EXHIBIT 10.10
STANDARD OFFICE LEASE
BY AND BETWEEN
LAOP IV, LLC
AS LANDLORD,
AND
SMARTALK TELESERVICES, INC.
AS TENANT
Table of Contents
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Page
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ARTICLE 1 - Basic Lease Provisions.............................. 1
ARTICLE 2 - Term................................................ 3
ARTICLE 3 - Rental.............................................. 3
(a) Basic Rental........................................ 3
(b) Increase in Direct Costs............................ 4
(c) Definitions......................................... 4
(d) Determination of Payment............................ 8
ARTICLE 4 - Security Deposit.................................... 10
ARTICLE 5 - Holding Over........................................ 10
ARTICLE 6 - Personal Property Taxes............................. 10
ARTICLE 7 - Use................................................. 11
ARTICLE 8 - Condition of Premises............................... 11
ARTICLE 9 - Repairs and Alterations............................. 12
ARTICLE 10 - Liens............................................... 14
ARTICLE 11 - Project Services.................................... 14
ARTICLE 13 - Indemnity; Exemption of Landlord from Liability..... 17
(a) Indemnity........................................... 17
(b) Exemption of Landlord from Liability................ 17
ARTICLE 14 - Insurance
(a) Tenant's Insurance.................................. 17
(b) Form of Policies.................................... 18
(c) Landlord's Insurance................................ 18
(d) Waiver of Subrogation............................... 18
(e) Compliance with Law................................. 19
ARTICLE 15 - Assignment and Subletting........................... 19
ARTICLE 16 - Damage or Destruction............................... 22
ARTICLE 17 - Subordination....................................... 23
ARTICLE 18 - Eminent Domain...................................... 24
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ARTICLE 19 - Default............................................. 24
ARTICLE 20 - Remedies............................................ 25
ARTICLE 21 - Transfer of Landlord's Interest..................... 27
ARTICLE 22 - Broker.............................................. 27
ARTICLE 23 - Parking............................................. 27
ARTICLE 24 - Waiver.............................................. 28
ARTICLE 25 - Estoppel Certificate................................ 28
ARTICLE 26 - Liability of Landlord............................... 28
ARTICLE 27 - Inability to Perform................................ 29
ARTICLE 28 - Hazardous Waste..................................... 29
ARTICLE 29 - Surrender of Premises; Removal of Property.......... 31
ARTICLE 30 - Miscellaneous....................................... 32
(a) Severability; Entire Agreement...................... 32
(b) Attorney's Fees..................................... 32
(c) Time of Essence..................................... 32
(d) Headings............................................ 33
(e) Reserved Area....................................... 33
(f) No Option........................................... 33
(g) Use of Project Name; Improvements................... 33
(h) Rules and Regulations............................... 33
(i) Quite Possession.................................... 33
(j) Rent................................................ 33
(k) Successors and Assigns.............................. 34
(l) Notices............................................. 34
(m) Persistent Delinquencies............................ 34
(n) Right of Landlord to Perform........................ 34
(o) Access, Changes in Project, Facilities, Name........ 34
(p) Corporate Authority................................. 35
(q) Identification of Tenant............................ 35
(r) Substitute Premises................................. 35
(s) Building Codes...................................... 36
(t) Exhibits and Addendum............................... 36
ARTICLE 31 - Option to Renew..................................... 36
(a) Option Right........................................ 36
(b) Option Rent......................................... 36
(c) Exercise of Options................................. 36
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(d) Determination of Market Rent........................ 37
ARTICLE 32 - Right of First Offer/Right of First Refusal......... 37
(a) Right of First Offer................................ 37
(b) Right of First Refusal.............................. 38
ARTICLE 33 - Storage Space....................................... 40
ARTICLE 34 - Signage/Directory................................... 40
ARTICLE 35 - Option to Cancel.................................... 40
ARTICLE 36 - Building Antenna(s) or Satellite Dish(es)........... 41
ARTICLE 37 - Limited Arbitration/Dispute Resolution Procedure.... 42
Addendum [_] Yes [X] No
Exhibit "A" Premises
Exhibit "B" Rules and Regulations
Exhibit "C" Notice of Lease Term Dates and Tenant's Percentage
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STANDARD OFFICE LEASE
This standard Office Lease ("Lease") is made and entered into as of this
10th day of January, 1996, between LAOP IV, LLC, a Nevada limited liability
company ("Landlord"), and SMARTALK TELESERVICES, INC., a California corporation
("Tenant").
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises described as Suite No. 500, as designated on the plan attached hereto
and incorporated herein as Exhibit "A" ("Premises"), of the project ("Project")
now known as Westwood Terrace, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for the term and upon the terms and conditions
hereinafter set forth, and Landlord and Tenant hereby agree as follows:
ARTICLE 1 - Basic Lease Provisions:
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A. Term: Commencement Date: On the later of (i) February 1, 1996, or
(ii) up to five (5) business days after
substantial completion of the tenant
improvement work defined in Article 9 below
to install Tenant's main "T-Switch";
provided, however, Tenant shall use its best
efforts to install such switch prior to the
expiration of said five (5) day period, and
if Tenant does install said switch prior to
the expiration of such five (5) day period
the Lease shall commence on such earlier
date. Substantial completion shall mean
completion of "the Tenant Improvements"
(defined in Article 9), punch-list items
excluded, in accordance with the approved
plans, and the final inspection by the City
of Los Angeles has occurred. Upon Tenant's
occupancy of the Premises, Landlord and
Tenant agree to execute and deliver a
Commencement Letter in a form substantially
similar to that attached hereto as Exhibit
"C." Tenant shall be allowed access to the
Premises prior to the commencement of the
Lease term (without a charge for rent), to
ensure the Premises are properly furnished
and special leasehold improvements,
equipment, furniture, telephone and
computer/data cabling is properly installed
and operational; provided, Tenant shall not
unreasonably interfere with any tenant
improvement work to be done. If Tenant
interferes with the tenant improvement work
because of such early occupancy, the
Commencement Date shall not be delayed but
shall be started as of the date which would
have occurred but for such Tenant
interference.
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Expiration Date: Seventy-two (72) months from the
Commencement Date.
B. Square Footage: Approximately 6,795 rentable square feet.
C. Basic Rental:
D. Base Year: 1996
E. Tenant's Proportionate Share:
F. Security Deposit
G. Permitted Use: General office use not inconsistent with the
use in the Project or other first-class
office projects in the area of the Project.
H. Broker: First Property Realty Corporation;
▇▇▇▇▇▇▇▇ Properties, Limited, Inc.
I. Parking Passes: Tenant shall have the use of three (3)
unreserved parking spaces for each 1,000
square feet contained in the Premises, which
equals twenty (20) spaces. Four (4) of the
twenty (20) spaces may be reserved spaces.
Parking charges for such spaces shall be as
set forth in Article 1.J., immediately
below.
J. Parking Charges: All parking provided in Article 1.1. above
shall be at the prevailing monthly rate in
effect at the beginning of each month during
the term of this Lease, and any extensions
or renewals thereof; provided, however, such
charge during the Initial Lease term shall
not exceed Ninety-Nine Dollars ($99.00) a
space each month (including all applicable
taxes) for each unreserved space or One
Hundred Thirty-Two Dollars ($132.00) a space
each month (including all applicable taxes)
for each unreserved space.
K. First Month's Rent:
L. Consent: Whenever the consent of either Landlord or
Tenant is required hereunder, the party
giving such consent shall not unreasonably
withhold or delay the giving of such
consent.
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ARTICLE 2 - Term
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The term of this Lease shall commence on the Commencement Date (the
"Commencement Date") as set forth in Article l.A. of the Basic Lease Provisions,
and shall end on the expiration date set forth in Article l.A. of the Basic
Lease Provisions. If Landlord is unable to deliver possession of the Premises
to Tenant on or before the Commencement Date, Landlord shall not be subject to
any liability for its failure to do so, and such failure shall not affect the
validity of this Lease nor the obligations of Tenant hereunder, but the term
hereof shall commence on the earlier of (a) the day that Landlord gives Tenant
written notice that the Premises are ready for occupancy or (b) on the day that
Tenant first occupies the Premises, and the expiration of the term hereof shall
be extended accordingly.
In the event that the Substantial Completion of the Premises has not
occurred by the "Outside Date", which shall be July 1, 1996, and as such the
July 1, 1996 date may be extended by the number of days of tenant delays (as
defined below), then the sole remedy of Tenant shall U the right to deliver a
notice to Landlord ("Termination Notice") electing to terminate this Lease
effective upon receipt of the Termination Notice by Landlord ("Effective Date").
The Termination Notice must be delivered by Tenant to Landlord, if at all, not
earlier than the Outside Date and not later than five (5) business days after
the Outside Date.
ARTICLE 3 - Rental
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(a) BASIC RENTAL. Tenant agrees to pay to Landlord during the term hereof,
at Landlord's office or to such other person or at such other place as directed
from time to time by written notice to Tenant from Landlord, the initial monthly
and annual sums as set forth in Article 1.C of the Basic Lease Provisions,
payable in advance on the first day of each calendar month, without demand,
setoff or deduction, and in the event this Lease commences or the date of
expiration of this Lease occurs other than on the first day or last day of a
calendar month, the rent of such month shall be prorated. Notwithstanding the
foregoing, the first month's rent shall be paid to Landlord in accordance with
Article 1.K. of the Basic Lease provisions. Basic Rental shall be subject to
increase from time to time pursuant to the subsequent provisions this Article 3,
or other articles of this Lease and any Addendum (if applicable) incorporated
herein.
(b) INCREASE IN DIRECT COSTS. The term "Base Year" means the calendar year
set forth in Article ▇.▇. of the Basic Lease Provisions. If, in any calendar
year during the term of this Lease, the "direct costs" (as hereinafter defined)
paid or incurred by Landlord shall be higher than the direct costs for the Base
Year, Tenant shall pay an additional sum for such and each subsequent calendar
year equal to the product of the amount set forth in Article 1.E. of the Basic
Lease Provisions multiplied by such increased amount of "direct costs." In the
event either the Premises and/or the Project is expanded or reduced, then
Tenant's proportionate share shall be appropriately adjusted, and as to the
calendar year in which such change occurs, Tenant's proportionate share for such
year shall be determined on the basis of the number of days during that
particular calendar year that such Tenant's proportionate share was in effect.
In the event this Lease shall terminate on any date other than the last day of A
calendar year, the additional sum payable hereunder by Tenant during the
calendar year in which this Lease terminates shall be prorated on the basis of
the relationship which the number of days which have elapsed from the
commencement of said calendar year to and including said date on which this
Lease
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terminates bears to three hundred sixty (360). Any and all amounts due and
payable by Tenant pursuant to Article 3(b), (c) and (d) hereof shall be deemed
"Additional Rent" and Landlord shall be entitled to exercise the same rights and
remedies upon default in these payments as Landlord is entitled to exercise with
respect to defaults in monthly Basic Rental payments.
(c) DEFINITIONS. As used herein the term "direct costs" shall mean the sum
of the following:
(i) "Tax Costs," which shall mean any and all real estate taxes and
other similar charges on real property or improvements, assessments, water and
sewer charges, and all other charges assessed, reassessed or levied upon the
Project and appurtenances thereto and the parking or other facilities thereof,
or the real property (the "Property") thereunder (collectively the "Real
Property") or attributable thereto or on the rents, issues, profits or income
received or derived therefrom which axe assessed, reassessed or levied by the
United States, the state of California or any local government authority or
agency or any political subdivision thereof, and shall include Landlord's
reasonable legal fees, costs and disbursements incurred in connection with
proceedings for reduction of Tax Costs or any part thereof (but only to the
extent Landlord reasonably expects to receive a reduction of Tax Costs);
provided, however, if at any time after the date of this Lease the methods of
taxation now prevailing shall be altered so that in lieu of or as a supplement
to or a substitute for the whole or any part of any Tax Costs, there shall be
assessed, reassessed or levied (a) a tax, assessment, reassessment, levy,
imposition or charge wholly or partially as a net income, capital or franchise
levy or otherwise on the rents, issues, profits or income derived therefrom, or
(b) a tax, assessment, reassessment, levy (including but not limited to any
municipal, state or federal levy), imposition or charge measured by or based in
whole or in part upon the Real Property and imposed upon Landlord, or (c) a
license fee measured by the rent payable under this Lease, then all such taxes,
assessments, reassessments or levies or the part thereof so measured or based,
shall be deemed to be included in the term "direct costs." Notwithstanding the
foregoing, Tax Costs shall not include excess profits, franchise taxes, gift
taxes, capital stock taxes, inheritance and succession taxes, estate taxes and
federal and state income taxes. Any increase in Tax Costs as a result of the
sale of the Project in 1995 which is paid, assessed or which accrues during the
Base Year shall be included in Tax Costs for the Base Year. Notwithstanding
anything to the contrary set forth in this Article 3(c)(i), any Tax Cost
increase resulting from the sale or transfer of the Project after the execution
of this Lease which results in a reassessment of the Project for tax purposes
shall not be included in computations for payment of increases of direct costs
during the first three (3) years of the initial Lease term.
(ii) "Operating Costs," which shall mean all costs and expenses
incurred by Landlord in connection with the maintenance, operation, replacement,
ownership (as set forth herein) and repair of the Project, the equipment, the
intrabuilding network cable, adjacent walks, malls and landscaped and common
areas and the parking structure, areas and facilities of the Project, including,
but not limited to, salaries, wages, medical, surgical and general welfare
benefits and pension payments, payroll taxes, fringe benefits, employment taxes,
workers' compensation, uniforms and dry cleaning thereof for all persons who
perform duties connected with the operation, maintenance and repair of the
Project, its equipment the intrabuilding network cable and the adjacent walks
and landscaped areas, including janitorial, gardening, security , parking,
operating engineer, elevator, painting, plumbing, electrical, carpentry,
heating,
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ventilation, air conditioning, window washing, hired services, a reasonable
allowance for depreciation of the cost of acquiring or the rental expense of
personal property used in the maintenance, operation and repair of the Project,
accountant's fees incurred in the preparation of rent adjustment statements,
legal fees, real estate tax consulting fees, personal property taxes on property
used in the maintenance and operation of the Project, gross receipts tax imposed
by the City of Los Angeles, capital expenditures incurred to effect economies of
operation (but only to the extent Landlord reasonably expects to receive a
savings effect from such capital expenditures) and capital expenditures required
by government regulations, laws, or ordinances, and the cost of all charges for
electricity, gas, water and other utilities furnished to the Project, including
any taxes thereon; the cost of all charges for fire and extended coverage,
liability and all other insurance for the Project carried by Landlord (provided,
however, if Landlord acquires additional insurance, then Landlord shall
recalculate the Base Year to take into account the cost of such additional
insurance as if the same had been an operating Cost in existence at the time the
Base Year was determined); the cost of all building and cleaning supplies and
materials; the cost of all charges for cleaning, maintenance and service
contracts and other services with independent contractors (including property
management fees); and license, permit and inspection fees relating to the
Project. In the event, during any calendar year, the Project is less than
ninety-five percent (95%) occupied at all times, the operating Costs shall be
adjusted to reflect the operating costs of the Project as though ninety-five
percent (95%) were occupied at all times, and the Increase or decrease in the
sums owed hereunder shall be based upon such operating costs as so adjusted.
Operating Costs shall also include all management fees (provided, however, the
Base Year Management fees shall be determined based on the percentage described
in Subsection (c)(ii)(k) immediately below) and administrative fees.
Notwithstanding the foregoing, for purposes of this Lease, Operating Costs and
Tax Costs shall not, however, include:
(a) Costs, including marketing costs, legal fees, space planner's
fees, advertising and promotional expenses, and brokerage fees incurred in
connection with the original construction or development, or leasing of the
Project, and costs, including permit, license and inspection costs,
incurred with respect to the installation of tenant improvements made for
new tenants in the Project or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant space for tenants or
other occupants of the Project (excluding, however, such costs relating to
any common areas of the Project or parking facilities);
(b) Depreciation, interest and principal payments on mortgage and
other debt costs, if any, penalties and interest, costs of all capital
items (except as set forth in (c)(ii) above with respect to economies of
operation and governmental compliance)f including without limitation,
repairs, replacements and alterations, and costs of capital improvements
and equipment;
(c) Costs for which Landlord is reimbursed by any tenant or
occupant of the Project or by insurance by its carrier or any tenant's
carrier, and electric power costs for which any tenant directly contracts
with the local public service company;
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(d) Costs associated with the operation of the business of the
partnership or entity which constitutes the Landlord, as the same are
distinguished from the costs of operation of the Project;
(e) The wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on maintaining,
operating or managing the Project vis-a-vis time spent on matters unrelated
to maintaining, operating or managing the Project; provided, that in no
event shall Operating Costs for purposes of this Lease include wages and/or
benefits attributable to personnel above the level of Project Manager or
Project Engineer (and allocated costs of Landlord's Asset Supervisor);
(f) Amount as ground rental for the Project by the Landlord;
(g) Except for a Project management fee to the extent allowed
pursuant to Subparagraph (c)(ii)(k) below, overhead and profit increment
paid to the Landlord or to subsidiaries or affiliates of the Landlord for
services in the Project to the extent the same exceeds the costs of such
services rendered by unaffiliated third parties on a competitive basis;
(h) Any compensation, including wages, benefits and bonuses paid
to clerks, attendants or other persons in commercial concessions (except
parking) operated by the Landlord;
(i) Rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the
cost of which would be excluded from Operating Costs as a capital cost,
except equipment not affixed to the Project which is used in providing
janitorial or similar services and, further excepting from this exclusion
such equipment rented or leased to remedy or ameliorate an emergency
condition in the Project;
(j) Costs, other than those incurred in ordinary maintenance and
repair, for sculpture, painting, fountains or other objects or art;
(k) Fees payable by landlord for management of the Project in
excess of five percent (5%) of Landlord's gross rental revenues, adjusted
and grossed up to reflect a one hundred percent (100%) occupancy of the
Project with all tenants paying rent, including base rent, pass-throughs
and parking fees (but excluding the cost of after-hours services or
utilities) from the Project for any calendar year or portion thereof;
(1) Any costs expressly excluded from Operating costs elsewhere
under this Lease;
(m) Rent for any space occupied by Project management personnel
to the extent the size or rental rate of such office space exceeds the size
or fair market rental value of office space occupied by management
personnel of the comparable buildings in the vicinity of the Project, with
adjustment where appropriate for the size of the applicable project;
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(n) Costs arising from Landlord's charitable or political
contributions;
(o) costs arising from the gross negligence or willful misconduct
of Landlord or its agents, employees, vendors, contractors, or providers of
materials or services, and costs arising from legal proceedings against
other tenants or occupants of the Project, or prospective occupants of the
Project;
(p) Costs of advertising and promotion;
(q) Except as set forth in Article 28 below, costs incurred to
comply with laws relating to the removal of hazardous material (as defined
under applicable law) and asbestos or asbestos containing material
(collectively, "Hazardous Material") which was in existence in or on the
Project prior to the Lease Commencement Date, and was of such a nature that
a federal, state or municipal governmental authorities, if it had then had
knowledge of the presence of such Hazardous Material, in the state, and
under the conditions that then existed in or on the Project, would have
then required the removal of such Hazardous Material or other remedial or
containment action with respect thereto; and costs incurred to remove,
remedy, contain or treat Hazardous Material, which Hazardous Material is
brought into or onto the Project after the date hereof by Landlord and is
of such a nature, at that time, that a federal, state or municipal
governmental authority, if it had then had knowledge of the presence of
such Hazardous Material in the state and under the conditions that then
exists in the building or on the Project, would have then required the
removal of such Hazardous Material or other remedial or containment action
with respect thereto;
(r) Any bad debt loss, rent loss, or reserves;
(s) Costs of seismic inspection and testing required pursuant to
statutes, codes or ordinances in effect and as enacted prior to the Lease
Commencement Date; and
(t) costs for capital improvements to comply with the
requirements of the Americans with Disabilities Act as enacted as of the
execution of this Lease.
(d) DETERMINATION OF PAYMENT.
(i) At any time following the end of calendar year 1996, but not more
often than once (excepting therefrom adjusted ▇▇▇▇▇▇▇▇) during each calendar
year, commencing with the present calendar year, Landlord shall furnish to
Tenant a written statement showing in reasonable detail Landlord's direct costs
for the Base Year and for the calendar year preceding the year in which such
statement is furnished, and showing the amount, if any, of any increase or
decrease in the sums due from Tenant for such calendar year. The failure of
Landlord to so furnish said statement shall not constitute a default by Landlord
hereunder or a waiver of Landlord's right to any adjustment provided for
hereunder.
(ii) On the monthly rental payment date which next occurs thirty (30)
days after Tenant's receipt of such statement Tenant shall pay to Landlord an
amount equal to the sum of (a) the amount shown in said statement as being due
from Tenant (less any amounts paid by
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Tenant on account therefrom during such previous calendar year) and (b) one
twelfth (1/12th) of said amount multiplied by the number of rental payment dates
having elapsed during the current calendar year, to be applied on account of
Tenant's proportionate share of the increase in direct costs for the then
present calendar year. The monthly rental payment then due and subsequent
monthly rental payments during the then current calendar year shall be increased
by one-twelfth (1/12th) of Tenant's Proportionate Share of the increase in
direct costs for the preceding calendar year over the Base Year direct costs. In
the case of the decrease in direct costs, any overpayment by Tenant shall be
credited against the next rent payment falling due.
(iii) In the event Tenant disputes Landlord's calculation of any
Additional Rent due hereunder for a given Lease year, Tenant shall, only once
for each lease year, have the right within one hundred eighty (180) days of
receipt of the yearly reconciliation provided to Tenant from Landlord, after
reasonable notice and at reasonable times, to inspect Landlord's accounting
records at Landlord's accounting office and if, after such inspection, Tenant
still disputes such Additional Rent, a certification as to the proper amount
shall be made by a nationally recognized accounting firm (who is paid on an
hourly or flat-fee basis and not a contingency or commission basis) selected by
Tenant and approved by Landlord. Tenant agrees to pay the cost of such
certification unless it is subsequently determined that Landlord's original
statement was in error to Tenant's disadvantage by more than five percent (5%)
of the direct costs. As a condition precedent to its exercise of its rights of
dispute aforesaid, Tenant shall timely pay to Landlord all amounts set forth in
the statement which Tenant wishes to dispute.
No audit may be conducted by Tenant if any other tenant of the Project
has notified Landlord of its intention to perform an audit and timely performs
the same. If Tenant requests an audit and another tenant of the Project has
previously notified Landlord of its intention to audit, then Landlord agrees to
furnish to Tenant a copy of the results of such other audit. No audit shall be
conducted if Tenant is in default under any provision of this Lease, including,
but not limited to, timely payment of any amount due pursuant to the actual
statement. Tenant shall deliver to Landlord a copy of the results of an audit
within fifteen (15) days of its receipt by Tenant.
If an audit indicates an over-billing, Tenant may submit a claim for
the over-billed amount to Landlord, detailing the nature of the over-billing,
and Landlord shall have sixty (60) days to pay such amount or contest the claim
by giving notice thereof to Tenant, detailing the nature of Landlord's contest
of Tenant's claims. If Landlord contests the claim, either Landlord or Tenant
may submit the claim to arbitration in accordance with the dispute resolution
procedures set forth by the American Arbitration Association (or similar
successor entity) for such matters. If the arbitration discloses that the
actual statement is more than five percent (5%) overstated, Landlord shall,
within thirty (30) days of the date of decision by the Arbitrator, pay to Tenant
the amount of any over-billing. If the Arbitrator determines that the actual
statement is understated, Tenant shall, within thirty (30) days of the date of
the Arbitrator's decision pay to Landlord the amount of the underbilling so
determined.
Except as provided in this Article 3, Tenant shall keep all
information gained in connection with any audit confidential. Tenant shall not
disclose any information gained in connection with any audit to third parties
except to those who must receive the information in order to carry out the
purpose of this Article 3, and agree in writing to keep the information
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confidential. Failure to observe the provision of this confidentiality
requirement shall be deemed a material default under the Lease.
(iv) Landlord shall have the right, prior to the commencement of each
calendar year during the term hereof during which Tenant's obligation may
adjusted under this Article 3, to furnish to Tenant a written estimate showing
in reasonable detail Landlord's estimated direct costs for the next following
calendar year and the amount of Tenant's proportionate share of increase in
direct costs over the Base Year direct costs appropriately prorated on a monthly
basis. Thereafter, the monthly rent adjustment payments becoming due hereunder
shall be in the amounts set forth in said written estimate. Neither Landlord's
failure to deliver nor the late delivery of such estimate shall constitute a
default by Landlord hereunder or a waiver of Landlord's right to any rent or
other-adjustment provided for herein. Within one hundred twenty (120) calendar
days following the close of each calendar year during the term hereof, Landlord
will furnish to Tenant a written statement (the "Reconciliation") showing in
reasonable detail Landlord's actual direct costs for the relevant calendar year,
together with a full statement of any adjustments necessary to reconcile any
sums paid (or credited) hereunder as an estimated amount of Tenant's
Proportionate Share of direct costs during such calendar year with those sums
actually payable and due hereunder for such calendar year as set forth in the
Reconciliation. If the Reconciliation shows that additional sums are due from
Tenant hereunder, Tenant shall pay such sums to Landlord within thirty (30) days
of receipt of the Reconciliation. If the Reconciliation shows that a credit is
due Tenant, such credit shall be credited against the next sums becoming due
from Tenant hereunder. Notwithstanding that the term of this Lease has expired
and Tenant has vacated the Premises, Tenant shall pay to Landlord any additional
sums due Landlord and Landlord shall rebate to Tenant the amount of any credit
due Tenant, as set forth in the Reconciliation for the year in which the Lease
term expired. Even though the term of this Lease has expired and Tenant has
vacated the Premises, when the final determination is made of Tenant's share of
Tax Costs and operating Costs for the year in which this Lease terminated,
Tenant shall pay any increase due over the estimated amounts paid. The terms of
this Article 3(d)(iv) shall survive the expiration or earlier termination of the
Lease Term (including any and all option periods, if applicable).
ARTICLE 4 - Security Deposit
----------------------------
Tenant has deposited with Landlord the sum set forth in Article 1.F. of the
Basic Lease Provisions as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. If Tenant breaches any
provision of this Lease, including but not limited to that payment of rent,
Landlord may, following the expiration of any grace or ▇ ▇▇▇ period, use all or
any part of this security deposit for the payment of any rent or any other sums
in default, or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
deposit is so used or applied, Tenant shall, within five (5) days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
the security deposit to amount then required in Article 1.F. of the Basic Lease
Provisions. Tenant agrees that Landlord shall not be required to keep this
security deposit in trust, segregate it or keep it separate from Landlord's
general funds but Landlord may commingle the security deposit with its general
funds and Tenant shall not be entitled to interest on such deposit. At the
expiration of the Lease term, and provided there exists no default, following
the expiration of any grace or notice period, by Tenant hereunder, the security
deposit or any balance thereof shall
9
be returned to Tenant (or, at Landlord's option, to Tenant's assignee), provided
that subsequent to the expiration of this Lease, Landlord may retain from said
security deposit (a) any and all amounts permitted by California Civil Code
(S)1950.7 or any successor or replacement statute; but not limited to this
section.
ARTICLE 5 - Holding Over
------------------------
Should Tenant, without Landlord's written consent, hold over after
termination of this Lease, Tenant shall become a tenant from month to month,
only upon each and all of the terms herein provided as may be applicable to a
mouth-to-month tenancy, and any such holding over shall not constitute an
extension of this Lease. During the first three (3) months of such holding
over, Tenant shall pay on the first of each month, Monthly Basic Rental, all
direct costs, and all other and additional rent due hereunder at the rate of one
hundred twenty-five percent (25%) for such amounts in effect for the last month
of the Lease term. After the first three (3) months of such holding-over
period, Tenant shall pay Monthly Basic Rental at the rate of one hundred fifty
percent (150%) of the Monthly Basic Rental in effect for the last month of the
term of this Lease, in addition to, and not in lieu of, all other payments
required to be made by Tenant hereunder, including but not limited to, Tenant's
Proportionate Share of any increase in direct costs. If Tenant fails to
surrender the Premises upon the expiration or termination of this Lease, Tenant
hereby indemnifies and agrees to hold Landlord and any real estate broker and
agent harmless from all costs, loss, expense or liability, including without
limitation, costs, real estate brokers claims and attorney's fees.
ARTICLE 6 - Personal Property Taxes
-----------------------------------
Tenant shall pay, prior to delinquency, all taxes assessed against or
levied upon fixtures, furnishings, equipment and all other personal property of
Tenant located in the Premises. In the event any or all of Tenant's fixtures,
furnishings, equipment and other personal property shall be assessed and taxed
with property of Landlord, Tenant shall pay to Landlord its share of such taxes
within ten (10) days after delivery to Tenant by Landlord of a statement in
writing setting forth the amount of such taxes applicable to Tenant's property.
Tenant shall pay directly to the party or entity entitled thereto all business
license fees, gross receipts taxes and similar taxes and impositions which may
from time to time be assessed against or levied upon Tenant, as and when the
same become due and before delinquency. Notwithstanding anything to the
contrary contained herein, any sums payable by Tenant under this Article 6 shall
not be included in the computation of "Tax Costs."
ARTICLE 7 - Use
---------------
Tenant shall use and occupy the Premises only for the use set forth in
Article 1.G. of the Basic Lease Provisions and shall not use or occupy the
Premises or permit the same to be used or occupied for any other purpose without
the prior written consent of Landlord, which Landlord consent may be given or
withheld in its sole and absolute discretion, and Tenant agrees that it will use
the Premises in such a manner so as not to unreasonably interfere with or
infringe the rights of other tenants in the Project. Tenant shall, at its sole
cost and expense, promptly comply with all laws, statutes, ordinances and
governmental regulations or requirements now in force or which may hereafter be
in force relating to or affecting (i) the manner of use or occupancy of the
10
Premises or the Project, and (ii) improvements installed or constructed in the
Premises by or for the benefit of Tenant. Tenant shall not do or permit to be
dome anything which would invalidate or increase the cost of any fire and
extended coverage insurance policy covering the Project and/or the property
located therein and Tenant shall comply with all rules, orders, regulations and
requirements of any organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance underwriters.
Tenant shall promptly upon demand reimburse Landlord for any additional premium
charges for any such insurance policy assessed or increased by reason of
Tenant's failure to comply with the provisions of this Article.
ARTICLE 8 - Condition of Premises
---------------------------------
Tenant hereby agrees that the Premises shall be taken "as is", and Tenant
hereby agrees and warrants that it has inspected the condition of the visible
portion of the Premises and the suitability of same for Tenant's purposes, and
Tenant does hereby waive and disclaim any objection to, cause action based upon,
or claim that its obligations hereunder should be reduced or limited because of
the condition of the visible portions of the Premises or the Project or the
suitability of same for Tenant's purposes. The foregoing sentence
notwithstanding, Landlord agrees to bear the cost for any latent structural
defects in the Premises which are discovered by Tenant (and written notice is
given to Landlord) during the first year of the Lease term only except to the
extent set forth in this Lease, Tenant acknowledges that neither Landlord nor
any agent nor any employee of Landlord has made any representations or warranty
with respect to the Premises or the Project or with respect to the suitability
of either for the conduct of Tenant's business. The taking of possession of the
Premises by Tenant shall conclusively establish that the Premises and the
Project were at such time in satisfactory condition, subject to punch list items
if applicable. Tenant hereby waives Sections 1941 and 1942 of the Civil Code of
California or any successor provision of law.
Landlord reserves the right from time to time: (i) to install, use,
maintain, repair, replace and relocate for service to the Premises and/or other
parts of the Project pipes, ducts, conduits, wires, appurtenant fixtures, and
mechanical systems, wherever located in the Premises or the Project, (ii) to
alter, close or relocate any facility in the Premises or the Common Areas or
otherwise conduct any of the above activities for the purpose of complying with
a general plan for fire/life safety for the Project or otherwise and (iii) to
comply with any federal, state or local law, rule or order with respect thereto
or the regulation thereof not currently in effect. Landlord shall attempt to
perform any such work with the least inconvenience to Tenant as possible
(including the performance of same during after hours), but in no event shall
Tenant be permitted to withhold or reduce Basic Rent or other charges due
hereunder as a result of same or otherwise make claim against Landlord for
interruption or interference with Tenant's business and/or operations or for any
other reason whatsoever unless the work materially interferes with the operation
of Tenant's business.
Landlord agrees, at its sole cost and expense, to thoroughly clean the
Premises immediately prior to Tenant's occupancy and immediately after Tenant
has moved in and "set-up" the Premises.
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ARTICLE 9 - Repairs and Alterations
-----------------------------------
Tenant shall keep the Premises in good condition and repair, except for
damage caused by ordinary wear and tear, or caused by Landlord, its agents,
representatives, employees or contractors or otherwise beyond the reasonable
control of Tenant (provided, however, such exclusion shall not exclude damage
caused by Tenant or Tenant's employees, invitees, agents and the like). All
damage or injury to the Premises or the Project caused by the act or negligence
of Tenant, its employees, agents or visitors, guests, invitees or licensees or
by the use of the Premises shall be promptly repaired by Tenant, at its sole
cost and expense (except to the extent Landlord has responsibility for same
under this Lease.), to the satisfaction of Landlord; provided, however, that for
damage to the Project, Landlord shall have the right (but not the obligation) to
select the contractor and oversee all such repairs. Landlord may make any
repairs which are not promptly made by Tenant after Tenant's receipt of written
notice and the reasonable opportunity of Tenant to make said repair within five
(5) business days from receipt of said written notice, and charge Tenant for the
cost thereof, which cost shall be paid by Tenant within five (5) days from
invoice from Landlord. Tenant shall be responsible for the design and function
of all nonstandard improvements of the Premises, whether or not installed by
Landlord at Tenant's request. Tenant waives all rights to make repairs at the
expense of Landlord, or to deduct the cost thereof from the rent. Tenant shall
make no alterations, changes or additions in or to the Premises without
Landlord's prior written consent, and then only by contractors or mechanics
approved by Landlord in writing and upon the approval by Landlord in writing of
fully detailed and dimensioned plans and specifications pertaining to the work
in question, to be prepared and submitted by Tenant at its sole cost and
expense. Tenant shall at its sole cost and expense obtain all necessary
approvals and permits pertaining to any work approved by Landlord. If Landlord,
in approving any work, specifies a reasonable commencement date therefor, Tenant
shall not commence any work prior to such date. Tenant hereby indemnifies and
agrees to hold Landlord free and harmless from all liens and claims of lien, and
all other liability, claims and demands arising out of any work done or material
supplied to the Premises by or at the request of Tenant. If permitted
alterations, changes, or additions are made, they shall be made at Tenant's sole
cost and expense and shall be and become the property of Landlord, except that
Landlord may, by written notice to Tenant given at the time of approval of such
work, require Tenant it Tenant's expense to remove all partitions, counters,
i and the like installed by Tenant (excluding the Tenant Improvements as
defined below), and to repair any damages to the Premises caused by such
removal. With regard to repairs, alterations or any other work (excluding the
Tenant Improvements) arising from or related to this Article 9 which Tenant
requests Landlord to complete, Landlord shall be entitled to receive an
administrative/supervision fee of fifteen percent (15%) of the total cost of all
(i) work performed; (ii) materials, plans and drawings furnished; and (iii) all
other costs and expenses related to such repairs, alterations or other work.
below, Tenant shall also pay for any required metering system for such unit(s)
and shall pay for any and all utility charges to operate the unit(s).
Notwithstanding anything to the contrary contained in this Lease, the
contractor(s) and subcontractors constructing the Tenant Improvements shall
receive free on-site parking during construction of the Tenant Improvements, and
Tenant shall not be charged for the use of freight elevators, loading docks,
utilities or temporary HVAC during the construction of the Tenant Improvements.
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ARTICLE 10 - Liens
------------------
Tenant shall keep the Premises and the Project free from any mechanics'
liens, vendors liens or any other liens arising out of any work performed,
materials furnished or obligations incurred by Tenant, and agrees to defend,
indemnify and hold harmless Landlord from and against any such lien or claim or
action thereon, together with costs of suit and reasonable attorneys, fees
incurred by Landlord in connection with any such claim or action. Before
commencing any work of alteration, addition or improvement (other than the
Tenant Improvements) to the Premises, Tenant shall give Landlord at least ten
(10) business days' written notice of the proposed commencement of such work (to
afford Landlord an opportunity to post appropriate notices of non-
responsibility). In the event that there shall be recorded against the Premises
or the Project or the property of which the Premises is a part any claim or lien
arising out of any such work performed, materials furnished or obligations
incurred by Tenant and such claim or lien shall not be removed or discharged
within ten (10) days of filing, Landlord shall have the right but not the
obligation to pay and discharge said lien without regard to whether such lien
shall be lawful or correct or to require that Tenant deposit with Landlord in
cash, lawful money of the United States, one hundred fifty percent (150%) of the
amount of such claim, which sum may be retained by Landlord until such claim
shall have been removed of record or until judgment shall have been rendered on
such claim and such judgment shall have become final, at which time Landlord
shall have the right to apply such deposit in discharge of the judgment on said
claim and any costs, including attorneys' fees incurred by Landlord, and shall
remit the balance thereof to Tenant.
ARTICLE 11 - Project Services
-----------------------------
(a) Landlord agrees to furnish to the Premises, at a cost to be included
in Operating Costs, from 8:00 a.m. to 6:00 p.m. Mondays through Fridays and 9:00
a.m. to 1:00 p.m. on Saturdays, excepting local and national holidays, air
conditioning and heat, electric current for normal lighting and fractional
horsepower for office machines, elevator service and water on the same floor as
the Premises, for lavatory and drinking purposes, all in such reasonable
quantities as in the judgment of Landlord is reasonably necessary for the
comfortable occupancy of the Premises and otherwise consistent with the amounts
furnished by landlords of similar office buildings in West Los Angeles.
Janitorial and maintenance services shall be furnished five (5) days a week,
excepting local and national holidays. Tenant shall comply with all non-
discriminatory rules and regulations which Landlord may reasonable establish for
the proper functioning and protection of the common area air conditioning,
heating, elevator, electrical intrabuilding network cable and plumbing systems.
Landlord shall enforce said rules and regulations on a non-discriminatory basis.
Landlord shall not be liable for, and there shall be no rent abatement as a
result of, any stoppage, reduction or interruption of any such services caused
by governmental rules, regulations or ordinances, riot, strike, labor disputes,
breakdowns, accidents, necessary repairs or other cause. Except as specifically
provided in this Article 11, Tenant agrees to pay for all utilities and other
services utilized by Tenant for all overtime or additional building services
furnished to Tenant not uniformly furnished to all tenants of the Project at
Landlord's actual expense.
(b) Tenant will not, without the prior written consent of Landlord, use
any apparatus or device in the Premises, including without limitation electronic
data processing machines,
13
computer or video equipment or other machines or equipment, using current in
excess of 110 volts, which will in any way increase the amount of electricity or
water usually furnished or supplied for use of the Premises as general office
space; nor connect any apparatus, machine or device with water pipes or electric
current (except through existing electrical outlets in the Premises), for the
purpose of using electric current or water. Nothing contained in this subsection
(b) is intended to restrict Tenant from using equipment and other machines which
are deemed to be standard in first-class office buildings in West Los Angeles.
(c) If Tenant shall require electric current in excess of that which
Landlord is obligated to furnish under Article 11(a) and (b) above, Tenant shall
first obtain the written consent of Landlord, which Landlord may refuse in its
reasonable discretion, to the use thereof and Landlord may cause an electric
current meter to be installed in the Premises to measure the amount of electric
current consumed for any such other use. The cost of any such meter and of
installation, maintenance and repair thereof shall be paid for by Tenant so long
as such consumption by Tenant is in excess of that uniformly furnished to all
tenants at Landlord's expense, and Tenant agrees to pay to Landlord, promptly
upon demand therefor by Landlord, for all such excess electric current consumed
by any such use as shown by said meter at the rates charged for such service by
the City in which the Project is located or the local Public Utility, as the
case may be, furnishing the same, plus any additional expense incurred by
Landlord in keeping account of the electric current so consumed.
(d) If any lights, machines or equipment (including but not limited to
computers) are used by Tenant in the Premises in amounts beyond the standard
found in first-class office buildings in West Los Angeles and which materially
affect the temperature otherwise maintained by the air conditioning system, or
generate substantially more heat in the Premises than would be generated by the
building standard lights and usual fractional horsepower office equipment,
Landlord shall have the right to install any machinery and equipment which
Landlord reasonably deems necessary to restore temperature balance, including
but not limited to modifications to the standard air conditioning equipment, and
the cost thereof, including the cost of installation and any additional cost of
operation and maintenance occasioned thereby, shall be paid by Tenant to
Landlord upon demand by Landlord. Landlord shall not be liable under any
circumstances for loss of or injury to properly, however occurring, through or
in connection with or incidental to failure to furnish any of the foregoing,
[unless such failure was within Landlord's actual control to prevent.]
(e) If Tenant requires heating, ventilation and/or air conditioning during
times other than the times provided in Article 11(a) above, Tenant shall give
Landlord such advance notice as Landlord shall reasonably require and shall pay
Landlord's actual cost for the use of such equipment with a two (2) hour minimum
provided, however, the cost for the use f such equipment shall not exceed,
during the Lease term, Sixty-Five Dollars ($65.00) for each hour.
(f) Landlord, at its sole cost and expense, shall hire a security service
company for the Project, which company shall also provide after-hours escort
service to the Project's parking structure for Tenant's employees and visitors.
Landlord makes no representations as to the type and level of security or
quality of the company's employees. Tenant specifically agrees that the
security is for the Project and is not a full-time service to guard the parking
structure or the Premises.
14
(g) In the event that Tenant is prevented from using the Premises or any
portion thereof as a result of any failure of Landlord to provide utilities,
services or access to the Premises or the Project, or there exists a hazardous
material in the Premises (not brought into the Premises by Tenant or any party
under Tenant's control, including employees, invitees, customers and the like)
which by law prevents Tenant from using the Premises, then Tenant shall promptly
give Landlord notice thereof ("Tenant's Notice"). Notwithstanding anything to
the contrary contained in this Lease, in the event that Tenant prevented from
using the Premises or any portion thereof as a result of such a failure for a
period of five (5) consecutive business days following the date Landlord
receives Tenant's Notice ("Notice Date"), all of Tenant's rents (and escalations
thereto) shall be abated or reduced, as the case may be, in the proportion that
the rentable area of the portion of the Premises that the Tenant is prevented
from using bears to the total rentable area of the Premises, during the period
after the Notice Date that Tenant is prevented from conducting its business from
the Premises or portion of the Premises. However, in the event that Tenant is
prevented from conducting its business in any portion of the Premises and the
remaining portion of the Premises is not sufficient to allow Tenant to
efficiently conduct its business therein, and if Tenant does not conduct its
business-from such remaining portion, then all of the rents for the entire
Premises shall be abated during said period. Provided, however, that if Tenant
is prevented from using the Premises and Tenant reoccupies and conducts its
business from any portion of the Premises during such period, the rents
allocable to such reoccupied portion, based upon the proportion which the
rentable area of such reoccupied portion of the Premises bears to the total
rentable area of the Premises, shall be payable by Tenant from the date such
business operation commences.
ARTICLE 12 - Rights of Landlord
-------------------------------
Landlord and its agents shall have the right to enter the Premises at all
reasonable times for the purpose of cleaning the Premises, examining or
inspecting the same, serving or posting and keeping posted thereon notice's as
provided by law, or which Landlord deems necessary for the protection of
Landlord or the Property, showing the same to prospective tenants or purchasers
of the Project, in the case of an emergency, and for making such alterations,
repairs, improvements or additions to the Premises or to the Project as Landlord
may deem necessary or desirable. If Tenant shall not be personally present to
open and permit an entry into the Premises at any time when such an entry by
Landlord is necessary or permitted hereunder, Landlord may enter by means of a
master key or may enter forcibly, only in the case of an emergency, without
liability to Tenant except for any failure to exercise due care for Tenant's
property, and without-affecting this Lease. Any such entry by Landlord shall be
conducted at such times as is reasonably necessary under the circumstances to
cause the least amount of disruption to Tenant's business.
ARTICLE 13 - Indemnity; Exemption of Landlord from Liability
------------------------------------------------------------
(a) INDEMNITY. Tenant shall indemnify, defend and hold Landlord harmless
from any and all claims arising from Tenant's use of the Premises or the Project
(including Tenant's Signage rights set forth in Article 34) or from the conduct
of its business or from any activity, work or thing which may be permitted or
suffered by Tenant in or about the Premises or the Project and shall further
indemnify, defend and hold Landlord harmless from and against any and all claims
arising from any breach or default in the performance of any obligation on
15
Tenant's part to be performed under this Lease or arising from any negligence of
Tenant or any of its agents, contractors, employees or invitees, patrons or
customers in or about the Project and from any and all costs, attorneys' fees,
expenses and liabilities incurred in the defense of any claim or any action or
proceeding brought thereon, including negotiations in connection therewith.
Tenant hereby assumes all risk of damage to property or injury to persons in or
about the Premises from any cause, and Tenant hereby waives all claims in
respect thereof against Landlord, excepting where the damage is caused by the
gross negligence or willful misconduct of Landlord and is not covered by
Tenant's insurance.
(b) EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not be liable for
injury to Tenant's business, or loss of income therefrom, or for damage that may
be sustained by the person, goods, wares, merchandise or property of Tenant, its
employees, invitees, customers, agents, or contractors, or any other person in,
on or about the Premises directly or indirectly caused by or resulting from
fire, steam, electricity, gas, water, or rain which may leak or flow from or
into any part of the Premises, or from the breakage , leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, light fixtures, or mechanical or electrical systems or from
intrabuilding network cable, whether such damage or injury results from
conditions arising upon the Premises or upon other portions of the Project or
from other sources or places and regardless of whether the cause of such damage
or injury or the means or repairing the same is inaccessible to Tenant, except
in connection with damage or injury resulting from the gross negligence or
willful misconduct of Landlord, or its authorized agents. Landlord shall not be
liable to Tenant for any damages arising from any act or neglect of any other
tenant of the building.
ARTICLE 14 - Insurance
----------------------
(a) TENANT'S INSURANCE. Tenant, shall at all times during the term of this
Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage: (i) Commercial General Liability Insurance with a
combined single limit for bodily injury and property damages of not less than
One Million Dollars ($1,000,000) per occurrence and Two Million Dollars
($2,000,000) in the annual aggregate, including products liability coverage if
applicable, covering the insuring provisions of this Lease and the performance
of Tenant of the indemnity and exemption of Landlord from liability agreements
set forth in Article 13 hereof; (ii) a policy of standard fire, extended
coverage and special extended coverage insurance (all risks), including a
vandalism and malicious mischief endorsement, sprinkler leakage coverage and
earthquake sprinkler leakage where sprinklers are provided in an amount equal to
the full replacement value new without deduction for depreciation of all
equipment, fixtures and furniture installed by or at the expense of Tenant; and
(iii) insurance for all telecommunications equipment and intrabuilding network
for which Tenant is responsible. Tenant shall carry and maintain during the
entire Lease term (including any option periods, if applicable), at Tenant's
sole cost and expense, increased amounts of the insurance required to be carried
by Tenant pursuant to this Article 14 and such other reasonable types of
insurance coverage and in such reasonable amounts covering the Premises and
Tenant's operations therein, as may be reasonably required by Landlord, so long
as such requirement is consistent with the requirements of other landlords of
first-class office buildings in West Los Angeles, or required by Landlord's
lender.
16
(b) FORM OF POLICIES. The aforementioned minimum limits of policies and
Tenant's procurement and maintenance thereof shall in no event limit the
liability of Tenant hereunder. Such insurance shall name Landlord and such
other persons or firms with insurable interests, as Landlord specifies from time
to time, as additional insureds' with an appropriate endorsement to the
policy(s) and shall be with companies having a rating of not less than A-VIII in
Best's Insurance Guide. Tenant shall furnish to Landlord, from the insurance
companies, or cause the insurance companies to furnish, certificates of
coverage. No such policy shall be cancelable or subject to reduction of
coverage or other modification or cancellation except after thirty (30) days
prior written notice to Landlord by the insurer. All such policies shall be
endorsed to agree that Tenant's policy is primary and that any insurance covered
by Landlord is excess and not contributing with any Tenant insurance requirement
hereunder. Tenant shall, at least twenty (20) days prior to the expiration of
such policies, furnish Landlord with renewals or binders. Tenant agrees that if
Tenant does not take out and maintain such insurance or furnish Landlord with
renewals or binders, Landlord may (but shall not be required to) procure said
insurance on Tenant's behalf and charge Tenant the cost thereof, which amount
shall be payable by Tenant upon demand with interest from the date such sums are
extended. Tenant shall have the right to provide such insurance coverage,
pursuant to blanket policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required by this
Lease.
(c) LANDLORD'S INSURANCE. Landlord shall, as a cost to be included in
Operating Costs, procure and maintain at all times during the term of this
Lease, a policy or policies of insurance covering loss or damage to the Project
(including the Tenant Improvements, but excluding Tenant's personal property,
equipment, fixtures, and the like) in the amount of the full replacement costs
without deduction for depreciation thereof (exclusive of Tenant's trade
fixtures, inventory, personal property and equipment); providing protection
against all perils included within the classification of fire and extended
coverage, vandalism coverage and malicious mischief, sprinkler leakage, water
damage, and special extended coverage on building. Additionally, Landlord may
(but shall not be required to) carry: (i Bodily Injury and Property Damage
Liability Insurance and/or Excess Liability Coverage insurance; and (ii)
Earthquake and/or Flood Damage insurance; and (iii) Rental Income Insurance at
its election or if required by its lender from time to time during the term
hereof, in such amounts and with such limits as Landlord or its lender may deem
appropriate. The costs of such insurance shall be included in operating Costs.
(d) WAIVER OF SUBROGATION. Tenant releases Landlord (and its respective
authorized representatives) and Landlord releases Tenant (and its respective
authorized representatives) from any claims for damage to any person or the
Premises, and to the fixtures, personal property, improvements, and alterations
of either Landlord or Tenant, in or on the Premises, and the Project, that are
caused by or result from risks insured against under any insurance policies
carried by either Tenant or Landlord and in force at the time of any such
damage.
(e) COMPLIANCE WITH LAW. Tenant agrees that it will not, at any time,
during the term of this Lease, carry any stock of goods or do anything in or
about the Premises that will in any way tend to increase the insurance rates
upon the Project. Tenant agrees to pay Landlord forthwith upon demand the
amount of any increase in premiums for insurance against loss by fire
17
that may be charged during the term of this Lease on the amount of insurance to
be carried by Landlord on the Project resulting from the foregoing, or from
Tenant doing any act in or about said Premises that does so increase the
insurance rates, whether or not Landlord shall have consented to such act on the
part of Tenant. If Tenant installs upon the Premises any electrical equipment
which constitutes an overload of electrical lines of the Premises, Tenant shall
at its own cost and expense in accordance with all other Lease provisions, and
subject to the provisions of Article 9, 10 and 11, hereof, make whatever changes
are necessary to comply with requirements of the insurance underwriters and any
governmental authority having Jurisdiction thereover, but nothing herein
contained shall be deemed to constitute Landlord's consent to such overloading.
Tenant shall, at its own expense, comply with all requirements of the insurance
authority having jurisdiction over the Project necessary for the maintenance of
reasonable fire and extended coverage insurance for the Premises, including
without limitation thereto, the installation of fire extinguishers or an
automatic dry chemical extinguishing system.
ARTICLE 15 - Assignment and Subletting
--------------------------------------
Tenant shall have no power to, either voluntarily, involuntarily, by
operation of law or otherwise, sell, assign, transfer or hypothecate this Lease,
or sublet the Premises or any part thereof, or permit the Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's employees
without the prior written consent of Landlord which consent shall not be
unreasonably withheld. If Tenant is a corporation, unincorporated association
or partnership, the sale, assignment, transfer or hypothecation of any class of
stock or other ownership interest in such corporation, association or
partnership in excess of twenty-five percent (25%) in the aggregate ("Internal
Transfer") shall meet the transfer provisions of Subsection (g) below, but
Tenant shall not be required to pay any of the review, processing or attorney's
fees set forth below. The foregoing notwithstanding, Landlord shall have no
right of consent or approval, of any kind, in connection with the issuance,
sale, transfer, assignment, or hypothecation of securities and/or assets by
Tenant for which filings are required to be made with federal or state agencies,
including by way of illustration, but not limitation, the Securities and
Exchange commission or the California Commissioner of Corporations. Subject to
the foregoing, Tenant may transfer its interest pursuant to this Lease only upon
the following express conditions:
(a) That the proposed transferee shall be subject to the prior written
consent of Landlord, which consent will not be unreasonably withheld (it being
agreed that if Landlord does not respond within ten (10) business days from a
written request for sublease or assignment, such refusal to respond shall be
deemed an approval by Landlord to such assignment or sublease) but, without
limiting the generality of the foregoing, it shall be reasonable for Landlord to
deny such consent if:
(i) The use to be made of the Premises by the proposed transferee is.
(a) not generally consistent with the character and mature of all other
tenancies in the Project, or (b) a use which conflicts with any so-called
"exclusive" then in favor of, or for any use which is the same as that stated in
any percentage Lease to, another tenant of the Project or any of Landlord's then
buildings which are in the same complex as the Project, or (c) a use which would
be prohibited by any other portion of this Lease (including but not limited to
any Rules and Regulations then in effect); or
18
(ii) The financial responsibility of the proposed transferee is not
reasonably satisfactory to Landlord or in any event not at least equal to those
which were possessed by Tenant as of the date of execution of this Lease;
(b) That Tenant shall pay to Landlord Landlord's then standard processing
fee, review fee and attorneys' fees up to the sum of One Thousand Dollars
($1,000.00);
(c) That the proposed transferee shall execute an agreement pursuant to
which it shall agree to perform faithfully and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease (provided,
however, this Subparagraph (c) shall not be deemed to apply to the economic
business terms of the transfer between Tenant and such transferee);
(d) That an executed duplicate original of said assignment and assumption
agreement or other transfer on Landlord's then standard form, shall be delivered
to Landlord within five days after the execution thereof, and that such transfer
shall not be binding upon Landlord until the delivery thereof to Landlord and
the execution and delivery of Landlord's consent thereto. It shall be a
condition to Landlord's consent to any subleasing, assignment or other transfer
of part or all of Tenant's interest in the Premises (hereinafter referred to as
a "Transfer") that (i) upon Landlord's consent to any Transfer, Tenant shall pay
and continue to pay one-half (1/2) of any "Transfer Premium" (defined below),
received by Tenant from the transferee; provided, however, Tenant shall have the
right to sublease up to twenty percent (20%) of the Premises to individual users
without sharing of the Transfer Premium; (ii) any Sublessee of part or all of
Tenant's interest in the Premises shall agree that in the event Landlord gives
such sublessee notice that Tenant is in default under this Lease following the
expiration of any grace or cure period, such sublessee shall thereafter make all
sublease or other payments directly to Landlord, which will be received by
Landlord without any liability whether to honor the sublease or otherwise
(except to credit such payments against sums due under this Lease), and any
sublessee shall agree to attorn to Landlord or its successors and assigns at
their request should this Lease be terminated for any reason, except that in no
event shall Landlord or its successors or assigns be obligated to accept such
attornment, (iii) any such Transfer and consent shall be effected on reasonable
forms, supplied or approved by Landlord and/or its legal counsel; and (iv)
Landlord may require that Tenant not then be in default following the expiration
of any grace or cure period hereunder in any respect. "Transfer Premium" shall
mean all rent, additional rent or other consideration payable by a transferee in
connection with a Transfer in excess of the rent and Additional Rent payable by
Tenant under this Lease during the term of the Transfer and if such Transfer is
less than all of the Premises, the Transfer Premium shall be calculated on a
rentable square foot basis. The Transfer Premium shall be calculated after
deducting the reasonable expenses incurred by Tenant for any reasonable Tenant
improvements (reasonably approved by Landlord), legal fees, rent concessions and
brokerage commissions in connection with the Transfer. "Transfer Premium" shall
also include, but not be limited to, key money, bonus money or other cash
consideration paid by a transferee to Tenant in connection with such Transfer,
and any payment in excess of fair market value for services rendered by Tenant
to transferee or for assets, fixtures, inventory, equipment, or furniture
transferred by Tenant to transferee in connection with such Transfer. If
Landlord consents to a requested assignment or sublease, Tenant hereby agrees
that (i) it shall thereupon be deemed, automatically and irrevocably to have
assigned to Landlord as additional security for the performance and observance
of Tenant's obligations and covenants under this Lease, all rent or other sums
received or to be received by
19
Tenant in connection therewith and (ii) Landlord as assignee and as attorney-in-
fact of Tenant, or a receiver for Tenant whether or not appointed on Landlord's
application may collect such rent or other sums and apply the same toward
Tenant's obligations under this Lease. Notwithstanding the foregoing, Tenant
shall have the right to collect such rent and other sums unless and until Tenant
commits any act of default hereunder following the expiration of any grace or
cure period. Tenant hereby agrees and acknowledges that the above conditions
imposed upon the granting of Landlord's consent to any proposed Transfer by
Tenant are reasonable. Any sale assignment, hypothecation, transfer or
subletting of this Lease which is not in compliance with the provisions of this
Article 15 shall be void. In no event shall the consent by Landlord to an
assignment or subletting be construed as relieving Tenant, any assignee, or
sublessee from obtaining the express written consent of Landlord to any further
assignment or subletting, or as releasing Tenant from any liability or
obligation hereunder whether or not then accrued and Tenant shall continue to be
fully liable therefor. No collection or acceptance of rent by Landlord from any
person other than Tenant shall be deemed a waiver of any provision of this
Article 15 on the acceptance of any assignee or subtenant hereunder, or a
release of Tenant (or of any successor of Tenant or any subtenant holding
theretofore or thereafter accruing). Notwithstanding anything to the contrary in
this Lease, if Tenant or any proposed transferee claims that Landlord his
unreasonably withheld or delayed its consent under this Article 15 or otherwise
has breached or acted unreasonably under this Article 15, their sole remedies
shall be a declaratory judgment and an injunction for the relief sought without
any monetary damages, and Tenant hereby waives all other remedies, including,
without limitation, any right at law or equity to terminate this Lease, on its
own behalf and, to the extent permitted under all applicable laws, on behalf of
the proposed transferee;
(e) Tenant shall not enter into any sublease or assignment in which any of
the following is applicable:
(i) The determination of the amount of rent is expressed in whole or
in part as a percentage of the income or profits derived by the tenant or
subtenant or assignee from the space Leased (other than an amount based on a
fixed percentage or percentages of gross receipts or gross sales);
(f) In any sublease or assignment in which the amount of rent is
determined in whole or in part by reference to the gross sales or receipts of
the subtenant or assignee such sublease or assignment shall contain a provision
which prohibits subleasing or assigning or if subleasing or assigning is
permitted it shall prohibit the tenant or any successor in interest from
subleasing all or any portion of its Leasehold interest for an amount of rent
determined in whole or in part from the income or profits derived by any person
from such interest (other than an amount based in a fixed percentage or
percentages of receipts or sales); provided, however, Tenant shall have the
right to sublease up to twenty percent (20%) of the Premises to individual users
without sharing of the Transfer Premium.
(g) Notwithstanding anything to the contrary contained in this Article 15,
(i) an internal Transfer, (it) an assignment or subletting of all or a portion
of the Premises to an affiliate of Tenant (an entity which is controlled by,
controls, or is under common control with, Tenant) ("Permitted Transferees"), or
a subletting or assignment of all of the premises to a purchaser of all or
substantially all of the assets of Tenant or a Permitted Transferee, or (iii) a
transfer, by law
20
or otherwise, in connection with the merger, consolidation or other corporate
reorganization of Tenant or a Permitted Transferee, shall not be deemed a
Transfer requiring payment of a Transfer Premium under this Article 15, but
Tenant shall still be required to obtain Landlord's written consent and approval
of such transfer; provided, however, Landlord shall only be able to disapprove
of such transfer under 15(a)(i) above, or if the transfer would result in either
Tenant or the Permitted Transferee having a net worth less than that of Tenant
on the date this Lease is executed (or in Landlord's reasonable business
discretion the Permitted Transferee does not have the financial ability to meet
the economic terms and conditions of the Lease); and further provided that such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. "Control" as used in this Section 15(g) shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a person or entity, or ownership of any sort,
whether through the ownership of voting securities, by contract or otherwise.
ARTICLE 16 - Damage Or Destruction
----------------------------------
If the Project is damaged by fire or other insured casualty and the
insurance proceeds have been made available therefor by the holder or holders of
any mortgages or deeds of trust covering the Premises or the Project, the damage
shall be repaired by and at the expense of the Landlord to the extent such
insurance proceeds are available therefor and provided such repairs can, in
Landlord's sole opinion, be completed within one hundred eighty (180) days after
the occurrence of such damage becomes known to Landlord without the payment of
overtime or other premiums, and until such repairs are completed rent shall be
abated in proportion to the part of the Premises which is unusable by Tenant in
the conduct of its business, provided that if the damaged portion renders the
entire Premises unusable by Tenant, then rent shall be abated for the entire
Premises (but there shall e no abatement of rent by reason of any portion of the
Premises being unusable for a period equal to one (1) day or less). If the
damage is due to the fault or neglect of Tenant, its employees, guests, invitees
and the like, there shall be no abatement of rent, and Tenant agrees to make a
claim, in an expeditious manner, under its insurance policies for the cost of
such damage or destruction, and to assign any such insurance proceeds from its
insurance policies to Landlord. If pairs cannot, in Landlord's opinion, be
completed within one hundred eighty (180) days, Landlord may, at its option,
make them in a reasonable time and in such event this Lease shall continue in
effect and the rent shall be abated, if at all, in the manner provided in this
Article 16; provided, however, that if repairs cannot be completed within one
hundred eighty (180) days from commencement of construction, Tenant shall have
the right after the expiration of such one hundred eighty (180) days to
terminate this Lease upon thirty (30) days' written notice to Landlord.
Tenant's failure to so notify Landlord within such thirty (30) day period shall
be deemed to constitute Tenant's waiver of its right to terminate this Lease.
In addition, Landlord may elect not to rebuild and/or restore the Project, and
instead terminate this Lease, by notifying Tenant in writing of such termination
within thirty (30) days after Landlord receives notice of the date of damage,
such notice to include a termination date giving Tenant sixty (60) days to
vacate the Premises, but Landlord may so elect only if the Project shall be
damaged by fire or other casualty or cause, whether or not the Premises are
affected, and the damage is not fully covered, except for deductible amounts, by
Landlord's insurance policies. A total destruction of the Project shall
automatically terminate this Lease. Except as provided in this Article, there
shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interference with Tenant's business or property arising
21
from such damage or destruction or the making of any repairs, alterations or
improvements in or to any portion of the Project or the Premises or in or to
fixtures, appurtenances and equipment therein. Tenant understands that Landlord
will not carry insurance of any kind to Tenant's furniture, furnishings,
fixtures or equipment, and that Landlord shall not be obligated to repair any
damage thereto or replace the same. with respect to any damage which Landlord is
obligated to repair or elects to repair, Tenant, as a material inducement to
Landlord entering into this Lease, irrevocably waives and releases its rights
under the provisions of Sections 1932 and 1933 of the California Civil Code.
ARTICLE 17 - Subordination
--------------------------
This Lease is subject and subordinate to all ground or underlying Leases,
mortgages and deeds of trust which affect the property or the Project, including
all renewals, modifications, consolidations, replacements and extensions
thereof; provided, however, if the lessor under any such lease or the holder or
holders of any such mortgage or deed of trust shall advise Landlord that they
desire or require this Lease to be prior and superior thereto , upon written
request of Landlord to Tenant, Tenant agrees to promptly execute, acknowledge
and deliver any and all documents or instruments which Landlord or such lessor,
holder or holders deem necessary or desirable for purposes thereof. Landlord
shall have the right to cause this Lease to be and become and remain subject and
subordinate to any and all ground or underlying leases, mortgages or deeds of
trust which may hereafter be executed covering the Premises, the Project or the
property or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof, provided, however, that Landlord obtains from the lender or other party
in question a written undertaking in favor of Tenant to the affect that such
lender or other party will not disturb Tenant's right of possession under this
Lease if Tenant is not then or thereafter in breach following the expiration of
any grace or cure period of any covenant or provision of this Lease; and Tenant
agrees, within fifteen (15) days after Landlord's written request therefor, to
execute, acknowledge and deliver upon request any and all documents or
instruments requested by Landlord or necessary or proper to assure the
subordination of this Lease to any such mortgages, deed of trust, or leasehold
estates. Tenant agrees not to assert against Landlord and hereby expressly
waives any claims for interference with, or disturbance of Tenant's right of
possession and/or breach of the covenant quiet enjoyment by reason of the
enforcement of any and all ground or underlying leases, mortgages and deeds of
trust affecting the Project or the Premises and all renewals, modifications,
consolidations, replacements and extensions thereof, whether or not the Lease is
subordinate thereto. The foregoing notwithstanding, Landlord shall use its best
efforts to obtain a Non-Disturbance and Attornment Agreement from any
lienholders or mortgagees of the Project, whether currently existing or in the
future. The Non-Disturbance and Attornment Agreement shall be in a form
reasonably acceptable to Tenant and any lienholders or mortgagees.
ARTICLE 18 - Eminent Domain
---------------------------
If the whole of the Premises or the Project or so much thereof as to render
the balance unusable by Tenant shall be taken under power of eminent domain, or
is sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such
22
condemnation, or as of the date possession is taken by the condemning authority
at Landlord's option. No award for any partial or entire taking shall be
apportioned, and Tenant hereby assigns to Landlord any award which may be made
in such taking or condemnation, together with any and all rights of Tenant now
or hereafter arising in or to the same or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any award made to Tenant for the
taking of personal property and fixtures and one-half (1/2) of any leasehold
bonus as it relates to the Premises belonging to Tenant and removable by Tenant
at the expiration of the term hereof as provided hereunder or for the
interruption of, or damage to, Tenant's business. In the event of a partial
taking described in this Article 18, or a sale, transfer or conveyance in lieu
thereof, which does not result in a termination of this Lease, the rent shall be
apportioned according to the ratio that the part of the Premises remaining
useable by Tenant bears to the total area of the Premises. Tenant hereby waives
any and all rights it might otherwise have pursuant to Section 1265.130 of the
California Code of Civil Procedure.
ARTICLE 19 - Default
--------------------
Each of the following acts or omissions of Tenant or of any guarantor of
Tenant's performance hereunder, or occurrences, shall constitute an "Event of
Default":
(a) Failure or refusal to pay Monthly Basic Rental, Additional Rent or any
other amount to be paid by Tenant to Landlord hereunder within five (5) calendar
days after notice that the same was not paid when due or payable hereunder; said
five (5) day period shall be in lieu of, and not in addition to, the notice
requirements pertaining to the unlawful detainer statutes;
(b) Except as set forth in item (g) below, failure to perform or observe
other covenant or condition of this Lease to be performed or observed within
thirty (30) days following written notice to Tenant of such failure; provided
that if the nature of such default cannot reasonably be cured within thirty (30)
days, Tenant shall not be in default if it commences such cure within such
period and diligently proceeds with such cure and does cure within ninety (90)
days. Such thirty (30) day notice shall also constitute any notice required
under Section 1161 of the California Code of Civil Procedure;
(c) Abandonment or vacationing or failure to accept tender of possession of
the Premises or any significant portion thereof, unless Tenant continues to pay
Monthly Basic Rental and all other sums due hereunder;
(d) The taking in execution or by similar process or law (other than by
eminent. domain) of the estate hereby created;
(e) The filing by Tenant or any guarantor hereunder in any court pursuant
to any statute of a petition in bankruptcy or insolvency or for reorganization
or arrangement for the appointment of a receiver of all or a portion of Tenant's
property; the filing against Tenant or any guarantor hereunder of any such
petition, or the commencement of a proceeding for the appointment of a trustee,
receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of
the property of either, or a proceeding by any governmental authority for the
dissolution or liquidation of Tenant or any guarantor hereunder, if such
proceeding shall not be dismissed or
23
trusteeship discontinued within thirty (30) days after commencement of such
proceeding or the appointment of such trustee or receiver; or the making by
Tenant or any guarantor hereunder of an assignment for the benefit of creditors.
Tenant hereby stipulates to the lifting of the automatic stay in effect and
relief from such stay for Landlord in the event Tenant files a petition under
the United States Bankruptcy laws, for the purpose of Landlord pursuing its
rights and remedies against Tenant and/or a guarantor of this Lease;
(f) Tenant's failure to cause to be released any mechanics liens filed
against the Premises or the Project within twenty (20) days after the date the
same shall have been filed or recorded; or
(g) Tenant's failure to observe or perform according to the provisions of
Articles 17 or 25 within fifteen (15) business days after notice from Landlord.
All defaults following the expiration of any applicable notice or grace period
by Tenant of any covenant or condition of this Lease shall be deemed by the
parties hereto to be material.
ARTICLE 20 - Remedies
---------------------
(a) In the event of a breach of or default under this Lease as provided in
Article 19 hereof, Landlord may exercise all of its remedies as may be permitted
by law, including but not limited to the remedy provided by Section 1951.4 of
the California Civil Code, and including without limitation, terminating this
Lease, reentering the Premises and removing all persons and property therefrom,
which property may be stored by Landlord at a warehouse or elsewhere at the
risk, expense and for the account of Tenant. If Landlord elects to terminate
this Lease, Landlord shall be entitled to recover from Tenant the aggregate of
all amounts permitted by law, including but not limited to (i) the worth at the
time of any unpaid rent which has been earned at the time of such termination;
plus (ii) the worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Tenant proves could have been reasonably
avoided; plus (iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the Lease Term after the time of award exceeds
the amount of such rental loss that Tenant proves could have been reasonable
avoided; plus (iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, specifically including but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and (v)
at Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law. The term
"rent" as used in this Article 20(a) shall be deemed to be and to mean all sums
of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others. As used in items (i) and (ii), above,
the "worth at the time of award" shall be computed by allowing interest at the
rate set forth in item (e), below, but in no case greater than the maximum
amount of such interest permitted by law. As used in item (iii), above, the
"worth at the time of award" shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%). If Landlord terminates this Lease or Tenant's right to
possession, Landlord shall
24
use reasonable efforts to mitigate Landlord's damages, and Tenant shall be
entitled to submit roof of such failure to mitigate as a defense to Landlord's
claims hereunder, if mitigation of damages by Landlord is required by applicable
law. Further, Tenant shall be liable for all unamortized leasing commissions
paid by or owing by Landlord arising from this Lease and extensions thereof.
(b) Nothing in this Article 20 shall be deemed to affect Landlord's right
to indemnification for liability or liabilities arising prior to the termination
of this Lease for personal injuries or property damage under the indemnification
clause or clauses contained in this Lease.
(c) Notwithstanding anything to the contrary set forth herein, Landlord's
re-entry to perform acts of maintenance or preservation of or in connection with
efforts to relet the Premises or any portion thereof, or the appointment of a
receiver upon Landlord's initiative to protect Landlord's interest under this
Lease shall not terminate Tenant's right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease, this
Lease shall continue in full force and effect and Landlord shall enforce all of
Landlord's rights and remedies hereunder including, without limitation, the
remedy described in California Civil Code Section 1951.4 (lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes due, if Lessee has the right to sublet or assign, subject only to
reasonable limitations). Accordingly, if Landlord does not elect to terminate
this Lease on account of any default by Tenant, Landlord may, from time to time,
without terminating this Lease, enforce all of its rights and remedies under
this Lease, including the right to recover all rent as it becomes due.
(d) All rights, powers and remedies of Landlord hereunder and under an
other agreement now or hereafter in force between Landlord and Tenant shall
cumulative and not alternative and shall be in addition to all rights, powers
and remedies given to Landlord by law, and the exercise of one or more rights or
remedies shall not impair Landlord's right to exercise any other right or
remedy.
(e) Any amount due from Tenant to Landlord hereunder which is not paid
within five (5) days after Tenant's receipt of written notice that the same is
due shall bear interest at the lower of 16% per annum or the maximum lawful rate
of interest from the due date until paid, unless otherwise specifically provided
herein, but the payment of such interest shall not excuse or cure any default by
Tenant under this Lease. In addition to such interest: (a) if Basic Rental is
not paid within ten (10) days after the same is due, a late charge equal to ten
percent (10%) of the amount overdue or $100, whichever is greater, shall be
assessed and shall accrue for each calendar month or part thereof until such
rental, including the late charge, is paid in full, which late charge Tenant
hereby agrees is a reasonable estimate of the damages Landlord shall Buffer as a
result of Tenant's late payment and (b) an additional charge of $25 shall be
assessed for any check (liven to Landlord by or on behalf of Tenant which is not
honored by the drawee thereof; which damages include Landlord's additional
administrative and other costs associated with such late payment and unsatisfied
checks and the parties agree that it would be impracticable or extremely
difficult to fix Landlord's actual damage in such event. Such charges for
interest and late payments and unsatisfied checks are separate and cumulative
and are in addition to and shall
25
not diminish or represent a substitute for any or all of Landlord's rights or
remedies under any other provision of this Lease.
(f) Tenant shall be liable for any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's default following
the expiration of any applicable cure or notice period under this Lease, or
which in the ordinary cause of things would be likely to result therefrom.
ARTICLE 21 - Transfer of Landlord's Interest
--------------------------------------------
In the event of any transfer or termination of Landlord's interest in the
Premises or the Project by sell, assignments, transfer, foreclosure, deed-in-
lieu of foreclosure or otherwise whether voluntary or involuntary, Landlord
shall be automatically relieved of any and all obligations and liabilities on
the part of Landlord which accrue from and after the date of such transfer or
termination, including furthermore without limitation the obligation of Landlord
under Article 4 and California Civil Code 1950.7 above to return the security
deposit, provided said security deposit is transferred to said assignee. Tenant
expressly waives and releases its rights with regard to its security deposit
pursuant to the provision of California Civil Code 1950.7 or any substitute or
successor statute to the extent the same could be asserted by Tenant against
Landlord.
ARTICLE 22 - Broker
-------------------
In connection with this Lease, Landlord and Tenant each warrant and
represent that it has had dealings only with firm(s) set forth in Article 1.H.
of the Basic Lease Provisions and that it knows of no other person or entity who
is or might be entitled to a commission, finder's fee or other like payment in
connection herewith and each does hereby indemnify and agree to hold the other,
its agents, partners, representatives, officers, affiliates, shareholders,
employees, successors and assigns harmless from and against any and all loss,
liability and expenses that such party may incur should such warranty and
representation prove incorrect, inaccurate or false.
ARTICLE 23 - Parking
--------------------
Tenant shall have the right but not the obligation to rent up to the number
of parking passes set forth in Article 1.1. of Basic Lease Provisions. The
initial parking rates are set forth in Article 1.J. of the Basic Lease
Provisions. Such parking shall be available upon terms and conditions to be
established from time to time by Landlord or Landlord's operator of such parking
facilities, but Landlord does not warrant or represent that the parking will
continue to be available if Tenant does not rent the same continuously from the
commencement of the term of this Lease. Tenant agrees that it shall be liable
for and pay for any and all parking taxes imposed in connection with such
parking.
ARTICLE 24 - Waiver
-------------------
No waiver by Landlord of any provision of this Lease shall be deemed to be
a waiver of any other provision hereof or of any subsequent breach by Tenant of
the same or any other provision. No provision of this Lease may be waived by
Landlord, except by an instrument in
26
writing executed by Landlord. Landlord's consent to or approval of any act by
Tenant requiring Landlord's consent or approval shall not be deemed to render
unnecessary the obtaining of Landlord's consent to or approval of any subsequent
act of Tenant, whether or not similar to the act so consented to or approved. No
act or thing done by Landlord or Landlord's agents during the term of this Lease
shall be deemed an acceptance of a surrender of the Premises, and no agreement
to accept such surrender shall be valid unless in writing and signed by
Landlord. Any payment by Tenant or receipt by Landlord of an amount less than
the total amount then due hereunder shall be deemed to be in partial payment
only thereof and not a waiver of the balance due or an accord and satisfaction,
notwithstanding any statement or endorsement to the contrary on any check or any
other instrument delivered concurrently therewith or in reference thereto.
Accordingly, Landlord may accept any such amount and negotiate any such check
without prejudice to Landlord's right to recover all balances due and owing and
to pursue its other rights against Tenant under this Lease, regardless of
whether Landlord makes any notation on such instrument of payment or otherwise
notifies Tenant that such acceptance or negotiation is without prejudice to
Landlord's rights.
ARTICLE 25 - Estoppel Certificate
---------------------------------
Tenant shall, at any time and from time to time, upon not less than fifteen
(15) days' prior written notice from Landlord, execute, acknowledge and deliver
to Landlord a statement in writing certifying the following information, (but
not limited to the following information in the event further information is
requested by Landlord): (i) that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as modified, is in full force and effect); (ii) the dates to
which the rental and other charges are paid in advance, if any; (iii) the amount
of Tenant's security deposit, if any; and (iv) acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
and no events or conditions then in existence which, with the passage of time or
notice or both, would constitute a default on the part of Landlord hereunder, or
specifying such defaults, events or conditions, if any are claimed. It is
expressly understood and agreed that any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Real
Property. Tenant's failure upon Landlord's reasonable request to deliver such
statement within such time shall, at the option of Landlord, constitute a
default under this Lease. Furthermore, Tenant's failure to deliver such
statement within such time shall constitute an admission by Tenant that all
statements contained therein are true and correct. Tenant agrees to execute all
documents required in accordance with this Article 25 within fifteen (15) days
after delivery of said documents.
ARTICLE 26 - Liability Of Landlord
----------------------------------
Tenant agrees to look solely to Landlord's interest in the Project and the
Premises if any for the satisfaction of any remedy of Tenant for the collection
of a judgment (or other judicial process) requiring the payment of money by
Landlord in the event of any default by Landlord hereunder or any claim cause of
action, obligation, contractual statutory or otherwise by Tenant against
Landlord concerning, arising out of or relating to any matter relating to this
Lease and all of the covenants and condition or any obligations, contractual,
statutory, or otherwise set forth herein, and no other property or assets of
Landlord, or any officer, director, shareholder, partner, trustee, agent,
servant or employee of Landlord (the "Representative") shall be subject to levy,
27
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, Landlord's obligations to Tenant,
whether contractual, statutory or otherwise, the relationship of Landlord and
Tenant hereunder, or Tenant's use or occupancy of the Premises. Tenant further
understands that any liability, duty or obligation of Landlord to Tenant, shall
no longer accrue as of the date that Landlord or any of the Representatives no
longer have any right, title or interest in or to the Project, and shall
automatically cease if another entity has agreed to assume such liabilities
through a written assignment and assumption agreement.
ARTICLE 27 - Inability To Perform
---------------------------------
This Lease and the obligations of Tenant hereunder shall not be affected or
impaired because Landlord is unable to fulfill any of its obligations hereunder
or is delayed in doing so, if such inability or delay is caused by reason of any
stoppage due to strikes, lockouts, acts of God, or any other cause previously,
or at such time, beyond the reasonable control or anticipation of Landlord
(collectively, a "Force Majeure") and Landlord's obligations under this Lease
shall be forgiven and suspended by any such Force Majeure, excepting, however,
Landlord's obligations under the last sentence of Article 2 and Article 11(g).
ARTICLE 28 - Hazardous Waste
----------------------------
(a) Tenant shall not cause or permit any Hazardous Material (as defined in
Article 28(d) below) to be brought, kept or used in or about the Project by
Tenant, its agents, employees, contractors, or invitees, excluding, however,
customary office supplies, and equipment. Tenant indemnitees Landlord from and
against any breach by Tenant of the obligations stated in the preceding sentence
and agrees to defend and hold Landlord harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities, or losses
(including, without limitation, diminution in value of the Project, damages; for
the loss or restriction or use of rentable or useable space or of any amenity of
the Project, damages arising from any adverse impact or marketing of space in
the Project, and sum paid in settlement of claims, attorneys' fees, consultant
fees, and expert fees) which arise during or after the term of this Lease as a
result of such breach. This indemnification of Landlord by Tenant includes,
without limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work required by an
federal, state, or local governmental agency or political subdivision because of
Hazardous Material present in the soil or ground water on or under the Project.
Without limiting the foregoing, if the presence of any Hazardous Material on the
Project caused or permitted by Tenant results in any contamination of the
Project and subject to the provisions of Articles 9, 10 and 11, hereof, Tenant
shall promptly take all actions at its sole expense as are necessary to return
the Project to the condition existing prior to the introduction of any such
Hazardous Material and the contractors to be used by Tenant must be approved by
the Landlord, which approval shall not be unreasonably withheld so long as such
actions would not potentially have any material adverse long-term or short-term
effect on the Project and so long as such actions do not materially interfere
with the use and enjoyment of the Project by the other tenants thereof.
(b) Landlord and Tenant acknowledge that Landlord may become legally liable
for the costs of complying with Laws (as defined in Article 29(e) below)
relating to Hazardous
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material which are not the responsibility of Landlord or the responsibility of
Tenant, including the following: (i) Hazardous Material present in the soil or
ground water on the project of which Landlord has no knowledge as of the
effective date of this Leases (ii) a change in Laws which relate to Hazardous
material which make that Hazardous Material which is present on the Property as
of the effective date of his Lease, whether known or unknown to Landlord, a
violation of such new Laws: (iii) Hazardous Material that migrates, flows,
percolates, diffuses, or in any way moves on to, or under the Project after the
effective date of this Lease; or Hazardous material present on or under the
Project as a result of any discharge, dumping or spilling (whether accidental or
otherwise) on the Product by other lessees of the Project or their agents,
employees, contractors, or invitees, or by others. Accordingly, Landlord and
Tenant agree that the cost of complying with Laws relating to Hazardous Material
on the Project for which Landlord is legally liable and which are paid or
incurred by Landlord shall not be an Operating Cost.
(c) it shall not be unreasonable for Landlord to withhold its consent to
any proposed Transfer if (i) the proposed transferee's anticipated use of the
Premises involves the generation, storage, use, treatment, or disposal of
Hazardous Material; ( ) the proposed Transferee has been required by any prior
landlord, lender, or governmental authority to take remedial action in
connection with Hazardous material contaminating a property if the contamination
resulted from such Transferee's actions or use of the property in question; or
(iii) the proposed Transferee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
Hazardous Material.
(d) As used herein, the term "Hazardous Material" means any hazardous or
toxic substance, material, or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term Hazardous material" includes, without limitation, any material or
substance which is (i) defined as "Hazardous Waste," "Extremely Hazardous
Waste," or "Restricted Hazardous Waste" under Sections 25115, 25117 or 25122.7,
or listed pursuant to Section 25140, of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a
"Hazardous Substance" under Section 25316 of the California Health and Safety
Code, Division 20, Chapter 6.8 (▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance
Account Act), (iii) defined as a "Hazardous Material," "Hazardous Substance," or
"Hazardous Waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory), (iv) defined as a "Hazardous Substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (underground Storage
of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under
Article 9 or defined as Hazardous or extremely hazardous pursuant to Article 11
of Title 22 of the California Administrative Code, Division 4, Chapter 20,
(viii) designated as a Hazardous Substance, pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. (S) 1317), (ix) defined as a
"Hazardous Waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. (S) 6901 et seq. (42 U.S.C. (S) 6903), or (x)
defined as a "Hazardous Substance" pursuant to section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. & 9601 et seq.
(42 U.S.C. & 9601).
29
(e) As used herein, the term "Laws" mean any applicable federal, state or
local laws, ordinances, or regulations relating to any Hazardous material
affecting the Project, including, without limitation, the laws, ordinances, and
regulations referred to in Article 28 (d) above.
ARTICLE 29 - Surrender of Premises; Removal of Property
-------------------------------------------------------
(a) The voluntary or other surrender of this Lease by Tenant to Landlord,
or a mutual termination hereof, shall not work a merger, and shall at the option
of Landlord, operate as an assignment to it of any or all subleases or
subtenancies affecting the Premises.
(b) Upon the expiration of the term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in as good order and condition as the same are now and
hereafter may be improved by Landlord or Tenant, reasonable wear and tear and
repairs which are Landlord's obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, all furniture, equipment, business and trade fixtures, free-standing
cabinet work, moveable partitioning and other articles of personal property
owned by Tenant or installed or placed by Tenant at its own expense in the
Premises, and all similar articles of any other persons claiming under Tenant
unless Landlord exercises its option to have any subleases or subtenancies
assigned to it, and Tenant shall repair all damage to the Premises resulting
from the installation and removal of such items to be removed.
(c) Whenever Landlord shall reenter the Premises as provided in Article 20
hereof, or as otherwise provided in this Lease, any property of Tenant not
removed by Tenant upon the expiration of the term of this Lease (or within
forty-eight (48) hours after a termination by reason of Tenant's default), as
provided in this Lease, shall be considered abandoned and Landlord may remove
any or all of such items and dispose of the same in any manner or store the same
in a public warehouse or elsewhere for the account and at the expense and risk
of Tenant, and if Tenant shall fail to pay the cost of storing any such property
after it has been stored for a period of ninety (90) days or more, Landlord may
sell any or all of such property at public or private sale, in such manner and
at such times and places as Landlord, in its sole discretion, may deem proper,
without notice or to demand upon Tenant, for the payment of all or any part of
such charges or the removal of any such property, and shall apply the proceeds
of such sale: first, to the cost and expense of such sale, including reasonable
attorneys' fees for services rendered; second, to the payment of the cost of or
charges for storing any such property; third, to the payment of any other sums
of money which may then or thereafter be due to Landlord from Tenant under any
of the terms hereof; and fourth, the balance, if any, to Tenant.
(d) All fixtures, equipment, alterations, additions, improvements and/or
appurtenances attached to or built into the Premises prior to or during the
Term, whether by Landlord or Tenant and whether at the expense of Landlord or
Tenant, or of both, shall be and remain part of the Premises and shall not be
removed by Tenant at the end of the term unless otherwise expressly provided for
in this Lease or unless such removal is required by Landlord pursuant to the
provisions of Article 9, above. Such fixtures, equipment, Tenant Improvements,
alterations, additions, improvements and/or appurtenances shall include but not
be limited to: all floor coverings, drapes, paneling, built-in cabinetry,
molding, doors, vaults (including vault doors), plumbing systems, electrical
systems, lighting systems, silencing equipment,
30
communication systems, all fixtures and outlets for the systems mentioned above
and for all telephone, radio, telegraph and television purposes, and any special
flooring or ceiling installations. Notwithstanding the foregoing, Tenant shall
have the right to remove any nonpermanently affixed alterations or free-standing
improvements mad and paid by Tenant, so long as Tenant repairs any damage to the
Premises caused by such removal.
ARTICLE 30 - Miscellaneous
--------------------------
(a) SEVERABILITY; ENTIRE AGREEMENT. Any provision of this Lease which
shall prove to be invalid, void, or illegal shall in no way affect, impair or
invalidate any other provision hereof any such other provisions shall remain in
full force and effect. This Lease and the Exhibits and any Addendum attached
hereto constitute the entire agreement between the parties hereto with respect
to the subject matter hereof, and no prior agreement or understanding pertaining
to any such matter shall be effective for any purpose. No provision of this
Lease may be amended or supplemented except by an agreement in writing signed by
the parties hereto or their successor in interest. This Lease shall be governed
by and construed in accordance with the laws of the State of California.
(b) ATTORNEYS, FEES.
(i) In any action to enforce the terms of this Lease, including any
suit by Landlord for the recovery of rent or possession of the Premises, the
losing party shall pay the successful party a reasonable sum for attorneys' fees
in such suit and such attorneys' fees shall be deemed to have accrued prior to
the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment.
(ii) Should Landlord, without fault on Landlord's part, be made a
party to any litigation instituted by Tenant or by any third party against
Tenant, or by or against any person holding under or using the Premises by
license of Tenant, or for the foreclosure of any lien for labor or material
furnished to or for Tenant or any such other person or otherwise arising out of
or resulting from any act or transaction of Tenant or of any such other person,
Tenant covenants to save and hold Landlord harmless from any judgment rendered
against Landlord or the Premises or any part thereof and from all costs and
expenses, including reasonable attorneys' fees incurred by Landlord in
collection with such litigation.
(iii) When legal services are rendered by an attorney at law who is
an employee of a party, shall be determined as to amount, including overhead, by
consideration of the same factors, including but not limited by, the importance
of the matter, time applied, difficulty and results, as are considered when an
attorney not in the employ of a party is engaged to render such service.
(c) TIME OF ESSENCE. Each of Tenant's covenants herein is a condition and
time is of the essence with respect to the performance of every provision of
this Lease.
(d) HEADINGS. The article headings contained in this Lease are for
convenience only and do not in any way limit or amplify any term or provision
hereof. The terms "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular, the neuter shall include the masculine and
feminine genders and the obligations herein imposed upon Tenant
31
shall be joint and several as to each of the persons, firms or corporations of
which Tenant may be composed.
(e) RESERVED AREA. Tenant hereby acknowledges and agrees that the,
exterior walls of the Premises and the area between the finished ceiling of the
Premises and the slab of the floor of the project thereabove have not been
demised hereby and the use thereof together with the right to install, maintain,
use, repair and replace pipes, ducts, conduits and wires leading through, under
or above the Premises in locations which will not materially interfere with
Tenant's use of the Premises and serving other parts of the Project are hereby
excepted and reserved unto Landlord.
(f) NO OPTION. The submission of this Lease by Landlord, its agent or
representative for examination or execution by Tenant does not constitute an
option or offer to Lease the Premises upon the terms and conditions contained
herein or a reservation of the Premises in favor of Tenant, it being intended
hereby that this Lease shall only become effective upon the execution hereof by
Landlord and delivery of a fully executed counterpart hereof to Tenant.
(g) USE OF PROJECT NAME; IMPROVEMENTS. Tenant shall not be allowed to use
the name, picture or representation of the Project, or words to that effect, in
connection with any business carried on in the Premises or otherwise (except as
Tenant's address) without the prior written consent of Landlord. In the event
that Landlord undertakes any additional improvements on the real property
including but not limited to new construction or renovation or additions to the
existing improvements, Landlord shall not be liable to Tenant for any noise,
dust, vibration or interference with access to the Premises or disruption in
Tenant's business caused thereby and rental hereunder shall only be abated to
the extent that such interference materially interferes with Tenant's business.
(h) RULES AND REGULATIONS. Tenant shall observe faithfully and comply
strictly with the Rules and Regulations attached to this Lease and made a part
hereof, and such other Rules and Regulations as Landlord may from time to time
reasonably adopt for the safety, care and cleanliness of the Project, the
facilities thereof, or the preservation of good order therein. Landlord shall
not be liable to Tenant for violation of any such Rules and Regulations, or for
the breach of any covenant or condition in any Lease by any other tenant in the
Project. A waiver by Landlord of any Rule or Regulation for any other tenant
shall not constitute nor be deemed a waiver of the Rule or Regulation for this
Tenant.
(i) QUIET POSSESSION. Upon Tenant's paying the Basic Rent, Additional Rent
and other sums provided hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant's part to be observed and
perforated hereunder, Tenant shall have quiet possession of the Premises for the
entire term hereof, subject to all of the provisions of this Lease.
(j) RENT. All payments required to be made hereunder shall be deemed to be
rent, whether or not described as such.
32
(k) SUCCESSORS AND ASSIGNS. Subject to the provisions of Article 15
hereof, all of the covenants, conditions and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.
(l) NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and may be given by facsimile, personal service, first-class mail,
or registered or certified mail, return receipt requested, addressed to Tenant
at the Premises with a copy via U.S. Mail, to ▇▇▇▇▇▇ ▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (provided, however, a notice shall not be ineffective because a copy was
not sent to ▇▇▇▇▇▇ ▇▇▇▇, Esq., or any other designated copy recipient), or to
Landlord at the address of the place from time to time established for the
payment of rent and which shall be effective upon proof of delivery. Either
party may by notice to the other specify a different address for notice purposes
except that, upon Tenant's taking possession of the Premises, the Premises shall
constitute Tenant's address for notice purposes. A copy of all notices to be
given to Landlord hereunder shall be concurrently transmitted by Tenant to such
party hereafter designated by notice from Landlord to Tenant. Any notices sent
by Landlord regarding or relating to eviction procedures, including without
limitation Three Day Notices, may be sent by regular mail.
(m) PERSISTENT DELINQUENCIES. In the event that Tenant shall be delinquent
by more than fifteen (15) days in the payment of rent on three (3) separate
occasions in any twelve (12) month period, Landlord shall have the right to
require Tenant to deposit (and maintain) three (3) months' rent in advance to be
used as security for future rental payments due hereunder and may be applied by
Landlord for the payment of Monthly Basic Rental and other sums as the same
become due hereunder.
(n) RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent,
except as otherwise provided in this Lease. If Tenant shall fail to pay any sum
of money, other than rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder, and such failure
shall continue beyond any applicable period of notice set forth in this Lease,
Landlord may, but shall not e obligated so to do, and without waiving or
releasing Tenant from any obligations of Tenant, make any such payment or
perform any such other act on Tenant's part to be made or performed as is in
this Lease provided. All sums so paid by Landlord and all reasonable incidental
costs, together with interest thereon at the rate of ten percent (10%) per annum
from the date of such payment by Landlord, shall be payable to Landlord on
demand and Tenant covenants to pay any such sums, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of the nonpayment thereof by Tenant as in the case of default by
Tenant in the payment of the rent.
(o) ACCESS, CHANGES IN PROJECT, FACILITIES, NAME.
(i) Every part of the Project except the inside surfaces of all walls,
windows and doors bounding the Premises (including exterior building walls, core
corridor walls and doors and any core corridor entrance), and any space in or
adjacent to the Premises used for
33
shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other utilities,
sinks or other building facilities, and the use thereof, as well as access
thereto through the Premises for the purposes of operation, maintenance,
decoration and repair, are reserved to Landlord.
(ii) Tenant shall permit Landlord to install, use and maintain pipes,
ducts and conduits within the walls, bearing columns and ceilings of the
Premises.
(iii) Landlord reserves the right, without incurring any liability to
Tenant therefor, to make such reasonable changes in or to the Building and the
fixtures and equipment thereof, as well as in or to the street entrances, halls,
passages, elevators, stairways and other improvements thereof, as it may deemed
necessary or desirable.
(iv) Landlord may adopt any name for the Project and Landlord
reserves the right to change the name or address of the Building at any time.
(p) CORPORATE AUTHORITY. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the By-laws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. If Tenant is a corporation, said corporation and each
individual executing this Lease on behalf of said corporation covenants that
Tenant shall provide to Landlord a copy of such resolution of the Board of
Directors authorizing the execution of this Lease on behalf of such corporation,
which copy of resolution shall be duly certified by the secretary or an
assistant secretary of the corporation to be a true copy of a resolution duly
adopted by the Board of Directors of said corporation.
(q) IDENTIFICATION OF TENANT.
(a) If more than one person executes this Lease as Tenant, (i) each of
them shall be jointly and severally liable for the keeping, observing and
performing of all of the terms, covenants, conditions and provisions of this
Lease to be kept, observed and performed by Tenant, (ii) the term "Tenant" as
used in this Lease shall mean and include each of them jointly and severally,
and (iii) the act of or notice from, or notice or refund to, or the signature
of, any one or more of them, with respect to the tenancy of this Lease,
including, but not limited to, any renewal, extension, expiration, termination
or modification of this Lease, shall be binding upon each and all of the person
executing this Lease as Tenant with the same force and effect as if each and all
of them had so acted or so given or received such notice or refund or so signed.
(r) SUBSTITUTE PREMISES. Provided Landlord shall have a full floor tenant
for the! fifth (5th) floor of the Project, then Landlord shall have the right at
any time during the term hereof, upon giving Tenant not less than one hundred
twenty (120) days prior notice, to provide and furnish Tenant with space
elsewhere in the Project of the same size or greater and reasonably similar
tenant improvements as the Premises, and remove and place Tenant in such space.
Landlord shall pay all verified costs and expenses incurred as a result of such
removal and relocation of Tenant, including without limitation the cost of
replacing Tenant's existing supply of stationary and business cards and
relocation of all of Tenant's telephone and communications
34
equipment. Should Tenant refuse to permit Landlord to move Tenant to such new
space at the end of said one hundred twenty (120) day period, Landlord or Tenant
shall have the right to cancel and terminate this Lease, subject to the
cancellation provisions set forth in Article 35, below, and Tenant's prospective
obligations hereunder effective ninety (90) days after the date of Landlord's
original notification to Tenant of its intent to relocate Tenant. If Landlord
moves Tenant to such new space, this Lease and each and all of its terms,
covenants and conditions shall remain in full force and effect and shall be
deemed applicable to such new space and such new space shall thereafter be
deemed to be the "Premises" as though Landlord and Tenant had entered into an
express written amendment of this lease with respect thereto.
(s) BUILDING CODES. After the Tenant Improvements have been completed, any
and all costs attributable to or related to the applicable building codes of the
city in which the Project is located (or any other authority having jurisdiction
over the Project) arising from Tenants plans, specifications, improvements,
alterations or otherwise (other than the Tenant Improvements) shall be paid by
Tenant at its sole cost and expense.
(t) EXHIBITS AND ADDENDUM. The Exhibits and Addendum, if applicable,
attached hereto are incorporated herein by this reference as if fully set forth
herein.
ARTICLE 31 - Option to Renew
----------------------------
(a) OPTION RIGHT. Landlord hereby grants the Tenant named in this Lease
and any Permitted Transferees (the "Original Tenant") one (1) option to extend
the Lease term for a period of five, (5) years an ("Option Term"), which option
shall, be exercisable only by written notice delivered by Tenant to Landlord set
forth below. The rights contained in this Article 31 shall be personal to the
original Tenant and may only be exercised by the Original Tenant and any
Permitted Transferees (and not any assignee, sublessee or other transferee of
the Original Tenant's interest in this Lease, excepting a Permitted Transferee)
if the Original Tenant, occupies at least fifty-one percent (51%) of the entire
Premises.
(b) OPTION RENT. The rent payable by Tenant during the Option Term
("Option Rent") shall be equal to one hundred percent (100%) of the "Market
Rent" (defined below). "Market Rent" shall mean the applicable monthly basic
rent, including all escalations, direct costs, additional rent and other
charges, including rent concessions and tenant improvement allowances at which
tenants, as of the commencement of the option term, are leasing non-sublease,
nonencumbered, non-equity, space comparable in size, location and quality to the
Premises for a term of five (5) years which comparable space is located in
office buildings comparable to the Project in the West Los Angeles area of Los
Angeles, California.
(c) EXERCISE OF OPTIONS. The Option shall be exercised by Tenant only in
the following manner (i) Tenant shall not be in default following the expiration
of any applicable notice or cure period on the delivery date of the notice to
exercise the Option; (ii) Tenant shall deliver written notice to Landlord not
more than ten (10) months nor less than nine (9) months prior to the expiration
of the Lease term, stating that Tenant is interested in exercising that Option,
(iii) within five (5) business days of Landlord's receipt of Tenant's written
notice, Landlord shall deliver notice ("Option Rent Notice") to Tenant setting
forth the Option Rent; and
35
(iv) if Tenant desires to exercise such Option, Tenant shall provide Landlord
written notice within thirty (30) calendar days after receipt of the Option Rent
Notice ("Tenant's Acceptance").
(d) DETERMINATION OF MARKET RENT. If Tenant timely and appropriately
objects to the Market Rent in Tenant's Acceptance, Landlord and Tenant shall
attempt to agree upon the Market Rent using their best good-faith efforts. If
Landlord and Tenant fail to reach agreement within ten (10) calendar days
following Tenant's Acceptance ("Outside Agreement Date"), then each party shall
make a separate determination of the market Rent which shall be submitted to
arbitration in accordance with the following items (i) through (vii):
(i) Landlord and Tenant shall each appoint one arbitrator who shall
by profession be a current real estate broker or appraiser of commercial high-
rise properties in the immediate vicinity of the Project, and who has been
active in such field over the last five (5) years. The determination of the
arbitrators shall be limited solely to the issue of whether Landlord's or
Tenant's submitted Market Rent is the closest to the actual Market Rent as
determined by the arbitrators, taking into account the requirements of item (b),
above.
(ii) The two arbitrators so appointed shall within five (5) business
days of the date of the appointment of the last appointed arbitrator agree upon
and appoint a third arbitrator who shall be qualified under the same criteria
set forth hereinabove for qualification of the initial two arbitrators.
(iii) The three arbitrators shall within fifteen (15) days of the
appointment of the third arbitrator reach a decision as to whether the parties
shall Use Landlord's or Tenant's submitted Market Rent, and shall notify
Landlord and Tenant thereof.
(iv) The decision of the majority of the three arbitrators shall be
binding upon Landlord and Tenant.
(v) If either Landlord or Tenant fails to appoint an arbitrator
within fifteen (15) days after the applicable Outside Agreement Date, the
arbitrator appointed by one of them shall reach a decision, notify Landlord and
Tenant thereof, and such arbitrator's decision shall be binding upon Landlord
and Tenant.
(vi) If the two arbitrators fail to agree upon and appoint a third
arbitrator, or both parties fail to appoint an arbitrator, then the appointment
of the third arbitrator or any arbitrator shall be dismissed and the matter to
be decided shall be forthwith submitted to arbitration under the provisions of
the American Arbitration Association, but subject to the instruction set forth
in this item (d).
(vii) The cost of arbitration shall be paid by Landlord and Tenant
equally.
ARTICLE 32 - Right of First Offer/Right of First Refusal
--------------------------------------------------------
(a) RIGHT OF FIRST OFFER. From and after the sixteenth (16th) month of the
Commencement Date, and provided Tenant is not, in default following the
expiration of any applicable notice or cure period under this Lease, then
Landlord grants to the Original Tenant (and any Permitted Transferees) a right
of first offer on any space which becomes available for
36
lease and which is contiguous to the Premises ("First Offer Space"), subject to
any rights of renewal or expansion of existing Tenants in the Project executing
leases with Landlord prior to the date of this Lease. Tenant's right of first
offer shall be on the terms and conditions set forth in this Article.
(i) Procedure for Offer. Landlord shall from time to time during the
initial Lease term, notify Tenant in writing of the availability to lease space
contiguous to the Premises which notice shall set forth the rental rate
therefore in accordance with Article 32(a)(iii) below ("First Offer Rent").
Within five (5) business days following such notice, Tenant shall notify
Landlord in writing of its desire to lease such available space ("Notice").
(ii) Procedure for Acceptance. In the event Tenant disputes the First
Offer Rent applicable to the First Offer Space, Tenant shall concurrently notify
Landlord of such dispute, along with the Notice, in which event the First Offer
Rent shall be determined in accordance with the terms of Article 31(b) and (d)
above, of this Lease. If Tenant does not so notify Landlord within the five (5)
business day period, then Landlord shall be free to lease the space to anyone to
whom Landlord desires on any terms Landlord desires, provided the amount is not
less than five percent (5%) of the First Offer Rent.
(iii) First Offer Rent. The rent payable by Tenant for the First
Offer Space (the "First Offer Rent") shall be equal to one hundred percent
(100%) of the then Market Rent.
(iv) Construction in First Offer Space. Landlord and Tenant shall
attempt to mutually agree on a tenant improvement allowance for such First Offer
Space at the time the First Offer Space becomes available and Tenant receives
the Notice in Article 32(a)(i) above.
(v) Amendment to Lease. If Tenant timely exercises Tenant's right to
lease the First Offer Space as set forth herein, Landlord and Tenant shall
within thirty (30) days thereafter execute an amendment to this Lease for the
First Offer Space upon the terms and conditions as set forth in the First Offer
Notice and this Article 32. Tenant shall commence payment of rent for the First
Offer Space and the term of the First Offer S ace shall commence upon the date
mutually agreed to by Landlord and Tenant ("First Offer Commencement Date") and
shall terminate on the Expiration Date of this Lease.
(vi) Termination of right of First Offer. The rights contained in
this Article 32 shall be personal to the Original Tenant or any Permitted
Transferee, and may only be exercised by the Original Tenant or any Permitted
Transferee (and not any other assignee, sublessee or other transferee of the
Original Tenant's interest in this Lease) if the Original Tenant or any
Permitted Transferee has not subleased fifty percent (50%) or more of the
original Premises. Tenant shall not have the right to lease First Offer Space,
as provided in this Article 32, or if, as of the date of the attempted exercise
of any right of first offer by Tenant, or as of the scheduled date of delivery
of the First Offer Space to Tenant, Tenant is in default following any
applicable notice or cure period under this Lease.
(b) RIGHT OF FIRST REFUSAL. During the first fifteen (15) months after the
Commencement Date, and provided Tenant has not subleased fifty percent (50%) or
more of the Premises, Landlord hereby grants to the Original Tenant and any
Permitted Transferee a right of
37
first refusal with respect to all the available space on the fifth (5th) floor
located in the Project other than the Premises ("First Refusal Space"). Tenant's
right of first refusal shall be on the terms and conditions set forth in this
Article 32(b).
(i) Procedure for Offer. During the first fifteen (15) months after
the Commencement Date, Landlord shall notify Tenant in writing, from time to
time, of third party interest in available space on the fifth (5th) floor of the
Project, along with the third party offer acceptable to Landlord ("First Refusal
Notice").
(ii) Procedure for Acceptance. If Tenant desires to exercise Tenant's
right of first refusal with respect to all or a portion (but not less than 1,500
rentable square feet) of the space described in the First Refusal Notice, then
within five (5) business days of delivery of the First Refusal Notice, Tenant
shall deliver notice to Landlord of Tenant's intention to exercise its right of
first refusal with respect to any portion of the available First Refusal Space
on the same terms and conditions of this Lease (including the effective rental
rate of $1.71 a rentable square foot and Subparagraph (iii) immediately below);
provided, however, that if Tenant desires to take less than all of the First
Refusal Space, the remaining space must be in a "commercially leasable
configuration" or Tenant cannot exercise its right of first offer hereunder.
Landlord shall have the right in its sole and absolute discretion to determine
what constitutes a "commercially leasable configuration". If Tenant does not
exercise its right of first refusal within such five (5) business day period,
then Landlord may lease the First Refusal Space to such third party upon terms
and conditions substantially similar to those set forth in the First Refusal
Notice.
(iii) Construction in First Refusal Space. Landlord and Tenant shall
agree in Tenant's acceptance of the First Refusal Space as to the construction,
if any, of the First Refusal Space. The amount of tenant improvements shall be
proportionately adjusted based on the term remaining on this Lease in comparison
to the original Lease term.
(iv) Amendment to Lease. If Tenant timely and in writing exercises
Tenant's right to lease the First Refusal Space as set forth herein, Landlord
and Tenant shall within thirty (30) days thereafter execute an amendment to this
Lease for the First Refusal Space upon the terms and conditions as set forth in
the First Refusal Notice. Tenant shall commence payment of rent for the First
Refusal. Space, and the term of the First Refusal Space shall commence upon the
date of delivery of the First Refusal Space to Tenant, including the substantial
completion of tenant improvements and shall terminate on the Expiration Date of
this Lease.
(v) Termination of Right of First Refusal. The rights contained in
this Article 32(b) shall be personal to the original Tenant, and may only be
exercised by the Original Tenant and any Permitted Transferee (and not any other
assignee, sublessee or other transferee of the original Tenant's interest in
this Lease, except an affiliate of Tenant) if the original Tenant and any
Permitted Transferee occupies at least fifty percent (50%) of the entire
Premises and Tenant may not exercise it, right of first refusal, if, as of the
date of the attempted exercise of such right of first refusal or as of the
scheduled date of delivery of the First Refusal Space to Tenant, Tenant is in
material default following the expiration of any applicable notice or cure
period under this Lease.
38
ARTICLE 33 - Storage Space
--------------------------
ARTICLE 34 -- Signage/Directory
-------------------------------
Provided Tenant is not in default hereunder, Tenant shall have the right to
the following signage/directory rights:
(a) At Landlord's sole cost and expense, the right to fourteen (14) lines
in the Project's lobby directory; and
(b) Tenant, at Tenant's sole cost and expense, shall have the right to
install custom suite identification (including logo and business name) on all
entrances to the Premises, subject to Landlord's reasonable approval, which
shall not be unreasonably withheld or delayed.
ARTICLE 35 - Option to Cancel
-----------------------------
Tenant shall have a one-time right to cancel the Lease effective as of the
end of the thirty-sixth (36th) month of the initial Lease term only
("Termination Date"). In order for the termination right set forth herein to be
valid and effective, Tenant must give Landlord written notice of its intention
to cancel the Lease not later than six (6) months prior to the Termination Date.
In the event Tenant timely and in writing exercises its option to cancel, Tenant
shall, at the time of providing such written notice, pay to Landlord a
cancellation fee equal to the sum of (a) the outstanding balance of the Loan
(defined in Article 9), (b) the unamortized portion of (i) Tenant Improvements
in the amount of Sixty-Two Thousand Fifty-Five Dollars ($62,055.00), (ii)
brokerage commissions in the amount of Forty-Five Thousand Eight Hundred
Forty-One Dollars and Seventy-Nine Cents ($45,841.79), and (iii) Sixty-One
Thousand One Hundred Fifty-Five Dollars ($61,155.00) in rent concessions paid by
and given by Landlord in connection with the Lease, and (c) the sum of Forty-Six
Thousand Six Hundred Thirteen Dollars and Seventy Cents ($46,613.70) Which
equals four (4) months' Monthly Basic Rental (calculated at the effective rate).
ARTICLE 36 - Building Antenna(s) or Satellite Dish(es)
------------------------------------------------------
Subject to all governmental laws, rules and regulations, Tenant and
Tenant's contractors (which shall first be reasonably approved by Landlord)
shall have the right and access to install, repair replace, remove, operate and
maintain one (1) so-called "satellite dish" or other similar
39
device, such as antennae (collectively, "Communication Equipment") no greater
than one (1) meter in diameter, together with all cable, writing, conduits and
related equipment, for the purpose of receiving and sending radio, television,
computer, telephone or other communication signals at a location on the roof of
the Project designated by Landlord. Landlord shall have the right to require
Tenant to relocate the Communication Equipment (at Landlord's cost) at any time
to another location on the roof of the Project reasonably approved by Tenant.
Tenant shall retain Landlord's roofing contractor to make any necessary
penetrations and associated repairs to the roof in order to preserve Landlord's
roof warranty. Tenant's installation and operation of the Communication
Equipment shall be governed by the following terms and conditions:
(a) Tenant's right to install, replace, repair, remove, operate and
maintain the Communication Equipment shall be subject to all governmental laws,
rules and regulations, and Landlord makes no representation that such laws,
rules and regulations permit such installation and operation.
(b) All plans and specifications for the Communication Equipment shall be
subject to Landlord's reasonable approval.
(c) All costs of installation, operation, maintenance and removal (and
restoration of the Project due to such removal) of the Communication Equipment
and any necessary related equipment (including, without limitation, costs of
obtaining any necessary permits and connections to the Project's electrical
system) shall be borne by Tenant.
(d) It is expressly understood that Landlord retains the right to use the
roof of the Project for any purpose whatsoever provided that Landlord shall not
unduly interfere with Tenant's use of the Communication Equipment.
(e) Tenant shall use the Communication Equipment so as not to cause any
interference to other tenants in the Project or with any other tenant's
Communication Equipment (installed prior to Tenant's installation), and not to
damage the Project or interfere with the normal operation of the Project.
(f) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the
Communication Equipment will be able to receive or transmit communication
signals without interference or disturbance (whether or not by reason of the
installation or use of similar equipment by others on the roof of the Project)
and Tenant agrees that Landlord shall not be liable to Tenant therefor.
(g) Tenant shall (i) be solely responsible for any damage caused as a
result of the Communication Equipment; (ii) promptly pay any tax, license or
permit fees charged pursuant to any laws or regulations in connection with the
installation, maintenance or use of the Communication Equipment and comply with
all precautions and safeguards recommended by all governmental authorities; and
(iii) pay for all necessary repairs, replacements, to or maintenance of the
Communication Equipment.
(h) The Communication Equipment shall remain the sole property of Tenant.
Tenant shall remove the Communication Equipment and related equipment at
Tenant's sole cost and expense upon the expiration or sooner termination of this
Lease or upon the imposition of any
40
governmental law or regulation which may require removal, and shall repair the
Project upon such removal to the extent required by such work of removal. If
Tenant fails to remove the Communication Equipment and repair the Project within
fifteen (15) days after the expiration or earlier termination of this Lease,
Landlord may do so at Tenant's expense. The provisions of this Article 36 shall
survive the expiration or earlier termination of this Lease.
(i) The communication Equipment shall be deemed to constitute a portion of
the Premises for purposes of the Basic Lease Provisions of this Lease
(j) Tenant shall be solely responsible for the cost of removal of the
Communication Equipment from the Project, and for the cost of repairing and
restoring the Project to its condition immediately prior to the communication
equipment being installed.
ARTICLE 37 - Limited Arbitration/Dispute Resolution Procedure
-------------------------------------------------------------
The submittal of all matters to arbitration in accordance with the terms of
this Article 37 shall be the sole and exclusive method, means and procedure to
resolve any and all claims, disputes or disagreements of Fifty Thousand Dollars
($50,000.00) or less arising under this Lease, except for (a) determination of
First Offer Rent and Fair Market Rental Rate, which shall be determined in
accordance with the applicable Articles above, (b) all claims by either party
which (i) seek anything other than enforcement of rights under this Lease, or
(ii) are primarily founded upon matters of fraud, willful misconduct, bad faith
or any other allegations of tortious action, and seek the award of punitive or
exemplary damages, and (c) claims relating to Landlord's exercise of any
unlawful detainer rights pursuant to California law or rights or remedies used
by Landlord to gain possession of the Premises or terminate Tenant's right of
possession to the Premises. Should there be a dispute under the Lease for
amounts less than Fifty Thousand Dollars ($50,000.00), and accepted pursuant to
(a), (b) or (c) above, then such procedure shall be that Landlord and Tenant
shall select an arbitrator, which arbitrator shall be selected and qualified
pursuant to the rules of the Judicial Arbitration and Mediation Service (such
arbitrator to be selected by a process by which each party either agrees upon a
third party arbitrator or selects an independent third party, each of which
independent third party shall meet and agree upon such arbitrator, and, failing
to agree within fifteen (15) days after the commencement of such process, such
arbitrator shall be selected by the rules of the Judicial Arbitration Mediation
Service without regard to input by Landlord and Tenant) and whose costs shall be
paid for by the losing party unless it is not clear that there is a "losing"
party, in which event the costs of arbitration shall be shared equally. The
purpose of the use of an arbitrator to resolve such dispute is to avoid the
delays incident to the court calendar system of the jurisdiction within which
the Premises are located. Therefore, the parties agree that if the issue in
dispute between Landlord and Tenant under this Article may be expected to be
resolved under the then current calendar of the court of appropriate
jurisdiction within a period not exceeding six (6) months from the date the
issue is in dispute arises, then the arbitration process described hereinabove
shall not be utilized, an the matter shall proceed through the judicial process
in the court of appropriate jurisdiction.
41
IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the
foregoing provisions and Articles, including all exhibits and other attachments
referenced therein, as of the date first above written.
"TENANT" "LANDLORD"
SmarTalk Teleservices, Inc., LAOP, IV, LLC,
a California corporation a Nevada limited liability company,
By: Metropolitan Falls Partners,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ a California general partnership
---------------------------- Its: Managing Member
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman, CEO
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
---------------------------- Managing General Partner
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Secretary
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Officer
42
EXHIBIT "B"
-----------
RULES AND REGULATIONS
1. No sign, advertisement or notice shall be displayed, printed or affixed
on or to the Premises or to the outside or inside of the Building or so as to be
visible from outside the Premises or Building without Landlord's prior written
consent. Landlord shall have the right to remove any non-approved sign,
advertisement or notice, without notice to and at the expense of Tenant, and
Landlord shall not be liable in damages for such removal. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant by Landlord or by a person selected by Landlord and in a
manner and style acceptable to Landlord.
2. Tenant shall not obtain for use on the Premises ice, drilling water,
waxing, cleaning, interior glass polishing, rubbish removal, towel or other
similar services, or accept barbering or bootblackening, or coffee cart
services, milk, soft drinks or other like services on the Premises, except from
persons authorized by Landlord and at the hours and under regulations fixed by
Landlord. No vending machines or machines of any description shall be
installed, maintained or operated upon the Premises without Landlord's prior
written consent.
3. The sidewalks, hall, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose other than
for ingress and egress from Tenant's Premises.
4. Toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein.
5. Tenant shall not overload the floor of the Premises or ▇▇▇▇, drive
nails, screw or drill into the partitions, ceilings or floor or in any way
deface the Premises.
6. In no event shall Tenant place a load upon any floor of the Premises or
portion of any such flooring exceeding the floor load per square foot of area
for which such floor is designed to carry and which is allowed by law, or any
machinery or equipment which shall cause excessive vibration to the Premises or
noticeable vibration to any other part of the Building. Prior to bringing any
heavy safes, vaults, large computers or similarly heavy equipment into the
Building, Tenant shall inform Landlord in writing of the dimensions and weights
thereof and shall obtain Landlord's consent thereto, which consent Landlord
shall have the right to deny. Such consent shall not constitute a
representation or warranty by Landlord that the safe, vault or other equipment
complies, with regard to distribution of weight and/or vibration, with the
provisions of this Rule 6 nor relieve Tenant from responsibility for the
consequences of such noncompliance, and any such safe, vault or other equipment
which Landlord determines to constitute a danger of damage to the Building or a
nuisance to other Tenants, either alone or in combination with other heavy
and/or vibrating objects and equipment, shall be promptly removed by Tenant upon
Landlord's written notice of such determination and demand for removal thereof.
1
7. Tenant shall not use or keep in the Premises or Project any kerosene,
gasoline or inflammable, explosive or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.
8. Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord.
9. Tenant shall not install or use any blinds, shades, awnings or-screens
in connection with any window or door of the Premises and shall not use any
drape or window covering facing any exterior glass surface other than the
standard drapes, blinds or other window covering.
2
EXHIBIT "C"
-----------
NOTICE OF LEASE TERM DATES AND TENANT'S PERCENTAGE
TO: _____________________________ DATE: ____________________________
_____________________________
_____________________________
RE: Lease dated ________________, 19___, between ______________________________
_______________________ ("Landlord"), and ______________________________________
("Tenant"), concerning Suite ______, located at ______________________________.
Gentlemen:
In accordance with the Lease, Landlord wishes to advise and/or conform the
following:
1. That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the Lease and that there is no
deficiency in construction.
2. That the Tenant has taken possession of the Premises and acknowledges
that under the provisions of the Lease the term of said Lease shall
commence as of __________________________ for a term of ___________________
___________ ending on ____________________________________.
3. That in accordance with the Lease, Basic Rental commenced to accrue on
_______________________.
4. If the Commencement Date of the Lease is other than the first day of
the month, the first billing will contain a pro rata adjustment. Each
billing thereafter shall be for the full amount of the monthly installment
as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and every
month during the term of said Lease. Your rent checks should be made
payable to __________________________ at __________________________________
____________________________________________________________________.
6. The exact number of rentable square feet within the Premises is
_________ square feet.
1
7. Tenant's Percentage, as adjusted b:s1d upon the exact number of
rentable square feet within the Premise is ________%.
-------
AGREED AND ACCEPTED:
TENANT:
By:
--------------------------
Its:
--------------------------
2
AMENDMENT NO. 1 TO LEASE AGREEMENT
----------------------------------
THIS AMENDMENT NO. 1 TO LEASE ("Agreement") dated as of tb12 16th day of
January, 1996 by and between LAOP IV, LLC, a Nevada limited liability company
("Landlord") and SMARTALK TELESERVICES, INC., a California corporation
("Tenant"), with reference to the following recitals:
A. Landlord and Tenant entered into that certain Lease dated January 10,
1996 ("Lease") for suite 500, consisting of approximately 6,795 rentable square
feet ("Premises"), located in the building at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, known as Westwood Terrace ("Project").
B. Pursuant to Article 32 of the Lease, Landlord has provided Tenant with
notice of the availability of approximately 1,729 rentable square feet of
contiguous space ("First Refusal Space") to the Premises and Tenant has provided
Landlord with written notification of its intent to exercise its right of first
refusal to lease the First Refusal Space.
C. Landlord and Tenant desire to amend the Lease to include the First
Refusal Space as part of the Premises on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the terms, covenants and conditions as
set forth in the Lease and in this Agreement, the sufficiency and adequacy of,
which is hereby acknowledged, Landlord and Tenant hereby agree to amend the
Lease as follows:
1. PREMISES: Article 1.B of the Lease shall be amended to delete the
--------
number "6,795" as the definition of rentable square feet of the
Premises and to replace it with the number "8,524" thereby reflecting
that the Premises shall be defined as for all purposes under the Lease
approximately 8,524 rentable square feet as designated on the plan
attached hereto and incorporated in the Lease as Exhibit "A."
2. BASIC RENTAL: Article 1.C of the Lease shall be amended to reflect
------------
that Tenant shall pay to Landlord as Monthly Base Rental during the
Lease term, the following amounts:
3. TENANT'S PROPORTIONATE SHARE: Article 1.E of the Lease shall be
----------------------------
amended by deleting the number "4.99045%" as the definition of
Tenant's Proportionate Share under the Lease and replacing it with the
number "6.26039%" reflecting that Tenant's Proportionate Share shall
be defined as for all purposes under the Lease as 6.26039%.
4. SECURITY DEPOSIT: Article 1.F of the Lease shall be amended to
----------------
5. PARKING PASSES: Article 1.1 of the Lease shall be amended to reflect
--------------
that Tenant shall be entitled to twenty-six (26) unreserved parking
spaces. Five (5) of the twenty-six (26) parking spaces located in the
Project's parking structure may
1
be reserved parking spaces. The charges for all parking spaces shall
be as set forth in the Lease.
6.
7. REPAIRS AND ALTERATIONS: Article 9 of the Lease shall be amended to
-----------------------
8. OPTION TO CANCEL: Article 35 of the Lease shall be amended to
----------------
9. CAPITALIZED TERMS: Except as otherwise expressly provided herein to
-----------------
the contrary, all capitalized terms used in this First Amendment to
Lease shall have the same meanings given such terms in the Lease.
10. APPLICABILITY OF LEASE: All terms, covenants and conditions of the
----------------------
Lease, except as expressly amended herein are hereby ratified and
shall continue in full force and effect throughout the term of the
Lease, including any extension or renewal thereof. The terms,
covenants and conditions expressly amended herein shall become
effective upon the execution o this First Amendment to Lease Agreement
by both Landlord and Tenant and the full and complete satisfaction of
each and every one of the conditions set forth in Paragraphs 4 and 6
above.
11. AUTHORIZATION: Each individual and entity executing this First
-------------
Amendment to Lease Agreement hereby represents and warrants that it
has the capacity set forth on the signature page hereof with full
power and authority to bind the party on whose behalf it is executing
this First Amendment to Lease Agreement, to the terms hereof.
2
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
date first written above.
"LANDLORD" "TENANT"
LAOP, IV, LLC, SmarTalk Teleservices, Inc.,
a Nevada limited liability company, a California corporation
By: Metropolitan Falls Partners, By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
a California general partnership --------------------------
Its: Managing Member ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman, CEO
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------- --------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Managing General Partner Secretary
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Officer
3
AMENDMENT NO. 2 TO LEASE AGREEMENT
----------------------------------
THIS AMENDMENT No. 2 TO LEASE ("Agreement") dated as of this 7th day of
February, 1996 by and between LAOP IV, LLC, a Nevada limited liability company
("Landlord") and SMARTALK TELESERVICES, INC., a California corporation
("Tenant"), with reference to the following recitals:
A. Landlord and Tenant entered into that certain Lease dated January 10,
1996 ("Lease ) for suite 500, consisting of approximately 6,795 rentable square
feet ("Premises"), located in the building at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, known as Westwood Terrace ("Project"). The Lease was
subsequently amended in or about February, 1996, to include approximately 1,729
rental square feet of additional contiguous space. The Lease and the Amendment
are collectively referred to herein as the "Lease" and the term "Premises"
includes the original Premises and the additional space added pursuant to the
Amendment.
B. Landlord and Tenant desire to amend the Lease to, among other matters,
change the Commencement Date set forth in the Lease on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the terms, covenants and conditions as
set forth in the Lease and in this Agreement, the sufficiency and adequacy of
which is hereby acknowledged, Landlord and Tenant hereby agree to amend the
Lease as follows:
1. COMMENCEMENT DATE: Article 1.A of the Lease shall be amended by
-----------------
deleting the following language: "On the later of (i) February 1,
1996," and replacing it with the following language: "The earlier of
(i) March 25, 1996,"
2. CAPITALIZED TERMS: Except as otherwise expressly provided herein to
-----------------
the contrary, all capitalized terms used in this Agreement shall have
the same meanings given such terms in the Lease.
3. APPLICABILITY OF LEASE: All terms, covenants and conditions of the
----------------------
Lease, except as expressly amended herein are hereby ratified and
shall continue in full force and effect throughout the term of the
Lease, including any extension or renewal thereof. The terms,
covenants and conditions expressly amended herein shall become
effective upon the execution of this Agreement by both Landlord and
Tenant.
4. AUTHORIZATION: Each individual and entity executing this Agreement
-------------
hereby represents and warrants that it has the capacity set forth on
the signature page hereof with full power and authority to bind the
party on whose behalf it is executing this Agreement.
1
"LANDLORD" "TENANT"
LAOP, IV, LLC, SmarTalk Teleservices, Inc.,
a Nevada limited liability company, a California corporation
By: Metropolitan Falls Partners, By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
a California general partnership --------------------------
Its: Managing Member ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman, CEO
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------- --------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Managing General Partner Secretary
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Officer
2
AMENDMENT NO. 3 TO LEASE AGREEMENT
----------------------------------
THIS AMENDMENT N0.3 TO LEASE ("Agreement") dated as of this 19th day of
April, 1996 by and between LAOP IV, LLC, a Nevada limited liability company
("Landlord") and SMARTALK TELESERVICES, INC., a California corporation
("Tenant"), with reference to the following recitals:
A. Landlord and Tenant entered into that certain Lease dated January 10,
1996 ("Lease") for Suite 500, consistency of approximately 6,795 rentable square
feet ("Premises"), located in the building at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, known as Westwood Terrace ("Project"). The Lease was
subsequently amended ("Amendment No. 1") in or about January or February, 1996,
to, among other things, include approximately 1,729 rental square feet of
additional contiguous space, and further amended on February 7, 1996,
("Amendment No. 2") to, among other things, recalculate the Commencement Date
under the Lease. The Lease and the amendments are collectively referred to
herein as the "Lease," and the term "Premises" includes the original Premises
and the additional space added pursuant to Amendment No. 1.
B. Landlord and Tenant desire to amend the Lease to, among other matters,
document the Loan to Tenant for construction of the Tenant Improvements and the
increase in Monthly Basic Rental for the repayment of the Loan, as more
specifically set forth in the Lease, on the terms and conditions hereinafter set
forth.
C. Except as otherwise stated herein, all capitalized and defined terms
have the same meaning as set forth in the Lease.
NOW, THEREFORE, in consideration of the terms, covenants and conditions as
set forth in the Lease and in this Agreement, the sufficiency and adequacy of
which is hereby acknowledged, Landlord and Tenant hereby agree to amend the
Lease as follows:
2. BASIC RENTAL: Article I.C. of the Lease and Paragraph 2 of Amendment
------------
No. 1 shall be amended to reflect that Tenant shall pay to Landlord as
Monthly Basic Rental during the Lease term, the following amounts
(which includes the repayment of the Loan with interest):
3. RENTAL ADJUSTMENT: Pursuant to the provisions of Paragraph 6 of
-----------------
4. APPLICABILITY OF LEASE: All terms, covenants and conditions of the
----------------------
Lease, except as expressly amended herein are hereby ratified and
shall continue in full force and effect throughout the term of the
Lease, including any extension or renewal thereof. The terms,
covenants and conditions expressly amended herein
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shall become effective upon the earlier of (i) disbursement of the
Loan to Tenant, or (ii) execution of this Agreement by both Landlord
and Tenant.
5. AUTHORIZATION: Each individual and entity executing this Agreement
hereby represents and warrants that it has the capacity set forth on
the signature page hereof with full power and authority to bind the
party on whose behalf it is executing this Agreement.
6. DEFAULTS: As of the date of this Agreement, Tenant hereby represents
and warrants to Landlord that Tenant is in full compliance with all
terms, covenants and conditions of the Lease and that there are no
breaches or defaults under the Lease by Landlord or Tenant, and Tenant
knows of no events or circumstances which given the passage of time
would constitute a default under the Lease by either Landlord or
Tenant.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and date first written above.
"LANDLORD" "TENANT"
LAOP, IV, LLC, SmarTalk Teleservices, Inc.,
a Nevada limited liability company, a California corporation
By: Metropolitan Falls Partners, By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
a California general partnership --------------------------
Its: Managing Member ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman, CEO
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------- --------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Managing General Partner Secretary
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Officer
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NOTICE OF LEASE TERM DATES AND TENANT'S PERCENTAGE
TO: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman, CEO DATE: April 25, ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D., Secretary
SMARTALK TELESERVICES, INC.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Lease dated January 10, 1996, Amendment No. 1 dated January 30, 1996,
Amendment No. 2 dated February 7, 1996 and Amendment No. 3 dated April 19,
1996, between LAOP IV, LLC, a Nevada limited liability company ("Landlord")
and SMARTALK TELESERVICES, INC., a California corporation ("Tenant"),
concerning Suite 500, located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇.
Gentlemen:
In accordance with the Lease, Landlord wishes to advise and/or confirm the
following:
1. That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the Lease and that there is no
deficiency in construction.
2. That the Tenant has taken possession of the Premises and acknowledges
that under the provisions of the Lease term of said Lease shall commence as of
March 11, 1996 for a term of seventy-two months ending on March 31, 2002.
3. That in accordance with the Lease Basic Rental commenced to accrue on
March 11, 1996.
4. If the Commencement Date of the Lease is other than the first day of
the mouth, the first billing will contain a pro rata adjustment. Each billing
thereafter shall be or the full amount of the monthly installment as provided
for in said Lease.
5. Rent is due and payable on the first day of each and every month during
the term of said Lease. Your rent checks should be mad payable to Hanford/▇▇▇▇▇
Agent for LBHI at ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
6. The exact number of rentable square feet within the Premises is 8,524
square feet.
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7. Tenant's Percentage, as adjusted based upon the exact number of
rentable square feet within the Premises is 6.26039%.
AGREED AND ACCEPTED:
TENANT
SMARTALK TELESERVICES, INC.,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Its: Chairman, CEO
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Its: Secretary
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TO: SMARTALK TELESERVICES, INC. DATE: August 18, 1997
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Fourth Amendment dated February 28, 1997 to Lease dated January 30, 1996
between ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Landlord") and SMARTALK TELESERVICES. INC., a California corporation
("Tenant"), concerning the Expansion Space on the fifth floor located at
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
Gentlemen:
In accordance with the Lease, Landlord wishes to advise and/or confirm the
following:
1. That the Expansion Space has been accepted herewith by the Tenant as
being substantially complete in accordance with the Fourth Amendment to Lease
and that there is no deficiency in construction.
2. That the Tenant has taken possession of the Expansion Space and
acknowledges that under the provisions of the Fourth Amendment to Lease term of
said Expansion Space shall. commence as of August 18, 1997 for a term of fifty-
five months ending on March 31, 2002.
3. That in accordance with the Lease Basic Rental for the Expansion Space
commenced to accrue on August 18, 1997.
4. If the Commencement Date of the Lease is other than the first day of
the month, the first billing will contain a pro rata adjustment. Each billing
thereafter shall be for the full amount of the monthly installment as provided
for in said Lease.
5. Rent is due and payable on the first day of each and every month during
the term of said Lease. Your rent checks should be made payable to Arden
Realty(TM) Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
6. The exact number of rentable square feet within the Expansion Space is
4,915 square feet for a total of 13, 439 square feet.
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7. Tenant's Percentage, as adjusted based upon the exact number of
rentable square feet within the Premises will increase to 3.6 1% on the
Expansion Commencement Date.
AGREED AND ACCEPTED:
TENANT:
SMARTALK TELESERVICES, INC.
---------------------------
a California corporation
By:
-----------------------
Its
--------------------
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FOURTH AMENDMENT TO LEASE
-------------------------
THIS FOURTH AMENDMENT TO LEASE ("Fourth Amendment") is made and entered
into as of the 28th day of February, 1997, by and between ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership ("Landlord") and SMARTALK
TELESERVICES, INC., a California corporation ("Tenant"):
R E C I T A L S :
- - - - - - - -
A. LAOP IV, LLC, a Nevada limited liability company ("LAOP") and Tenant
entered into that certain Standard Office Lease dated as of January 10, 1996
("Original Lease"), as amended by that certain Amendment No. 1 to Lease
Agreement dated January 1996 ("First Amendment"), that certain Amendment No. 2
to Lease Agreement dated February 28, 1996 ("Second Amendment"), and that
certain Amendment No. 3 to Lease Agreement dated April 19, 1996 ("Third
Amendment") collectively referred to as the "Amendments," whereby Landlord
leased to Tenant and Tenant leased from Landlord certain space (the "Premises")
located on the fifth (5th) floor of that certain building located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Project"). The
Original Lease as amended by the Amendments may be referred to herein as the
"Lease" Landlord is the successor in interest to LAOP.
B. Tenant desires to expand the Premises to include that certain space
("Expansion Space") located on the fifth (5th) floor of the Project, which space
contains approximately 4,915 rentable (4,241 useable) square feet as delineated
on Exhibit "A" attached hereto and made a part hereof. In connection therewith,
Landlord and Tenant desire to amend the Lease as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
A G R E E M E N T :
- - - - - - - - -
1. Capitalized Terms. All capitalized terms when used herein shall have
-----------------
the same meaning as is given such terms in the Lease unless expressly superseded
by the terms of this Fourth Amendment.
2. Expansion Commencement Date. The term "Expansion Commencement Date"
---------------------------
shall mean the later of (a) March 15, 1997; or (b) the date upon which the
Tenant Improvements have been substantially completed in the Expansion Space (as
described in the Tenant Work Letter attached hereto as Exhibit "B").
3. Addition to Premises. Effective as of the Expansion Commencement
--------------------
Date, Tenant shall lease from Landlord and Landlord shall lease to Tenant the
Expansion Space. Consequently, effective upon the Expansion Commencement Date,
the original Premises shall be increased to include the Expansion Space. The
term of Tenant's leases of the Expansion Space shall expire co-terminously with
the Term of Tenant's lease of the original Premises on March 31, 2002. Landlord
and Tenant hereby agree that such addition of the Expansion Space to
1
the original Premises shall, effective as of the Expansion Commencement Date,
increase the number of rentable square feet contained within the Premises to
thirteen thousand four hundred thirty nine (13,439) rentable square feet.
4. Tenant's Proportionate Share. Effective upon the Expansion
----------------------------
Commencement Date, Tenant's Proportionate Share shall increase to three point
six one percent (3.61%). The Base Year specified in Section 1.A.D. of the
Original Lease shall apply to Tenant's lease of the Expansion Space as well as
the Original Premises.
5. Monthly Base Rental. Monthly Base Rental applicable to the Expansion
-------------------
Space for the period from the Expansion Commencement Date and continuing until
the expiration of the initial term of the Lease shall be as follows:
6. Improvements to Expansion Space. Landlord shall construct the
-------------------------------
improvements to the Expansion Space pursuant to the terms and conditions of the
Tenant Work Letter attached hereto as Exhibit "B." Except as specifically set
forth in the Tenant Work Letter, Tenant hereby acknowledges that Landlord shall
not be obligated to provide or pay for any improvement work or services related
to the improvement of the Expansion Space. Tenant also acknowledges that
Landlord has made no representation or warranty regarding the condition of the
Expansion Space.
7. Exterior Signage. Provided that Tenant is not in default under the
----------------
Lease and provided that Tenant has not assigned the Lease by means other than
merger or consolidation, or subleased more than fifty percent (50%) of the
Premises then under the Lease, Tenant shall be entitled, during the initial
lease term and the Option Term (if applicable), to install and maintain one (1)
sign identifying Tenant, with such sign to be located immediately above the
window line on the fifth floor of the Project on the South side of the Project
(the "Exterior Signage"). The graphics, materials, color, design, lettering,
lighting, size, specifications and exact location of the Exterior Signage shall
be subject to the prior written approval of Landlord, which approval shall be at
Landlord's sole and absolute discretion. However, Landlord shall in no event
approve Exterior Signage that would restrict another user from erecting similar
Exterior Signage and Tenant's signage rights shall be non-exclusive. Landlord
shall in no event approve exterior signage for another user that would abut
Tenant's exterior signage. In addition, such signage shall be subject to
Tenant's receipt of all required governmental permits and approvals and shall be
subject to all applicable governmental laws and ordinances. The cost of
installation of the Exterior Signage, as well as all costs of design and
construction of such signage and all other costs associated with such signage,
including, without limitation, utility charges and hook-up fees (if applicable),
permits, maintenance and repair, shall be the sole responsibility of Tenant.
Tenant further acknowledges that any repairs necessitated as a result of window
washing equipment cabling passing over such signage in the normal course of
cleaning the exterior
2
windows of the Project shall be the sole responsibility of Tenant. The rights
set forth in this Section 7, and Landlord's obligations with respect thereto,
shall be personal to the originally named Tenant under this Fourth Amendment and
may only be exercised by the originally named Tenant, and not any assignee,
subtenant or other person or entity.
(a) Monthly Basic Rental For Exterior Signage. Monthly Basic Rental
-----------------------------------------
for the Exterior Signage right shall commence as of the Expansion Commencement
Date and shall be in the amount of One Thousand Dollars ($1,000.00) per month
during the initial Lease Term (which amount is reflected in the schedule in
Section 5 above) and One Thousand Five Hundred Dollars ($1,500.00) per month
during the Option Term (if applicable), said rental to be paid at the same time
as Tenant's Monthly Basic Rental for the Premises and in accordance with the
terms of the Lease.
(b) Maintenance of Exterior Signage. Should the Exterior Signage
-------------------------------
require maintenance or repairs as determined in Landlord's reasonable judgment,
Landlord shall have the right to provide written notice thereof to Tenant and
Tenant shall cause such repairs and/or maintenance to be performed within thirty
(30) days after receipt of such notice from Landlord, at Tenant's sole cost and
expense; provided, however, if such repairs and/or maintenance are reasonably
expected to require longer than thirty (30) days to perform, Tenant shall
commence such repairs and/or maintenance within such thirty (30) day period and
shall diligently prosecute such repairs and maintenance to completion. Should
Tenant fail to perform such maintenance and repairs within the periods described
in the immediately preceding sentence, Landlord shall have the right to cause
such work to be performed and to charge Tenant as additional rent for the costs
of such work. Upon the expiration or earlier termination of the Lease, Tenant
shall, at Tenant's sole cost and expense, cause the Exterior Signage to be
removed from the exterior of the Project and shall cause the exterior of the
Project to be restored to the condition existing prior to the placement of such
signage. If Tenant fails to remove such signage and to restore the exterior of
the Project as provided in the immediately preceding sentence within thirty (30)
days following the expiration or earlier termination of the Lease, then Landlord
may perform such work, and all costs and expenses incurred by Landlord in so
performing shall be reimbursed by Tenant to Landlord within ten (10) days after
Tenant's receipt of invoice therefor. The immediately preceding sentence shall
survive the expiration of earlier termination of the Lease.
8. Parking. Tenant shall be entitled to lease fourteen (14) parking
-------
passes, of which three (3) may be reserved at Tenant's request and subject to
availability as determined by Landlord, in addition to those passes Tenant is
entitled to lease under the Original Lease, located in the Project's parking
facility, at prevailing market rates. Said additional parking passes shall
increase Tenant'' total number of parking passes to forty (40), of which Tenant
shall be entitled to request a total of eight (8) reserved parking passes,
subject to availability as determined by Landlord. Any such reserved parking
passes shall be for reserved parking at a location in the Project'' parking
facility designated by Landlord.
9.
10. Cancellation Rights. Article 35 of the Original Lease (as amended by
-------------------
Section 8 of the First Amendment) is hereby deleted in its entirety.
3
11. No further Modification. Except as set forth in this Fourth
-----------------------
Amendment, all of the terms and provisions of the Lease shall apply with respect
to the Expansion Space and shall remain unmodified and in full force and effect.
"LANDLORD"
ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership
By: Arden Realty, Inc. a Maryland corporation,
Its sole general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and COO
By: /s/
------------------------------------------
Its: CEO
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer
"TENANT"
SMARTALK TELESERVICES, INC.
a California corporation
By: /s/
------------------------------------------
Its: CFO
-------------------------------------
By:
------------------------------------------
Its:
-------------------------------------
***
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