEMENT IN WRITING SIGNED BY THE PARTIES HERETO OR THEIR SUCCESSOR IN
INTEREST. THE PARTIES AGREE THAT ANY DELETION OF LANGUAGE FROM THIS LEASE PRIOR
TO ITS MUTUAL EXECUTION BY LANDLORD AND TENANT SHALL NOT BE CONSTRUED TO HAVE
ANY PARTICULAR MEANING OR TO RAISE ANY PRESUMPTION, CANON OF CONSTRUCTION OR
IMPLICATION INCLUDING, WITHOUT LIMITATION, ANY IMPLICATION THAT THE PARTIES
INTENDED THEREBY TO STATE THE CONVERSE, OBVERSE OR OPPOSITE OF THE DELETED
LANGUAGE.
(b) Attorneys' Fees; Waiver of Jury Trial.
-------------------------------------------
(i) In any action to enforce the terms of this Lease, including
any suit by Landlord for the recovery of rent or possession of the Premises, the
losing party shall pay the successful party a reasonable sum for attorneys' fees
and costs in such suit and such attorneys' fees and costs shall be deemed to
have accrued prior to the commencement of such action and shall be paid whether
or not such action is prosecuted to judgment.
(ii) Should Landlord, without fault on Landlord's part, be made a
party to any litigation instituted by Tenant or by any third party against
Tenant, or by or against any person holding under or using the Premises by
license of Tenant, or for the foreclosure of any lien for labor or material
furnished to or for Tenant or any such other person or otherwise arising out of
or resulting from any act or transaction of Tenant or of any such other person,
Tenant covenants to save and hold Landlord harmless from any judgment rendered
against Landlord or the Premises or any part thereof and from all costs and
expenses, including reasonable attorneys' fees and costs incurred by Landlord in
connection with such litigation.
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(iii) When legal services are rendered by an attorney at law who
is an employee of a party, attorneys' fees and costs incurred by that party
shall be deemed to include an amount based upon the number of hours spent by
such employee on such matters multiplied by an appropriate billing rate
determined by taking into consideration the same factors, including but not
limited by, the importance of the matter, time applied, difficulty and results,
as are considered when an attorney not in the employ of a party is engaged to
render such service.
(iv) EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION SEEKING SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES
FOR ANY BREACH UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR
REMEDY HEREUNDER.
(c) Time of Essence. Each of Tenant's covenants herein is a condition
-----------------
and time is of the essence with respect to the performance of every provision of
this Lease.
(d) Headings; Joint and Several. The article headings contained in
------------------------------
this Lease are for convenience only and do not in any way limit or amplify any
term or provision hereof. The terms "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular, the neuter shall include the
masculine and feminine genders and the obligations herein imposed upon Tenant
shall be joint and several as to each of the persons, firms or corporations of
which Tenant may be composed.
(e) Reserved Area. Tenant hereby acknowledges and agrees that the
--------------
exterior walls of the Premises and the area between the finished ceiling of the
Premises and the slab of the floor of the Project thereabove have not been
demised hereby and the use thereof together with the right to install, maintain,
use, repair and replace pipes, ducts, conduits, wiring and cabling leading
through, under or above the Premises or throughout the Project in locations
which will not materially interfere with Tenant's use of the Premises and
serving other parts of the Project are hereby excepted and reserved unto
Landlord.
(f) NO OPTION. THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR
---------
REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN
OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED
HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT, IT BEING INTENDED
HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY
LANDLORD AND TENANT AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.
(g) Use of Project Name; Improvements. Tenant shall not be allowed to
-----------------------------------
use the name, picture or representation of the Project, or words to that effect,
in connection with any business carried on in the Premises or otherwise (except
as Tenant's address) without the prior written consent of Landlord. In the
event that Landlord undertakes any additional improvements on the Real Property
including but not limited to new construction or renovation or additions to the
existing improvements, Landlord shall not be liable to Tenant for any noise,
dust, vibration or interference with access to the Premises or disruption in
Tenant's business caused thereby.
(h) Rules and Regulations. Tenant shall observe faithfully and comply
----------------------
strictly with the Rules and Regulations attached to this Lease as Exhibit "B"
and made a part hereof, and such other Rules and Regulations as Landlord may
from time to time reasonably adopt for the safety, care and cleanliness of the
Project, the facilities thereof, or the preservation of good order therein.
Landlord shall not be liable to Tenant for violation of any such Rules and
Regulations, or for the breach of any covenant or condition in any lease by any
other tenant in the Project. A waiver by Landlord of any Rule or Regulation for
any other tenant shall not constitute nor be deemed a waiver of the Rule or
Regulation for this Tenant.
(i) Quiet Possession. Upon Tenant's paying the Basic Rental, Additional
----------------
Rent and other sums provided hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant's part to be observed and
performed hereunder, Tenant shall have quiet possession of the Premises for the
entire Term hereof, subject to all of the provisions of this Lease.
(j) Rent. All payments required to be made hereunder to Landlord shall
----
be deemed to be rent, whether or not described as such.
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(k) Successors and Assigns. Subject to the provisions of Article 15
------------------------
hereof, 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.
(l) Notices. Any notice required or permitted to be given hereunder
-------
shall be in writing and may be given by personal service evidenced by a signed
receipt or sent by registered or certified mail, return receipt requested, or
via overnight courier, and shall be effective upon proof of delivery, addressed
to Tenant at the Premises or to Landlord at the management office for the
Project, with a copy to Landlord, c/o Arden Realty, Inc., 11601 Wilshire
Boulevard, Fourth Floor, Los Angeles, California 90025, Attn: Legal Department.
Either party may by notice to the other specify a different address for notice
purposes except that, upon Tenant's taking possession of the Premises, the
Premises shall constitute Tenant's address for notice purposes. A copy of all
notices to be given to Landlord hereunder shall be concurrently transmitted by
Tenant to such party hereafter designated by notice from Landlord to Tenant. Any
notices sent by Landlord regarding or relating to eviction procedures, including
without limitation three day notices, may be sent by regular mail.
(m) Persistent Delinquencies. In the event that Tenant shall be
-------------------------
delinquent by more than fifteen (15) days in the payment of rent on three (3)
separate occasions in any twelve (12) month period, Landlord shall have the
right to terminate this Lease by thirty (30) days written notice given by
Landlord to Tenant within thirty (30) days of the last such delinquency.
(n) Right of Landlord to Perform. All covenants and agreements to be
------------------------------
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent. If
Tenant shall fail to pay any sum of money, other than rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue beyond any applicable cure
period set forth in this Lease, Landlord may, but shall not be obligated to,
without waiving or releasing Tenant from any obligations of Tenant, make any
such payment or perform any such other act on Tenant's part to be made or
performed as is in this Lease provided. All sums so paid by Landlord and all
reasonable incidental costs, together with interest thereon at the rate of ten
percent (10%) per annum from the date of such payment by Landlord, shall be
payable to Landlord on demand and Tenant covenants to pay any such sums, and
Landlord shall have (in addition to any other right or remedy of Landlord) the
same rights and remedies in the event of the nonpayment thereof by Tenant as in
the case of default by Tenant in the payment of the rent.
(o) Access, Changes in Project, Facilities, Name.
----------------------------------------------
(i) Every part of the Project except the inside surfaces of all
walls, windows and doors bounding the Premises (including exterior building
walls, the rooftop, core corridor walls and doors and any core corridor
entrance), and any space in or adjacent to the Premises or within the Project
used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other
utilities, sinks or other building facilities, and the use thereof, as well as
access thereto through the Premises for the purposes of operation, maintenance,
decoration and repair, are reserved to Landlord.
(ii) Tenant shall permit Landlord to install, use and maintain
pipes, ducts and conduits within the walls, columns and ceilings of the Premises
and throughout the Project.
(iii) Landlord reserves the right, without incurring any liability
to Tenant therefor, to make such changes in or to the Project and the fixtures
and equipment thereof, as well as in or to the street entrances, halls,
passages, elevators, stairways and other improvements thereof, as it may deem
necessary or desirable.
(iv) Landlord may adopt any name for the Project and Landlord
reserves the right, from time to time, to change the name and/or address of the
Project.
(p) Signing Authority. If Tenant is a corporation, partnership or
------------------
limited liability company, each individual executing this Lease on behalf of
said entity represents and warrants that he or she is duly authorized to execute
and deliver this Lease on behalf of said entity in accordance with: (i) if
Tenant is a corporation, a duly adopted resolution of the Board of Directors of
said corporation or in accordance with the By-laws of said corporation, (ii) if
Tenant is a partnership, the terms of the partnership agreement, and (iii) if
Tenant is a limited liability company, the terms of its
-25-
operating agreement, and that this Lease is binding upon said entity in
accordance with its terms. Concurrently with Tenant's execution of this Lease,
Tenant shall provide to Landlord a copy of: (i) if Tenant is a corporation, such
resolution of the Board of Directors authorizing the execution of this Lease on
behalf of such corporation, which copy of resolution shall be duly certified by
the secretary or an assistant secretary of the corporation to be a true copy of
a resolution duly adopted by the Board of Directors of said corporation and
shall be in a form reasonably acceptable to Landlord, (ii) if Tenant is a
partnership, a copy of the provisions of the partnership agreement granting the
requisite authority to each individual executing this Lease on behalf of said
partnership, and (iii) if Tenant is a limited liability company, a copy of the
provisions of its operating agreement granting the requisite authority to each
individual executing this Lease on behalf of said limited liability company. In
the event Tenant fails to comply with the requirements set forth in this
subparagraph (p), then each individual executing this Lease, jointly and
severally along with Tenant, shall be personally liable for all of Tenant's
obligations in this Lease.
(q) Identification of Tenant.
--------------------------
(i) If Tenant constitutes more than one person or entity, (A)
each of them shall be jointly and severally liable for the keeping, observing
and performing of all of the terms, covenants, conditions and provisions of this
Lease to be kept, observed and performed by Tenant, (B) the term "Tenant" as
used in this Lease shall mean and include each of them jointly and severally,
and (C) 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 of 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 persons or
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 received such notice or refund
or so signed.
(ii) If Tenant is a partnership (or is comprised of two or more
persons, individually and as co-partners of a partnership) or if Tenant's
interest in this Lease shall be assigned to a partnership (or to two or more
persons, individually and as co-partners of a partnership) pursuant to Article
15 hereof (any such partnership and such persons hereinafter referred to in this
Article 30(q)(ii) as "PARTNERSHIP TENANT"), the following provisions of this
Lease shall apply to such Partnership Tenant:
(A) The liability of each of the parties comprising
Partnership Tenant shall be joint and several.
(B) Each of the parties comprising Partnership Tenant hereby
consents in advance to, and agrees to be bound by, any written instrument which
may hereafter be executed, changing, modifying or discharging this Lease, in
whole or in part, or surrendering all or any part of the Premises to the
Landlord, and by notices, demands, requests or other communication which may
hereafter be given, by the individual or individuals authorized to execute this
Lease on behalf of Partnership Tenant under Subparagraph (p) above.
(C) Any bills, statements, notices, demands, requests or
other communications given or rendered to Partnership Tenant or to any of the
parties comprising Partnership Tenant shall be deemed given or rendered to
Partnership Tenant and to all such parties and shall be binding upon Partnership
Tenant and all such parties.
(D) If Partnership Tenant admits new partners, all of such
new partners shall, by their admission to Partnership Tenant, be deemed to have
assumed performance of all of the terms, covenants and conditions of this Lease
on Tenant's part to be observed and performed.
(E) Partnership Tenant shall give prompt notice to Landlord
of the admission of any such new partners, and, upon demand of Landlord, shall
cause each such new partner to execute and deliver to Landlord an agreement in
form satisfactory to Landlord, wherein each such new partner shall assume
performance of all of the terms, covenants and conditions of this Lease on
Partnership Tenant's part to be observed and performed (but neither Landlord's
failure to request any such agreement nor the failure of any such new partner to
execute or deliver any such agreement to Landlord shall terminate the provisions
of clause (D) of this Article 30(q)(ii) or relieve any such new partner of its
obligations thereunder).
(r) Intentionally Omitted.
----------------------
-26-
(s) Survival of Obligations. Any obligations of Tenant occurring prior
-----------------------
to the expiration or earlier termination of this Lease shall survive such
expiration or earlier termination.
(t) Confidentiality. Tenant acknowledges that the content of this
---------------
Lease and any related documents are confidential information. Tenant shall keep
such confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant's financial,
legal and space planning consultants and any proposed Transferees.
(u) Governing Law. This Lease shall be governed by and construed in
--------------
accordance with the laws of the State of California. No conflicts of law rules
of any state or country (including, without limitation, California conflicts of
law rules) shall be applied to result in the application of any substantive or
procedural laws of any state or country other than California. All
controversies, claims, actions or causes of action arising between the parties
hereto and/or their respective successors and assigns, shall be brought, heard
and adjudicated by the courts of the State of California, with venue in the
County of Orange. Each of the parties hereto hereby consents to personal
jurisdiction by the courts of the State of California in connection with any
such controversy, claim, action or cause of action, and each of the parties
hereto consents to service of process by any means authorized by California law
and consent to the enforcement of any judgment so obtained in the courts of the
State of California on the same terms and conditions as if such controversy,
claim, action or cause of action had been originally heard and adjudicated to a
final judgment in such courts. Each of the parties hereto further acknowledges
that the laws and courts of California were freely and voluntarily chosen to
govern this Lease and to adjudicate any claims or disputes hereunder.
(v) Storage Space. Tenant shall have the right, upon written request to
-------------
Landlord, to rent storage space up to 1,000 rentable square feet at the Project
(the "STORAGE SPACE"). The monthly rental rate for the Storage Space (the
"MONTHLY STORAGE RENT") shall be One Dollar and NO/100 ($1.00) per rentable
square foot per month of the Storage Space. Such Monthly Storage Rent shall be
payable on the first day of each month in advance during the Lease Term at the
same time and in the same manner as Monthly Basic Rental for the Premises. In
the even the Monthly Storage Rent is not paid when due, Landlord shall have the
same rights as provided in Article 20 of this Lease for unpaid Rent. Tenant's
Proportionate Share shall not be increased as a result of Tenant leasing such
Storage Space. Except to the extent any loss, costs, damage, expense or
liability exceeds the coverage of liability insurance and property insurance
coverage required hereunder to be carried by Tenant and is caused by (i) any
default by Landlord in the observance or performance of any of the terms,
covenants or conditions to be observed or performed by Landlord under this
Lease, or (ii) the negligence or willful misconduct of Landlord or any of its
agents, employees, contractors, or licensees, Tenant hereby absolves Landlord
from any and all loss, cost, damage, expense and liability, whether foreseeable
or not, from any cause whatsoever, that Tenant may suffer to its personal
property located anywhere in the Storage Space or that it or its agents,
employees, principals, invitees, or licensees may suffer as a direct or indirect
consequence of Tenant's lease of or use of the Storage Space or access areas to
the Storage Space. In addition, Tenant hereby agrees to indemnify, defend,
protect and hold Landlord harmless from and against any loss, cost, damage,
liability, expense, claim, action or cause of action of any third party, whether
foreseeable or not, resulting as a direct or indirect consequence of Tenant's
lease or use of the Storage Space or access areas to the Storage Space. Tenant
agrees not to store any flammable or highly combustible materials in the Storage
Space. Tenant also agrees not to store excess or highly concentrated waste in
the Storage Space; it shall be Tenant's responsibility to obtain from Landlord
the tolerable limits thereof. Tenant agrees to use the Storage Space solely for
storage purposes and not as office space. Tenant agrees that Landlord and its
agents may enter and inspect the Storage Space and any goods stored therein at
any time during regular business hours upon giving twenty-four (24) hours prior
notice to Tenant and so long as accompanied by a representative of Tenant.
Tenant shall, at its sole cost and expense, deliver to Landlord a key for any
locks installed by Tenant for Landlord's emergency entrance purposes. Landlord
shall deliver the Storage Space as a condition suitable for the storage of
files. Except as aforesaid, Tenant shall accept the Storage Space without any
warranties or representations and shall alter, with Landlord's prior written
approval (which approval shall not be unreasonably withheld or delayed),
maintain and repair the Storage Space at its sole cost and expense.
(w) Exhibits. The Exhibits attached hereto are incorporated herein by
---------
this reference as if fully set forth herein.
-27-
(x) Independent Covenants. This Lease shall be construed as though the
---------------------
covenants herein between Landlord and Tenant are independent (and not dependent)
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to set off of any of the rent or other amounts owing
hereunder against Landlord.
(y) Counterparts. This Lease may be executed in counterparts, each of
------------
which shall be deemed an original, but such counterparts, when taken together,
shall constitute one agreement.
(z) Limitation of Liability of Trustee. Any obligation or liability
--------------------------------------
whatsoever of James J. Joseph as Chapter 11 Trustee, which may arise at any time
under this Lease or any obligation or liability which may be incurred herein
pursuant to any other instrument, transaction or undertaking contemplated hereby
shall be in his official capacity as Trustee and not in his personal capacity
and shall be satisfied, if at all, out of assets vested in the bankruptcy
estate, or any successor entity as provided in Article 15 hereof. No such
obligation or liability shall be personally binding upon, nor shall resort for
the enforcement thereof be had to, the property of James J. Joseph, either
individually or in any other professional capacity or of any of his agents or
employees, regardless of whether such obligation or liability is in the nature
of contract, tort or otherwise.
-28-
ARTICLE 31
----------
OPTION TO EXTEND
----------------
Landlord hereby grants the Tenant named in this Lease (the "ORIGINAL
TENANT") one (1) option ("OPTION") to extend the Term for the entire Premises
for a period of five (5) years ("OPTION TERM"), which option shall be
exercisable only by written notice delivered by Tenant to Landlord set forth
below. The rights contained in this Article 31 shall be personal to the Original
Tenant and may only be exercised by the Original Tenant (and not any assignee,
sublessee or other transferee of the Original Tenant's interest in this Lease)
if the Original Tenant occupies the entire Premises as of the date of Tenant's
Acceptance (as defined in Section 31 (b), below).
(a) Option Rent. The rent payable by Tenant during the Option Term
------------
("OPTION RENT") shall be equal to the "Market Rent" (defined below), but in no
event less than the amount Tenant is paying under the Lease for the month
immediately preceding the Option Term. "MARKET RENT" shall mean the applicable
Basic Rental, including all escalations, Operating Costs, additional rent and
other charges at which tenants, as of the commencement of the Option Term, are
leasing non-sublease, non-encumbered, space comparable in size, location and
quality to the Premises in renewal transactions for a term comparable to the
Option Term which comparable space is located in office buildings comparable to
the Project in the Anaheim, California area, taking into consideration the value
of the existing improvements in the Premises to Tenant, as compared to the value
of the existing improvements in such comparable space, with such value to be
based upon the age, quality and layout of the improvements and the extent to
which the same could be utilized by Tenant with consideration given to the fact
that the improvements existing in the Premises are specifically suitable to
Tenant.
(b) Exercise of Options. The Option shall be exercised by Tenant only
---------------------
in the following manner: (i) Tenant shall not be in default, and shall not have
been in default under this Lease more than once, on the delivery date of the
Interest Notice and Tenant's Acceptance; (ii) Tenant shall deliver written
notice ("INTEREST NOTICE") to Landlord not more than twelve (12) months nor less
than seven (7) months prior to the expiration of the Term, stating that Tenant
is interested in exercising the Option, (iii) within fifteen (15) business days
of Landlord's receipt of Tenant's written notice, Landlord shall deliver notice
("OPTION RENT NOTICE") to Tenant setting forth the Option Rent; and (iv) if
Tenant desires to exercise such Option, Tenant shall provide Landlord written
notice within five (5) business days after receipt of the Option Rent Notice
("TENANT'S ACCEPTANCE"). Tenant's failure to deliver the Interest Notice or
Tenant's Acceptance on or before the dates specified above shall be deemed to
constitute Tenant's election not to exercise the Option. If Tenant timely and
properly exercises its Option, the Term shall be extended for the Option Term
upon all of the terms and conditions set forth in the Lease, as hereby amended,
except that the rent for the Option Term shall be as indicated in the Option
Rent Notice.
ARTICLE 32
----------
RIGHT OF FIRST OFFER
--------------------
Landlord hereby grants to Tenant a right of first offer with respect to
that space on the fourth (4th) floor of the Project outlined on Exhibit "A-l"
-------------
attached hereto and made a part hereof ("FIRST OFFER SPACE"). Notwithstanding
the foregoing (i) such first offer right of Tenant shall commence only following
the expiration or earlier termination of (A) any existing lease pertaining to
the First Offer Space, and (B) as to any First Offer Space which is vacant as of
the date of this Lease, the first lease pertaining to any portion of such First
Offer Space entered into by Landlord after the date of this Lease (collectively,
the "SUPERIOR LEASES"), including any renewal or extension of such existing or
future lease, whether or not such renewal or extension is pursuant to an express
written provision in such lease, and regardless of whether any such renewal or
extension is consummated pursuant to a lease amendment or a new lease, and (ii)
such first offer right shall be subordinate and secondary to all rights of
expansion, first refusal, first offer or similar rights granted to (A) the
tenants of the Superior Leases and (B) any other tenant of the Project (the
rights described in items (i) and (ii), above to be known collectively as
"SUPERIOR RIGHTS"). Tenant's right of first offer shall be on the terms and
conditions set forth in this Section 32.
(i) Procedure for Offer. Landlord shall notify Tenant (the "FIRST
--------------------
OFFER NOTICE") from time to time when Landlord determines that Landlord shall
commence the marketing of any
-29-
First Offer Space because such space shall become available for lease to third
parties, where no holder of a Superior Right desires to lease such space. The
First Offer Notice shall describe the space so offered to Tenant and shall set
forth Landlord's proposed economic terms and conditions applicable to Tenant's
lease of such space (collectively, the "ECONOMIC TERMS"). Notwithstanding the
foregoing, Landlord's obligation to deliver the First Offer Notice shall not
apply during the last nine (9) months of the initial Lease Term unless Tenant
has delivered an Interest Notice to Landlord pursuant to Section 30(1) above nor
shall Landlord be obligated to deliver the First Offer Notice during the last
eight (8) months of the initial Lease Term unless Tenant has timely delivered
Tenant's Acceptance to Landlord pursuant to Section 30(1) above.
(ii) Procedure for Acceptance. If Tenant wishes to exercise
--------------------------
Tenant's right of first offer with respect to the space described in the First
Offer Notice, then within five (5) business days after delivery of the First
Offer Notice to Tenant, Tenant shall deliver notice to Landlord of Tenant's
intention to exercise its right of first offer with respect to the entire space
described in the First Offer Notice. If concurrently with Tenant's exercise of
the first offer right, Tenant notifies Landlord that it does not accept the
Economic Terms set forth in the First Offer Notice, Landlord and Tenant shall,
for a period of fifteen (15) days after Tenant's exercise, negotiate in good
faith to reach agreement as to such Economic Terms. If Tenant does not so notify
Landlord that it does not accept the Economic Terms set forth in the First Offer
Notice concurrently with Tenant's exercise of the first offer right, the
Economic Terms shall be as set forth in the First Offer Notice. In addition, if
Tenant does not exercise its right of first offer within the five (5) business
day period, or, if Tenant exercises its first offer right but timely objects to
Landlord's determination of the Economic Terms and if Landlord and Tenant are
unable to reach agreement on such Economic Terms within said fifteen (15) day
period, then Landlord shall be free to lease the space described in the First
Offer Notice to anyone to whom Landlord desires on any terms Landlord desires
and Tenant's right of first offer shall terminate as to the First Offer Space
described in the First Office Notice, Notwithstanding anything to the contrary
contained herein, Tenant must elect to exercise its right of first offer, if at
all, with respect to all of the space offered by Landlord to Tenant at any
particular time, and Tenant may not elect to lease only a portion thereof.
(iii) Construction of First Offer Space. Tenant shall take the
-------------------------------------
First Offer Space in its "as-is" condition, and Tenant shall be entitled to
construct improvements in the First Offer Space in accordance with the
provisions of Article 9 of this Lease.
(iv) Lease of First Offer Space. If Tenant timely exercises
------------------------------
Tenant's right to lease the First Offer Space as set forth herein, Landlord and
Tenant shall execute an amendment adding such First Offer Space to this Lease
upon the same non-economic terms and conditions as applicable to the initial
Premises, and the economic terms and conditions as provided in this Section 32.
Tenant shall commence payment of rent for the First Offer Space and the Lease
Term of the First Offer Space shall commence upon the date of delivery of such
space to Tenant. The Lease Term for the First Offer Space shall expire
co-terminously with Tenant's lease of the initial Premises.
(v) No Defaults. The rights contained in this Section 32 shall be
------------
personal to the Original Tenant, and may only be exercised by the Original
Tenant (and not any assignee, sublessee or other transferee of the Original
Tenant's interest in this Lease) if Tenant occupies the entire Premises as of
the date of the First Offer Notice. Tenant shall not have the right to lease
First Offer Space as provided in this Section 32 if, as of the date of the First
Offer Notice, or, at Landlord's option, as of the scheduled date of delivery of
such First Offer Space to Tenant, Tenant is in default under this Lease or
Tenant has previously been in default under this Lease more than once. Original
Tenant shall include PCMLLC for the purposes of this Article.
-30-
ARTICLE 33
----------
SIGNAGE
-------
Provided Tenant is not in default hereunder, Landlord, at Landlord's sole
cost and expense, shall provide Tenant or any Transferee with one (1) space on
the lobby directory board for each 1,000 square feet of space leased at the
Project.
IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the
foregoing provisions and Articles, including all exhibits and other attachments
referenced therein, as of the date first above written.
"LANDLORD": ARDEN REALTY FINANCE PARTNERSHIP, L.P.,
a California limited partnership
By: ARDEN REALTY FINANCE, INC.,
a California corporation
Its: Sole Generation Partner
By: /s/ Victor J. Coleman
--------------------------------------
Victor J. Coleman
Its: President and COO
By: /s/ Robert C. Peddicord
--------------------------------------
Robert C. Peddicord
Its: Senior Vice President
Leasing and Operations
----------------------------------
"TENANT": JAMES J. JOSEPH, AS CHAPTER 11 TRUSTEE
FOR PERFORMANCE CAPITAL MANAGEMENT,
INC., a California corporation
By: /s/ James J. Joseph 10/26/01
-------------------------------------
Print Name: James J. Joseph
------------------------------
Title: Trustee
-----------------------------
By:
---------------------------------------
Print Name:
------------------------------
Title:
-----------------------------
-31-
EXHIBIT "A"
-----------
PREMISES
--------
EXHIBIT "A"
-----------
-1-
[GRAPHIC OMITTED]
PERFORMANCE CAPITAL MANAGEMENT
SUITE 400
222 S. HARBOR BLVD
ANAHEIM, CA
EXHIBIT "B"
-----------
RULES AND REGULATIONS
---------------------
1. No sign, advertisement or notice shall be displayed, printed or
affixed on or to the Premises or to the outside or inside of the Project or so
as to be visible from outside the Premises or Project without Landlord's prior
written consent. Landlord shall have the right to remove any non-approved sign,
advertisement or notice, without notice to and at the expense of Tenant, and
Landlord shall not be liable in damages for such removal. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant by Landlord or by a person selected by Landlord and in a
manner and style acceptable to Landlord.
2. Tenant shall not obtain for use on the Premises ice, waxing,
cleaning, interior glass polishing, rubbish removal, towel or other similar
services, or accept barbering or bootblackening, or coffee cart services, milk,
soft drinks or other like services on the Premises, except from persons
authorized by Landlord and at the hours and under regulations fixed by Landlord.
3. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose other than
for ingress and egress from Tenant's Premises. Under no circumstances is trash
to be stored in the corridors. Notice must be given to Landlord for any large
deliveries. Furniture, freight and other large or heavy articles, and all
other deliveries may be brought into the Project only at times and in the manner
designated by Landlord, and always at Tenant's sole responsibility and risk.
Landlord may impose reasonable charges for use of freight elevators after or
before normal business hours. All damage done to the Project by moving or
maintaining such furniture, freight or articles shall be repaired by Landlord at
Tenant's expense. Tenant shall not take or permit to be taken in or out of
entrances or passenger elevators of the Project, any item normally taken, or
which Landlord otherwise reasonably requires to be taken, in or out through
service doors or on freight elevators. Tenant shall move all supplies, furniture
and equipment as soon as received directly to the Premises, and shall move all
waste that is at any time being taken from the Premises directly to the areas
designated for disposal.
4. Toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein.
5. Tenant shall not overload the floor of the Premises or mark, drive
nails, screw or drill into the partitions, ceilings or floor or in any way
deface the Premises. Tenant shall not place typed, handwritten or computer
generated signs in the corridors or any other common areas. Should there be a
need for signage additional to the Project standard tenant placard, a written
request shall be made to Landlord to obtain approval prior to any installation.
All costs for said signage shall be Tenant's responsibility.
6. In no event shall Tenant place a load upon any floor of the Premises
or portion of any such flooring exceeding the floor load per square foot of area
for which such floor is designed to carry and which is allowed by law, or any
machinery or equipment which shall cause excessive vibration to the Premises or
noticeable vibration to any other part of the Project. Prior to bringing any
heavy safes, vaults, large computers or similarly heavy equipment into the
Project, Tenant shall inform Landlord in writing of the dimensions and weights
thereof and shall obtain Landlord's consent thereto. Such consent shall not
constitute a representation or warranty by Landlord that the safe, vault or
other equipment complies, with regard to distribution of weight and/or
vibration, with the provisions of this Rule 6 nor relieve Tenant from
responsibility for the consequences of such noncompliance, and any such safe,
vault or other equipment which Landlord determines to constitute a danger of
damage to the Project or a nuisance to other tenants, either alone or in
combination with other heavy and/or vibrating objects and equipment, shall be
promptly removed by Tenant, at Tenant's cost, upon Landlord's written notice of
such determination and demand for removal thereof.
EXHIBIT "B"
-----------
-1-
7. Tenant shall not use or keep in the Premises or Project any
kerosene, gasoline or inflammable, explosive or combustible fluid or material,
or use any method of heating or air-conditioning other than that supplied by
Landlord.
8. Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord,
9. Tenant shall not install or use any blinds, shades, awnings or
screens in connection with any window or door of the Premises and shall not use
any drape or window covering facing any exterior glass surface other than the
standard drapes, blinds or other window covering established by Landlord.
10. Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing window coverings when the sun's
rays fall directly on windows of the Premises. Tenant shall not obstruct,
alter, or in any way impair the efficient operation of Landlord's heating,
ventilating and air-conditioning system. Tenant shall not tamper with or
change the setting of any thermostats or control valves.
11. The Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the permitted use of
the Premises. Tenant shall not, without Landlord's prior written consent, occupy
or permit any portion of the Premises to be occupied or used for the manufacture
or sale of liquor or tobacco in any form, or a barber or manicure shop, or as an
employment bureau. The Premises shall not be used for lodging or sleeping or
for any improper, objectionable or immoral purpose. No auction shall be
conducted on the Premises.
12. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises, or disturb or interfere with occupants of Project or
neighboring buildings or premises or those having business with it by the use of
any musical instrument, radio, phonographs or unusual noise, or in any other
way.
13. No bicycles, vehicles or animals of any kind shall be brought into
or kept in or about the Premises, and no cooking shall be done or permitted by
any tenant in the Premises, except that the preparation of coffee, tea, hot
chocolate and similar items for tenants, their employees and visitors shall be
permitted. No tenant shall cause or permit any unusual or objectionable odors
to be produced in or permeate from or throughout the Premises. The foregoing
notwithstanding, Tenant shall have the right to use a microwave and to heat
microwavable items typically heated in an office. No hot plates, toasters,
toaster ovens or similar open element cooking apparatus shall be permitted in
the Premises.
14. The sashes, sash doors, skylights, windows and doors that reflect
or admit light and air into the halls, passageways or other public places in the
Project shall not be covered or obstructed by any tenant, nor shall any bottles,
parcels or other articles be placed on the window sills.
15. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanisms thereof unless Landlord is first notified thereof, gives
written approval, and is furnished a key therefor. Each tenant must, upon the
termination of his tenancy, give to Landlord all keys and key cards of stores,
offices, or toilets or toilet rooms, either furnished to, or otherwise procured
by, such tenant, and in the event of the loss of any keys so furnished, such
tenant shall pay Landlord the cost of replacing the same or of changing the lock
or locks opened by such lost key if Landlord shall deem it necessary to make
such change. If more than two keys for one lock are desired, Landlord will
provide them upon payment therefor by Tenant. Tenant shall not key or re-key any
locks. All locks shall be keyed by Landlord's locksmith only. Notwithstanding
anything to the contrary in this Paragraph 15, it is acknowledged and agreed by
Landlord, that Tenant shall be permitted, at Tenant's sole cost and expense, the
installation and maintenance of an electronic access system through a national
security company, such as ADT, shall not violate or be prohibited by this
Paragraph 15; provided, however, Landlord shall be provided with any codes, key
cards, etc. which may be necessary to afford Landlord access to the Premises as
required by this Lease.
EXHIBIT "B"
-----------
-2-
16. Landlord shall have the right to prohibit any advertising by any
tenant which, in Landlord's opinion, tends to impair the reputation of the
Project or its desirability as an office building and upon written notice from
Landlord any tenant shall refrain from and discontinue such advertising.
17. Landlord reserves the right to control access to the Project by all
persons after reasonable hours of generally recognized business days and at all
hours on Sundays and legal holidays and may at all times control access to the
equipment areas of the Project outside the Premises. Each tenant shall be
responsible for all persons for whom it requests after hours access and shall be
liable to Landlord for all acts of such persons. Landlord shall have the right
from time to time to establish reasonable rules and charges pertaining to
freight elevator usage, including the allocation and reservation of such usage
for tenants' initial move-in to their premises, and final departure therefrom,
Landlord may also establish from time to time reasonable rules and charges for
accessing the equipment areas of the Project, including the risers, rooftops and
telephone closets.
18. Any person employed by any tenant to do janitorial work shall,
while in the Project and outside of the Premises, be subject to and under the
control and direction of the Office of the Project or its designated
representative such as security personnel (but not as an agent or servant of
Landlord, and the Tenant shall be responsible for all acts of such persons).
19. All doors opening on to public corridors shall be kept closed,
except when being used for ingress and egress. Tenant shall cooperate and
comply with any reasonable safety or security programs, including fire drills
and air raid drills, and the appointment of "fire wardens" developed by Landlord
for the Project, or required by law. Before leaving the Premises unattended,
Tenant shall close and securely lock all doors or other means of entry to the
Premises and shut off all lights and water faucets in the Premises.
20. The requirements of tenants will be attended to only upon
application to the Office of the Project.
21. Canvassing, soliciting and peddling in the Project are prohibited
and each tenant shall cooperate to prevent the same.
22. All office equipment of any electrical or mechanical nature shall
be placed by tenants in the Premises in settings approved by Landlord, to absorb
or prevent any vibration, noise or annoyance.
23. No air-conditioning unit or other similar apparatus shall be
installed or used by any tenant without the prior written consent of Landlord.
Tenant shall pay the cost of all electricity used for air-conditioning in the
Premises if such electrical consumption exceeds normal office requirements,
regardless of whether additional apparatus is installed pursuant to the
preceding sentence.
24. There shall not be used in any space, or in the public halls of the
Project, either by any tenant or others, any hand trucks except those equipped
with rubber tires and side guards.
25. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Project must be fluorescent and/or of a quality, type, design
and bulb color approved by Landlord. Tenant shall not permit the consumption in
the Premises of more than 2 1/2 watts per net usable square foot in the Premises
in respect of office lighting nor shall Tenant permit the consumption in the
Premises of more than 1 1/2 watts per net usable square foot of space in the
Premises in respect of the power outlets therein, at any one time. In the event
that such limits are exceeded, Landlord shall have the right to require Tenant
to remove lighting fixtures and equipment and/or to charge Tenant for the cost
of the additional electricity consumed.
26. Parking.
-------
(a) Project parking facility hours for Tenant, its employees,
invitees and guests, shall be 4:30 a.m. to 8:30 p.m., Monday through Friday,
4:30 a.m. to 12:30 p.m. on Saturdays, and closed on Sundays, state and federal
holidays excepted, as such hours may be revised from time to time by Landlord.
(b) Automobiles must be parked entirely within the stall lines on
the floor.
EXHIBIT "B"
-----------
-3-
(c) All directional signs and arrows must be observed.
(d) The speed limit shall be 5 miles per hour.
(e) Parking is prohibited in areas not striped for parking.
(f) Parking cards or any other device or form of identification
supplied by Landlord (or its operator) shall remain the property of Landlord (or
its operator). Such parking identification device must be displayed as
requested and may not be mutilated in any manner. The serial number of the
parking identification device may not be obliterated. Devices are not
transferable or assignable and any device in the possession of an unauthorized
holder will be void. There will be a replacement charge to the Tenant or
person designated by Tenant of $25.00 for loss of any parking card. There shall
be a security deposit of S25.00 due at issuance for each card key issued to
Tenant
(g) The monthly rate for parking is payable one (1) month in
advance and must be paid by the third business day of each month. Failure to do
so will automatically cancel parking privileges and a charge at the prevailing
daily rate will be due. No deductions or allowances from the monthly rate will
be made for days parker does not use the parking facilities.
(h) Tenant may validate visitor parking by such method or methods as
the Landlord may approve, at the validation rate from time to time generally
applicable to visitor parking.
(i) Landlord (and its operator) may refuse to permit any person who
violates the within rules to park in the Project parking facility, and any
violation of the rules shall subject the automobile to removal from the Project
parking facility at the Parker's expense. In either of said events, Landlord (or
its operator) shall refund a prorata portion of the current monthly parking rate
and the sticker or any other form of identification supplied by Landlord (or its
operator) will be returned to Landlord (or its operator).
(j) Project parking facility managers or attendants are not authorized
to make or allow any exceptions to these Rules and Regulations.
(k) All responsibility for any loss or damage to automobiles or any
personal property therein is assumed by the parker.
(l) Loss or theft of parking identification devices from automobiles
must be reported to the Project parking facility manager immediately, and a lost
or stolen report must be filed by the parker at that time.
(m) The parking facilities are for the sole purpose of parking one
automobile per space. Washing, waxing, cleaning or servicing of any vehicles by
the parker or his agents is prohibited.
(n) Landlord (and its operator) reserves the right to refuse the
issuance of monthly stickers or other parking identification devices to any
Tenant and/or its employees who refuse to comply with the above Rules and
Regulations and all City, State or Federal ordinances, laws or agreements.
(o) Tenant agrees to acquaint all employees with these Rules and
Regulations.
(p) No vehicle shall be stored in the Project parking facility for a
period of more than one (1) week.
27. The Project is a non-smoking Project. Smoking or carrying lighted
cigars or cigarettes in the Premises or the Project, including the elevators in
the Project, is prohibited.
EXHIBIT "B"
-----------
-4-
EXHIBIT"C"
----------
NOTICE OF LEASE TERM DATES
AND TENANT'S PROPORTIONATE SHARE
--------------------------------
TO: _______________________________ DATE:________________________
_______________________________
_______________________________
RE: Lease dated October 24, 2001, between ARDEN REALTY FINANCE PARTNERSHIP,
L.P. ("LANDLORD"), and JAMES J. JOSEPH, AS CHAPTER 11 TRUSTEE FOR
PERFORMANCE CAPITAL MANAGEMENT, INC., for Suite 400, located at Anaheim
City Centre, 222 Harbor Boulevard, Anaheim, California.
Ladies and Gentlemen:
In accordance with the Lease, Landlord wishes to advise and/or confirm the
following:
1. That the Premises have been accepted herewith by the Tenant as
being substantially complete in accordance with the Lease and that there is no
deficiency in construction.
2. That the Tenant has taken possession of the Premises and
acknowledges that under the provisions of the Lease the Term of said Lease shall
commence as of ____________for a term of five (5) years ending
on________________________.
3. That in accordance with the Lease, Basic Rental commenced to
accrue on________________________.
4. If the Commencement Date of the Lease is other than the first
day of the month, the first billing will contain a prorata adjustment. Each
billing thereafter 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 Landlord at________________________.
6. The exact number of rentable square feet within the Premises
is 13,988 square feet.
7. Tenant's Proportionate Share, as adjusted based upon the exact
number of rentable square feet within the Premises is 7.98%.
AGREED AND ACCEPTED:
TENANT:
JAMES J. JOSEPH, AS CHAPTER 11 TRUSTEE FOR
PERFORMANCE CAPITAL MANAGEMENT, INC.,
a California corporation
By:
--------------------------------------
Its:
----------------------------------
EXHIBIT "C"
-----------
EXHIBIT "D"
-----------
TENANT WORK LETTER
------------------
This Tenant Work Letter shall set forth the terms and conditions relating
to the renovation of the tenant improvements in the Premises. This Tenant Work
Letter is essentially organized chronologically and addresses the issues of the
renovation of the Premises, in sequence, as such issues will arise.
SECTION 1
---------
LANDLORD'S INITIAL CONSTRUCTION IN THE PREMISES
-----------------------------------------------
Landlord has constructed, at its sole cost and expense, the base, shell and
core (i) of the Premises, and (ii) of the floor of the Project on which the
Premises is located (collectively, the "BASE, SHELL AND CORE"). Tenant has
inspected and hereby approves the condition of the Base, Shell and Core, and
agrees that the Base, Shell and Core shall be delivered to Tenant in its current
"as-is" condition. The improvements to be initially installed in the Premises
shall be designed and constructed pursuant to this Tenant Work Letter. Any costs
of initial design and construction of any improvements to the Premises shall be
an "Improvement Allowance Item", as that term is defined in Section 2.2 of this
Tenant Work Letter.
SECTION 2
---------
IMPROVEMENTS
------------
2.1 Improvement Allowance. Tenant shall be entitled to a one-time
----------------------
improvement allowance (the "IMPROVEMENT ALLOWANCE") in the amount of $94,333.45
for the costs relating to the initial design and construction of Tenant's
improvements which are permanently affixed to the Premises (the "IMPROVEMENTS").
In no event shall Landlord be obligated to make disbursements pursuant to this
Tenant Work Letter in a total amount which exceeds the Improvement Allowance and
in no event shall Tenant be entitled to any credit for any unused portion of the
Improvement Allowance not used by Tenant by February 28, 2002.
2.2 Disbursement of the Improvement Allowance. Except as otherwise
--------------------------------------------
set forth in this Tenant Work Letter, the Improvement Allowance shall be
disbursed by Landlord (each of which disbursements shall be made pursuant to
Landlord's disbursement process) for costs related to the construction of the
Improvements and for the following items and costs (collectively, the
"IMPROVEMENT ALLOWANCE ITEMS"): (i) payment of the fees of the "Architect" and
the "Engineers," as those terms are defined in Section 3.1 of this Tenant Work
Letter, and payment of the fees incurred by, and the cost of documents and
materials supplied by, Landlord and Landlord's consultants in connection with
the preparation and review of the "Construction Drawings," as that term is
defined in Section 3.1 of this Tenant Work Letter; (ii) the cost of permits;
(iii) the cost of any changes in the Base, Shell and Core required by the
Construction Drawings; (iv) the cost of any changes to the Construction Drawings
or Improvements required by applicable building codes (the "CODE"); and (v) the
"Landlord Coordination Fee", as that term is defined in Section 4.3.2 of this
Tenant Work Letter. However, in no event shall more than Three and 00/100
Dollars ($3.00) per usable square foot of the Improvement Allowance be used for
the aggregate cost of items described in (i) and (ii) above; any additional
amount incurred as a result of (i) and (ii) above shall be deemed to constitute
an Over-Allowance Amount.
2.3 Standard Improvement Package. Landlord has established
-------------------------------
specifications (the "SPECIFICATIONS") for the Project standard components to be
used in the construction of the Improvements in the Premises (collectively, the
"STANDARD IMPROVEMENT PACKAGE"), which Specifications are available upon
request. The quality of Improvements shall be equal to or of greater quality
than the quality of the Specifications, provided that Landlord may, at
Landlord's option, require the Improvements to comply with certain
Specifications.
EXHIBIT "D"
-----------
-1-
SECTION 3
---------
CONSTRUCTION DRAWINGS
---------------------
3.1 Selection of Architect/Construction Drawings. Tenant shall retain
--------------------------------------------
an architect/space planner designated by Landlord (the "ARCHITECT") to prepare
the "Construction Drawings," as that term is defined in this Section 3.1. Tenant
shall also retain the engineering consultants designated by Landlord (the
"ENGINEERS") to prepare all plans and engineering working drawings relating to
the structural, mechanical, electrical, plumbing, HVAC and lifesafety work of
the Tenant Improvements. The plans and drawings to be prepared by Architect and
the Engineers hereunder shall be known collectively as the "CONSTRUCTION
DRAWINGS." All Construction Drawings shall comply with the drawing format and
specifications as reasonably determined by Landlord, and shall be subject to
Landlord's reasonable approval. Tenant and Architect shall verify, in the field,
the dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the
same, and Landlord shall have no responsibility in connection therewith.
Landlord's review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Landlord's review of the same,
or obligate Landlord to review the same, for quality, design, Code compliance or
other like matters. Accordingly, notwithstanding that any Construction Drawings
are reviewed by Landlord or its space planner, architect, engineers and
consultants, and notwithstanding any advice or assistance which may be rendered
to Tenant by Landlord or Landlord's space planner, architect, engineers, and
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings.
3.2 Final Space Plan. On or before the date set forth in Schedule 1,
------------------
attached hereto, Tenant and the Architect shall prepare the final space plan for
Improvements in the Premises (collectively, the "FINAL SPACE PLAN"), which Final
Space Plan shall include a layout and designation of all offices, rooms and
other partitioning, their intended use, and equipment to be contained therein,
and shall deliver the Final Space Plan to Landlord for Landlord's approval.
3.3 Final Working Drawings. On or before the date set forth in Schedule
----------------------
1, Tenant, the Architect and the Engineers shall complete the architectural and
engineering drawings for the Premises, and the final architectural working
drawings in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the "FINAL WORKING
DRAWINGS") and shall submit the same to Landlord for Landlord's approval.
3.4 Permits. The Final Working Drawings shall be approved by Landlord
-------
(the "APPROVED WORKING DRAWINGS") prior to the commencement of the construction
of the Improvements. Tenant shall cause the Architect to immediately submit the
Approved Working Drawings to the appropriate municipal authorities for all
applicable building permits necessary to allow "Contractor," as that term is
defined in Section 4.1, below, to commence and fully complete the construction
of the Improvements (the "PERMITS"). No changes, modifications or alterations in
the Approved Working Drawings may be made without the prior written consent of
Landlord, which consent shall not be unreasonably withheld.
3.5 Time Deadlines. Tenant shall use its best efforts and all due
---------------
diligence to cooperate with the Architect, the Engineers, and Landlord to
complete all phases of the Construction Drawings and the permitting process and
to receive the permits, and with Contractor for approval of the "Cost Proposal,"
as that term is defined in Section 4.2 of this Tenant Work Letter, as soon as
possible after the execution of the Lease, and, in that regard, shall meet with
Landlord on a scheduled basis to be determined by Landlord, to discuss Tenant's
progress in connection with the same. The applicable dates for approval of
items, plans and drawings as described in this Section 3, Section 4 below, and
in this Tenant Work Letter are set forth and further elaborated upon in Schedule
1 (the "TIME DEADLINES"), attached hereto. Tenant agrees to comply with the Time
Deadlines.
SECTION 4
---------
CONSTRUCTION OF THE IMPROVEMENTS
--------------------------------
4.1 Contractor. The contractor which shall construct the Improvements
----------
shall be a contractor selected pursuant to the following procedure. The Final
Working Drawings shall be
EXHIBIT "D"
-----------
-2-
submitted by Landlord to three (3) general contractors: one (1) such general
contractor shall be selected by Landlord and the other general contractors shall
be selected by Tenant on or before the date the Final Working Drawings are
approved by Landlord and Tenant and which contractor so selected by Tenant shall
be subject to Landlord's reasonable approval. Each such contractor shall submit
a sealed, fixed price contract bid (on such bid form as Landlord shall
designate) to construct the Improvements. Each contractor shall be notified in
the bid package of the time schedule for construction of the Improvements. The
subcontractors utilized by the contractor shall be subject to Landlord's
reasonable approval and the bidding instructions shall provide that as to work
affecting the structure of the Project and/or the systems and equipment of the
Project, Landlord shall be entitled to designate the subcontractors. The bids
shall be submitted promptly to Landlord as a reconciliation shall be performed
by Landlord to adjust inconsistent or incorrect assumptions so that a like-kind
comparison can be made and a low bidder determined. Landlord shall select the
contractor who shall be the lowest bidder and who states that it will be able to
meet Landlord's construction schedule. The contractor selected may be referred
to herein as the "CONTRACTOR".
4.2 Cost Proposal. After the Approved Working Drawings are signed by
--------------
Landlord and Tenant, Landlord shall provide Tenant with a cost proposal in
accordance with the Approved Working Drawings, which cost proposal shall
include, as nearly as possible, the cost of all Improvement Allowance Items to
be incurred by Tenant in connection with the construction of the improvements
(the "COST PROPOSAL"). Tenant shall approve and deliver the Cost Proposal to
Landlord within three (3) business days of the receipt of the same, and upon
receipt of the same by Landlord, Landlord shall be released by Tenant to
purchase the items set forth in the Cost Proposal and to commence the
construction relating to such items. The date by which Tenant must approve and
deliver the Cost Proposal to Landlord shall be known hereafter as the "COST
PROPOSAL DELIVERY DATE".
4.3 Construction of Improvements by Contractor under the Coordination
-------------------------------------------------------------------
of Landlord.
- ------------
4.3.1 Over-Allowance Amount. On the Cost Proposal Delivery Date,
---------------------
Tenant shall deliver to Landlord an amount (the "OVER-ALLOWANCE AMOUNT") equal
to the difference between (i) the amount of the Cost Proposal and (ii) the
amount of the Improvement Allowance (less any portion thereof already disbursed
by Landlord, or in the process of being disbursed by Landlord, on or before the
Cost Proposal Delivery Date). The Over-Allowance Amount shall be disbursed by
Landlord prior to the disbursement of any then remaining portion of the
Improvement Allowance, and such disbursement shall be pursuant to the same
procedure as the Improvement Allowance. In the event that, after the Cost
Proposal Delivery Date, any revisions, changes, or substitutions shall be made
to the Construction Drawings or the Improvements, any additional costs which
arise in connection with such revisions, changes or substitutions or any other
additional costs shall be paid by Tenant to Landlord immediately upon Landlord's
request as an addition to the Over-Allowance Amount.
4.3.2 Landlord's Retention of Contractor. Landlord shall
-------------------------------------
independently retain Contractor, on behalf of Tenant, to construct the
Improvements in accordance with the Approved Working Drawings and the Cost
Proposal and Landlord shall coordinate the construction by Contractor, and
Tenant shall pay a construction coordination fee (the "LANDLORD COORDINATION
FEE") to Landlord in an amount equal to the product of (i) five percent (5%) and
(ii) an amount equal to the Improvement Allowance plus the Over-Allowance Amount
(as such Over-Allowance Amount may increase pursuant to the terms of this Tenant
Work Letter).
SECTION 5
---------
COMPLETION OF THE IMPROVEMENTS
------------------------------
5.1 Substantial Completion. For purposes of this Lease, "SUBSTANTIAL
-----------------------
COMPLETION" of the Improvements in the Premises shall occur upon the completion
of construction of the Improvements in the Premises pursuant to the Approved
Working Drawings, with the exception of any punch list items and any tenant
fixtures, work-stations, built-in furniture, or equipment to be installed by
Tenant.
5.2 Delay of the Substantial Completion of the Premises. Except as
-------------------------------------------------------
provided in this Section 5, the Commencement Date and Tenant's obligation to pay
rent for the Premises shall occur as set forth in the Lease. However, if there
shall be a delay or there are delays in the
EXHIBIT "D"
-----------
-3-
Substantial Completion of the Improvements in the Premises as a result of the
following (collectively, "TENANT DELAYS"):
5.2.1 Tenant's failure to comply with the Time Deadlines;
5.2.2 Tenant's failure to timely approve any matter requiring
Tenant's approval;
5.2.3 A breach by Tenant of the terms of this Tenant Work Letter
or the Lease;
5.2.4 Changes in any of the Construction Drawings after
disapproval of the same by Landlord or because the same do not comply with Code
or other applicable laws;
5.2.5 Tenant's request for changes in the Approved Working
Drawings;
5.2.6 Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Improvements in the Premises,
or which are different from, or not included in, the Standard Improvement
Package;
5.2.7 Changes to the Base, Shell and Core required by the Approved
Working Drawings; or
5.2.8 Any other acts or omissions of Tenant, or its agents, or
employees;
then, notwithstanding anything to the contrary set forth in the Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of Improvements in the Premises, the date of Substantial Completion
thereof shall be deemed to be the date that Substantial Completion would have
occurred if no Tenant Delay or Delays, as set forth above, had occurred.
SECTION 6
---------
MISCELLANEOUS
-------------
6.1 Tenant's Representative. Tenant has designated Ken Roelke as its
------------------------
sole representative with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.
6.2 Landlord's Representative. Prior to commencement of construction
-------------------------
of Improvements, Landlord shall designate a representative with respect to the
matters set forth in this Tenant Work Letter, who, until further notice to
Tenant, shall have full authority and responsibility to act on behalf of the
Landlord as required in this Tenant Work Letter.
6.3 Time of the Essence in This Tenant Work Letter. Unless otherwise
-------------------------------------------------
indicated, all references herein to a "number of days" shall mean and refer to
calendar days.
EXHIBIT "D"
-----------
-4-
SCHEDULE 1
----------
TIME DEADLINES
--------------
Dates Actions to be Performed
----- --------------------------
A. Completed Tenant to deliver Final Space Plan to
Landlord.
B. Completed Tenant to deliver Final Working Drawings
to Landlord.
C. Three (3) business days after Tenant to approve Cost Proposal and deliver
the receipt of the Cost Cost Proposal to Landlord.
Proposal by Tenant.
SCHEDULE 1
----------
-1-