Common use of Proposition 13 Clause in Contracts

Proposition 13. Notwithstanding anything to the contrary contained in this Lease, if, during the first 36 months after the Commencement Date (the “Prop 13 Protection Period”), any sale, transfer, refinancing or other changes in ownership of the San Diego Facility is consummated, and solely as a result thereof, and to the extent that solely in connection therewith, the San Diego Facility is reassessed (the "Reassessment") for real estate tax purposes by the appropriate Governmental Authority pursuant to the terms of Proposition 13, Tenant shall not be obligated to pay the Tax Increase to the extent pertaining to the Prop 13 Protection Period. The term "Tax Increase" shall mean that portion of the Taxes, as calculated immediately following the Reassessment, which is attributable solely to the Reassessment. Tenant shall be responsible for all Taxes (including, without limitation, any Tax Increase) applicable to the period following the expiration of the Prop 13 Protection Period regardless of whether such Taxes are based on the Reassessment or any subsequent reassessment. Accordingly, the term Tax Increase shall not include (and Tenant shall be required to pay for) any portion of the Taxes which (i) is attributable to the initial assessment of the value of the San Diego Facility, the base, shell and core of the Building or the tenant improvements located in the Building, (ii) is attributable to assessments which were pending prior to the Reassessment or which would otherwise have occurred unrelated to the sale, or (iii) is attributable to the annual inflationary increase of real estate taxes. In addition, nothing contained in this paragraph is intended to excuse Tenant from paying the full amount of any Taxes (including, without limitation, as a result of reassessments) resulting from any construction and/or improvements made to the San Diego Facility by Landlord or Tenant at any time pursuant to and/or in connection with this Lease.

Proposition 13. Notwithstanding anything to any other provision of the contrary contained in this Lease, if, during the first 36 months after if at any time commencing on the Commencement Date and expiring five (5) years thereafter (“Full Protection Period”), or if at any time commencing on the sixth (6th) anniversary of the Commencement Date and expiring two (2) years thereafter (“Prop 13 Partial Protection Period”), any sale, transfer, refinancing or other changes in ownership sale of the San Diego Facility Building is consummatedconsummated and, and solely as a result thereofof such sale, and to all or part of the extent that solely in connection therewith, the San Diego Facility Building is reassessed (the "“Reassessment"”) for real estate tax purposes by the appropriate Governmental Authority pursuant to government authority under the terms of Proposition 13, the terms of this Section 3.3. 9.1.1 shall apply. In the event Proposition 13 is repealed or modified, the provisions of this Section 3.3.9.1.1 shall be applied as if no such repeal or modification was effective. (i) For purposes of this Section 3.3.9.1.1, the term Tax Increase (“Tax Increase”) shall mean that portion of Operating Expenses, as calculated immediately following any such the Reassessment that is attributable solely to the Reassessment. Accordingly, a Tax Increase shall not include any portion of the Operating Expenses, as calculated immediately following the Reassessment, that is attributable to: (A) the assessment immediately prior to the Reassessment of the value of the Building, the base Building, or the tenant improvements constructed by Tenant to its Premises (it being agreed that Operating Expenses do not include any taxes or assessments resulting from or allocable to tenant improvements made by other tenants to their respective premises); or (B) assessments pending immediately before the Reassessment that were conducted during, and included in, that Reassessment or that were otherwise rendered unnecessary following the Reassessment; or (C) attributable to the annual inflationary increase in real estate taxes; or (D) any real property taxes and assessments incurred during the Base Year as determined under the Lease which are included in the calculation of Operating Expenses for the Base Year. (ii) During the Full Protection Period, Tenant shall not be obligated to pay the Tax Increase to the extent pertaining to the Prop 13 Protection Period. The term "Tax Increase" shall mean that portion of the Taxes, as calculated immediately following the Reassessment, which is attributable solely to the Reassessment. Tenant shall be responsible for all Taxes (including, without limitation, any Tax Increase) applicable to the period following the expiration of the Prop 13 Protection Period regardless of whether such Taxes are based on the Reassessment or any subsequent reassessment. Accordingly, the term Tax Increase shall not include (and Tenant shall be required to pay for) any portion of the Taxes Tax Increase relating to a Reassessment allocable to the Full Protection Period. (iii) During the Partial Protection Period, (A) Tenant shall be obligated to pay thirty-three and one-third percent (33 1/3rd%) of the Tax Increase relating to a Reassessment allocable to the first (1st) year of the Partial Protection Period; (B) Tenant shall be obligated to pay sixty-seven percent (67%) of the Tax Increase relating to a Reassessment allocable to the Warner Center III\Health Net\JS\December 22, 2003 second year (2nd) year of the Partial Protection Period; and (C) thereafter Tenant shall be obligated to pay in full the portion of the Tax Increase relating to a Reassessment allocable to any year after the second year (2nd) year of the Partial Protection Period. (iv) The amount of any Tax Increase which Tenant is not obligated to pay, if any, in connection with a particular Reassessment pursuant to the terms of this Section 3.3.9.1.1 shall be referred to hereinafter as a “Proposition 13 Protection Amount”. If, in connection with a pending or anticipated sale of the Building by Landlord, the occurrence of a Reassessment is reasonably foreseeable by Landlord and the Proposition 13 Protection Amount attributable to such Reassessment can be reasonably quantified or estimated for each year of the Lease Term commencing with the year in which the Reassessment will occur, the terms of this Section 3.3.9.1.1(iv) shall apply to each such Reassessment. Upon notice to Tenant, Landlord shall have the right to purchase the Proposition 13 Protection Amount relating to the applicable Reassessment (the “Applicable Reassessment”), within a reasonable period of time (but no earlier than 45 days) prior to the pending or anticipated sale of the Building by Landlord, by paying to Tenant an amount equal to the “Proposition 13 Purchase Price”, as that term is defined below, provided that the right of any successor of Landlord to exercise its right of repurchase hereunder shall not apply to any Reassessment which results from the sale of the Building pursuant to which such successor of Landlord became the Landlord under the Lease, as hereby amended. ▇▇▇▇▇▇▇▇’s right to purchase the Proposition 13 Protection Amount shall expire and terminate upon the sale of the Building by Landlord if prior thereto Landlord did not exercise the right of purchase, or upon Landlord’s failure to pay the Proposition 13 Purchase Price to Tenant on or before the closing of such sale. As used herein, “Proposition 13 Purchase Price” shall mean the present value of the Proposition 13 Protection Amount remaining during the Term, as of the date of payment of the Proposition 13 Purchase Price by Landlord. Such present value shall be calculated (i) is by using the portion of the Proposition 13 Protection Amount attributable to each remaining year of the Term of the Lease (as though the portion of such Proposition 13 Protection Amount benefited Tenant at the end of each such year), as the amounts to be discounted, and (ii) by using discount rates for each amount to be discounted equal to the average rates of yield for United States Treasury Obligations with maturity dates as close as reasonably possible to the end of each year of the Term of the Lease during which the portions of the Proposition 13 Protection Amount would have benefited Tenant, which rates shall be those in effect as of Landlord’s exercise of its right hereunder. Upon such payment of the Proposition 13 Purchase Price, the provisions of Section 3.3.9.1.1 (ii) and (iii) above, of shall not apply to any Tax Increase attributable to the initial assessment Applicable Reassessment. Since Landlord, if Landlord exercises its repurchase right hereunder, will be estimating the Proposition 13 Purchase Price because a Reassessment has not yet occurred, then when such Reassessment occurs, if Landlord has underestimated the Proposition 13 Purchase Price, then upon notice by Landlord to Tenant, ▇▇▇▇▇▇’s Rent next due shall be credited with the amount of such underestimation, and if Landlord overestimates the Proposition 13 Purchase Price, then upon notice by Landlord (to be given promptly following ▇▇▇▇▇▇▇▇’s receipt of notice of Reassessment) to Tenant, Rent next due shall be increased by the amount of the value of the San Diego Facility, the base, shell and core of the Building or the tenant improvements located in the Building, (ii) is attributable to assessments which were pending prior to the Reassessment or which would otherwise have occurred unrelated to the sale, or (iii) is attributable to the annual inflationary increase of real estate taxes. In addition, nothing contained in this paragraph is intended to excuse Tenant from paying the full amount of any Taxes (including, without limitation, as a result of reassessments) resulting from any construction and/or improvements made to the San Diego Facility by Landlord or Tenant at any time pursuant to and/or in connection with this Leaseoverestimation.