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611 WILSHIRE BOULEVARD
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Lease
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TENANT: COMMUNICATIONS TELESYSTEMS INTERNATIONAL, DBA WORLDXCHANGE
COMMUNICATIONS
DATE: SEPTEMBER 17, 1997
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611 WILSHIRE BOULEVARD
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Lease
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TABLE OF CONTENTS
SUMMARY OF LEASE TERMS............................................................. 1
AGREEMENT.......................................................................... 3
1. PREMISES.............................................................. 3
2. TERM.................................................................. 3
3. RENT.................................................................. 3
4. RENT ESCALATION....................................................... 3
5. TAX ON TENANT'S PROPERTY; OTHER TAXES................................. 6
6. SECURITY DEPOSIT...................................................... 7
7. LATE PAYMENTS......................................................... 7
8. USE OF PREMISES....................................................... 7
9. BUILDING SERVICES..................................................... 8
10. CONDITION OF PREMISES.................................................10
11. DAMAGE TO PREMISES OR BUILDING........................................10
12. EMINENT DOMAIN........................................................11
13. DEFAULT...............................................................12
14. REMEDIES UPON DEFAULT.................................................12
15. SURRENDER OF PREMISES; REMOVAL OF PROPERTY............................14
16. COSTS OF SUIT; ATTORNEYS' FEES; WAIVER OF JURY TRIAL..................15
17. ASSIGNMENT AND SUBLETTING.............................................15
18. TRANSFER OF LANDLORD'S INTEREST.......................................19
19. HOLDING OVER..........................................................19
20. NOTICES...............................................................19
21. QUIET ENJOYMENT.......................................................19
22. TENANT'S FURTHER OBLIGATIONS..........................................19
23. ESTOPPEL CERTIFICATE BY LESSEE........................................20
24. SUBORDINATION AND ATTORNMENT..........................................20
25. RIGHTS RESERVED TO LANDLORD...........................................20
26. FORCE MAJEURE.........................................................21
27. WAIVER OF CLAIMS; INDEMNITY...........................................21
28. INSURANCE.............................................................22
29. FIXTURES, TENANT IMPROVEMENTS AND ALTERATIONS.........................23
30. MECHANIC'S LIENS......................................................24
31. ALTERNATE SPACE.......................................................24
32. HAZARDOUS MATERIALS...................................................24
33. MISCELLANEOUS.........................................................25
34. RULES AND REGULATIONS AFFECTING TELECOMMUNICATIONS USE................28
35. "AS IS" CONDITION.....................................................28
36. ROOF SPACE............................................................29
EXHIBITS AND RIDERS
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611 WILSHIRE BOULEVARD
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Lease
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COMMUNICATION TELESYSTEMS INTERNATIONAL, DBA WORLDXCHANGE COMMUNICATIONS
THIS LEASE is made as of the 17th day of September, 1997, between Downtown
Properties, L.L.C., a California Limited Liability Company (hereinafter
called "Landlord"), and Communications TeleSystems International, dba
WorldxChange Communications, a California corporation (hereinafter called
"Tenant").
SUMMARY OF LEASE TERMS
A. Addresses:
1. Tenant's Premises and Notice Address: 611 Wilshire Boulevard, Suite 601, Los Angeles, CA 90017
2. Landlord's Notice Address: Downtown Properties, L.L.C., c/o Kennedy-Wilson Management
818 West 7th Street, Suite 980, Los Angeles, CA 90017
3. Landlord's Address for Rent Payments: Downtown Properties, L.L.C., c/o Kennedy-Wilson Management
818 West 7th Street, Suite 980, Los Angeles, CA 90017
B. Approximate Rentable Area of the Premises:
6,390 rentable square feet. The parties agree that such figure is only a
reasonable estimate of the area of the Premises. The figures in Items E,
G, H and J below and the other provisions of this Lease shall not be
adjusted due to any difference between the actual area of the Premises
and the estimated area shown above.
C. Lease Term: 5 years and 0 months.
D. 1. Estimated Commencement Date: October 1, 1997.
2. Commencement Date: The later of the following 2 dates:
(a) The Estimated Commencement Date; or
(b) The date upon which Landlord tenders possession of the Premises to Tenant.
E. Schedule of Monthly Base Rents:
The following schedule of monthly Base Rents shall apply during the term of
the Lease:
Monthly Monthly
Period Base Rent Rent Credit
------ --------- -----------
From October 1, 1997 to May 31, 1998 $10,650.00 $5,325.00
From June 1, 1998 to September 30, 2002 $10,650.00 None
The Base Rent for the period from October 1, 1998 to October 31, 1998,
shall be prepaid by Tenant upon execution of this Lease. If the actual
Commencement Date is before or after the Estimated Commencement Date,
than all dates set forth above shall be correspondingly accelerated or
delayed, as the case may be. In the event of any default by Tenant under
this Lease which is not cured within the applicable cure period set forth
in Section 13.2, Tenant shall be obligated to pay to Landlord, without
any further notice from Landlord, as sum equal to all rent credits
previously credited to Tenant pursuant to the above schedule, and no
further rent credits shall be applicable for the balance of the Lease
term.
F. Base Years for Expenses: Real Estate Taxes--1997-1998: Operating and
Utility Costs--1997.
G. Tenant's "Percentage Share" of Real Estate Taxes, Operating and Utility
Costs: 4.35%.
H. Security Deposit: $10,650.00.
I. Permitted Use: Installation and operation of telecommunications switching
equipment and related office use.
J. Maximum Tenant Improvement Allowance: None. Tenant to take Premises "as
is" as described in Section 35.
K. Tenant's Parking Allotment: 2 parking spaces.
L. Landlord's Brokers: None.
M. Riders:
The following exhibits, riders and addenda are attached to and are part of
this Lease:
Exhibit A -- Floor Plan of Premises
Exhibit B -- Rules and Regulations
Exhibit C -- Waiver and Consent per Telecommunications Finance Group
Exhibit D -- Waiver and Consent per Foothill Capital Corporation
Backup Power Generator Rider
Parking Space Rider
Telecommunications Conduit Rider
Extension Option Rider
N. Guaranty: None.
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AGREEMENT
1. PREMISES. Landlord hereby leases the Premises to Tenant and
Tenant hereby hires and takes the Premises from Landlord. The Premises are
located at the address set forth in Section A(l) on page 1 and are more
particularly shown on Exhibit "A" attached hereto and incorporated herein by
this reference. The office building in which the Premises are located is
referred to herein as the "Building."
2. TERM.
2.1 The term of this Lease shall commence on the "Commencement
Date" indicated in Section D on Page 1 and shall extend for the period set
forth in Section C on Page 1. In the event that Landlord, for any reason,
cannot tender possession of the Premises to Tenant on or before the
"Estimated Commencement Date" indicated in Section D on Page 1, this Lease
shall not be void or voidable, nor shall Landlord be liable to Tenant in any
way as a result of such failure to tender possession. In the event that
Landlord cannot tender possession of the Premises to Tenant for any reason
other than the acts or omissions of Tenant, Tenant's obligation to pay rent
hereunder shall be deferred by a period of time equal to the delay in
Landlord's delivery of possession not caused by Tenant. If such inability to
tender possession of the Premises for reasons other than the acts or
omissions of Tenant continues for a period in excess of 90 days after the
Estimated Commencement Date, Tenant shall have the right, exercisable by
notice to Landlord, to terminate this Lease, but the suspension of rent
obligations and the right of termination pursuant to this Section 2.1 shall
be Tenant's sole remedies in the circumstances herein described.
2.2 In the event that Tenant is allowed to enter into possession
of the Premises prior to the Commencement Date, such possession shall be
deemed to be pursuant to, and shall be governed by, the terms, covenants and
conditions of this Lease, including without limitation the covenant to pay
rent, as though the Commencement Date occurred upon the date of taking of
possession by Tenant.
2.3 In the event that the Commencement Date falls on other than
the first day of a month, rent for any initial partial month of the term
hereof shall be appropriately prorated; and if the date of commencement of
Tenant's rent obligations is delayed, pursuant to Section 2.1, the end of the
term hereof shall be correspondingly delayed. At the request of either party
hereto, both parties shall execute a memorandum confirming the date of
commencement of Tenant's rent obligations.
3. RENT. Beginning on the Commencement Date (subject to
adjustment pursuant to Section 2.1 above), the base rent ("Base Rent") for
the Premises shall be in accordance with the Schedule of Monthly Base Rents
set forth in Section E on Page 2. Each installment of Base Rent shall be
payable in advance on the first day of each and every month throughout the
term of this Lease. Tenant agrees to pay all rent, without offset, demand or
deduction of any kind, to Landlord by mail to the address set forth in
Section A(3) on page 1 or in such manner, to such other person or at such
other place as Landlord may from time to time designate. Tenant agrees that
no payment made to Landlord by check or other instrument shall contain a
restrictive endorsement of any kind; and if any such instrument should
contain a restrictive endorsement in violation of the foregoing, that
endorsement shall have no legal effect whatever, notwithstanding that such
item is processed for payment.
4. RENT ESCALATION.
4.1 Tenant shall pay, as monthly rent hereunder, in addition to
the Base Rent, the sums provided in this Section 4. Tenant shall be advised
of any change, from time to time, in rent escalation payments required
hereunder by written notice from Landlord, which shall include information in
such detail as Landlord may reasonably determine to be necessary in support of
such change. Tenant shall have 30 days after the receipt of any such notice
to protest the change indicated therein, and Tenant's failure to make such
protest in a written notice to Landlord within such 30-day period shall be
conclusively deemed to be Tenant's agreement to such changes. Notwithstanding
any such protest all rent escalation payments falling due after service of
such notice shall be made in accordance with such notice until the protest
has been resolved, whereupon any necessary adjustment shall be made between
Landlord and Tenant. Any audit arising out of such a protest by Tenant shall
be done, at Tenant's expense, in accordance with generally accepted auditing
and management standards by a major public accounting firm selected by Tenant
and approved by Landlord in its reasonable discretion. Such audit shall be
performed at Landlord's offices in Los Angeles or at such other location in
the United States as Landlord may select from time to time for the
maintenance of its accounting records for the Building.
4.2 Following the first December 31 during the term of the Lease,
Tenant shall pay Landlord in a single lump sum upon billing therefor, Tenant's
Percentage Share (as defined in Section G on Page 2 of the Lease) of each of
the following amounts (collectively, "Excess Expenses"): (1) the amount (if
any) by which Real Estate Taxes for the then current tax fiscal year exceed
the Real Estate Taxes for the Base Year for Real Estate Taxes set forth in
Section F on Page 2; (2) the amount (if any) by which Operating Costs for the
just completed calendar year exceed the Operating Costs for the Base Year for
Operating Costs set forth in Section F on Page 2; and (3) the amount (if any)
by which Utility Costs for the just completed calendar year exceed the
Utility Costs for the Base Year for Utility Costs set forth in Section F on
Page 2. At the same time Tenant shall also pay to Landlord one-twelfth of
Tenant's Percentage Share of such amounts for each month that has
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commenced since December 31, as estimated payments towards Tenant's share
of the Excess Expenses for the following year. (If Landlord estimates in
good faith that the Excess Expenses for the following year will exceed
the Excess Expenses for the just completed calendar year, Landlord shall
notify Tenant in writing of such estimate, and Tenant's new monthly
payment shall be one-twelfth of Tenant's Percentage Share of Landlord's
estimate of the annual Excess Expenses. Landlord may revise such estimate
and Tenant's monthly payment not more than twice during any calendar
year.) Following each succeeding December 31, Landlord again shall
determine in the same fashion the increase or decrease (if any) in annual
Real Estate Taxes, Operating Costs, and Utility Costs over or under those
for the previous year. If there is an increase in one or more of the
three categories, Tenant shall pay to Landlord in a single lump sum upon
billing Tenant's Percentage Share of the increase. Tenant shall pay
Landlord at the same time one-twelfth of Tenant's Percentage Share of
such increase (or if Landlord gives a written estimate as described above
that Excess Expenses will increase in the new year, then one-twelfth of
Landlord's new estimate of annual Excess Expenses) for each month that
has then commenced in the new calendar year. If there is a decrease in
one or more of the three categories, Landlord shall refund to Tenant or,
at Landlord's option, credit against the next rent falling due under the
Lease the amount of the overpayment made by Tenant during the preceding
calendar year, provided that the amount of such refund or credit shall in
no event exceed the total payments previously made by Tenant for such
calendar year toward Tenant's Percentage Share of excess charges for the
category in question. Thereafter, with each month's Base Rent until the
next adjustment hereunder, Tenant shall pay one-twelfth of Tenant's
Percentage Share of each of the following amounts; (i) the excess (if
any) of annual Real Estate Taxes (based on the then-current fiscal year)
over the Base Year Real Estate Taxes; (ii) the excess (if any) of annual
Operating Costs (based on the preceding calendar year) over the Base Year
Operating Costs; and (iii) the excess (if any) of annual Utility Costs
(based on the preceding calendar year) over Base Year Utility Costs. The
Real Estate Taxes for any partial fiscal year at the end of the Lease
term and the Operating Costs and Utility Costs for any partial calendar
year at the end of the Lease term shall be appropriately prorated.
For purposes hereof, "Real Estate Taxes" shall include any form of
assessment, license fee, license tax, business license fee, commercial rental
tax, levy, penalty, charge, tax or similar imposition (other than net income,
inheritance or estate taxes), imposed by any authority having the direct or
indirect power to tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage, flood control,
public transit or other special district thereof, as against any legal or
equitable interest of Landlord in the Premises or in the real property of
which the Premises and the Building are a part, including, but not limited
to, the following:
(i) Any tax on Landlord's "right" to rent or "right" to
other income from the Premises or as against Landlord's business of leasing
the Premises;
(ii) Any assessment, tax, fee, levy or charge in
substitution, partially or totally, of any assessment, tax, fee, levy or
charge previously included within the definition of Real Estate Taxes, it
being acknowledged by Tenant and Landlord that Proposition 13 was adopted
by the voters of the State of California in the June, 1978 Election and
that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or
occupants. It is the intention of Tenant and Landlord that all such new
and increased assessments, taxes, fees, levies and charges be included
within the definition of "Real Property Taxes" for the purpose of this
Lease;
(iii) Any assessment, tax, fee, levy or charge allocable
to or measured by the area of the Premises or the rent payable hereunder,
including, without limitation, any gross income tax or excise tax levied by
the State, City or Federal government, or any political subdivision thereof,
with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises, or any portion thereof;
(iv) Any assessment, tax, fee, levy or charge upon this
transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises;
(v) Any assessment, tax, fee, levy or charge by any
governmental agency related to any transportation plan, fund or system
instituted within the geographic area of which the Building is a part; or
(vi) Reasonable legal and other professional fees,
costs and disbursements incurred in connection with proceedings to contest,
determine or reduce real property taxes.
The definition of "Real Estate Taxes," including any additional tax
the nature of which was previously included within the definition of "Real
Estate Taxes," shall include any increases in such taxes, levies, charges or
assessments occasioned by increases in tax rates or increases in assessed
valuations, whether occurring by sale or otherwise.
As used in this Lease, the term "Operating Costs" shall mean all
costs and expenses of management, operation, maintenance, overhaul,
improvement or repair of the Building, the common areas and the site, as
determined by standard accounting practices, including the following costs by
way of illustration but not limitation:
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(a) Any and all assessments imposed with respect to the
Building, common areas, and/or the site on which the Building is located,
pursuant to any covenants, conditions and restrictions affecting the site,
common areas or Building;
(b) Any costs, levies or assessments resulting from
statutes or regulations promulgated by any governmental authority in
connection with the use or occupancy of the Building or the Premises;
(c) Costs of all insurance obtained by Landlord;
(d) Wages, salaries and other labor costs (including
but not limited to social security taxes, unemployment taxes, other payroll
taxes and governmental charges and the costs, if any, of providing
disability, hospitalization, medical welfare, pension, retirement or other
employee benefits, whether or not imposed by law) of employees, independent
contractors and other persons engaged in the management, operation,
maintenance, overhaul, improvement or repair of the Building;
(e) Building management office and storage rental;
(f) Management and administrative fees (which Tenant
acknowledges are presently 6% of accrued gross revenues of the Building and
which may be adjusted from time to time);
(g) Supplies, materials, equipment and tools;
(h) Costs of, and appropriate reserves for, repair,
painting, resurfacing, and maintenance of the Building, the common areas, the
site and the parking facilities, and their respective fixtures and equipment
systems, including but not limited to the elevators, the structural portions
of the Building, and the plumbing, heating, ventilation, air-conditioning,
telephone cable riser, and electrical systems installed or furnished by
Landlord;
(i) Depreciation on a straight-line basis and rental of
personal property used in maintenance;
(j) Amortization on a straight-line basis over the
useful life (together with interest at the interest rate defined in
Subsection 33.9 of this Lease on the unamortized balance) of all costs of a
capital nature (including, without limitation, capital improvements, capital
replacements, capital repairs, capital equipment and capital tools);
(1) reasonably intended to produce a reduction in
Operating Costs, Utility Costs or energy consumption; or
(2) required under any governmental or
quasi-governmental law, rule, order, ordinance or regulation that was not
applicable to the Building at the time it was originally constructed; or
(3) for repair or replacement of any Building
equipment needed to operate the Building at the same quality levels as prior
to the replacement;
(k) Costs and expenses of gardening and landscaping;
(l) Maintenance of signs (other than signs of tenants of
the Building);
(m) Personal property taxes levied on or attributable to
personal property used in connection with the Building, the common areas, or
the site;
(n) Costs of all service contracts pertaining to the
Premises, the Building or the site;
(o) Reasonable accounting, audit, verification, legal and
other consulting fees;
(p) Costs and expenses of lighting, janitorial service,
cleaning, refuse removal, security and similar items, including appropriate
reserves;
(q) Any costs incurred with respect to a transportation
systems manager, rider share coordinator or any private transportation system
established for the benefit of tenants in the Building, whether or not
imposed by any governmental authority;
(r) If the Building has a helipad, its costs to the
extent not covered by user fees; and
(s) Fees imposed by any federal, state or local
government for fire and police protection, trash removal or other similar
services which do not constitute Real Estate Taxes.
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The following shall be excluded from Operating Costs: federal and
state income taxes imposed on Landlord's net income; any and all costs or
expenses to procure tenants for the Building, including but not limited to
brokerage commissions, legal fees, and costs of remodeling suites; costs of
asbestos removal work excluded from Operating Costs by Section 32.4 below;
mortgage or debt service; and depreciation, except that amortization of
improvements of the type specified in Subsection (j) above shall in no event
be considered "depreciation."
For purposes hereof, "Utility Costs" shall include all charges,
surcharges and other costs of all utilities paid for by Landlord in
connection with the Premises and/or Building, including without limitation
costs of heating, ventilation and air conditioning for the Premises and/or
Building, costs of furnishing gas, electricity and other fuels or power
sources to the Premises and/or Building, and costs of furnishing water and
sewer services to the Premises and/or Building.
The term "Building" as used in this Section 4.2 shall be deemed to
include not only the Building but also any parking facility owned, leased or
operated by Landlord in order to meet the parking requirements of the
Building.
If the average occupancy of the rentable area of the Building during
the Tenant's Base Year for Operating and Utility Costs as set forth in
Section F on page 2 or during any other calendar year of the Lease term is
less than 90% of the total rentable area of the Building, the Operating
Costs and Utility Costs shall be adjusted by Landlord for such Base Year or
other calendar year, prior to the pass-through of Operating Costs and Utility
Costs to Tenant pursuant to this Section 4.2, to reflect what they would have
been had 90% of the rentable area been occupied during that year. In making
such calculation, the Landlord's reasonable opinion of what portion, if any,
of each costs was affected by changes in occupancy shall be binding upon the
parties.
5. TAX ON TENANT'S PROPERTY; OTHER TAXES.
5.1 Tenant shall be liable for, and shall pay at least 10 days
before delinquency, and Tenant hereby indemnifies and holds Landlord harmless
from and against any liability in connection with, all taxes levied directly
or indirectly against any personal property, fixtures, machinery, equipment,
apparatus, systems and appurtenances placed by Tenant in or about, or
utilized by Tenant in, upon or in connection with, the Premises ("Equipment
Taxes"). If any Equipment Taxes are levied against Landlord or Landlord's
property or if the assessed value of Landlord's property is increased by the
inclusion therein of a value placed upon such personal property, fixtures,
machinery, equipment, apparatus, systems or appurtenances of Tenant, and if
Landlord, after written notice to Tenant, pays the Equipment Taxes or taxes
based upon such an increased assessment (which Landlord shall have the right
to do regardless of the validity of such levy, but only under proper protest
if requested by Tenant prior to such payment and if payment under protest is
permissible), Tenant shall pay to Landlord upon demand, as additional rent
hereunder, the taxes so levied against Landlord or the proportion of such
taxes resulting from such increase in the assessment; provided, however, that
in any such event Tenant shall have the right, in the name of Landlord and
with Landlord's full cooperation, but at no cost to Landlord, to bring suit
in any court of competent jurisdiction to recover the amount of any such tax
so paid under protest, and any amount so recovered shall belong to tenant.
5.2 If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which tenant
improvements conforming to Landlord's building standards in other space in
the Building are assessed, then the real property taxes and assessments
levied against Landlord or Landlord's property by reason of such excess
assessed valuation shall be deemed to be Equipment Taxes and shall be
governed by the provisions of Section 5.1. Any such amounts, and any similar
amounts attributable to excess improvements by other tenants of the Building
and recovered by Landlord from such other tenants under comparable lease
provisions, shall not be included in Real Estate Taxes for purposes of rent
escalation under Section 4 of this Lease.
5.3 Tenant shall pay, as additional rent hereunder, upon demand
and in such manner and at such times as Landlord shall direct from time to
time by written notice to Tenant, any excise, sales privilege or other tax,
assessment or other charge (other than income or franchise taxes) imposed,
assessed or levied by any governmental or quasi-governmental authority or
agency upon Landlord on account of this Lease, the rent or other payments
made by Tenant hereunder, any other benefit received by Landlord hereunder,
Landlord's business as a lessor hereunder, or otherwise in respect of or as
a result of the agreement or relationship of Landlord and Tenant hereunder.
6. SECURITY DEPOSIT. A deposit (the "Security Deposit") in the
amount set forth in Section H on page 2 shall be paid by Tenant upon
execution of this Lease and shall be held by Landlord without liability for
interest and as security for the performance by Tenant of Tenant's covenants
and obligations under this Lease, it being expressly understood that the
Security Deposit shall not be considered an advance payment of rent or a
measure of Landlord's damages in case of default by Tenant. Upon the
occurrence of any default under this Lease by Tenant, Landlord may, from time
to time, without prejudice to any other remedy, use the Security Deposit or
any portion thereof to the extent necessary to make good any arrearages of
rent or any other damage, injury, expense, or liability caused to Landlord by
such breach or default. Following any application of the Security Deposit,
Tenant shall pay to Landlord on demand an amount to restore the Security
Deposit to its original amount. In the event of bankruptcy or other debtor
relief proceedings by or against Tenant, the Security Deposit shall be deemed
to be applied first to the payment of rent and other charges due Landlord. In
the order that such rent
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or charges became due and owing, for all periods prior to filing of such
proceedings. Landlord shall not be required to keep the Security Deposit
separate from its general funds. Upon termination of this Lease any remaining
balance of the Security Deposit shall be returned by Landlord to Tenant's
tenancy.
7. LATE PAYMENTS. 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. Tenant
acknowledges that the late payment by Tenant to Landlord of any sums due
under this Lease will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such cost being extremely difficult and
impractical to fix. Such costs include, without limitation, processing and
accounting charges, and late charges that may be imposed on Landlord by the
terms of any note or other obligation secured by any encumbrance covering the
Premises or the Building of which the Premises are a part. Therefore, if any
monthly installment of rent is not received by Landlord by the date five (5)
calendar days after it is due, or if Tenant fails to pay any other sum of
money due hereunder, Tenant shall pay to Landlord, as additional rent, the
sum of ten percent (10%) of the overdue amount as a late charge. Landlord's
acceptance of any late charge, or interest pursuant to Section 33.9, shall
not be deemed to be liquidated damages, nor constitute a waiver of Tenant's
default with respect to the overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies available to Landlord under
this Lease or any law now or hereafter in effect. Further, in the event such
late charge is imposed by Landlord for 3 consecutive months for whatever
reason, Landlord shall have the option to require that, beginning with the
first payment of rent due following the imposition of the second consecutive
late charge, rent shall no longer be paid in monthly installments but shall
be payable 3 months in advance.
8. USE OF PREMISES. Tenant, and any permitted subtenant or
assignee, shall use the Premises only for the use described in Section I on
page 2. Any other use of the Premises is absolutely prohibited. Tenant shall
not use or occupy the Premises in violation of any recorded covenants,
conditions and restrictions affecting the land on which the Building is
located nor of any law, ordinance, rule and regulation. Tenant shall not do
or permit to be done anything which will invalidate or increase the cost of
any fire, extended coverage or any other insurance policy covering the
Building or property located therein and shall comply with all rules, orders
regulations and requirements of any applicable fire rating bureau or other
organization performing a similar function. Tenant shall promptly upon demand
reimburse Landlord as additional rent for any additional premium charged for
any insurance policy by reason of Tenant's failure to comply with the
provisions of this Section 8. Tenant shall not do or permit anything to be
done in or about the Premises which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Building, or injure or
annoy them, or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises. Tenant shall not commit or suffer
to be committed any waste in or upon the Premises and shall keep the
Premises in first class repair and appearance. Tenant shall not place a load
upon the Premises exceeding the average pounds of live load per square foot
of floor area specified for the Building by Landlord's architect, with any
partitions to be considered a part of the live load. Tenant acknowledges that
as of execution of this Lease, the maximum live load permitted by Landlord,
before improvements, is 70 pounds per usable square foot. Landlord reserves
the right to prescribe the weight and position of all safes, files and heavy
equipment which Tenant desires to place in the Premises so as to distribute
properly the weight thereof. Tenant's business machines and mechanical
equipment which cause vibration or noise that may be transmitted to the
Building structure or to any other space in the Building shall be so
installed, maintained and used by Tenant as to eliminate such vibration or
noise. Tenant shall be responsible for the cost of all structural engineering
required to determine structural load. In any event, unless specifically
authorized herein, Tenant shall not prepare or serve, or authorize the
preparation or service of, food or beverages in the Premises, except only the
occasional preparation of coffee, tea, hot chocolate and other such common
refreshments for Tenant and its employees. Tenant shall not conduct any
auction in or about the Premises or the Building without Landlord's prior
written consent.
9. BUILDING SERVICES.
9.1 Throughout the term of this Lease, subject to shortage and
accidents beyond Landlord's reasonable control, and subject to reimbursement
pursuant to Section 4.2, Landlord shall repair and maintain all structural
elements of the Building and common areas (including, without limitation, the
structural walls, doors, floors, ceilings, roof, elevators, stairwells,
lobby, heating system, air conditioning system, telephone cable riser for
Building-standard service from the Building's main terminal to the terminal
box on the same floor as the Premises [but excluding Tenant's telephone
equipment and the cable and wiring from such equipment to the terminal box],
plumbing and electrical wiring) and maintain the exterior of the Premises,
including grounds, walks, drives and loading area, if any. Tenant shall
reimburse Landlord upon demand, as additional rent hereunder, for the cost of
any repairs or extraordinary maintenance necessitated by acts of Tenant or
Tenant's employees, contractors, agents, licensees or invitees.
9.2 Provided that Tenant is not in default hereunder, subject to
shortages and accidents beyond Landlord's reasonable control, Landlord shall
furnish building standard heating and air conditioning service Monday through
Friday from 8:00 A.M. to 6:00 P.M., and Saturday from 8:00 A.M. to 1:00 P.M.,
except for holidays. No heating or air conditioning will be furnished by
Landlord on Sundays, holidays or during hours other than as set forth above,
except upon prior arrangement with Tenant and at an extra charge based on
Landlord's actual cost plus Landlord's administrative fees, as may be agreed
to between Landlord and Tenant. For purposes of this Section 9.2, "holidays"
shall mean and refer to the holidays of Christmas, New Year's Day, Martin
Luther King Day, President's Day, Memorial Day, the Fourth of July, Labor Day,
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Thanksgiving and the day after Thanksgiving, as those holidays are defined,
recognized or established by governmental authorities or agencies from time
to time and such other days the New York Stock Exchange is closed. Tenant
shall install, at its expense, such additional air conditioning equipment as
may be reasonably determined by Landlord to be necessary in order to maintain
building air conditioning standards resulting from Tenant's installation and
operation of computer equipment or other special equipment or facilities
placing a greater burden on the air conditioning system than would general
office use. Without limiting the foregoing. Tenant shall have the right to
install in the Premises at its expense its own self-contained 24-hour
heating, ventilating and air-conditioning unit, subject to compliance with
the other provisions of this Lease, including but not limited to obtaining
Landlord's prior written consent to the plans and specifications for the work
and electrical requirements of the unit. Tenant shall in no event be
permitted to exhaust such system out of the west, south or north sides of the
Building, but may only exhaust such system out of the east side of the
Building. Tenant shall pay all costs of electricity for such unit. The
electrical requirements for such unit, as well as all of Tenant's other
electrical requirements, shall be separately metered to Tenant at Tenant's
expense as described below.
During the initial 8-week period of the Lease term commencing with
the Commencement Date, Landlord shall furnish electric current to the
Premises in amounts reasonably sufficient for normal non-telecommunications
business use, including operation of building standard lighting and operation
of typewriters and standard fractional horsepower office machinery. Following
such Initial 8-week period, Landlord shall also furnish electric current
reasonably sufficient as determined by Landlord in its reasonable discretion,
for normal telecommunications operations and machinery, but in no event,
however, shall the total amount of electric current furnished to the Premises
exceed 200 amps at 120/208 volts, three-phase wiring. Further, the provision
of such electrical current shall be subject to the obligations of Tenant for
payment of the costs of such electricity as provided herein. Notwithstanding
the foregoing, Tenant agrees that, at all times during the term of this
Lease, Tenant's use of electric current shall never exceed the capacity of
the feeders to the Building or the risers or wiring installation in the
Building. Any transformer or other special equipment required to connect
Tenant's facilities to Landlord's electrical supply shall be provided and
installed at Tenant's expense. Landlord may, at its election, separately
meter at Tenant's expense the electrical usage of some or all of Tenant's
equipment, facilities or Premises. Tenant shall pay the charges for all such
separately metered electrical usage, together with Landlord's 10%
administrative fee, within 15 days after receipt of a billing therefor.
Except as provided above. Tenant shall not install or use or permit
the Installation or use upon or about the Premises of any computer or
electronic data processing or other equipment requiring in excess of 120
volts or requiring power in excess of 1800 watts, without the excess prior
written consent of Landlord. Such consent shall not be unreasonably withheld,
conditioned or delayed. Landlord shall not use its approval rights to
arbitrarily or discriminatorily prevent Tenant's installation of and use of
equipment customarily used in a telecommunications business, but Landlord may
impose reasonable conditions on such installation and use, regarding such
matters as the placement, venting, power sources, and structural requirements
for such equipment.
Tenant shall pay monthly upon billing as additional rent under this
Lease such sums as Landlord's building engineer may reasonably determine to
be necessary in order to reimburse Landlord for the additional cost of any
utilities which have not been separately metered to Tenant (including,
without limitation, electricity, gas and other fuels or power sources, and
water, and Landlord's reasonable costs of administration, which costs of
administration shall not exceed 10% of the other costs) attributable to any
requirements in excess of those for normal office use by reason of the
operation of computer or telecommunications equipment or other special
equipment or facilities, or attributable to Tenant's conducting business
beyond the business hours described in the first sentence of this Section 9.2.
Any utility charges billed directly to Tenant shall not be included
in the Building's "Utility Costs" for purposes of Section 4 above. Any extra
maintenance charges or service calls attributable to the actions of Tenant
(E.G., continual adjustments of the thermostats or the failure to keep window
coverings closed as necessary) shall be payable by Tenant to Landlord upon
demand, as additional rent hereunder.
9.3 Landlord shall furnish unheated water from mains for
drinking, lavatory and toilet purposes drawn through fixtures installed by
Landlord, or by Tenant with Landlord's express prior written consent, and
heated water for lavatory purposes from regular building supply in such
quantities as required in Landlord's judgment for the comfortable and normal
use of the Premises. Tenant shall pay Landlord for additional water which is
furnished for any other purpose. The amount that Tenant shall pay Landlord
for such additional water shall be the average price per gallon charged to
the Landlord for the Building by the entity providing water, increased by 10%
to cover Landlord's administrative expense.
9.4 Landlord shall furnish janitor service (including washing of
windows with reasonable frequency as determined by Landlord) in and about the
Premises, to the extent necessitated by normal office use of the Premises,
Monday through Friday, holidays excepted. Landlord shall have no obligation
to furnish janitor service for any portion of the Premises which is occupied
after 7:00 p.m., is locked or may be used (to the extent permitted under this
Lease) for the preparation, dispensing or consumption of food or beverages or
for any purpose other than general office use, and Tenant shall keep all such
portions of the Premises in a clean and orderly condition at Tenant's sole
cost and expense. In the event that Tenant shall fail to keep such portions
of the Premises in a clean and orderly condition, Landlord may do so and any
costs incurred by Landlord in connection therewith shall be payable by Tenant
to Landlord upon demand, as additional rent hereunder.
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Tenant shall also pay to Landlord, as additional rent hereunder, amounts
equal to any increase in cost of janitor service in and about the Premises if
such increase in costs is due to (a) use of the Premises by Tenant during
hours other than normal business hours, or (b) location in or about the
Premises of any fixtures, improvements, materials or finish items (including
without limitation wall coverings and floor coverings) other than those which
are of the standard type adopted by Landlord for the Building. Only those
persons who have been approved by Landlord may perform janitorial services.
9.5 Landlord shall furnish passenger and freight elevator
service in common with Landlord and other tenants Monday through Friday from
8:00 A.M. to 6:00 P.M. and Saturday from 8:00 A.M. to 1:00 P.M. Landlord
shall provide limited passenger elevator service daily at all times such
normal passenger service is not furnished.
9.6 Landlord does not warrant that any service will be free from
interruptions caused by repairs, renewals, improvements, changes of service,
alterations, strikes, lockouts, labor controversies, accidents, inability to
obtain fuel, steam, water or supplies or other cause. Landlord agrees to give
Tenant notice of any extended interruptions of which Landlord has prior
knowledge. No interruption of service shall be deemed an eviction or
disturbance of Tenant's use and possession of the Premises or any part
thereof, nor relieve Tenant from payment of rent or performance of Tenant's
other obligations under this Lease except as provided below in this Section
9.6. Landlord shall not be responsible for correcting any such interruption
in service which is not curable by Landlord on a commercially reasonable
basis, as determined by Landlord in its sole discretion. Subject to Section
11 below, and subject to Landlord's rights to recover certain costs under
other provisions of this Lease, if Landlord determines that such interruption
in service is curable on such a commercially reasonable basis, Landlord shall
make good faith efforts to so correct the interruption within a reasonable
time after Landlord receives written notice from Tenant of the interruption
in service. In doing such work Landlord shall use commercially reasonable,
good faith efforts to interfere as little as reasonably practicable with the
conduct of Tenant's business in the Premises, without, however, being
obligated to incur liability for overtime or other premium payment to its
agents, employees or contractors in connection therewith. Landlord shall in
no event be liable for any injury to or interference with Tenant's business
or any punitive, incidental or consequential damages, whether foreseeable or
not, arising from the making of or failure to make any repairs, alterations
or improvements, or provision of or failure to provide or restore any service
in or to any portion of the Building, Including the Premises, or the
fixtures, appurtenances and equipment therein. However, if Tenant's
beneficial use of all or a substantial portion of the Premises is prevented
for a period in excess of 5 consecutive business days (excluding Saturdays,
Sundays, and holidays) due to interruptions in service, the Base Rent shall
be equitably abated commencing with the sixth business day and continuing
until such use is no longer prevented. Moreover, if Tenant's beneficial use
of all or substantial portion of the Premises is prevented by such an
interruption in services, Tenant shall have the right to terminate the Lease
in the manner and subject to the time limitations set forth in more detail in
Section 11.1 below. Such abatement and such right of termination, to the
extent provided above, shall be Tenant's sole remedies. Except as provided
above, Tenant shall not be entitled to any abatement or reduction of rent or
other remedy by reason of Landlord's failure to furnish any of the services
or Building systems called for by this Lease whether such failure is caused
by accident, breakage, repairs, strikes, lockouts or other labor disturbances
or labor disputes of any character, or any other cause. As a material
inducement to Landlord's entry into this Lease, Tenant waives and releases
any rights it may have to make repairs at Landlord's expense under Section
1941 and 1942 of the California Civil Code.
10. CONDITION OF PREMISES. By occupying the Premises, Tenant
shall be deemed to accept the same and acknowledge that they comply fully
with Landlord's covenants and obligations hereunder, subject to completion of
any items which it is Landlord's responsibility hereunder to furnish and
which are listed by Landlord and Tenant upon Inspection of the Premises prior
to the Commencement Date. Tenant acknowledges that neither Landlord nor any
agent, employee or representative of Landlord has made any representation or
warranty with respect to any matters, including but not limited to any matter
regarding the Building or Premises, the applicable zoning or the effect of
other applicable laws, or the suitability or fitness of the Building or
Premises for the conduct of Tenant's business or any other purpose. Tenant
is relying solely on its own investigations with respect to all such matters.
During the term of this Lease, Tenant shall maintain the Premises in as good
condition as when Tenant took possession, ordinary wear and tear and repairs
which are specifically made the responsibility of Landlord hereunder
excepted, and shall repair all damage or inquiry to the Building or to
fixtures, appurtenances and equipment of the Building caused by Tenant's
installation or removal of its property or resulting from the negligence or
tortious conduct of Tenant, its employees, contractors, agents, licensees and
invitees. In the event of failure by Tenant to perform its covenants of
maintenance and repair hereunder, Landlord may perform such maintenance and
repair, and any amounts expended by Landlord in connection therewith shall be
payable by Tenant to Landlord upon demand, as additional rent hereunder.
11. DAMAGE TO PREMISES OR BUILDING.
11.1 In the event that the Building should be totally destroyed
by fire or other casualty, this Lease shall terminate as of the date of such
casualty. If the Building is damaged but not totally destroyed by the
casualty or if there is an interruption in services or utilities provided by
Landlord pursuant to Section 9.6 of this Lease, and if such damage or
interruption in services or utilities prevents Tenant's beneficial use of all
or a substantial portion of the Premises, then Landlord shall notify Tenant
in writing, within 45 days after the date Tenant's beneficial use is so
prevented, of whether Landlord intends to restore the Building or the
services or utilities in question and of how long, in Landlord's opinion, the
restoration will take to complete. In the event that the repairs and
restoration can, in Landlord's reasonable opinion, be
9
completed within 270 days after the date Tenant's beneficial use is so
prevented, and Landlord will receive insurance proceeds sufficient to cover
the costs of such repairs and restoration, Landlord shall restore the
Building or the services or utilities in question. In the event the Premises
or a substantial portion of the Building or the delivery system for Building
services or utilities should be so damaged or destroyed that restoration or
repairs cannot, in Landlord's opinion, be completed within 270 days after the
date Tenant's beneficial use is so prevented, or Landlord will not receive
insurance proceeds sufficient to cover the costs of such repairs and
restoration, Landlord may at its option terminate this Lease upon notice to
Tenant, or Landlord may elect to proceed to restore the Building. Similarly,
in the event Landlord's notice notifies Tenant that the restoration in
Landlord's opinion will not be completed within 270 days after the date
Tenant's beneficial use is so prevented. Tenant shall have twenty (20) days
from the date of Tenant's receipt of Landlord's notice to elect to terminate
this Lease by delivering written notice of such termination to Landlord. If
either Landlord or Tenant terminates this Lease as provided above, such
termination shall be effective immediately upon the other party's receipt of
the notice of termination, and Tenant shall be entitled to an abatement of
the Base Rent as provided below as of the date 5 business days after Tenant's
beneficial use of the Premises was first prevented. In the event that
Landlord is obligated or elects to restore the Building or the services or
utilities in question, Landlord shall commence such work reasonably promptly
and shall proceed with reasonable diligence to restore the Building or the
services or utilities to substantially the condition in which they were
immediately prior to the casualty, except that Landlord shall not be required
to rebuild, repair or replace any part of the partitions, fixtures,
alterations, decorations or other improvements which may have been
constructed by or specifically for Tenant, or by or for other tenants within
the Building.
If neither Landlord nor Tenant terminates this Lease due to the
casualty, the Lease shall remain in full force and effect. However, if Tenant
is dispossessed by reason of such casualty from all or a substantial portion
of the Premises for more than 5 consecutive business days, Tenant shall be
entitled to a ratable abatement of the Base Rent during the time and to the
extent the Premises are unfit for occupancy, commencing with the sixth
business day. After Landlord completes Landlord's restoration work on the
Premises (i.e., any necessary repair work on the Building shell and the
Building systems originally provided by Landlord in the core of the
Building), Tenant shall diligently complete Tenant's repairs to its tenant
improvements. If Tenant is unable to conduct its business in all or a
substantial portion of the Premises during Tenant's repairs, then Tenant's
ratable rental abatement shall continue during such repairs, but in no event
for more than 90 days after Landlord completes Landlord's restoration
opinion, that is feasible and appropriate. Tenant shall have the right to
terminate this Lease upon notice served upon Landlord prior to actual
completion of Landlord's restoration work on the Premises if such restoration
work is not substantially completed within 365 days after the date Tenant's
beneficial use is first prevented (provided, however, that if Landlord's
original notice to Tenant estimated that the restoration work would take more
than 270 days after the date Tenant's beneficial use is so prevented, and
Tenant did not elect to terminate the Lease on that basis, then Tenant shall
not be entitled to terminate the Lease pursuant to this sentence unless
Landlord fails to substantially complete such restoration work at least
within 95 days after the estimated restoration period given in Landlord's
original notice). For purpose of this Section, "Substantial completion" shall
not require full completion of all "punch list" type items which do not
materially affect Tenant's use of the Premises. Rental abatement or lease
termination, to the extent provided above, shall be Tenant's sole remedies.
Notwithstanding the foregoing to the contrary, if the damage is due to the
negligence or willful misconduct of Tenant or any of Tenant's agents,
employees or invitees, there shall be no abatement of rent. Except for
abatement of rent as provided above, Tenant shall not be entitled to any
compensation or damages for loss of, or interference with, Tenant's business
or use of access of all or any part of the Premises resulting from any such
damage, repair, reconstruction or restoration.
11.2 In the event of any damage or destruction of all or any
part of the Premises or any interruption in utilities or services, Tenant
shall immediately notify Landlord thereof.
11.3 In the event any holder of a mortgage or deed of trust on
the Building should require that the insurance proceeds payable upon damage
or destruction to the Building by fire other casualty be used to retire the
debt secured by such mortgage or deed of trust, or in the event any lessor
under any underlying or ground lease should require that such proceeds be
paid to such lessor, Landlord shall in no event have any obligation to
rebuild, and at Landlord's election this Lease shall terminate.
11.4 With the exception of insurance required to be carried by
Tenant under Section 28 of this Lease, any insurance which may be carried by
Landlord or Tenant against loss or damage to the Building or the Premises
shall be for the sole benefit of the party carrying such insurance and under
its sole control. Landlord shall not be required to carry insurance of any
kind on Tenant's property and, except by reason of the breach by Landlord of
any of its obligations hereunder, shall not be obligated to repair any damage
thereto or to replace the same.
11.5 In addition to its termination rights in Subsection 11.1
above, Landlord shall have the right to terminate this Lease if any damage to
the Building or Premises occurs during the last 12 months of the Term of this
Lease and Landlord estimates that the repair, reconstruction of such damage
cannot be completed within the earlier of (a) the scheduled expiration date
of the Lease Term, or (b) 60 days after the date of such casualty.
10
11.6 Tenant, as a material inducement to Landlord's entering into
this Lease, irrevocably waives and releases its rights under the provisions
of Sections 1932(2) and 1933(4) of the California Civil Code (and any successor
statutes permitting Tenant to terminate this Lease as a result of any damage
or destruction), it being the intention of the parties hereto that the
express terms of this Lease shall control under any circumstances in which
those provisions might otherwise apply.
12. EMINENT DOMAIN.
12.1 In the event that the whole of the Premises, or so much
thereof as to render the balance unusable to Tenant for the purposes leased
hereunder, as reasonably determined by Landlord, shall be lawfully condemned
or taken in any manner for any public or quasi-public use, or conveyed by
Landlord in lieu thereof (a "Taking"), this Lease and the term hereby granted
shall forthwith cease and terminate on the date of the taking of possession
by the condemning authority (the "Date of Taking").
12.2 In the event of a Taking of a portion of the Premises which
does not result in the termination of this Lease pursuant to Section 12.1,
above, the Base Rent shall be abated in proportion to the part of the
Premises so taken and thereby rendered unusable to Tenant for the purposes
leased hereunder, as reasonably determined by Landlord.
12.3 In the event that there is a Taking of a portion of the
Building other than the Premises, and if, in the opinion of Landlord, the
Taking is so substantial as to render the remainder of the Building
uneconomic to maintain despite reasonable reconstruction or remodeling, or if
it would be necessary to alter the Building or Premises materially, Landlord
may terminate this Lease by notifying Tenant of such termination within 60 days
following the Date of Taking, and this Lease shall end on the date specified
in the notice of termination, which shall not be less than 60 days after the
giving of such notice.
12.4 No temporary Taking of the Building or Premises and/or of
Tenant's rights therein or under this Lease shall terminate this Lease or
give Tenant any right to abatement of rent hereunder. Tenant shall be
entitled to receive such portion of any award as is specifically made for
such a temporary use with respect to the period of the Taking which is within
the term of this Lease, provided that the Taking renders the Premises
unusable to Tenant for the purposes leased hereunder, as reasonably
determined by Landlord. If such Taking shall remain in force at the
expiration or earlier termination of this Lease, then Tenant shall pay to
Landlord a sum equal to the reasonable costs of performing Tenant's
obligations under Section 15 with respect to Tenant's surrender of the
Premises and, upon such payment, shall be excused from such obligations. For
purposes of this Section 12.4, a temporary Taking shall be defined as a
Taking for a period of 270 days or less.
12.5 Except for the award in the event of a temporary Taking as
contemplated in Section 12.4, above, Tenant hereby releases and shall have no
interest in, or right to participate with respect to the determination of,
any compensation for any Taking, except only that Tenant shall be entitled
to the portion of any award specifically designated by the condemning
authority to be for any personal property of Tenant included in any such
Taking or for any relocation expenses or business interruption loss incurred
by Tenant.
13. DEFAULT.
13.1 The following events shall be deemed to be events of default
by Tenant under this Lease, if not cured as provided below in Section 13.2:
(a) If Tenant shall fail to pay any installment of rent or
any other sum required to be paid by Tenant under this Lease as due.
(b) If Tenant shall fail to comply with any term, provision
or covenant of this Lease, other than provisions pertaining to the payment of
money.
(c) If Tenant shall make an assignment for the benefit of
creditors.
(d) If Tenant shall file a petition under any section or
chapter of the federal Bankruptcy Code, as amended from time to time, or
under any similar law or statute of the United States or any State thereof
pertaining to bankruptcy, insolvency or debtor relief, or Tenant shall have a
petition or other proceedings filed against Tenant under any such law or
chapter thereof and such petition or proceeding shall not be vacated or set
aside within 60 days after such filing.
(e) If a receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant and such receivership shall not be
terminated and possession of such assets restored to Tenant within 30 days
after such appointment.
(f) If Tenant shall desert or vacate any substantial portion
of the Premises and the same shall remain unoccupied for more than 14 days
thereafter.
(g) If Tenant shall assign this Lease or sublet the Premises
in violation of the terms hereof.
11
13.2 Any shorter period for cure provided by law notwithstanding,
and in lieu thereof, including without limitation California Code of Civil
Procedure Section 1161, Tenant may cure any monetary default under Subsection
13.1(a), above, at any time within 5 days after written notice of default is
received by Tenant from Landlord; and (except as specifically provided
otherwise in Section 24) Tenant may cure any non-monetary default within 15
days after written notice of default is received by Tenant from Landlord,
provided that if such non-monetary default is curable but is of such a nature
that the cure cannot be completed within 15 days, Tenant shall be allowed to
cure the default if Tenant promptly commences the cure upon receipt of the
notice and diligently prosecutes the same to completion, which completion
shall occur not later than 60 days from the date of such notice from Landlord.
14. REMEDIES UPON DEFAULT.
14.1 Upon the occurrence of any event of default by Tenant,
Landlord shall have, in addition to any other remedies available to Landlord
at law or in equity, the option to pursue any one or more of the following
remedies (each and all of which shall be cumulative and non-exclusive)
without any notice or demand whatsoever.
(a) Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying
the Premises or any part thereof, without being liable for prosecution or any
claim or damages therefor; and Landlord may recover from Tenant the following:
(1) The worth at the time of award of any unpaid rent
which has been earned at the time of such termination; plus
(2) 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
(3) The worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(4) 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
attorneys' fees, removal and storage (or disposal) of Tenant's personal
property, unreimbursed leasehold improvement costs (e.g., the amounts
Landlord has expended for leasehold improvements which have not been
recovered as of the termination of the Lease when amortized on a
straight-line basis over the originally scheduled lease term), 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
(5) 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 Subsection 14.1(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. Any such sums
which are based on percentages of income, increased costs or other historical
data shall be reasonable estimates or projections computed by Landlord on the
basis of the amounts thereof accruing during the 24-month period immediately
prior to default, except that if it becomes necessary to compute such sums
before a 24-month period has expired, then the computation shall be made on
the basis of the amounts accruing during such shorter period. As used in
Subsections 14.1(a)(1) and (2), above, the "worth at the time of award" shall
be computed by allowing interest from the date the sums became due at the
lesser of (i) the Bank of America prime rate on the due date plus 6%, or (ii)
the maximum rate permitted by law. As used in Subsection 14.1(a)(3), 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 1%.
(b) In the event of any such default by Tenant, in addition
to any other remedies available to Landlord under this Lease, at law or in
equity, Landlord shall also have the right, with or without terminating this
Lease, to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed, stored and/or disposed of pursuant to
any procedures permitted by applicable law, including but not limited to
those described in Section 15.3. No re-entry or taking possession of the
Premises by Landlord pursuant to this Subsection 14.1(b), and no acceptance
of surrender of the Premises or other action on Landlord's part, shall be
construed as an election to terminate this Lease unless a written notice of
such intention be given to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction.
12
(c) In the event of any such default by Tenant, in addition
to any other remedies available to Landlord under this Lease, at law or in
equity, Landlord shall have the right to continue this Lease in full force
and effect, whether or not Tenant shall have abandoned the Premises. The
foregoing remedy shall also be available to Landlord pursuant to California
Civil Code Section 1951.4 and any successor statute in the event Tenant has
abandoned the Premises. In the event Landlord elects to continue this Lease
in full force and effect pursuant to this Subsection 14.1(c), than Landlord
shall be entitled to enforce all of its rights and remedies under this Lease,
including the right to recover rent as it becomes due. Landlord's election
not to terminate this Lease pursuant to this Subsection 14.1(c) or pursuant
to any other provision of this Lease, at law or in equity, shall not preclude
Landlord from subsequently electing to terminate this Lease or pursuing any
of its other remedies.
(d) Whether or not Landlord elects to terminate this Lease
on account of any default by Tenant, Landlord shall have the right to
terminate any and all subleases, licenses, concessions or other consensual
arrangements for possession entered into by Tenant and affecting the Premises
or may, in Landlord's sole discretion, succeed to Tenant's interest in such
subleases, licenses, concessions or arrangements. If Landlord so elects to
succeed to Tenant's interest, Tenant shall, as of the date of notice by
Landlord of such election, have no further right to or interest in the rent
or other consideration receivable thereunder.
14.2 Following the occurrence of an event of default by Tenant,
Landlord shall have the right to require that any or all subsequent amounts
paid by Tenant to Landlord hereunder, whether in cure of the default in
question or otherwise, be paid in the form of cash, money order, cashier's or
certified check drawn on an institution acceptable to Landlord, or by other
means approved by Landlord, notwithstanding any prior practice of accepting
payments in any different form.
14.3 All rights, options and remedies of Landlord contained in
this Section 14 and elsewhere in this Lease shall be construed and held to be
cumulative, and no one of them shall be exclusive of the other, and Landlord
shall have the right to pursue any one or more of such remedies or any other
remedy or relief which may be provided by law or in equity, whether or not
stated in this Lease. Nothing in this Section 14 shall be deemed to limit or
otherwise affect Tenant's indemnification of Landlord pursuant to any
provision of this Lease.
14.4 Landlord shall not be deemed in default in the
performance of any obligation required to be performed by Landlord under
this Lease unless Landlord has failed to perform such obligation within
30 days after the receipt of written notice from Tenant specifying in
detail Landlord's failure to perform; provided however, that if the
nature of Landlord's obligation is such that more than 30 days are
required for its performance, then Landlord shall not be deemed in
default if it commences such performance within such 30-day period and
thereafter diligently pursues the same to completion. Upon any such
uncured default by Landlord, Tenant shall be entitled, as Tenant's sole
and exclusive remedy, to recover from Landlord Tenant's actual damages
(but not lost profits or any punitive, incidental or consequential
damages) shown by Tenant to have been directly caused thereby; provided,
however: (a) Tenant shall have no right to offset or abate rent in the
event of any default by Landlord under this Lease, except to the extent
offset rights are specifically provided to Tenant in this Lease; (b)
Tenant shall in no event be entitled to terminate this Lease by reason of
Landlord's default; and (c) Tenant's rights and remedies hereunder shall
be subject to any specific limitations set forth in other provisions of
this Lease.
14.5 No waiver by Landlord or Tenant of any violation or breach of
any of the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other or later violation or breach of
the same or any other of the terms, provisions, and covenants herein
contained. Forbearance by Landlord in enforcement of one or more of the
remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default. The acceptance of any rent
hereunder by Landlord following the occurrence of any default, whether or not
known to Landlord, shall not be deemed a waiver of any such default, except
only a default in the payment of the rent so accepted, subject to the
provisions of Section 33.1.
15. SURRENDER OF PREMISES; REMOVAL OF PROPERTY.
15.1 No act or thing done by Landlord or any agent or employee of
Landlord during the term hereof shall be deemed to constitute an acceptance
by Landlord of a surrender of the Premises unless such intent is specifically
acknowledged in a writing signed by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Landlord, and
notwithstanding such delivery Tenant shall be entitled to the return of such
keys at any reasonable time upon request until this Lease shall have been
properly terminated. The voluntary or other surrender of this Lease by
Tenant, whether accepted by Landlord or not, or a mutual termination hereof,
shall not work a merger, and at the option of Landlord shall operate as an
assignment to Landlord of all subleases or subtenancies affecting the
Premises.
15.2 Upon the expiration of the term of this Lease, or upon any
earlier termination of this Lease, Tenant shall subject to the provisions of
this Section 15, quit and surrender possession of the Premises to Landlord
in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Landlord hereunder
excepted. Upon such expiration or termination, Tenant shall, without expense
to Landlord, remove or cause to be removed from the Premises all debris and
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rubbish, and such items of furniture, equipment, free-standing cabinet work,
movable partitions and other articles of personal property owned by Tenant or
installed or placed by Tenant at its expense in the Premises, and such
similar articles of any other persons claiming under Tenant, as Landlord may,
in its sole discretion, require to be removed, and Tenant shall repair at its
own expense all damage to the Premises and Building resulting from such
removal.
15.3 Whenever Landlord shall re-enter the Premises as provided in
this Lease, any personal property of Tenant not removed by Tenant upon the
expiration of the term of this Lease, or within 48 hours after a termination
by reason of Tenant's default as provided in this Lease, shall be deemed
abandoned by Tenant and may be disposed of by Landlord (without liability to
Tenant) in accordance with Sections 1980 through 1991 of the California Civil
Code and Section 1174 of the California Code of Civil Procedure, or in
accordance with any laws or judicial decisions which may supplement or
supplant those provisions from time to time, or in accordance with any other
legally permissible procedure, whether by public or private sale or
otherwise. Landlord shall be entitled to apply any proceeds of the sale of
such items to any sums due to Landlord by Tenant and to Landlord's costs of
removal, storage and sale of such items. Alternatively, Landlord shall be
entitled to treat Tenant's failure to remove such items from the Premises as
either a permitted or unpermitted holdover pursuant to Section 19 of this
Lease.
15.4 All fixtures, alterations, additions, repairs, improvements
and/or appurtenances attached to or built into or on or about the Premises
prior to or during the term hereof, whether by Landlord at its expense or at
the expense of Tenant, or by Tenant at its expense, or by previous occupants
of the Premises, shall be and remain part of the Premises and shall not be
removed by Tenant at the end of the term of this Lease. Such fixtures,
alterations, additions, repairs, improvements and/or appurtenances shall
include, without limitation, floor coverings, drapes, paneling, molding,
doors, kitchen and dishwashing fixtures and equipment, plumbing systems,
electrical systems, lighting systems, silencing equipment, 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 (but excluding Tenant's telecommunications switch and other
telecommunications trade fixtures and equipment, which Tenant agrees to
remove upon the expiration or termination of this Lease). Notwithstanding the
foregoing, Landlord may, in its sole discretion, require Tenant, at Tenant's
sole cost and expense, to remove any fixtures, alterations, additions,
repairs, improvements and/or appurtenances attached or built into on or about
the Premises. Tenant shall repair any damage to the Building and Premises
occasioned by the installation, construction, operation and/or removal of any
fixtures, trade fixtures, equipment, alterations, additions, repairs,
improvements and/or appurtenances pursuant to this section. If Tenant shall
fail to complete such removal and repair such damage, Landlord may do so and
may charge the reasonable cost thereof to Tenant.
15.5 Tenant hereby waives all claims for damages or other
liability in connection with Landlord's re-entering and taking possession of
the Premises or removing, retaining, storing or selling the property of
Tenant as herein provided, and Tenant hereby indemnifies and holds Landlord
harmless from any such damages or other liability, and no such re-entry shall
be considered or construed to be a forcible entry.
16. COSTS OF SUIT; ATTORNEYS' FEES; WAIVER OF JURY TRIAL.
16.1 If Tenant or Landlord shall bring any action for any relief,
declaratory or otherwise, against the other arising out of or under 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 its costs of
suit, including, without limitation, a reasonable sum for attorneys' and
other professional fees relating to such suit, and such fees shall be deemed
to have accrued on the commencement of such action and shall be paid whether
or not such action is contested or prosecuted to judgment.
16.2 In the event that Landlord shall, without fault on Landlord's
part, be made 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 of any such other person, Tenant
hereby indemnifies and holds Landlord harmless from and against all costs and
expenses, including reasonable attorneys' fees, incurred by Landlord in or in
connection with such litigation.
16.3 In order to limit the cost of resolving any disputes between
the parties, and as a material inducement to each party to enter into this
Lease, each party hereby waives the right to a jury trial with respect to any
litigation between the parties arising out of this Lease, Tenant's occupancy
of the Premises, or Landlord's ownership, operation or management of the
Building, irrespective of any rights to a jury trial which either party
otherwise then would have under applicable statutes, constitutions, judicial
decisions or other laws.
17. ASSIGNMENT AND SUBLETTING.
17.1 Except as hereinafter provided, Tenant shall not sublet all
or any part of the Premises, nor assign this Lease, nor enter any license,
"co-location agreement" or other agreement permitting a third party (other
than Tenant's employees and occasional guests) to use or occupy any portion
of the Premises, without Landlord's express prior written consent, which
consent shall not unreasonably be withheld. (For purposes of the balance of
this Section 17.1 and Sections 17.2 through 17.5, the term "sublease" shall
be deemed to include licenses, co-location agreements, and other agreements
for use or
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occupancy of the Premises as described in the preceding sentence. The terms
"subtenant" and "sublet" shall be construed accordingly.)
In order to assist Landlord in evaluating any proposed assignment or
sublease, Tenant agrees to provide Landlord with the proposed subtenant or
assignee's current financial statement and financial statements for the
preceding 2 years and such other information concerning the business
background and financial condition of the proposed subtenant or assignee and
of Tenant as Landlord may reasonably request.
Landlord and Tenant hereby agree that Landlord's disapproval of any
proposed sublease or assignment hereunder shall be deemed reasonable if based
upon any reasonable factor, including, without limitation, any or all of
the following factors:
(a) The proposed transfer would result in more than two
subleases of portions of the Premises being in effect at any time during the
term;
(b) The rent payable by the proposed transferee would
be less than the fair market rental value for the space as determined
pursuant to the last paragraph of this Section 17.1 (except as otherwise
provided in Section 17.2);
(c) The proposed transferee is an existing tenant or
occupant of the Building or has negotiated with Landlord within the last
twelve months for space in the Building or is another transferee prohibited
by the next to last paragraph of this Section 17.1;
(d) The proposed transferee is a governmental entity;
(e) The transaction calls for new demising walls to be
built, and the portion of the Premises proposed to be sublet or assigned is
irregular in shape and/or has inadequate means of ingress and egress;
(f) The use of the Premises by the proposed transferee
(i) is not permitted by the use provisions of this Lease, or (ii) might, in
Landlord's reasonable opinion, violate any right for an exclusive use granted
by Landlord to another Tenant in the Building;
(g) The transfer would likely result, in Landlord's
reasonable opinion, in a significant increase in the use of the parking areas
or common areas of the Building due to the transferee's employees or
visitors, and/or significant increase in the demand for utilities and
services to be provided by Landlord to the Premises;
(h) The assignee or subtenant does not, in Landlord's
reasonable opinion, have the financial capability to fulfill the obligations
imposed by the transfer, or in the case of an assignment, the assignee does
not, in Landlord's reasonable opinion, have income and net worth at least
equal to that of Tenant;
(i) The transferee is not, in the Landlord's reasonable
opinion, of reputable or good character or consistent with Landlord's desired
tenant mix;
(j) The transferee is a real estate developer or
landlord or is acting directly or indirectly on behalf of a real estate
developer or landlord;
(k) The proposed transferee may, in Landlord's
reasonable opinion, increase the chances of significant hazardous waste
contamination within the Premises of the Building; or
(l) In the reasonable judgment of the Landlord, the
purpose for which the transferee intends to use the Premises is not in
keeping with the standards of the Landlord for the Building or is in
violation of the terms of any other lease in the Building.
Notwithstanding the foregoing, Tenant may, subject to the rest of
the terms hereof, sublet all of the Premises or assign this Lease to any
entity controlling, controlled by or under common control with Tenant,
(including assignment or subletting to any corporation resulting from a
merger or consolidation with Tenant, or to any person or entity which
acquires all the assets of Tenant's business as a going concern) provided
that, with regard to each such assignment or subletting: (A) Landlord
receives the financial statements prescribed above and such other financial
and background information as Landlord may request regarding the assignee or
subtenant at least 20 days prior to such proposed assignment or sublease; (B)
the Landlord determines, in its reasonable discretion, that the income and
net worth of the assignee or subtenant comply with the standards prescribed
in Item (h) above; (C) the use of the Premises is not altered; (D) the
Landlord determines, in its reasonable discretion, that the transaction is
not being entered into as a subterfuge to avoid the restrictions on
assignment and subletting in the Lease; and (E) the subtenant or assignee
expressly assumes the obligations of Tenant hereunder as prescribed below in
this Section 17.1.
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Neither this Lease nor the term hereby demised shall be mortgaged by
Tenant, nor shall Tenant mortgage, assign, pledge or otherwise transfer the
interest of Tenant in and to any sublease or the rentals payable thereunder
or in the Security Deposit.
Any sublease, assignment, mortgage, pledge, encumbrance, or transfer
made in violation of this Section 17.1 shall be void and at Landlord's
election shall terminate this Lease.
Each subtenant, assignee or transferee of Tenant, other than
Landlord, shall assume all obligations of Tenant under this Lease and shall
be and remain liable jointly and severally with Tenant for the payment of the
rent, and for the due performance of all the terms, covenants, conditions and
agreements herein contained on Tenant's part to be performed for the term of
this Lease (provided that in the case of a sublease, the subtenant's
obligations shall be limited to those obligations relating to the subleased
space and the common areas during the sublease term). No sublease or
assignment shall be deemed approved by Landlord unless such subtenant or
assignee and Tenant shall deliver to Landlord a counterpart of such sublease
or assignment and an instrument in a form acceptable to Landlord, which
contains a covenant of assumption by the subtenant or assignee satisfactory
in substance and form to Landlord, consistent with the requirements of this
Section 17.1, but the failure or refusal of the subtenant or assignee to
execute such instrument of assumption shall not release or discharge the
subtenant or assignee from its liability as set forth above.
No subtenant or assignee not complying with the foregoing
requirements shall have any interest in the Security Deposit. Any assignee
that does comply with the foregoing requirements shall automatically succeed
to Tenant's position with respect to the Security Deposit, and Landlord shall
have the right to refund all or any portion of the Security Deposit to the
assignee at any time or under any circumstances with no liability to the
assignor.
Landlord may require that the assignee or subtenant remit directly
to Landlord on a monthly basis, all monies due to Tenant by said assignee or
subtenant. In such event Landlord shall apply the sums received to the
obligations of Tenant and its successors under this Lease.
In the event of default by any assignee or subtenant or any
successor of Tenant in the performance of any of the terms hereof, Landlord
may proceed directly against Tenant without the necessity of exhausting
remedies against such assignee, subtenant or successor.
Landlord may consent to subsequent assignments of the Lease or
sublettings or amendments or modifications to the Lease with the assignee or
other successor of Tenant, and without obtaining Tenant's consent thereto,
and any such actions shall not relieve Tenant of liability under this Lease.
Consent by Landlord to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting.
If Tenant is a corporation which, under California law, is not
deemed a publicly-held corporation, or is an unincorporated association or
partnership, the transfer, assignment or hypothecation of any stock or
interest controlling such corporation, association or partnership shall be
deemed an assignment within the meaning and provisions of this Section 17.
For purposes hereof, "control" shall be deemed to refer to any amount, in the
aggregate, exceeding 50% of the voting power of such corporation, association
or partnership. Notwithstanding the foregoing, the immediately preceding
sentence shall not apply to any transfer of stock of Tenant if Tenant is a
publicly-held corporation and such stock is transferred publicly over a
recognized security exchange or over-the-counter market.
Subject to Section 17.2, Tenant agrees that all advertising by
Tenant to market the space in the Premises to be sublet or assigned shall
require Landlord's prior written approval, which shall not be unreasonably
withheld. Subject to Section 17.2, Tenant further agrees that it shall not,
without Landlord's prior written consent, which may be granted or withheld in
Landlord's sole discretion, market any space in the Premises, assign the
lease or sublet any space in the Premises to existing tenants or occupants of
the Building, or to any entity controlling, controlled by, or under common
control with any existing tenant or occupant of the Building, except for any
entity controlling, controlled by or under common control with Tenant
(including assignment or subletting to any corporation resulting from a
merger or consolidation with Tenant, or to any person or entity which
acquires all the assets of Tenant's business as a going concern).
17.2 Landlord acknowledges that Tenant's business to be conducted
on the Premises requires the installation on the Premises of certain
communications equipment by telecommunications customers of Tenant
("Customers") in order for such Customers to interconnect with Tenant's
terminal facilities. Notwithstanding anything contained elsewhere in this
Section 17, Landlord agrees not to withhold its consent to any license
agreement, sublease or "co-location agreement" between Tenant and such a
Customer for the purposes of permitting such a telecommunications connection,
so long as (a) such Customer agrees in writing (in a form approved by
Landlord in advance in writing, which approval shall not be unreasonably
withheld or delayed) to comply with all obligations imposed on Tenant under
this Lease to the extent relating to the portion of the Premises in question
(including but not limited to insurance, waiver and indemnity requirements);
(b)
16
such licenses, subleases or co-location agreements do not collectively cover
more than 50% of the Premises at any one time; and (c) each such license,
sublease or co-location agreement is on a form for this purpose approved by
Landlord in writing in advance (which approval shall not be unreasonably
withheld or delayed). Provided that Tenant's transactions with Customers
comply with items (a), (b) and (c) above, they need not comply with those
requirements of Section 17.1 above regarding financial statements,
advertising, and minimum rental rates. Tenant represents that Tenant's
Customers will require only infrequent access to their equipment placed in
the Premises pursuant to such a transaction, and Tenant agrees not to permit
any Customers to have such access unless they are accompanied by a
representative of Tenant. Tenant shall be liable to Landlord for any
violation by its Customers of any provisions of this Lease.
17.3 In the event that Tenants desires to assign this Lease, or to
enter into a sublease, as to all or any portion of the Premises, except (a)
where the subtenant or assignee is an entity controlling, controlled by or
under common control with Tenant (including assignment or subletting to any
corporation resulting from a merger or consolidation with Tenant, or to any
person or entity which acquires all the assets of Tenant's business as a
going concern), or (b) as permitted under Section 17.2 herein, Tenant shall,
prior to solicitation of offers therefor, give Landlord notice of Tenant's
desire to assign or sublet and of the portion of the Premises to be affected
by the proposed assignment or sublease. Landlord shall have the right,
exercisable by notice to Tenant within 30 days after Landlord's receipt of
Tenant's notice of desire to assign or sublet, to terminate this Lease as to
the portion of the Premises affected by the proposed assignment or sublease,
such termination to be effective as of the date 30 days after notice by
Landlord to Tenant of such termination.
In the event of a termination of this Lease as to a portion of the
Premises pursuant to this Section 17.3, effective as of such termination, the
Premises shall be deemed to no longer include the portion of the Premises
subject to such termination, Tenant shall surrender possession of that
portion of the Premises in accordance with the provisions of this Lease, and
the rent payable hereunder and Tenant's Percentage Share shall be
appropriately adjusted based upon the rentable area remaining within the
Premises.
If Landlord does not elect to terminate pursuant to this Section 17.3,
and if Tenant does not enter into an assignment or sublease as specified in
Tenant's notice of desire to assign or sublet within 6 months after the
expiration of Landlord's 60-day period for election to terminate, then
Tenant shall again comply with the provisions of this Section 17.3 before
assigning this Lease, or entering into a sublease, as to all or any portion
of the Premises.
17.4 In the event that Tenant has sought and received Landlord's
consent to assign this Lease, or to enter into a sublease as to all or any
portion of the Premises, the monthly rent payable by Tenant to Landlord,
pursuant to Section 3, shall be increased by the amount to be received by
Tenant during each month pursuant to the terms of the assignment or sublease,
in excess of Tenant's monthly rental payable to Landlord for the space
subject to the assignment or sublease. The amounts referred to in the
previous sentence include rent, additional rent, or any other payment in
respect of use or occupancy, or in reimbursement of costs of leasehold
improvements installed by Tenant, and whether paid in a lump sum or periodic
payments; provided however, such amounts shall not include any fees charged
by Tenant to its Customers to the extent such fees are based on Tenant's
services (not square footage of space used by the Customers) as provided under
Section 17.2 herein. In no event shall the total sums payable to the
Landlord be less than the monthly rental Landlord would have received but for
such assignment or sublease.
The additional rent shall be due and payable to Landlord in
accordance with the schedule specified in the sublease or assignment
instrument, and the failure of any subtenant or assignee to make any payments
in accordance with that schedule shall not affect the obligation of Tenant to
pay the additional rent to Landlord.
The calculation of the amount of rentable space being sublet shall
be made by Landlord in accordance with its usual standards. Landlord may
require acknowledgement by Tenant of Tenant's concurrence on the Landlord's
calculation of the amount of rentable space being sublet as a condition to
Landlord's consent to any sublease.
The provisions of a sublease or assignment instrument consented to
by Landlord cannot be modified, nor the sublease or assignment terminated,
other than in accordance with its terms, without the prior written consent of
the Landlord, which consent shall not be unreasonably withheld. The terms of
this Section 17.4 shall apply to any subleasing or assignment by any
subtenant or assignee.
17.5 Tenant shall pay to Landlord, promptly upon receipt of a
billing from Landlord, the amount of Landlord's reasonable attorney fees
incurred in connection with Landlord's review or approval of any sublease or
assignment transaction requiring Landlord's consent hereunder.
18. TRANSFER OF LANDLORD'S INTEREST. In the event of any
transfer of Landlord's interest in the Building or Premises, other than a
transfer for security purposes only, the transferor shall be automatically
relieved of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer, including, without
limitation, the obligation of Landlord to return the Security Deposit as
provided in this Lease; provided that the transferor shall, within a
reasonable time, transfer any Security Deposit then held by Landlord, or any
portion thereof remaining after proper deductions therefrom, to the
transferee and shall thereafter notify Tenant of such transfer, of any claims
made against
17
the Security Deposit, and of the transferee's name and address, by written
notice delivered personally (in which case Tenant shall acknowledge receipt
of such notice by signing Landlord's copy of such notice) or by registered or
certified mail.
19. HOLDING OVER. If Tenant holds over after the term hereof,
with or without the express or implied consent of Landlord, such tenancy
shall be from month-to month only, and shall not constitute a renewal hereof
or an extension for any further term, and in such case, Base Rent shall be
payable at a monthly rate equal to the greater of: (a) two hundred percent
(200%) of the Base Rent applicable to the Premises immediately prior to the
date of such expiration or earlier termination; or (b) one hundred fifty
percent (150%) of the prevailing market rate excluding any rental or other
concessions (as reasonably determined by Landlord) for the Premises in
effect on the date of such expiration or earlier termination. Such
month-to-month tenancy shall be subject to every other term, covenant and
agreement contained herein. Nothing contained in this Section 19 shall be
construed as consent by Landlord to any holding over 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 other
termination of this Lease.
20. NOTICES. In every case when, under the provisions of this
Lease, it shall be necessary or desirable for one party hereto to serve any
notice, request or demand on the other, such notice or demand shall be in
writing and shall be served personally or by deposit in the United States
mail, postage and fees fully prepaid, registered or certified mail, with
return receipt requested, addressed to the applicable address for notice set
forth in Section A on page 1. Landlord or Tenant may, from time to time, by
notice in writing served upon the other as aforesaid, designate a different
mailing address or a different person to whom all such notices or demands are
thereafter to be addressed. Service of any such notice or demand if given
personally shall be deemed complete upon-delivery, and if made by mail shall
be deemed complete on the day of actual delivery as shown by the addressee's
registry or certification receipt or at the expiration of 2 business days
after the date of mailing, whichever is earlier.
Notwithstanding the provisions of this Section 20, any pleadings or
notices given by either party to the other with respect to any judicial
proceeding between the parties shall be served in the manner prescribed by
applicable California law without reference to this paragraph, and shall be
deemed served at such time as is provided by such applicable law without
reference to this paragraph.
21. QUIET ENJOYMENT. Landlord covenants that Tenant, upon paying
the rent and performing the covenants of this Lease on Tenant's part to be
performed, shall and may peaceably and quietly have, hold and enjoy the
Premises for the term of this Lease.
22. TENANT'S FURTHER OBLIGATIONS.
22.1 Except for ordinary wear and as otherwise provided in the
Lease, Tenant shall, at Tenant's expense, keep in good order, condition and
repair the interior of the Premises and shall promptly and adequately repair
all damage to the interior of the Premises and replace or repair all glass,
fixtures, equipment and appurtenances therein damaged or broken, under the
supervision and with the approval of Landlord and, if Tenant does not do so,
Landlord may, but need not, make such repairs and replacements. If Landlord
does so, Tenant shall pay Landlord the cost thereof promptly upon demand, as
additional rent hereunder.
22.2 Tenant shall comply with all laws, ordinances, rules,
regulations, orders and directives of governmental and quasi-governmental
bodies and authorities having jurisdiction over Tenant or the Premises from
time to time and shall obtain and keep in effect all licenses, permits
(including but not limited to conditional use permits) and other
authorizations required with respect to the business or businesses conducted
by Tenant within or from the Premises or with respect to any special
equipment or facilities of Tenant permitted under the other provisions of this
Lease. Tenant and its employees, agents, licenses and invitees shall also
comply with all reasonable rules and regulations which Landlord may adopt
from time to time for the protection and welfare of the Building and its
tenants and occupants; provided that Tenant shall not be responsible for
compliance with any rule or regulation adopted by Landlord unless or until
Tenant is furnished with a copy thereof. The present rules and regulations
for the Building are attached hereto as Exhibit "B". Landlord shall have no
liability to Tenant for the failure of any other tenant in the Building to
observe the rules and regulations.
23. ESTOPPEL CERTIFICATE BY TENANT. At any time and from time to
time, within 10 days after written request by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord a statement in writing certifying that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that this Lease is in full force and effect as modified and
stating the modifications), that Tenant knows of no default hereunder by
Landlord and has no right of offset or deduction against the rent or any
other charge payable to Landlord (or specifying any claimed), the amount of
any security posted by Tenant, the dates to which the rent and other charges
have been paid in advance, any increases or decreases of rent that are
anticipated, the commencement date of the Lease and such other matters as may
be reasonably requested by Landlord. It is intended that any statement
delivered pursuant to this Section 23 may be relied upon by any purchaser of
the fee or mortgagee or beneficiary or assignee of any mortgage or trust deed
upon the fee of the Building or Premises. Tenant's failure to deliver the
statement within the period specified above shall be conclusive and binding
upon Tenant that the Lease is in full force and effect without modification
except as may be represented by Landlord, that there are no uncured defaults
18
in Landlord's performance and that Tenant has no right of offset,
counterclaim or deduction against rental, and that no more than one month's
rental has been paid in advance.
24. SUBORDINATION AND ATTORNMENT. This Lease is and at all times
shall be subject and subordinate to any ground or underlying leases,
mortgages, trust deeds or like encumbrances, which may now or hereafter
affect the Building or Premises, and to all renewals, modifications,
consolidations, replacements and extensions of any such lease, mortgage,
trust deed or like encumbrance. As a condition precedent to the
effectiveness of any such subordination of this Lease to any future ground or
underlying leases or the lien of any future mortgages, deeds of trust, or
like encumbrances, Landlord shall provide to Tenant a commercially reasonable
non-disturbance and attornment agreement in favor of Tenant executed by such
future ground lessor, master lessor, mortgagee or deed of trust beneficiary,
as the case may be, which shall provide that Tenant's quiet possession of the
Premises shall not be disturbed on account of such subordination to such
future lease or lien so long as Tenant is not in default under any provisions
of this Lease. Notwithstanding the foregoing, Landlord shall have the right
to subordinate or cause to be subordinated any or all ground or underlying
leases or the lien of any or all mortgages, deeds or trust or like
encumbrances to the Lease. In the event that any ground or underlying lease
terminates for any reason or any mortgage, deed of trust or like encumbrance
is foreclosed or a conveyance in lieu of foreclosure is made for any reason,
then at the election of Landlord's successor-in-interest, Tenant shall attorn
to and become the tenant of such successor. Tenant hereby waives its rights
under any current or future law which gives or purports to give Tenant any
right to terminate or otherwise adversely effect this Lease and the
obligations of Tenant hereunder in the event of any such foreclosure
proceeding or sale. Tenant covenants and agrees to execute and deliver to
Landlord in the form reasonably required by Landlord, within 10 days after
receipt of written demand by Landlord, any additional documents evidencing
the priority or subordination of this Lease with respect to any ground or
underlying lease or the lien of any mortgage, deed of trust, or like
encumbrance. Should Tenant fail to sign and return any such documents
within said 10-day period, Tenant shall be in default hereunder without the
benefit of any additional notice or cure periods, except as may be required
by statute.
25. RIGHTS RESERVED BY LANDLORD.
25.1 All portions of the Building are reserved to Landlord,
including exterior building walls, core corridor walls and doors and any core
corridor entrance, but excluding the premises and the inside surfaces of all
walls, windows and doors bounding the Premises. Landlord also reserves any
space in or adjacent to the Premises 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 the right to access
thereto through the Premises for the purposes of operation, maintenance,
decoration and repair.
25.2 Landlord shall have the following rights exercisable without
notice and without liability to Tenant for damage or injury to property,
person or business (all claims for damage being hereby released), and without
effecting an eviction or disturbance of Tenant's use or possession or giving
rise to any claim for setoffs or abatement of rent:
(a) To enter the Premises at all reasonable times during
the term of this Lease for the purpose of inspecting the same, supplying
janitorial service, posting notices of non-responsibility, exhibiting the
Premises to prospective tenants, purchasers or others, or making such repairs
or replacements therein as may be required by this Lease or as Landlord may
deem appropriate; provided that Landlord shall use all reasonable efforts not
to disturb Tenant's use and occupancy and shall, when practical, give Tenant
prior notice of such repairs. For each of the foregoing purposes, Tenant
shall provide to Landlord a key with which to unlock at any time all of the
doors in, upon and about the Premises, excluding Tenant's vaults and safes.
Landlord may use any other means which Landlord may deem proper to open such
doors in an emergency in order to obtain entry to the Premises. Any entry to
the Premises obtained by Landlord by any means shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into,
or a detainer of, the Premises, or an eviction of Tenant from the Premises or
any portion thereof, or grounds for any abatement or reduction of rent. Any
damages or losses on account of any such entry by Landlord shall be Tenant's
sole responsibility except as otherwise expressly provided herein. Nothing
in this Section 25 shall be construed as obligating Landlord to perform any
repairs, alterations or decorations, except as otherwise expressly required in
this Lease.
(b) To change the name or street address of the Premises
or Building.
(c) To install and maintain signs on the exterior and
interior of the Building, except within the Premises.
(d) To have pass keys to the Premises.
(e) To decorate, remodel, repair, alter or otherwise
prepare the Premises for reoccupancy during the last 6 months of the term
hereof if, during or prior to such time, Tenant has vacated the Premises, or
at any time after Tenant abandons the Premises.
(f) To have access to all mail chutes according to the
rules of the United States Postal Service.
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(g) To do or permit to be done any work in or about the
exterior of the Building or any adjacent or nearby building, land, street or
alley.
(h) To grant to anyone the exclusive right to conduct any
business or tender any service in the Building, provided such exclusive right
shall not operate to exclude Tenant from the use expressly permitted by this
Lease.
26. FORCE MAJEURE. Whenever there is provided in this Lease a
time limitation for performance by Landlord or Tenant of any construction,
repair, maintenance or service, the time provided for shall be extended for
as long as and to the extent that delay in compliance with such limitation is
due to an act of God, governmental control or other factors beyond the
reasonable control of Landlord or Tenant, respectively.
27. WAIVER OF CLAIMS; INDEMNITY.
27.1 Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of, and waives all claims it may have
against Landlord, its agents, employees, partners, officers, directors,
affiliates and successors in interest (collectively, the "Landlord Group")
for damage to or loss of property or personal injury or loss of life
resulting from the Building or Premises or any part thereof becoming out of
repair, by reason of any repair or alteration thereof, or resulting from any
accident within the Building or Premises or on or about any space adjoining
the Building or Premises, or resulting directly or indirectly from any act or
omission of any person, or due to any condition, design or defect of the
Building or Premises, or any space adjoining the Building or Premises, or the
mechanical systems of the Building or Premises, which may exist or occur,
whether such damage, loss or injury results from conditions arising upon the
Premises or upon other portions of the Building, or from other sources or
places, and regardless of whether the cause of such damage, loss or injury or
the means of repairing the same is accessible to Tenant; provided such
assumption and waiver shall not apply to claims caused by the gross
negligence or willful misconduct of Landlord or its agents.
27.2 Tenant hereby agrees to indemnify, defend, and hold
Landlord and the Landlord Group harmless from and against (a) any and all
claims, demands, suits, fines, losses, expenses and liabilities
(collectively, "Claims") for or relating to injury or loss of life to persons
or damage to or loss of property arising from Tenant's use of the Building or
the Premises, or from the conduct of Tenant's business, or from any work
done, permitted or suffered by Tenant in or about the Premises or elsewhere,
or from any negligence or intentional conduct of Tenant or Tenant's agents,
employees, contractors, licensees, invitees, representatives or successors in
interest; (b) any and all Claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the
terms of this Lease; and (c) all costs, attorneys' and other professional
fees, expenses and liabilities incurred by Landlord or any member of the
Landlord Group in or in connection with any such Claim. In the event that any
action or proceeding is brought against Landlord or any member of the
Landlord Group by reason of any such Claim, Tenant upon notice from Landlord
shall defend such action or proceeding at Tenant's cost and expense by
counsel approved by Landlord, such approval not to be unreasonably withheld.
Tenant's obligations under this Section 27.2 shall survive the expiration or
termination of this Lease as to any matters arising prior to such expiration
or termination or prior to Tenant's vacation of the Building.
28. INSURANCE
28.1 Tenant shall procure and shall maintain in effect, at
Tenant's sole cost and expense throughout the term of this Lease, including
any extensions and renewals thereof, public liability and property damage
insurance against claims for bodily injury, death or property damage
occurring upon or about the Premises or Building, in each case naming
Landlord and its managing agents as additional insureds and, upon request by
Landlord, naming the holder of any mortgage, deed of trust or like
encumbrance or the lessor under any underlying lease covering the Building as
additional insured, with a limit of liability of not less than $3,000,000.00
single limit. If from time to time, the limits of liability set forth above
are, in the reasonable opinion of Landlord, inadequate, Tenant shall increase
such insurance coverage to an amount as shall be designated by Landlord's
notice to Tenant.
Tenant shall also procure and maintain, at Tenant's sole cost and
expense throughout the term of this Lease, casualty insurance on tenant's
personal property in the Premises and any leasehold improvements which the
Tenant installed at its own cost in an amount at least equal to the full
replacement cost of such property, providing coverage against all perils
insured against by a "fire and extended coverage" policy, as well as
sprinkler damage, vandalism and malicious mischief.
Tenant shall also obtain the following insurance:
(a) Worker's compensation and employer's liability
insurance in form and amount satisfactory to Landlord.
(b) Loss of income and extra expense insurance in such
amounts as will reimburse Tenant for direct or indirect loss of earnings
attributable to all perils commonly insured against by prudent tenants or
attributable to prevention of access to or use of the Premises or the
Building as a result of such perils.
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(c) Liquor liability insurance coverage in limits of not
less than Five Hundred Thousand Dollars ($500,000) if at any time during the
term hereof any alcoholic beverages of any nature are served on the Premises.
(d) Any other form or forms of insurance as Landlord or
Landlord's lender or ground or primary lessors may reasonably require from
time to time in form, in amounts, and for insurance risks against which a
prudent tenant of a comparable size and in a comparable business would
protect itself.
Such policies of insurance shall be with insurance companies
acceptable to Landlord, shall not have a deductible amount exceeding
$5,000.00 in the aggregate, and shall specifically provide that the insurance
afforded by such policies for the benefit of Landlord and its managing agents
and Landlord's mortgagees and ground lessors shall be primary, and that any
insurance carried by Landlord or Landlord's mortgagees and ground lessors
shall be excess and non-contributing. Such policies shall be evidenced by
certificates of insurance delivered to Landlord from time to time showing
such insurance to be at all times prepaid and in full force and effect and
providing that such insurance cannot be canceled or modified upon less than
30 days' prior written notice to Landlord, and such other evidence of
coverage requested by Landlord. (Such evidence may consist of copies of such
policies, including additional insured endorsements.) If at any time tenant
has not provided Landlord with a then currently effective certificate of
insurance or other evidence of coverage acceptable to Landlord as to any
insurance required to be maintained by Tenant, Landlord may, without further
inquiry as to whether such insurance is actually in force, obtain such a
policy and Tenant shall reimburse Landlord, upon demand as additional rent
hereunder, for the cost thereof, together with Landlord's administrative fee
equal to 25% of the premium.
28.2 Tenant hereby waives its rights against Landlord and its
managing agent and their respective partners, officers, directors,
shareholders, employees, agents, representatives, contractors, affiliates,
successors, licensees, and invitees with respect to any claims or damages
or losses (including any claims for bodily injury to persons and/or damage
to property) which are caused by or result from (a) risks insured against
under any insurance policy carried by Tenant at the time of such claim,
damage, loss or injury, or (b) risks which would have been covered under any
insurance required to be obtained and maintained by Tenant under this Lease
had such insurance been obtained and maintained as required. The foregoing
waivers shall be in addition to, and not a limitation of, any other waivers or
releases contained in this Lease.
28.3 Tenant shall cause each insurance policy required to be
obtained by it pursuant to this Section 28 to provide that the insurer waives
all rights of recovery by way of subrogation against Landlord and its
managing agent and their respective partners, officers, directors,
shareholders, employees, agents, representatives, contractors, affiliates,
successors, licensees, and invitees in connection with any claims, losses and
damages covered by such policy. If Tenant fails to maintain insurance
required hereunder, Tenant shall be deemed to be self-insured with a deemed
full waiver of subrogation as set forth in the immediately preceding sentence.
29. FIXTURES, TENANT IMPROVEMENTS AND ALTERATIONS.
29.1 Except as otherwise provided in any rider to this Lease,
all improvements, fixtures and/or equipment which Tenant may install or place
in or about the Premises, and all alterations, repairs or changes to the
Premises, and all signs installed in, on or about the Premises, from time to
time, shall be at the sole cost of Tenant. Landlord shall be without any
obligation in connection therewith. Tenant hereby agrees to indemnify,
defend, and hold Landlord harmless from any liability, cost, obligation,
expense or claim of lien in any manner relating to the installation,
placement, removal or financing of any such alterations, repairs, changes,
improvements, fixtures, and/or equipment in, on or about the Premises.
Tenant's obligations under the preceding sentence shall survive the
expiration or termination of this Lease as to any matters arising prior to
such expiration or termination or prior to Tenant's vacation of the Building.
29.2 Notwithstanding any provision in this Section 29 to the
contrary, Tenant is absolutely prohibited from making any alterations,
additions, improvements or decorations which: (i) affect any area outside the
Premises; (ii) affect the Building's structure, equipment, services or
systems, or the proper functioning thereof, or Landlord's access thereto;
(iii) affect the outside appearance, character or use of the Building or the
common areas; (iv) weaken or impair the structural strength of the Building;
(v) in the reasonable opinion of Landlord, lessen the value of the Building;
(vi) will violate or require a change in any occupancy certificate applicable
to the Premises; or (vii) in the reasonable opinion of Landlord, will
increase the Building's Operating Costs or Utility Costs.
29.3 Before proceeding with any alteration, repair or change
which is not otherwise prohibited in Subsection 29.2 above, Tenant must first
obtain Landlord's written approval of (i) the plans and specifications for all
such work; (ii) with respect to any connecting lines that will be outside the
Premises (if such lines are permitted by Landlord in its sole discretion), a
description of the areas of the Building to which Tenant will require access
both for the initial work and for ongoing maintenance of the improvements or
installations; (iii) the names of all contractors and subcontractors who will
perform such work, all of whom shall be selected from Landlord's then-current
list of approved contractors, which Landlord may compile in Landlord's sole
discretion and will provide to Tenant within ten days following Landlord's
receipt of Tenant's written request; (iv) copies of all construction
contracts entered by Tenant with any contractor for the work; (v) copies of
all liability, casualty, worker's compensation and builder's risk insurance
applicable to the construction, maintenance and ongoing operation of the
improvements and installations; and (vi) copies of all governmental permits
required for the work. Landlord's
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consent to such matters shall not unreasonably be withheld; provided,
however, that with regard to any such matters which may affect the structural
members, the heating, ventilation, air conditioning or other building
systems, exterior walls, windows and doors of the Building, and with regard to
the installation of any signs outside the Premises, Landlord may grant or
withhold its consent in its unlimited discretion. Landlord may impose, as a
condition of its consent to any alterations, repairs or changes of the
Premises, such requirements as Landlord in its sole discretion may deem
desirable, including, but not limited to, the requirement that Tenant utilize
for such purposes only contractors, materials, mechanics and materialmen
previously used and currently approved by Landlord for work in the Building.
29.4 After Landlord has approved the change, repair or
alteration and the other items listed in Section 29.3, Tenant shall enter
into an agreement for the performance of such change, repair or alteration
with the contractors and subcontractors approved by Landlord, as provided in
Section 29.3. Before proceeding with any change, repair or alteration Tenant
shall (i) provide Landlord with 10 days' prior written notice thereof; and
(ii) pay to Landlord, within 10 days after written demand, the costs of any
increased insurance premiums incurred by Landlord as a result of such
changes, repairs or alterations. In addition, before proceeding with any
change, repair or alteration, Tenant's contractors shall obtain, on behalf of
tenant and at Tenant's sole cost and expense: (A) all necessary governmental
permits and approvals for the commencement and completion of such change,
repair or alteration; and (b) a completion and lien indemnity bond, or other
surety, satisfactory to Landlord for such change, repair or alteration.
Landlord's approval of permits pursuant to Section 29.3 shall not relive
Tenant of the obligation to obtain any other or supplemental permits required
by the preceding sentence.
29.5 Tenant shall pay to Landlord, as additional rent, the
reasonable costs of Landlord's engineers and other consultants (but not
Landlord's on-site management personnel) for review of all plans,
specifications and working drawings for the change, repair or alteration
within 10 business days after Tenant's receipt of invoices either from
Landlord or such consultants. In addition to such costs, Tenant shall pay to
Landlord, within 10 business days after completion of any change, repair or
alternation, the actual, reasonable costs incurred by Landlord for services
rendered by Landlord's management personnel and engineers to coordinate and/or
supervise any of the change, repair or alteration to the extent such services
are provided in excess of or after the normal on-site hours of such engineers
and management personnel.
29.6 All changes, repairs and alterations shall be performed:
(i) in accordance with the approved plans, specifications and working
drawings; (ii) lien-free and in a first-class and workmanlike manner; (iii)
in compliance with all laws, rules, and regulations of all governmental
agencies and authorities; (iv) in such a manner so as to not to interfere
with the occupancy of any other tenant in the Building, or impose any
additional expense or delay upon Landlord in the maintenance and operation of
the Building; and (v) at such times, in such manner and subject to rules and
regulations as Landlord may from time to time reasonably designate. Following
completion of the work, Tenant shall promptly provide to Landlord a set of
"as built" plans and specifications for the work and copies of all warranties
and guarantees provided by Tenant's contractors and subcontractors.
29.7 Throughout the performance of any such change, repair or
alteration Tenant shall obtain, or cause its contractors to obtain, worker's
compensation insurance and general liability insurance covering the work in
compliance with provisions of Section 28 of this lease, and builder's risk
insurance for the work reasonably acceptable to Landlord.
29.8 With respect to any construction, alteration, decorating
or repair work undertaken by Tenant's contractors under a direct contract
with Tenant, Tenant shall pay Landlord as additional rent a fee equal to 8%
of the contract price in order to compensate Landlord for monitoring the
compliance of Tenant's construction with the Building's rules and regulations
and the provisions of this Lease. Such fee shall be paid by Tenant to
Landlord in monthly progress payments as calculated and billed by Landlord in
its reasonable discretion. Tenant shall pay such amounts to Landlord within
15 days after Tenant's receipt of a billing therefor. Tenant acknowledges
that such monitoring of Tenant's construction is for Landlord's benefit only
and shall not release Tenant from any obligations hereunder, nor impose on
Landlord any obligation to Tenant or any third party relating to Tenant's
construction.
In the event Tenant orders any construction, alteration, decorating
or repair work directly from Landlord, or from the contractor selected by
Landlord, the charges for such work, together with Landlord's administration
fee equal to 15% of the contract price, shall be deemed additional net under
this Lease, payable upon billing therefor, either in advance of the start of
work, or periodically during construction, or upon the substantial completion
of such work, at Landlord's option.
30. MECHANIC'S LIENS. Tenant agrees to give Landlord written
notice of the commencement date of any alterations, improvements or repairs
to be made in, to or upon the premises not later than 10 days prior to the
commencement of any such work, in order to give Landlord time to post notices
of nonresponsibility. Tenant will not permit any mechanic's, materialman's or
other lien to be placed upon the premises or Building or improvements therein
during the term hereof; and in the event that any mechanic's, materialman's
or other lien is filed against the Premises or Building or improvements
therein in connection with any alteration, repair, improvement or change of,
or installation of fixtures or equipment in, the premises, Tenant shall cause
such lien to be released within 10 days after such filing, either by
satisfaction of such claim or by posting of a bond. Notwithstanding the
foregoing, Landlord shall have the right and privilege at Landlord's option
of paying the amount of any such lien or claim, or any portion, thereof,
without inquiry as to the validity thereof, and
22
any amounts so paid, including expenses and interest, shall be deemed
additional rent hereunder due from Tenant to Landlord upon demand.
31. ALTERNATE SPACE. PARAGRAPH DELETED
32. HAZARDOUS MATERIALS.
32.1 In addition to its other obligations under this Lease,
Tenant covenants to comply with all laws relating to Hazardous Materials, as
defined below, with respect to the Premises and the Building. Tenant shall
have the right to use general office supplies typically used in an office
area in the ordinary course of business (such as copier toner, liquid paper,
glue, ink and cleaning solvents) and items typically used in a comparable
telecommunications business, provided that Tenant uses them in the manner for
which they were designed and only in accordance with all Hazardous Materials
laws and the highest standards prevailing in the industry for such use, and
then only in such amounts as may be normal for the office business operations
or telecommunications operations conducted by Tenant on the Premises.
Except as provided in the preceding sentence, neither Tenant nor any of
Tenant's agents, employees, contractors, subtenants, assignees, licensees,
invitees, successors, or representatives ("Tenant's Parties") shall use,
handle store or dispose of any Hazardous Materials in, on, under or about the
Premises, the Building or the site on which the Building is located. Tenant
shall promptly take all actions, at its sole cost and expense as are
necessary to return the Premises, Building and site to the condition existing
prior to the introduction of any such Hazardous Materials by Tenant or any
Tenant Parties, provided Landlord's approval of such actions shall first be
obtained. Furthermore, Tenant shall immediately notify Landlord of any
inquiry, test, investigation or enforcement proceeding by or against Tenant
or the Premises concerning the presence of any Hazardous Material.
32.2 Tenant's obligations under Section 27.2 to indemnity, defend
and hold Landlord harmless from and against certain Claims shall be deemed to
include, without limitation, any and all Claims (as defined in Section 27.2)
relating in any way to investigation and clean-up costs, attorneys' fees,
consultant fees and court costs that arise during or after the term of this
Lease as a result of the breach of any of the obligations and covenants set
forth in this Section 32, or relating in any way to any contamination of the
Premises, Building or site directly or indirectly arising from the activities
of Tenant or any Tenant Parties. Tenant's obligations under the preceding
sentence shall survive the expiration or earlier termination of this Lease as
to any matters arising prior to such expiration or termination or prior to
Tenant's vacation of the Building.
32.3 For purposes of this Lease, the term "Hazardous Materials"
shall mean, collectively, asbestos, any petroleum fuel, and any hazardous or
toxic substance, material or waste which is or becomes regulated or defined
as hazardous or toxic by any local governmental authority, the State of
California or the United States Government, including, but not limited to,
any material or substance defined as hazardous or toxic under the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601, ET SEQ.; the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901, ET SEQ.; the Toxic Substance Control Act, 15 U.S. C.
Sections 2601, ET SEQ.; the Federal Water Pollution Control Act, 33 U.S.C.
Sections 1251, ET SEQ.; the California Hazardous Substance Account Act,
California Health and Safety Code Sections 25330, ET SEQ.; the California
Hazardous Waste Control Act, California Health and Safety Code Sections
25100, ET SEQ.; the California Safe Drinking Water and Toxic Health
Enforcement Act, California Health and Safety Code Sections 252495, ET SEQ.;
California Health and Safety Code Sections 25280, ET SEQ. (Underground
Storage of Hazardous Substances); the California Hazardous Waste Treatment
Reform Act, California Health and Safety Code Sections 25179.1, ET SEQ.;
California Health and Safety Code Sections 25501, ET SEQ. (Hazardous
Materials Release Response Plans and inventory); Petroleum Underground
Storage Tank Cleanup, Health and Safety Code Sections 25299.10, ET SEQ. and
the Porter-Cologne Water Quality Control Act, California Water Code Sections
13000, ET SEQ., as such laws may be amended form time to time.
32.4 Tenant acknowledges that Tenant has received and read the
notice from Landlord regarding Landlord's asbestos in the Building. Landlord
agrees that the costs of asbestos removal work in the Building shall not be
charged to Tenant or included in the Building's Operating Costs for purposes
of calculating Tenant's obligations for rent escalations under Section 4
above. The preceding sentence shall not apply to costs for such work
necessitated by the acts or omissions of Tenant or Tenant's Parties (as
defined in Section 32.1), including but not limited to alteration work
undertaken by Tenant.
33. MISCELLANEOUS.
33.1 No receipt of money by Landlord from Tenant after the
termination of this Lease, the service of any notice, the commencement of
any suit or final judgment for possession shall reinstate, continue or extend
the term of this Lease or affect any such notice, demand, suit or judgment.
No payment by Tenant or receipt by Landlord of a lesser amount than the rent
payment herein stipulated shall be deemed to be other than on account of the
rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice
to Landlord's right to recover the balance of such rent or pursue any other
remedy provided in this Lease. Any amount billed by Landlord to Tenant under
this Lease or in connection with Tenant's occupancy of space in the
Building, with Tenant does not dispute in a written notice delivered to
Landlord within thirty days after Tenant's receipt of such billing, shall be
conclusively deemed to be correct, and Tenant shall be
23
obligated for such amount. Such thirty-day period to give notice of a
dispute shall not be deemed to extend the due date for any payments, but
Tenant shall be entitled to make the payment in question under protest by
timely giving such notice, Tenant agrees that each of the foregoing covenants
and agreements shall be applicable to all obligations of Tenant to Landlord,
whether expressly contained in this Lease or imposed by any statute or at
common law.
33.2 If any provision of this Lease or its application to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of
this Lease or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable to any extent, shall not be affected thereby, and each
provision hereof shall be valid and shall be enforced to the fullest extent
permitted by law; and it is the intention of the parties to this Lease that
in lieu of each clause or provision of this Lease that its illegal, invalid
or unenforceable, there be added as a part of this Lease a clause or
provision as similar in terms to such illegal, invalid or unenforceable
clause or provision as may be possible and be legal, valid and enforceable.
33.3 The covenants and obligations of Tenant pursuant to this
Lease shall be independent of performance by Landlord of the covenants and
obligations of Landlord pursuant to this Lease, and performance by Tenant of
each covenant and obligation of Tenant pursuant to this Lease shall be a
condition precedent to the duty of Landlord to perform the covenants and
obligations of Landlord pursuant to this Lease.
33.4 The headings of Sections of this Lease are for convenience
only and do not define, limit or construe the contents thereof. References
made in the Lease to numbered Sections, Paragraphs and Subparagraphs shall
refer to numbered Sections, Paragraphs or Subparagraphs of this Lease unless
otherwise indicated.
33.5 Where appropriate, words in the singular, including without
limitation the words "Landlord" and "Tenant", include the plural, and vice
versa. Words in the neuter gender include the masculine and feminine
genders, and vice versa, and words in the masculine gender include the
feminine gender, and vice versa.
33.6 If more than one person or entity executes this Lease as
Tenant: (a) each of them is and shall be jointly and severally liable for the
covenants, conditions, provisions and agreements of this Lease to be kept,
observed and performed by Tenant; and (b) the act or signature of, or notice
from or to, any one or more of them with respect to this Lease shall be
binding upon each and all of the persons and entities executing this Lease as
Tenant with the same force and effect as if each and all of them had so acted
or signed, or given or received such notice.
33.7 Time is of the essence of this Lease. Failure of either
party to perform any act strictly within the applicable period specified
herein shall entitle the other to exercise all remedies herein contemplated.
All references in this Lease to "days" shall mean calendar days unless
specifically stated herein to be "business" days.
33.8 This Lease shall be governed by and interpreted in
accordance with the laws of the State of California.
33.9 All monetary obligations of Tenant remaining past due 10
days or more after the date specified herein for payment shall bear interest
until paid at the lesser of (i) the Bank of America prime rate as of the due
date plus 6%, or (ii) the maximum rate permitted by law.
33.10 This instrument, along with any riders, exhibits and
attachments or other documents referred to in Section M on page 2 (all of
which riders, exhibits, attachments and other documents are hereby
incorporated into this instrument by this reference), constitutes the entire
and exclusive agreement between Landlord and Tenant relating to the Premises,
and this agreement and said riders, exhibits and attachments an other
documents may be altered, amended or revoked only by an instrument in writing
signed by the party to be charged thereby. All prior or contemporaneous oral
agreements, understandings and/or practices relative to the leasing of the
Premises are merged herein or revoked hereby. References in this instrument
to this "Lease" shall mean, refer to and include this instrument as well as
any riders, exhibits, attachments or other documents referred to in Section
M, and references to any covenant, condition, obligation and/or undertaking
"herein", "hereunder" or "pursuant hereto" (or language of like import) shall
mean, refer to and include the covenants, conditions, obligations and
undertakings existing pursuant to this instrument and such riders, exhibits,
attachments or other documents. All terms defined in this instrument shall
be deemed to have the same meanings in all riders, exhibits, attachments or
other documents referred to in Section M unless the context thereof clearly
requires the contrary.
33.11 Tenant hereby consents to amendment of this Lease as to the
extent required by any lender which makes a loan to Landlord secured in whole
or in part by the Building, provided that no such change shall increase the
rent payable hereunder or impair Tenant's use or the Premises; provided,
however, any such amendments shall not adversely affect tenant's interests in
any material respect.
33.12 Unless otherwise agreed in writing, if Tenant has dealt with
any real estate broker or other person or firm with respect to leasing or
renting space in the Building, Tenant shall be solely responsible for the
payment of any fee due said broker, person or firm and Tenant hereby
indemnifies and holds Landlord harmless from and against any liability with
respect
24
thereto. Notwithstanding the foregoing, Landlord agrees to pay, and to hold
Tenant harmless from, the commission owing to the brokers identified in
Section L on page 2, as provided in a separate agreement between Landlord and
such brokers.
33.13 Tenant agrees to pay to Landlord as additional rent
hereunder any taxes required by law to be paid by Tenant and collected from
Tenant by Landlord.
33.14 Submission of this Lease for examination, even though
executed by Tenant, shall not bind Landlord in any manner, and no lease or
other obligation on the part of Landlord shall arise until this Lease is
executed and delivered by Landlord to Tenant. This Lease shall not be
binding and in effect until a counterpart hereof has been executed and
delivered by the parties, each to the other.
33.15 Tenant shall not cause the recordation of this Lease, a
short form memorandum of this Lease or any reference to this Lease.
33.16 Upon 10 days' prior written request from Landlord (which
Landlord may make at any time during the term but no more often than two
times in any calendar year), Tenant shall deliver to Landlord (a) a current
financial statement of Tenant and any guarantor of this Lease, and (b)
financial statements of Tenant and such guarantor for the two years prior to
the current financial statement year. Landlord shall use best efforts to
assure that any disclosure of such statements by Landlord to third parties
shall be made so as to preserve the confidential nature of such statements.
Such statements shall be prepared in accordance with general acceptable
accounting principles, and certified as true in all material respects by
Tenant (if Tenant is an individual) or by an authorized officer or general
partner of Tenant (if Tenant is a corporation or partnership, respectively).
33.17 Notwithstanding anything contained in this Lease to the
contrary, the obligations of Landlord under this Lease (including any actual
or alleged breach or default of Landlord) do not constitute personal
obligations of the individual partners, directors, officers, shareholders,
agents or employees of Landlord or of Landlord's partners or agents, and
Tenant shall not seek recourse against any such persons or entities or any of
their personal assets for satisfaction of any liability with respect to this
Lease. In addition, in consideration of the benefits accruing hereunder to
Tenant and notwithstanding anything contained in this Lease to the contrary,
Tenant hereby covenants and agrees for itself and all of its successors and
assigns that the liability of Landlord for its obligations under this Lease
(including any liability as a result of any actual or alleged failure, breach
or default hereunder by Landlord) shall be limited solely to, and Tenant's
and its successors' and assigns' sole and exclusive remedy shall be against,
Landlord's interest in the Building and proceeds therefrom, and no other
assets of Landlord.
33.18 If Tenant is identified herein as a corporation, then the
persons executing this Lease on behalf of Tenant hereby represent that they
are duly authorized to execute and deliver this Lease on behalf of Tenant
pursuant to Tenant's by-laws or a resolution of its board of directors.
If Tenant is identified herein as a partnership, the undersigned
represent that they are all of the general partners of Tenant, that
Tenant has been formed under the laws of the State of California, and is
duly qualified to do business in the State of California, and that this
Lease is being executed on behalf of Tenant. Each of the partners of
Tenant executing this Lease agrees that he or she and Tenant are
irrevocably bound by execution of any amendment to or modification of
this Lease by one or more of the partners of Tenant. Tenant agrees that
each new partner in Tenant shall be obligated under this Lease, in the
same fashion as the existing partners, and that each new partner shall
execute a copy of this Lease and deliver it to Landlord within 60 days
after that partner's admission to the partnership. In the event that such
newly admitted partner is a corporation, the principal or principal's for
whose benefit the corporation has been organized shall execute and
deliver to Landlord a lease guaranty in form acceptable to Landlord.
Each newly admitted partner in Tenant shall be jointly and severally
liable with the remaining partners for the performance and satisfaction
of all obligations of the Tenant under this Lease accruing from and after
the effective date of the admission of the new partner to the
Partnership. If the provisions of this paragraph are satisfied, the
admission of a new partner shall not be considered an assignment of the
lease for the purposes of Section 17 hereof.
33.19 Subject to the provisions of Section 17 above, and except as
otherwise provided in this Lease, all of the covenants, conditions and
provisions of this Lease shall be binding upon, and shall inure to the
benefit of the parties hereto and their respective heirs, personal
representatives and permitted successors and assigns; provided, however, that
no rights shall inure to the benefit of any transferee of Tenant unless the
transfer to such transferee is made in compliance with the provisions of
Section 17, and no options or other rights which are expressly made personal
to the original Tenant hereunder or in any rider attached hereto shall be
assignable to or exercisable by anyone other than the original Tenant under
this Lease.
33.20 The voluntary or other surrender of this Lease by Tenant or
a mutual termination thereof shall not work as a merger and shall, at the
option of Landlord, either (a) terminate all and any existing subleases, or
(b) operate as an assignment to Landlord of Tenant's interest under any or
all subleases.
25
33.21 Except for Tenant's identity sign on the entry doors of
the Premises and Tenant's elevator lobby identity sign on any full floor of
the Building leased by Tenant (which signs shall be consistent with the
Building's signage program and otherwise subject to Landlord's prior written
approval), Tenant shall have no right to place any sign upon the Premises,
the Building or the site on which the Building is located of which can be
seen from outside the Premises.
33.22 The effectiveness of this Lease and Landlord's obligations
hereunder are subject to and conditional upon Tenant's delivery to Landlord
of a lease guaranty in the form prescribed by Landlord in its sole
discretion, fully executed by the guarantor or guarantors specified in
Section N on page 2 of this Lease.
33.23 EQUIPMENT FINANCING. Lessee may enter into secured
financing arrangements for which Lessee's furniture, fixtures and
equipment are security, provided that such arrangements shall not impair
or abridge the rights of Lessor under this Lease, and such secured party
agrees to pay lessor for its use or occupancy of the Premises and for any
damage resulting from its removal of the security, and to be bound by the
terms and provisions of this Lease from the time it succeeds to the
interest of Lessee under this Lease. Lessor shall, upon request of
Lessee, execute agreements in favor of Lessee's secured lender and
equipment financer, in the exact form of Exhibits "C" and "D" attached
hereto.
34. RULES AND REGULATIONS AFFECTING TELECOMMUNICATIONS USE.
Nothing in the Rules and Regulations attached hereto as Exhibit B (or any
further rules and regulations promulgated by Landlord as described in Section
22.2) shall be deemed to prohibit Tenant from installing in the Premises
telecommunications switching equipment or any other equipment specifically
permitted in the other provisions of this Lease, which does not pose a safety
hazard or create a nuisance or illegal condition; provided, however, that
Tenant shall comply with the provisions of this Lease (including the Rules
and Regulations) regarding the moving, installation, operation, use,
maintenance, removal, power requirements, and structural support of all such
equipment, and shall obtain any approvals from Landlord required under this
Lease as to such matters.
35. "AS IS" CONDITION. Tenant is taking the Premises in its
"as is" shall condition existing as of the execution date of this Lease.
Landlord shall have no obligation for the construction or modification of
tenant improvements for Tenant. In constructing its own tenant improvements to
the Premises, Tenant shall comply with the other applicable provisions of
this Lease (including but not limited to Section 29) and shall utilize only
contractors, materials, mechanics, materialmen, architects and engineers used
and currently approved in writing by Landlord for work in the Building.
36. ROOF SPACE. Tenant shall have the right during the Lease
term to use an area on the ninth floor roof of the Building (the "Roof
Space") sufficient in Landlord's reasonable discretion for the installation
and operation of a heating, ventilating and air-conditioning condenser unit
or units with up to 20-tons cooling capacity. Within 30 days after Landlord's
receipt of Tenant's written request for the Roof Space (which request shall
include the specifications for the proposed condenser unit or units),
Landlord shall designate, reasonably and in good faith, the size and location
for the Roof Space based on the condenser unit specifications provided to
Landlord. The installation and operation of the condenser unit or units shall
be at the sole cost and expense of Tenant (including, but not limited to,
costs of electrical supply, which, if Landlord so elects, shall be metered
separately to Tenant at Tenant's expense). Such installation and operation
shall be in accordance with the provisions of this Lease and shall require
Landlord's prior written approval of the items listed in Section 29.3. Such
approval shall not be unreasonably withheld or delayed, but may be
conditioned, among other things, upon Tenant's making or paying for any
reinforcement to the Roof Space reasonably deemed necessary by Landlord to
support the condenser unit or units.
26
IN WITNESS WHEREOF, this instrument has been duly executed by the
parties hereto, as of the date first above written.
TENANT:
WORLDXCHANGE COMMUNICATIONS
a California corporation
By: /s/ Edward S. Soren
--------------------------------
Its: President
--------------------------
By:
--------------------------------
Its:
--------------------------
LANDLORD:
DOWNTOWN PROPERTIES, L.L.C.
a California Limited Liability Company
By: /s/ ILLEGIBLE
--------------------------------
Its: President
--------------------------
By:
--------------------------------
Its:
--------------------------
27
======================
611 WILSHIRE BOULEVARD
======================
LEASE
======================
EXTENSION OPTION RIDER
Provided that Tenant is not in default under this Lease beyond any
applicable notice and cure period, Tenant shall have the option to extend the
term of this Lease for an additional five-year period following the expiration
of the initial term. Tenant may exercise such option only by giving Landlord
a written notice at least nine (9) months, but not more than twelve (12)
months, prior to the commencement of the five-year period, and only if tenant
is not in default beyond any applicable notice and cure period at the time
Tenant gives such notice. If Tenant has exercised such option, but is in
default beyond any applicable notice and cure period on the date the
additional five-year extended term is to commence, then at Landlord's
election, the extended term shall not commence until and unless the Tenant
timely cures such default.
With respect to the additional five-year term, the Lease shall be
adjusted to reflect the following: (a) a new Base Rent for the Premises equal
to 95% of the average Base Rents per rentable square foot charged by Landlord
for telecommunications space in the Building of comparable size and quality
in comparable renewal leases for a comparable term entered into by Landlord
within six months prior to the date Tenant exercises this option (provided,
however, that if no such comparable renewal leases were entered into within
such six month period, then the valuation shall be based on the Base Rent
Landlord would have been willing to accept at that time as reasonably
calculated by Landlord in good faith); and (b) a new rental rate for the
Conduit Space based on the then-prevailing rate being charged by Landlord for
similar interducts in the Building; and (c) a new fee for use of the
generator described in the Backup Power Generator Rider based on the
then-prevailing rate being charged by Landlord for comparable usage; and (d)
a new rental rate for the Roof Space based on the then-prevailing rate being
charged by Landlord for similar roof space on the Building.
Landlord shall advise Tenant of such rental adjustments within one
month after Landlord's receipt of Tenant's notice. Tenant shall have ten
business days following Tenant's receipt of notice of the rental adjustment
within which to accept such terms by executing any appropriate reasonable
documentation submitted by Landlord to Tenant. If Tenant fails to so accept
such terms, Tenant's rights to extend the term pursuant to this Rider shall
be cancelled.
In no event shall the terms offered by Landlord under this Rider
bind Landlord to offer such terms to Tenant or to any other person or entity
at any time except as explicitly set forth in this Rider, nor shall such terms
prevent Landlord from leasing the Premises to any person or entity on
different terms if Tenant does not timely accept the terms determined in
accordance with this Rider.
EOR-1
LIST OF OMITTED EXHIBITS AND RIDERS
The following Exhibits and Riders to the 611 Wilshire Boulevard Lease
have been omitted from this Exhibit and shall be furnished supplementally to
the Commission upon request:
Exhibit A - Floor Plan of Premises
Exhibit B - Rules and Regulations
Exhibit C - Consent and Waiver by Owner, Landlord or Mortgagee of
Real Estate
Exhibit D - Waiver and Consent by Real Property Owner(s)
Backup Power Generator Rider
Parking Space Rider
Telecommunications Conduit Rider