EXHIBIT 10.07
OFFICE LEASE
LANDLORD: ARAI CORPORATION OF AMERICA,
A DELAWARE CORPORATION
TENANT: THE SHOPPERS' SOURCE,
A CALIFORNIA CORPORATION
DATE: FEBRUARY 6, 1997
TABLE OF CONTENTS
ARTICLE I - PREMISES......................................................... 1
1.1 Lease of Premises...................................................... 1
1.2 Rentable Area.......................................................... 1
ARTICLE II - TERM............................................................ 1
2.1 Effective Date......................................................... 1
2.2 Term of Lease.......................................................... 1
2.3 Commencement Date...................................................... 2
2.4 Delivery of Premises................................................... 2
2.5 Early Entry Into Premises.............................................. 2
2.6 Notice of Commencement Date............................................ 2
ARTICLE III - RENT AND ADJUSTMENTS TO RENT................................... 2
3.1 Payment of Rent........................................................ 2
3.2 Abatement of Basic Rent................................................ 3
3.3 Definition of Rent..................................................... 3
3.4 Late Charge............................................................ 3
3.5 Acceleration of Rent Payments.......................................... 3
3.6 Disputes as to Payments of Rent........................................ 3
3.7 Operating Expense Adjustments.......................................... 4
3.8 Procedure for Payment of Operating Expense Adjustments................. 4
3.9 Certain Defined Terms.................................................. 5
3.10 Exclusion From Operating Expenses...................................... 7
3.11 Review of Operating Expenses........................................... 8
3.12 Rent Control........................................................... 8
3.13 Governmental Assessments............................................... 9
ARTICLE IV - USE............................................................. 9
4.1 Permitted Use.......................................................... 9
4.2 Restriction on Use..................................................... 9
4.3 Compliance by Other Tenants............................................ 9
ARTICLE V - IMPROVEMENTS/ALTERATIONS......................................... 10
5.1 Tenant's Rights to Make Alterations.................................... 10
5.2 Installation of Alterations............................................ 10
ARTICLE VI - INDEMNIFICATION AND INSURANCE................................... 11
6.1 Indemnification and Waiver............................................. 11
6.2 Tenant's Insurance..................................................... 12
6.3 Waiver of Subrogation.................................................. 13
ARTICLE VII - ASSIGNMENT AND SUBLETTING...................................... 13
7.1 Right to Assign, and Sublease and Encumber............................. 13
7.2 Procedure for Assignment and Sublease/Landlord's Recapture Rights...... 14
7.3 Conditions Regarding Consent to Sublease and Assignment................ 14
7.4 Intentionally Omitted.................................................. 14
7.5 Affiliated Companies/Restructuring of Business Organization............ 15
7.6 Landlord's Right to Assign............................................. 15
ARTICLE VIII- DAMAGE OR DESTRUCTION.......................................... 15
8.1 Loss Covered By Insurance.............................................. 15
8.2 Loss Not Covered By Insurance.......................................... 15
8.3 Destruction During Final Year.......................................... 16
8.4 Destruction of Tenant's Personal Property, Tenant Improvements or
Property of Tenant's Employees......................................... 16
8.5 Exclusive Remedy....................................................... 16
ARTICLE IX - CONDEMNATION.................................................... 16
9.1 Permanent Taking - When Lease Can Be Terminated........................ 16
9.2 Permanent Taking - When Lease Cannot Be Terminated..................... 17
9.3 Temporary Taking....................................................... 17
9.4 Exclusive Remedy....................................................... 17
9.5 Release Upon Termination............................................... 17
ARTICLE X - DEFAULTS/REMEDIES................................................ 17
10.1 Events of Default...................................................... 17
10.2 Remedies Upon Default.................................................. 17
10.3 Assignment of Rents.................................................... 18
10.4 Waiver of Default...................................................... 19
10.5 Bankruptcy............................................................. 19
ARTICLE XI - DEFAULT BY LANDLORD............................................. 19
ARTICLE XII - SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE.................. 19
12.1 Subordination Attornment and Non-Disturbance........................... 19
12.2 Landlord's Right to Assign............................................. 20
12.3 Non-Disturbance........................................................ 20
12.4 Attorney-In-Fact....................................................... 20
ARTICLE XIII - ESTOPPEL CERTIFICATES......................................... 20
ARTICLE XIV - ENTRY BY LANDLORD.............................................. 21
ARTICLE XV - TENANT'S AND LANDLORD'S REPAIR OBLIGATIONS...................... 21
15.1 Tenant's Repair........................................................ 21
15.2 Landlord's Repair...................................................... 21
ARTICLE XVI - SURRENDER OF PREMISES.......................................... 22
16.1 Surrender of Premises.................................................. 22
16.2 Removal of Tenant Property by Tenant................................... 22
16.3 Property Rights........................................................ 22
ARTICLE XVII - ARBITRATION................................................... 22
17.1 Arbitration............................................................ 22
17.2 Payment of Expenses.................................................... 23
ARTICLE XVIII - SECURITY DEPOSIT............................................. 23
ARTICLE XIX - NO LIENS BY TENANT............................................. 24
ARTICLE XX - SERVICES........................................................ 24
20.1 Heating, Ventilating or Air-Conditioning............................... 24
20.2 Cleaning............................................................... 24
20.3 Additional Services.................................................... 25
20.4 Landlord's Right to Cease Providing Services........................... 25
ARTICLE XXI - SECURITY SERVICES.............................................. 25
21.1 Landlord's Obligation to Furnish Security Services..................... 25
21.2 Tenant's Right to Install Security System.............................. 25
ARTICLE XXII - SUBSTITUTED PREMISES.......................................... 26
ARTICLE XXIII - RULES AND REGULATIONS........................................ 26
ARTICLE XXIV - HOLDING OVER.................................................. 26
24.1 Surrender of Possession............................................... 26
24.2 Payment of Money After Termination.................................... 27
ARTICLE XXV - WAIVER......................................................... 27
ARTICLE XXVI - RIGHT TO PERFORMANCE.......................................... 27
ARTICLE XXVII - PARKING...................................................... 28
ARTICLE XXVIII - MUST TAKE SPACE............................................. 29
28.1 Must-Take Commencement Date........................................... 29
28.2 Base Rent and Additional Rent......................................... 29
ARTICLE XXIX - QUIET ENJOYMENT............................................... 29
ARTICLE XXX - NOTICES........................................................ 29
ARTICLE XXXI - BROKER........................................................ 30
ARTICLE XXXII - INTENTIONALLY OMITTED........................................ 30
ARTICLE XXXIII - MISCELLANEOUS............................................... 30
33.1 Severability.......................................................... 30
33.2 Entire Agreement...................................................... 30
33.3 Cumulative Rights..................................................... 30
33.4 Relationship of Parties............................................... 30
33.5 Successors............................................................ 30
33.6 Captions.............................................................. 30
33.7 Authority............................................................. 31
33.8 Industry Class........................................................ 31
33.9 Attorneys' Fees....................................................... 31
33.10 Governing Law......................................................... 31
33.11 Modification for Lender............................................... 31
33.12 No Recordation........................................................ 31
33.13 Confidentiality....................................................... 31
33.14 Hazardous Materials................................................... 31
EXHIBITS
EXHIBIT "A" - PREMISES....................................................... 34
EXHIBIT "B" - CONSTRUCTION AGREEMENT......................................... 35
EXHIBIT "C" - NOTICE OF LEASE TERM DATES..................................... 36
EXHIBIT "D" - RULES AND REGULATIONS.......................................... 38
EXHIBIT "E" - INSURANCE REQUIREMENTS......................................... 41
EXHIBIT "F" - CONFIRMATION REAL ESTATE AGENCY................................ 42
EXHIBIT "G" - TENANT EMERGENCY DIRECTIVE..................................... 43
EXHIBIT "H" - OPTION TO EXTEND TERM.......................................... 44
FUNDAMENTAL LEASE PROVISIONS
The following fundamental lease provisions are incorporated into the
Lease attached hereto and said provisions shall have the following meanings
throughout the Lease.
a. LANDLORD: Arai Corporation of America, Inc.,
a Delaware Corporation
b. LANDLORD'S PROPERTY Investment Development Services, Inc.,
MANAGEMENT AGENT: a California Corporation
c. TENANT: The Shoppers' Source,
a California Corporation
d. BUILDING: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
e. PREMISES: Approximately 8,881 rentable square feet
("RSF") located on the second floor(s),
as shown cross-hatched on Exhibit "A"
attached hereto and to be commonly known
as the Garden Level.
f. USABLE AREA OF PREMISES: 8,599 usable square feet ("USF")
g. RENTABLE AREA OF THE BUILDING: Approximately 46,939 RSF
h. SCHEDULED ANTICIPATED
COMMENCEMENT DATE: March 1, 1997
i. TERM: Five (5) years and zero (0) months
j. COMMENCEMENT DATE: See Section 2.3
k. EXPIRATION DATE: February 28, 2002
l. BASIC RENT: Free Rent Month 1
$8,881.00 Months 2 through 12
$10,140.90 Months 13 through 24
$10,623.80 Months 25 through 36
$11,106.70 Months 37 through 48
$11,589.60 Months 49 through 60
m. ABATEMENT OF BASIC RENT: One (1) month
n. BASE YEAR: 1997
o. TENANT'S PRO RATA SHARE: 18.92%
Effective March 1, 1998 - 20.58%
p. SECURITY DEPOSIT: $8,881.00
q. TENANT IMPROVEMENTS: See Exhibit "B"
r. USE: General business office use only, subject
to the restrictions set forth in
Article IV.
s. TENANT'S ADDRESS FOR NOTICES: Until Tenant commences business operations
from the Premises:
The Shoppers' Source
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
THEREAFTER: The Shoppers' Source.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
t. LANDLORD'S ADDRESS FOR NOTICES: Arai Corporation of America, Inc.
c/o Investment Development Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Real Estate Manager
COPY TO: Pillsbury, Madison & Sutro
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
u. BROKER(S): Landlord's Broker:
Investment Development Services, Inc.
Tenant's Broker:
▇▇▇▇▇▇ Realty
v. PARKING PRIVILEGES: Forty (40) unreserved spaces
w. DATE OF LEASE: February 6, 1997 (for reference purposes only).
LEASE AGREEMENT
This LEASE AGREEMENT ("Lease"), dated for reference purposes only as
of the date set forth in provision (w) of the Fundamental Lease Provisions, is
made and entered into by and between Arai Corporation of America, Inc., a
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Delaware Corporation ("Landlord"), and The Shoppers' Source, a California
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Corporation ("Tenant"), who agree generally as follows:
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ARTICLE I
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PREMISES
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1.1 LEASE OF PREMISES. Landlord leases to Tenant, and Tenant leases from
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Landlord, the Premises described in provision (e) of the Fundamental Lease
Provisions. The Building, the Parking Facility (as hereinafter defined in
Article XXVII) and the land upon which the Building is located are herein
sometimes collectively referred to as the "Real Property." Tenant is hereby
granted the right to the non-exclusive use of the common corridors and hallways,
stairwells, elevators, restrooms and other public or common areas located on the
Real Property; provided, however, that the manner in which such public and
common areas are maintained and operated shall be at the sole discretion of
Landlord and the use thereof shall be subject to the restrictions of Article IV
and to the Rules and Regulations attached hereto as Exhibit "D." Landlord
reserves the right to make alterations or additions to or to change the location
of elements of the Real Property and the common areas thereof and the right to
use any portion of the common areas for filming purposes. In addition to the
foregoing, Landlord shall have the right to add additional eating or conference
facilities in the Building and/or to eliminate any eating or conference
facilities in the Building in Landlord's sole and absolute discretion.
1.2 RENTABLE AREA. Landlord and Tenant hereby agree that (a) the Premises
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and the Building consist of the rentable area set forth in provisions (e) and
(g), respectively, of the Fundamental Lease Provisions, and (b) the Premises
consists of the usable area set forth in provision (f) of the Fundamental Lease
Provisions. The parties hereto acknowledge that prior to the execution of this
Lease, Landlord and Tenant have measured the Premises and hereby stipulate that
the Premises contains approximately 8,599 USF and 8,881 RSF.
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ARTICLE II
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TERM
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2.1 EFFECTIVE DATE. The Lease will become effective when signed and
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delivered by Landlord and Tenant.
2.2 TERM OF LEASE. The term of the Lease ("Term") shall be for the term
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set forth in provision (i) of the Fundamental Lease Provisions beginning on the
Commencement Date, as such term is defined below, and, unless sooner terminated
as hereinafter provided, ending on the Expiration Date specified in provision
(k) of the Fundamental Lease Provisions.
2.3 COMMENCEMENT DATE. The Term of this Lease and Tenant's obligation to
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pay Rent, as such term is defined below, shall commence on the earliest of: (a)
the date that the Tenant Improvements are substantially completed and the
Premises are Ready For Occupancy; or (b) the date the Tenant Improvements would
have been substantially completed and the Premises would have been Ready For
Occupancy except for Tenant Delays; or (c) the date that Tenant, or any person
occupying any of the Premises with Tenant's permission, commences business
operations from the Premises ("Commencement Date"). The terms "Tenant
Improvements," "Ready for Occupancy" and "Tenant Delays" are defined in the
Construction Agreement attached hereto as Exhibit "B" and made a part hereof.
2.4 DELIVERY OF PREMISES. The Premises will be delivered to Tenant when
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the Tenant Improvements have been constructed and the Premises are Ready For
Occupancy. Delay of the Commencement Date to the extent not attributable to
Tenant Delays shall be Tenant's sole remedy for any delay in constructing the
Tenant Improvements or making the Premises Ready For Occupancy. Tenant
understands that it is in Landlord's best economic interests to have the Tenant
Improvements completed as soon as reasonably possible in order to have the
Commencement Date occur as early as possible, and Tenant understands that to the
extent that the Tenant Improvements are not completed because of Tenant Delays,
the Commencement Date will nevertheless occur on the date the Tenant
Improvements would have been completed except for Tenant Delays.
2.5 EARLY ENTRY INTO PREMISES. Tenant may enter into the Premises upon
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receipt of Landlord's consent, for the purpose of installing furniture, special
flooring or carpeting, trade fixtures, telephones, computers, photocopy
equipment, and other business equipment. Such early entry will not advance the
Commencement Date, provided (a) Tenant does not commence business operations
from any part of the Premises, and (b) Tenant's early entry does not interfere
with, or delay, the completion of the Tenant Improvements. If Tenant is allowed
early entry, Landlord shall not be responsible for, and Tenant is required to
obtain insurance covering, any loss, including theft, damage or destruction to
any work or material installed or stored by Tenant or Landlord, or any
contractor or individual involved in the completion of the Tenant Improvements,
or for any injury to Tenant or Tenant's employees, agents, contractors,
licensees, directors, officer, partners, trustees, visitors or invitees
(collectively, "Tenant's Employees") or to any other person. Landlord shall have
the right to post the appropriate notices of non-responsibility and to require
Tenant to provide Landlord with evidence that Tenant has fulfilled its
obligation to provide insurance pursuant to this Lease. To the extent any such
early entry actually delays the making of the Premises Ready For Occupancy, such
delay, but only to the extent that such early entry actually delays the
completion of the Tenant Improvements, shall constitute a Tenant Delay.
2.6 NOTICE OF COMMENCEMENT DATE. Landlord may send Tenant notice of the
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occurrence of the Commencement Date in the form of the attached Exhibit "C",
which notice Tenant shall acknowledge by executing a copy of the notice and
returning it to Landlord. If Tenant fails to sign and return the notice to
Landlord within ten (10) days of receipt of the notice from Landlord, the notice
as sent by Landlord shall be deemed to have correctly set forth the Commencement
Date. Failure of Landlord to send such notice shall have no effect on the
Commencement Date.
ARTICLE III
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RENT AND ADJUSTMENTS TO RENT
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3.1 PAYMENT OF RENT. Tenant agrees to pay Landlord, as rent ("Basic Rent")
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for the Premises, the Basic Rent specified in provision (1) of the Fundamental
Lease Provisions. Such Basic Rent shall be paid monthly in advance beginning on
the Commencement Date and on or before the first day of each calendar month
thereafter during the entire Term in the amount specified in provision (i) of
the Fundamental Lease Provisions. In addition to the payment of Basic Rent,
Tenant shall also pay all Operating Expense Adjustments computed pursuant to
Section 3.7 of the Lease. Concurrently with the execution of this Lease, Tenant
shall pay to Landlord the Basic Rent payable hereunder for the first full
calendar month of the Term after the Commencement Date.
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3.2 ABATEMENT OF BASIC RENT. Provided Tenant shall faithfully perform all
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of the terms and conditions of this Lease, Landlord shall ▇▇▇▇▇ Tenant's
obligation to pay Basic Rent for the number of months set forth in provision (m)
of the Fundamental Lease Provisions following the Commencement Date. In the
event of a default by Tenant under the terms of this Lease which results in
either the early termination of this Lease and/or Tenant vacating and/or being
evicted from the Premises, then as part of the recovery permitted Landlord
under this Lease, Landlord shall be entitled to a recovery of the Basic Rent
which was abated under the provisions of this Section 3.2; i.e., such Basic Rent
shall not be deemed to have been forgiven or abated, but shall become
immediately due and payable as unpaid Rent which had been earned at the date of
default.
3.3 DEFINITION OF RENT. Any and all payments of Basic Rent and any and all
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taxes, fees, charges, costs, expenses, insurance obligations, late charges,
assessments, Operating Expense Adjustments, and all other payments,
disbursements or reimbursements (collectively, "Rent") which are attributable
to, payable by or the responsibility of Tenant under this Lease, constitute
"rent" within the meaning of California Civil Code Section 1951(a). Any Rent
payable to Landlord by Tenant for any fractional month shall be prorated based
on the actual number of days in the applicable month. All payments owed by
Tenant under this Lease shall be paid to Landlord in lawful money of the United
States of America at the location specified by Landlord pursuant to Article XXX
of the Lease. All payments of Rent shall be paid by Tenant by check drawn on a
bank that is a member of a National Association Bank. All payments shall be made
without deduction, offset or counterclaim.
3.4 LATE CHARGE. Tenant acknowledges that the late payment of Rent will
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cause Landlord to incur damages, including administrative costs, loss of use of
the overdue finds and other costs, the exact amount of which would be
impractical and extremely difficult to fix. Landlord and Tenant agree that if
Landlord does not receive a payment of Rent on or before the date that such
payment is due, Tenant shall pay to Landlord a hate charge equal to five percent
(5%) of the overdue amount and the overdue amount shall bear interest at the
Interest Rate (as such term is defined below), from the date payment of such
amount was due until Landlord receives the overdue payment. Acceptance of the
late charge by Landlord shall not cure or waive Tenant's default, nor prevent
Landlord from exercising, before or after such acceptance, any of the rights and
remedies for a default provided by this Lease or at law. Payment of the late
charge is not an alternative means of performance of Tenant's obligation to pay
Rent at the times specified in this Lease. Tenant will be liable for the late
charge regardless of whether Tenant's failure to pay the Rent when due
constitutes a default under the Lease and regardless of whether Landlord sent
Tenant an invoice for such Rent and/or late charge. The term "Interest Rate"
shall mean the lower of (a) the maximum interest rate permitted by law or (b)
two percent (2%) above the rate publicly announced from time to time by Bank of
America N.T. & S.A. (or if Bank of America N.T. & S.A. ceases to exist, then the
largest bank headquartered in the State of California) ("Bank") as its Reference
Rate. If the use of the announced Reference Rate is discontinued by the Bank,
then the reference to Reference Rate shall mean the announced rate charged by
the Bank which is from time to time substituted for such Reference Rate.
Whenever interest is required to be paid under this Lease, the interest shall be
calculated from the date the payment was due or should have been due if
correctly assessed or estimated (or any overcharge paid), until the date payment
is made or the refund is paid or is credited against rent next due.
3.5 ACCELERATION OF RENT PAYMENTS. In the event a late charge becomes
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payable pursuant to Section 3.4 of the Lease for three (3) installments of
Rent within a twelve (12) month period, the all subsequent Rent payments
shall immediately and automatically become payable by Tenant quarterly in
advance instead of monthly.
3.6 DISPUTES AS TO PAYMENTS OF RENT. Tenant agrees to pay the Rent
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required under this Lease within the time limits set forth in this Lease. If
Tenant receives from Landlord an invoice or statement, which invoice is sent by
Landlord in good faith, and Tenant in good faith disputes whether all or any
part of such Rent is due and owing, Tenant shall nevertheless pay to Landlord
the amount of the Rent indicated on the invoice or statement until Tenant
receives a final judgement from a court of competent jurisdiction (or when
arbitration is permitted or required, receives a final award from an
arbitrator) relieving or mitigating Tenant's obligation to
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pay such Rent. In such instance where Tenant disputes its obligations to pay all
or part of the Rent indicated on such invoice or statement, Tenant shall,
concurrently with the payment of such Rent, provide Landlord with a letter or
notice entitled "Payment Under Protest," specifying in detail why Tenant is not
required to pay all or part of such Rent. Tenant will be deemed to have waived
its right to contest any past payment of Rent unless it has filed a lawsuit
against Landlord (or when arbitration is permitted or required, filed for
arbitration and has served Landlord with notice of such filing), and has served
a summons on Landlord, within one (1) year of such payment. Until an event of
default by Tenant occurs, Landlord shall continue to provide the services and
utilities required by this Lease.
3.7 OPERATING EXPENSE ADJUSTMENTS. Beginning with the expiration of the
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Base Year set forth in provision (n) of the Fundamental Lease Provisions and
thereafter during the Term of this Lease, Tenant shall pay, in addition to the
Basic Rent computed and due pursuant to Section 3.1, an additional sum as an
operating expense adjustment ("Operating Expense Adjustment") equal to Tenant's
Pro Rata Share, as set forth in provision (o) of the Fundamental Lease
Provisions, of the excess of Operating Expenses (as hereinafter defined) for the
Master Premises over the total Operating Expenses for the Master Premises
incurred by Landlord during the Base Year ("Allowance") pursuant to the terms
and conditions of the Master Lease.
3.8 PROCEDURE FOR PAYMENT OF 0PERATING EXPENSE ADJUSTMENTS. Tenant shall
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pay Tenant's Pro Rata Share of any excess Operating Expenses over the Allowance
as follows:
a. Landlord may, from time to time but not more than twice during
each calendar year by ten (10) days' notice to Tenant, reasonably estimate in
advance the amounts Tenant shall owe on a monthly basis for excess Operating
Expenses over the Allowance for any full or partial calendar year of the Term.
In such event, Tenant shall pay such estimated amounts, on a monthly basis, on
or before the first day of each calendar month, together with Tenant's payment
of Basic Rent. Such estimate may be reasonably adjusted from time to time by
Landlord by written notice to Tenant.
b. Within one hundred twenty (120) days after the end of each
calendar year after the Base Year, or as soon thereafter as reasonably
practicable, Landlord shall provide a statement (the "Statement") to Tenant
showing: (i) the amount of actual Operating Expenses for such calendar year,
(ii) any amount paid by Tenant toward excess Operating Expenses over the
Allowance during such calendar year on an estimated basis, and (iii) any revised
estimate of Tenant's obligations for excess Operating Expenses over the
Allowance for the current calendar year.
c. If the Statement shows that Tenant's estimated payments were
less than Tenant's actual obligations for excess Operating Expenses over the
Allowance for such year, Tenant shall pay the difference. If the Statement
shows an increase in Tenant's estimated payments for the current calendar year,
Tenant shall pay the difference between the new and former estimates, for the
period from January 1 of the current calendar year through the month in which
the Statement is sent. Tenant shall make such payments within thirty (30) days
after Landlord sends the Statement.
d. If the Statement shows that Tenant's estimated payments exceeded
Tenant's actual obligations for excess Operating Expenses over the Allowance,
Tenant shall receive a credit of such difference against payment(s) of Rent
next due. If the Term shall have expired and no further Rent shall be due,
Tenant shall receive a refund of such difference within thirty (30) days after
Landlord sends the Statement.
e. So long as Tenant's obligations hereunder are not materially
adversely affected, Landlord reserves the right to change, from time to time,
the manner or timing of the foregoing payments. No delay by Landlord in
providing the Statement (or separate statements) shall be deemed a default by
Landlord or a waiver of Landlord's right to require payment of Tenant's
obligations for actual or estimated excess Operating Expenses over the
Allowance.
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f. If Tenant's obligation to pay Operating Expense Adjustments
commences other than on January 1, or ends other than on December 31, Tenant's
obligation to pay estimated and actual amounts toward excess Operating Expenses
over the Allowance for such first or final calendar years shall be prorated to
reflect the portion of such years included within the period for which Tenant is
obligated to pay Operating Expense Adjustments. Such proration shall be made by
multiplying the total estimated or actual (as the case may be) excess Operating
Expenses over the Allowance for such calendar years by a fraction, the numerator
which shall be the number of days within the period for which Tenant is
obligated to pay Operating Expenses Adjustments during such calendar year, and
the denominator of which shall be the total number of days in such year.
3.9 CERTAIN DEFINED TERMS. "Tenant's Pro Rata Share" means the ratio, as
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determined from time to time, of the RSF of the Premises to the RSF of the
Building. Tenant's Pro Rata Share as of the Commencement Date is stipulated to
be the percentage set forth in provision (o) of the Fundamental Lease
Provisions. "Operating Expenses" are defined to be the sum of all costs,
expenses, and disbursements, of every kind and nature whatsoever, and the Taxes,
which shall become the obligation of Landlord in connection with the operation,
servicing, maintenance and repair of the Real Property including, but not
limited to, the following:
a. All costs for materials, utilities, goods and services (but
excluding all costs for materials, utilities, goods and services furnished by
Landlord which are not required to be furnished by Landlord, and which have
been directly paid for by Tenant or other tenants to Landlord);
b. All wages and benefits and costs of employees or independent
contractors or employees of independent contractors engaged in the operation,
maintenance and security of the Building;
e. All expenses for janitorial, maintenance, security and safety
services;
d. All repairs to, replacement of, and physical maintenance of the
Building, including the cost of all supplies, uniforms, equipment, tools and
materials;
e. Any license, permit and inspection fees required in connection
with the operation of the Building;
f. Any auditor's fees for accounting provided for the operation and
maintenance of the Building;
g. Any legal fees, costs and disbursements as would normally be
incurred in connection with the operation, maintenance and repair of the
Building;
h. All reasonable fees for management services provided by a
management company or by Landlord or an agent of Landlord;
i. The annual amortization of costs, including financing costs, if
any, incurred by Landlord after the issuance of the temporary certificate of
occupancy for the Building for any capital improvements installed or paid for by
Landlord and required by any new (or change in) laws, rules or regulations of
any governmental or quasi-governmental authority (collectively "Laws");
j. The annual amortization of costs, including financing costs, if
any, of any equipment, device or capital improvement purchased or incurred as a
labor-saving measure or to affect other economies in the operation or
maintenance of the Building (provided the annual amortized cost does not
exceed the higher of the actual cost savings realized or the cost savings
reasonably anticipated to be available, and such savings do not redound
primarily to the benefit of any particular tenant);
5
k. The annual amortization of costs, if any, incurred after
completion of the Building for the replacement of (i) exterior perimeter window
draperies or blinds provided by Landlord and (ii) carpeting and wall coverings
in the public areas of the Buildings comprising the Building;
l. All insurance premiums and other charges (including the amount
of any deductible payable by Landlord with respect to damage or destruction to
all or any portion of the Building) incurred by Landlord with respect to
insuring the Real Property including, without limitation, the following to the
extent carried by Landlord: (i) fire and extended coverage insurance,
windstorm, hail and explosion; (ii) riot attending a strike, civil commotion,
aircraft, vehicle and smoke insurance; (iii) public liability, bodily injury and
property damage insurance; (iv) elevator insurance; (v) workers' compensation
insurance for the employees specified in Section 3.9(b) above; (vi) boiler and
machinery insurance, sprinkler leakage, water damage, property, burglary,
fidelity and pilferage insurance on equipment and materials; (vii) loss of rent,
rent abatement, rent continuation, business interruption insurance, and similar
types of insurance; and (viii) such other insurance as is customarily carried by
operators of other comparable first-class office buildings in Southern
California; provided, however, that in the event Landlord shall not carry a type
or amount of insurance during the Base Year but shall subsequently either obtain
an additional type of insurance or increase the amount of coverage of an
existing type of insurance, the Operating Expenses for the Base Year shall be
increased by an amount equal to the cost of (1) such additional insurance, or
(2) the increase in the amount of such existing type of insurance would have
been if Landlord had obtained such additional insurance or increase in the
amount of an existing type of insurance during the Base Year.
m. All actual taxes, assessments, levies, charges, water and sewer
charges, rapid transit and other similar or comparable governmental charges
(collectively "Taxes") levied or assessed on, imposed upon or attributable to
the calendar year in question (i) to the Building, and/or (ii) to the operation
of the Building, including but not limited to Taxes against the Building,
personal property taxes or assessments levied or assessed against the Building,
plus any tax measured by gross rentals received from the Building, together with
any costs incurred by Landlord, including attorneys' fees, in contesting any
such Taxes but excluding any net income, franchise, capital stock, estate or
inheritance taxes imposed by the State of California or the United States or by
their respective agencies, branches or departments; provided that, if at any
time during the Term there shall be levied, assessed or imposed on Landlord or
the Building by any governmental entity, any general or special, ad valorem or
specific excised capital levy or other Taxes on the payments received by
Landlord under this Lease or other leases affecting the Building and/or any
license fee, excise or franchise Taxes measured by or based, in whole or in
part, upon such payments, and/or transfer, transaction, or Taxes based directly
or indirectly upon the transaction represented by this Lease or other leases
affecting the Building, and/or any occupancy, use, per capita or other Taxes,
based directly or indirectly upon the use or occupancy of the Premises or the
Building, then all such Taxes shall be deemed to be included within the
definition of the term Taxes;
n. Minor capital improvements or expenditures where each such
improvement or acquisition costs less than Three Thousand Dollars ($3,000.00)
and the costs of capital tools not in excess of Ten Thousand Dollars ($10,000)
in any twelve (12) month period; and
o. Such other usual costs and expenses which are paid by other
landlords for the purpose of providing for the on-site operation, servicing,
maintenance and repair of first-class office buildings in Southern California.
If the Building does not have at least ninety-five percent (95%) of the
rentable area of the Building occupied during any calendar year period, then
the Operating Expenses for such period shall be deemed to be equal to the total
of (x) the Operating Expenses, other than Taxes, which would have become the
obligation of Landlord pursuant to the terms and conditions of the Master Lease
if ninety-five percent (95%) of the rentable area of the Building had been
occupied for the entirety of such Calendar year and (y) the actual Taxes as
defined above.
6
3.10 EXCLUSION FROM OPERATING EXPENSES. Notwithstanding anything in the
---------------------------------
definition of Operating Expenses in the Lease to the contrary, Operating
Expenses shall not include the following, except to the extent specifically
permitted by a specific exception to the following:
(i) Any ground lease rental;
(ii) Costs of capital improvements, replacements or equipment
except as specifically set forth in the definition of Operating Expenses in
Section 3.9;
(iii) Rentals for items (except when needed in connection with
normal repairs and maintenance of permanent systems) which if purchased, rather
than rented, would constitute a capital improvement which is specifically
excluded in Subsection (ii) above (excluding, however, equipment not affixed to
the Building which is used in providing janitorial or similar services);
(iv) Costs incurred by Landlord for the repair of damage to the
Building, to the extent that Landlord is reimbursed by insurance proceeds;
(v) Costs, including permit, license and inspection costs,
incurred with respect to the installation of tenant or other occupants
improvements made for tenants in the Building or incurred in renovating or
otherwise improving, decorating, painting or redecorating vacant space for
tenants of the Building;
(vi) Marketing costs including leasing commissions, attorneys'
fees in connection with the negotiation and preparation of letters, deal memos,
letters of intent, leases, subleases and/or assignments, space planning costs,
and other costs and expenses incurred in connection with lease, sublease and/or
assignment negotiations and transactions with present or prospective tenants or
other occupants of the Building;
(vii) Expenses in connection with services or other benefits which
are not offered to Tenant or for which Tenant is charged for directly but which
are provided to another tenant or occupant of the Building the cost of which is
included as Operating Expenses;
(viii) Costs incurred by Landlord due to the violation by Landlord
of the terms and conditions of any lease of space in the Building;
(ix) Interest, principal, points and fees on debts or
amortization on any mortgage or mortgages or any other debt instrument
encumbering the Building or the land on which the Building is situated;
(x) Except for making repairs or keeping permanent systems in
operation while repairs are being made, rentals and other related expenses
incurred in leasing air conditioning systems, elevators or other equipment
ordinarily considered to be of a capital nature, except equipment not affixed
to the Building which is used in providing janitorial or similar services;
(xi) Advertising and promotional expenditures;
(xii) Costs incurred in connection with upgrading the Building to
comply with disability, life, fire and safety codes in effect prior to the
issuance of the temporary certificate of occupancy for the Building;
(xiii) Tax penalties incurred as a result of Landlord's negligence,
inability or unwillingness to make payments when due;
(xiv) Costs arising from Landlord's charitable or political
contributions; and
(xv) Costs for acquisition of sculpture, paintings or other
objects of art.
7
3.11 REVIEW OF OPERATING EXPENSES. Tenant shall have a period of three (3)
----------------------------
months following receipt of the Statement, within which to inspect through an
authorized employee, agent, or contractor of Tenant, at Landlord's office during
normal business hours, Landlord's books and records concerning Operating
Expenses for the preceding calendar year period in question. Such inspection
may only be done by an accounting firm which is generally considered to be one
of the ten largest accounting firms headquartered in the United States. If
Tenant shall not have availed itself of such inspection, Tenant shall be deemed
to have accepted as final and determinative the amounts shown on the Statement.
If Tenant shall have availed itself of its right to inspect the books and
records, and then disputes the accuracy of the information set forth in
Landlord's books and records with respect to the Statement, Tenant shall
nevertheless continue to pay the amounts as required by the provisions of this
Article III; provided however, that no later than six (6) months after receipt
of the Statement, Tenant must (or its right to contest such charges shall be
deemed waived) institute arbitration proceedings against Landlord in an
arbitration proceeding governed by the rules of the American Arbitration
Association to collect and recover any overpayments made by Tenant resulting
from errors in the books and records of Landlord; and provided further, that
Tenant shall, within ten (10) days of filing of the complaint, serve Landlord
with a copy of the complaint filed in any such proceeding. Tenant shall be
precluded from contesting Operating Expenses and Landlord's computations of the
amounts payable by Landlord or Tenant pursuant to this Article III, unless an
arbitration complaint is filed and served within such six (6) month period.
Should the arbitrator(s) in any such arbitration proceeding find errors in
excess of ten percent (10%) of the Statement, then Landlord shall be responsible
for all reasonable fees incurred by Tenant with respect to the arbitration
proceeding including reasonable legal or accounting fees. Should the
arbitrator(s) find errors of less than ten percent (10%) of the Statement, then
Tenant shall be responsible for all the reasonable fees incurred by Landlord
with respect to the arbitration proceeding. Should the arbitrator(s) find errors
of between four percent (4%) and ten percent (10%) of the Statement, then each
party shall be responsible for all fees incurred by it with respect to the
arbitration proceeding.
If Tenant institutes such arbitration procedures, then the arbitrator(s)
shall have the power to, and shall inquire into and determine, not only whether
or not Tenant was overcharged for any Operating Expenses, but whether or not
Tenant was undercharged for any excess Operating Expenses over the Allowance. At
the conclusion of the arbitration, the arbitrator(s) shall issue a ruling as to
what the excess Operating Expenses over the Allowance should have been had
Landlord strictly complied with the provisions of this Lease. If Landlord
overcharged Tenant for the excess Operating Expenses over the Allowance, the
amount of the overcharge shall be returned to Tenant within thirty (30) days
following the issuance of the arbitration ruling. If the arbitrator(s)
determine(s) that Tenant was undercharged for the excess Operating Expenses over
the Allowance, Tenant shall pay the amount of such undercharge to Landlord
within thirty (30) days following the issuance of the arbitration ruling.
3.12 RENT CONTROL. To the fullest extent permitted by law, Tenant waives
------------
the benefit of all existing and future rent control laws and similar
governmental rules and regulations, whether in time of war or not. If the Basic
Rent or any additional rent or any portion thereof shall be or become
uncollectable by virtue of any law, Tenant shall enter into such agreement or
agreements and take such other action (without additional expense to Tenant) as
Landlord may request, as may be legally permissible, to permit Landlord to
collect the maximum Basic Rent and additional rent which may, from time to time
during the continuance of such legal rent restrictions, be legally permissible,
but not in excess of the amounts of Basic Rent or additional rent which are
stipulated as payable under this Lease. Upon the termination of such legal rent
restriction, (a) the Basic Rent and additional rent, after such termination,
shall become payable under this Lease in the amount of the Basic Rent and
additional rent set forth in this Lease for the period following such
termination and (b) Tenant shall pay to Landlord, if legally permissible, an
amount equal to (i) the Basic Rent and additional rent which would have been
paid pursuant to this Lease but for such rent restriction, minus (ii) the Basic
Rent and additional rent paid by Tenant during the period that such rent
restriction was in effect.
8
3.13 GOVERNMENTAL ASSESSMENTS. IN addition to the Basic Rent and Operating
------------------------
Expenses as set forth above, Tenant shall pay, prior to delinquency, (a) all
real property taxes, if any, and personal property taxes, charges, rates, duties
and license fees assessed against or levied upon (i) Tenant's occupancy of the
Premises, (ii) upon any Tenant Improvements (in excess of the valuation at which
tenant improvements conforming to Landlord's "Building standard" in other space
in the Building are assessed, which for purposes of this Section 3.13 shall be
deemed to equal Thirty and 00/100 Dollars ($30.00) per USF of the premises),
and (iii) trade fixtures, furnishings, equipment or other personal property
contained in the Premises (collectively, "Personal Property"), and (b) Tenant's
Pro Rata Share of any governmental fees or charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind
whatsoever attributable to the Building (collectively, "Assessments"). Landlord
shall apply the same "Building standard" to all tenants of the Building. Tenant
shall cause such Assessments upon the Personal Property to be billed separately
from the property of Landlord. Tenant hereby indemnifies and holds Landlord
harmless from and against the payment of all such Assessments.
ARTICLE IV
----------
USE
---
4.1 PERMITTED USE. The Premises shall be used only for the use specified
-------------
in provision (r) of the Fundamental Lease Provisions and for no other purpose.
4.2 RESTRICTION USE. Tenant shall not do or permit to be done in or about
---------------
the Building nor bring, keep or permit to be brought or kept therein, anything
which is prohibited by the Rules and Regulations attached to this Lease as
Exhibit "D" and made a part hereof or by any standard form fire insurance policy
or which will in any way increase the existing rate of, or affect, any fire or
other insurance upon the Building or its contents, or which will cause a weight
load or stress on the floor or any other portion of the Premises in excess of
the weight load or stress which the floor or other portion of the Premises is
designed to bear. Tenant shall not allow occupancy density of use of the
Premises which is greater than the average density of other tenants of the
Building. Tenant, at Tenant's sole cost, shall comply with all Laws affecting
the Premises, and the requirements of any Board of Fire Underwriters or other
similar body now or hereafter instituted, and shall also comply with any order,
directive or certificate of occupancy issued pursuant to any Laws, which affect
the condition, use or occupancy of the Premises, including, but not limited to,
any requirements of structural changes related to or affected by Tenant's acts,
occupancy or use of the Premises. The judgment of any court of competent
jurisdiction or the admission of Tenant in any action against Tenant, whether or
not Landlord is a party to such action, shall be conclusive as between Landlord
and Tenant in establishing such violation. Tenant shall not use the Premises for
school or any educational purposes, medical or dental offices or the office of
other health care providers, restaurant or food service operations, radio,
television and/or other communication operations, for retail offices, for the
sale and/or storage of goods for sale, for manufacturing or assembly purposes,
for the performance of governmental or quasi-governmental services, or for any
other office purpose which is different from the office operations permitted by
Landlord of its other tenants in the Building. Tenant shall comply with all
recorded covenants, conditions and restrictions now or hereafter effecting the
Building. Tenant shall not use or allow another person or entity to use any part
of the Premises for the storage, use, treatment, manufacture or sale of
hazardous materials or substances as defined pursuant to any applicable federal,
state or local governmental or quasi-governmental law, ordinance, rule or
regulation.
4.3 COMPLIANCE BY OTHER TENANTS. Landlord shall not be liable to Tenant
---------------------------
for any other occupant's or tenant's failure to conduct itself in accordance
with the provisions of this Article IV, and Tenant shall not be released or
excused from the performance of any of its obligations under the Lease in the
event of any such failure.
9
ARTICLE V
---------
IMPROVEMENTS/ALTERATIONS
------------------------
5.1 TENANT'S RIGHTS TO MAKE ALTERATIONS. Following the Commencement Date,
-----------------------------------
Tenant, at its sole cost and expense, shall have the right upon receipt of
Landlord's consent, to make alterations, additions, or improvements to the
Premises if such alterations, additions or improvements are made in accordance
with this Article V, are commercially reasonable, normal for general office use,
do not adversely affect the utility or value of the Premises or the Building for
future tenants, will not cause the Premises (or any other portion of the
Building) to not be in a rentable configuration, do not alter the exterior
appearance of the Building, are not of a structural nature, do not require
excessive removal expenses and are not otherwise prohibited under the Lease.
Such alterations, additions, and improvements to the Premises made by or for
Tenant following the Commencement Date are collectively called "Alterations."
All such Alterations shall be made in conformity with the requirements of
Section 5.2 below. Once the Alterations have been completed, such Alterations
shall thereafter be included in the designation of Tenant Improvements and shall
be treated as Tenant Improvements and shall remain part of the Building in
accordance with the provisions of Article XVI.
5.2 INSTALLATION OF ALTERATIONS. Any alterations installed by Tenant
---------------------------
during the Term shall be done in strict compliance with all of the following:
a. No such work shall proceed without Landlord's reasonable prior
approval of (i) Tenant's contractor(s); (ii) certificates of insurance from a
company or companies approved by Landlord, furnished to Landlord by Tenant's
contractor(s) and/or vendor(s), with the types and amounts of insurance more
particularly set forth on Exhibit "E", attached hereto and made a part hereof
(provided, however, nothing in this Section 5.2(a) shall release Tenant of its
other insurance obligations hereunder); and (iii) detailed plans and
specifications for such work;
b. All such work shall be done in a first-class workmanlike manner
and in conformity with a valid building permit and/or all other permits or
licenses when and where required, copies of which shall be furnished to Landlord
before the work is commenced, and any work not acceptable to any governmental
authority or agency having or exercising jurisdiction over such work, or not
reasonably satisfactory to Landlord, shall be promptly replaced and corrected at
Tenant's expense. Landlord's approval or consent to any such work shall not
impose any liability upon Landlord. No work shall proceed until and unless
Landlord has received at least ten (10) days notice that such work is to
commence;
c. Tenant shall immediately reimburse Landlord for any reasonable
expense incurred by Landlord in reviewing and approving the plans and
specifications for such work (which shall not exceed $1,000.00) or by reason of
any faulty work done by Tenant or Tenant's contractors, or by reason of delays
caused by such work, or by reason of inadequate cleanup, or which is otherwise
incurred by Landlord to review the plans and specifications, and monitor and
inspect the progress of such work;
d. Tenant or its contractors will in no event be allowed to make
(i) any improvements to the Premises which could possibly affect any of the
Building systems or (ii) any structural modification to the Building without
first obtaining Landlord's consent, which Landlord can withhold in its sole and
absolute discretion;
e. All work by Tenant shall be scheduled through Landlord and shall
be diligently and continuously pursued from the date of its commencement
through its completion; and
f. Tenant shall obtain any bonds required by Landlord pursuant to
Article XIX of the Lease.
10
ARTICLE VI
----------
INDEMNIFICATION AND INSURANCE
-----------------------------
6.1 INDEMNIFICATION AND WAIVER. Landlord shall not be liable for and
--------------------------
Tenant hereby waives all claims against Landlord for damage to any property or
injury, illness or death of any person in, upon, or about the Premises arising
at any time and from any cause whatsoever other than damages proximately caused
by reason of the gross negligence or willful misconduct of Landlord or its
agents and employees. Tenant shall indemnify, defend, and protect Master
Landlord and Landlord, their successors and assigns, and their respective
officers, directors, shareholders, partners and employees (collectively the
"Indemnified Parties") and hold the Indemnified Parties harmless from any and
all losses, costs, damages, expenses and liabilities (including without
limitation court costs and reasonable attorneys' fees) incurred in connection
with or arising from any cause in the use or occupancy of the Premises during
the Term of this Lease, including, without limiting the generality of the
foregoing: (a) any default by Tenant in the observance or performance of any of
the terms, covenants or conditions of this Lease on Tenant's part to be observed
or performed; (b) the use or occupancy of the Premises by Tenant or any person
claiming by, through or under Tenant; (c) the condition of the Premises or any
occurrence or happening on the Premises from any cause whatsoever; or (d) any
acts, omissions or negligence of Tenant or any person claiming by, through or
under Tenant or Tenant's Employees or any such person, in, on or about the
Premises either prior to, during, or after the expiration of the Lease Term,
including, without limitation, any acts, omissions or negligence in the making
or performance of any alterations, provided, however, that the foregoing
indemnification shall not apply to damages proximately caused by reason of the
negligence or willful misconduct of any of the Indemnified Parties. The
provisions of this Section 6.1 shall survive the expiration or sooner
termination of this Lease, subject to applicable statutes of limitation.
6.2 TENANT'S INSURANCE. Tenant shall have the following insurance
------------------
obligations:
a. LIABILITY INSURANCE. Tenant shall obtain and keep in full force a
-------------------
policy of commercial general liability covering bodily injury and property
damage liability. Such commercial general liability shall include personal
injury liability, broad form contractual liability, broad form property damage
and fire legal liability. In addition to the foregoing, Tenant shall carry
automobile liability insurance including hired/non-owned automobile liability.
All policies shall show Tenant as a named insured and shall show Landlord,
Landlord's agent, Master Landlord and any lessors, mortgagees and assignees
(whose names shall have been furnished to Tenant) named as additional insureds
and under which the insurer agrees to indemnify and hold Landlord, its managing
agent, Master Landlord and all applicable lessors, mortgagees and assignees
harmless from and against all cost, expense and/or liability arising out of or
based upon the indemnification obligations of this Lease. The minimum limits of
liability shall be a combined single limit with respect to each occurrence of
not less than Two Million Dollars ($2,000,000.00). The policy shall contain a
cross liability endorsement and shall be primary coverage for Tenant and
Landlord for any liability arising out of Tenant's and Tenant's Employees' use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall provide that it is primary insurance and not "excess over" or
contributory to any insurance maintained by Landlord. The policy shall contain a
severability of interest clause. Not more frequently than once each year, if, in
the opinion of Master Landlord, Landlord's lender or of the insurance consultant
retained by Landlord, the amount of public liability and property damage
insurance coverage at that time is not adequate, Tenant shall increase the
insurance coverage as required by Master Landlord, Landlord's lender or
Landlord's insurance consultant; provided however, that in no event shall any
such insurance coverage be increased in excess of that which is from time to
time being required by comparable landlords of comparable tenants leasing
comparable amounts of space in other first-class buildings in the vicinity of
the Building.
b. TENANT'S PROPERTY INSURANCE. Tenant at its cost shall maintain on
---------------------------
all of its personal property (including, without limitation, the Tenant
Improvements and any leasehold improvements) in, on, or about the Premises, an
"all risk" property policy including coverage for earthquake sprinkler leakage
and containing an agreed amount endorsement in an amount not
11
less than one hundred percent (100%) of the full replacement cost valuation
under which Tenant is named as the insured and Landlord, Landlord's agents,
Master Landlord and any lessors and mortgagees (whose names shall have been
furnished to Tenant) are named as additional insureds and loss payees. The
proceeds from any such policy shall be used by Tenant for the replacement OF
such personal property and Tenant Improvements. The "full replacement cost
valuation" of the personal property and the Tenant Improvements to be insured
under this Article VI shall be furnished to the company issuing the insurance
policy by Tenant at least once every year. Landlord shall not be responsible for
any deductibles under Tenant's policies, nor any personal property or Tenant
Improvements of Tenant that is underinsured or valued at less than one hundred
percent (100%) of the replacement cost.
c. WORKERS' COMPENSATION INSURANCE. Tenant shall maintain Workers'
-------------------------------
Compensation insurance as required by law and Employer's Liability insurance in
an amount not less than One Million Dollars ($1,000,000).
d. BUSINESS INTERRUPTION/EXTRA EXPENSE INSURANCE. Tenant shall
---------------------------------------------
maintain loss of income, business interruption and extra expense insurance in
such amounts as will reimburse Tenant for direct or indirect loss of earnings
and incurred costs attributable to the perils commonly covered by Tenant's
property insurance described above but in no event less than One Million Dollars
($1,000,000.00). Such insurance will be carried with the same insurer that
issues the insurance for the personal property. Landlord shall not be
responsible for any deductibles under Tenant's policies, nor any personal
property of Tenant that is underinsured or valued at less than one hundred
percent cent (100%) of the replacement cost.
Tenant shall maintain rental loss insurance for the benefit of
Landlord equal to twelve (12) months of Basic Rent payable by Tenant to
Landlord.
e. OTHER COVERAGE. Tenant, at its cost, shall maintain such other
--------------
insurance as Landlord or Master Landlord may reasonably require from time to
time.
f. INSURANCE CRITERIA. All the insurance required to be maintained by
------------------
Tenant under this Lease shall:
(i) Be issued by insurance companies authorized to do business
in the state of California, with a financial rating of at least an A:VIII status
for any property insurance and A:VIII for any liability insurance as rated in
the most recent edition of the Best's Guide Insurance Reports;
(ii) Be issued as a primary policy;
(iii) Contain an endorsement requiring thirty (30) days' written
notice from the insurance company to both parties and to Landlord's lender
before cancellation or any material change in the coverage, scope, or amount of
any policy; and
(iv) With respect to property loss or damage, a waiver of
subrogation must be obtained, as hereinafter required by Section 6.3.
(g) EVIDENCE OF COVERAGE. A duplicate original policy, or a
--------------------
certificate of insurance with the actual policy attached shall be deposited with
Landlord before the earlier of the date Tenant takes possession of the Premises
or authorizes anyone to have access to the Premises for any purposes, including
the commencement of the construction of the Tenant Improvements, and on renewal
of the policy a certificate of insurance listing the insurance coverages
required hereunder and naming Landlord and any other interested parties as
additional insured shall be deposited with Landlord not less than seven (7) days
before expiration of the term of the policy.
6.3 WAIVER OF SUBROGATION. Landlord and tenant each hereby releases the
---------------------
other from any and all liability or responsibility to the other or anyone
claiming through or under the other by way of subrogation or otherwise for any
loss or damage to property and/or loss of business interruption, extra expense
and rental loss insurance caused by fire or any other perils
12
insured in policies of insurance covering such property, even if such loss or
damage shall have been caused by the fault or negligence of the other party, or
anyone for whom such party may be responsible, including, without limitation,
any subtenants or occupants of the Premises; provided, however, that this
release shall be applicable and in force and effect only to the extent that
such release shall be lawful at that time and in any event only with respect to
loss or damage occurring during such time as the releasing party's insurance
policies shall contain a clause or endorsement to the effect that such release
shall not adversely affect or impair said policies or prejudice the right of
the releasing party to recover thereunder, and then only to the extent of the
sum of (a) the deductible amount under the applicable insurance policy plus (b)
the collected insurance proceeds actually received under such insurance policy;
provided, however, that if Tenant fails to obtain and/or maintain in full force
and effect the insurance coverage required of Tenant under Section 6.2 hereof
(including without limitation the required waiver of subrogation endorsement as
described below and the required naming of Landlord and Master Landlord as
additional named insureds), Tenant shall nevertheless release (and shall be
deemed to have released) Landlord from any liability as set forth above, as
fully as if Tenant had not so failed to obtain and/or maintain such insurance
coverage, but Landlord shall in such event not release (or be deemed to have
released) any liability of Tenant to Landlord for such event. Each party shall
cause each policy for property damage insurance to include a provision
permitting such a release of liability (commonly referred to as a waiver of
subrogation endorsement) as described above; provided, that if an insurer will
not include such a provision in such policy or if the inclusion of such a
provision would involve an additional premium in excess of fifteen percent (15%)
of the premium which would otherwise be charged, the party carrying the policy
shall so advise the other party within a reasonable time. If the other party
notifies the party carrying the policy that it desires such a provision to be
included in the policy, the party carrying the policy shall use its best efforts
to cause such a provision to be so included provided the other party shall
promptly pay all premiums therefor over and above said fifteen percent (15%)
excess premium.
ARTICLE VII
-----------
ASSIGNMENT AND SUBLETTING
-------------------------
7.1 RIGHT TO ASSIGN, AND SUBLEASE AND ENCUMBER. Landlord and Tenant
------------------------------------------
recognize and specifically agree that this Article VII is an economic provision,
like Rent, and that Landlord's right to recapture and to share in profits is
granted by Tenant to Landlord in consideration of certain other economic
concessions granted by Landlord to Tenant. Tenant may voluntarily assign or
encumber its interest in this Lease or in the Premises, or sublease all or any
part of the Premises, or allow any other person or entity to occupy or use all
or any part of the Premises, upon first obtaining Landlord's prior consent
(which consent shall not be unreasonably withheld or delayed), but only if such
assignment or sublease does not conflict with or result in a breach of Article
IV and if such proposed assignee or sublessee of Tenant's proposed assignment or
sublease is not:
a. a governmental entity;
b. a person with whom Landlord has negotiated for space in the
Building during the twelve (12) month period ending with the date Landlord
receives notice of such assignment, encumbrance or subletting;
c. a present tenant in the Building;
d. a person or business entity whose tenancy in the Building would
violate any exclusivity arrangement which Landlord has with any other tenant or
occupant of the Building; or
e. a person whose tenancy results in more people working at, or
visiting, the Premises than would have worked at, or visited, the Premises if
the Premises had been used for normal business office purposes typical of a
class A building in the vicinity of the Building.
13
Any assignment, encumbrance or sublease without Landlord's prior
consent shall be voidable, at Landlord's election, and shall, at Landlord's
further election, constitute a default. No consent to an assignment,
encumbrance, or sublease shall constitute a further waiver of the provisions of
this Article VII.
7.2 PROCEDURE FOR ASSIGNMENT AND SUBLEASE/LANDLORD'S RECAPTURE
----------------------------------------------------------
RIGHTS. Tenant shall advise Landlord by notice of (a) Tenant's intent to assign,
------
encumber, or sublease this Lease, (b) the name of the proposed assignee or
sublessee, and evidence reasonably satisfactory to Landlord that such proposed
assignee or sublessee is comparable in reputation, stature and financial
condition to the other tenants then leasing comparable space in the Building,
and (c) the terms of the proposed assignment or subletting. Landlord shall,
within thirty (30) days of receipt of such notice, and any additional
information requested by Landlord concerning the proposed assignee's or
sublessee's financial responsibility, elect one of the following:
(i) Consent to such proposed assignment, encumbrance or
sublease; or
(ii) Refuse such consent, which refusal shall be not
unreasonably withheld.
Notwithstanding the foregoing, in the event Tenant, prior to seeking to
assign or encumber its interest in this Lease or in the Premises, or sublease
all or any part of the Premises, or allow any other person or entity to occupy
or use all or any part of the Premises, shall determine that it no longer needs
a11 or a part of the Premises, Tenant shall advise Landlord by written notice
("Intention Notice") to Landlord describing which portion (or all) of the
Premises Tenant no longer needs. By written notice to Tenant ("Termination
Notice") within fifteen (15) days of receipt by Landlord of the Intention
Notice, Landlord shall elect one of the following: (a) in the event such
Intention Notice shall state that Tenant no longer needs the entire Premises,
terminate the Lease; or (b) in the event such Intention Notice shall state that
Tenant no longer needs only a portion of the Premises, terminate the Lease as to
such portion of the Premises for the proposed term. Pursuant to the receipt by
Tenant of the Termination Notice, the Lease, either as to the entire Premises
or to a portion of the Premises as shall be set forth in the Intention Notice,
shall terminate and such termination shall be effective ninety (90) days
following the date Tenant receives the Termination Notice.
7.3 CONDITIONS REGARDING CONSENT TO SUBLEASE AND ASSIGNMENT. In
-------------------------------------------------------
the event that Landlord shall consent to an assignment or sublease under the
provisions of this Article VII, Tenant shall pay Landlord's processing costs,
reviewing costs reasonable administrative and attorneys' fees incurred in giving
such consent. Notwithstanding any permitted assignment or subletting, Tenant
shall at all times remain directly, primarily and fully responsible and liable
for all payments owed by Tenant under the Lease and for compliance with all
obligations under the terms, provisions and covenants of the Lease. If for any
proposed assignment or sublease, Tenant receives rent or other consideration,
either initially or over the term of the assignment or sublease, in excess of
the rent required by this Lease, or, in the case of the sublease of a portion of
the Premises, in excess of such rent fairly allocable to such portion, after
appropriate adjustments to assure that all other payments called for hereunder
are taken into account, Tenant shall pay to Landlord as additional rent, fifty
percent (50%) of the excess of each such payment of rent or other consideration
received by Tenant within five (5) days of its receipt or, in the event the
sublessee or assignee makes payment directly to Landlord, Landlord shall refund
fifty percent (50%) of the excess to Tenant; provided, however, that Tenant may
deduct from such excess of each such payment of rent or other consideration
received by Tenant the actual reasonable and documented costs of the following
to the extent paid by Tenant in connection with the assignment or subletting:
(a) brokers' commissions, (b) attorneys' fees, (c) the costs of advertising the
space for sublease or assignment and (d) any improvement allowance, planning
allowance or moving expenses granted to the assignee or sublessee by Tenant.
Landlord may, from time to time, request documentation from Tenant supporting
the above deductions from excess consideration and Tenant shall supply such
supporting documentation to Landlord within five (5) days of Landlord's request.
7.4 INTENTIONALLY OMITTED
---------------------
14
7.5 AFFILIATED COMPANIES/RESTRUCTURING OF BUSINESS ORGANIZATION. Occupancy
-----------------------------------------------------------
of all or part of the Premises by parent, subsidiary, or affiliated companies of
Tenant shall not be deemed an assignment or subletting provided that such
parent, subsidiary or affiliated companies were not formed as a subterfuge to
avoid the obligation of this Article VII. If Tenant is a corporation,
unincorporated association, trust or general or limited partnership, then the
sale, assignment, transfer or hypothecation of any shares, partnership interest,
or other ownership interest of such entity which from time to time in the
aggregate exceeds twenty-five percent (25%) of the total outstanding shares,
partnership interests or ownership interests of such entity or which effects a
change in the management or control of Tenant, or the dissolution, merger,
consolidation, or other reorganization of such entity, or the sale, assignment,
transfer or hypothecation of more than forty percent (40%) of the value of the
assets of such entity, shall be deemed an assignment subject to the provisions
of this Article VII. Tenant shall notify Landlord not less than thirty (30) days
of such assignment or transfer.
7.6 LANDLORD'S RIGHT TO ASSIGN. Landlord shall have the right to sell,
--------------------------
encumber, convey, transfer, and/or assign any of its rights and obligations
under the Lease.
ARTICLE VIII
------------
"DAMAGE OR DESTRUCTION"
-----------------------
8.1 LOSS COVERED BY INSURANCE. If, at any time prior to the expiration
-------------------------
or termination of this Lease, the Premises or the Building is wholly or
partially damaged or destroyed by a fire or casualty, the loss to Landlord from
which is (except for any applicable deductible) fully covered by insurance
maintained by Landlord or for Landlord's benefit, which casualty renders the
Premises totally or partially inaccessible or unusable by Tenant in the ordinary
conduct of Tenant's business, then:
a. REPAIRS WHICH CAN BE COMPLETED WITHIN ONE YEAR. Within sixty (60)
----------------------------------------------
days of notice to Landlord of such damage or destruction, Landlord shall provide
Tenant with notice of its determination of whether the damage or destruction can
be repaired within one (1) year of such damage or destruction without the
payment of overtime or other premiums. If all repairs to such Premises or
Building can, in Landlord's judgment, be completed within one (1) year following
the date of notice to Landlord of such damage or destruction without the payment
of overtime or other premiums, Landlord shall, at Landlord's expense, repair the
same and this Lease shall remain in full force and effect and a proportionate
reduction of the Rent shall be allowed Tenant for such portion of the Premises
as shall be rendered inaccessible or unusable to Tenant, and which is not used
by Tenant, during the period of time that such portion is unusable or
inaccessible and not used by Tenant.
b. REPAIRS WHICH CANNOT BE COMPLETED WITHIN ONE YEAR. If all such
-------------------------------------------------
repairs to the Building and Premises cannot, in Landlord's judgment, be
completed within one (1) year following the date of notice to Landlord of such
damage or destruction without the payment of overtime or other premiums,
Landlord shall notify Tenant of such determination and Landlord may, at
Landlord's sole and absolute option, upon written notice to Tenant given within
sixty (60) days after notice to Landlord of the occurrence of such damage or
destruction, elect to repair such damage or destruction at Landlord's expense,
and in such event, this Lease shall continue in full force and effect but the
Rent shall be proportionately reduced as hereinabove provided in Section 8.1(a).
If Landlord does not elect to make such repairs, then either Landlord or Tenant
may, by written notice to the other no later than ninety (90) days after the
occurrence of such damage or destruction elect to terminate this Lease as of the
date of the occurrence of such damage or destruction.
8.2 LOSS NOT COVERED BY INSURANCE. If, at any time prior to the expiration
-----------------------------
or termination of this Lease, the Premises or the Building is totally or
partially damaged or destroyed from a casualty, the loss to Landlord from which
is not fully covered by insurance maintained by Landlord or for Landlord's
benefit, which damage renders the Premises inaccessible or unusable to Tenant in
the ordinary course of its business, Landlord, at its option, upon written
notice to Tenant within sixty (60) days after notice to Landlord of the
occurrence of, such damage or destruction, may elect to repair or restore such
damage or destruction, or
15
Landlord may elect to terminate this Lease. If Landlord elects to repair or
restore such damage or destruction, this Lease shall continue in full force and
effect but the Rent shall be proportionately reduced as provided in Section
8.1(a). If Landlord does not elect by notice to Tenant to repair such damage, or
if the damage cannot, in Landlord's judgment, be completed within one (1) year
following the date of notice to Landlord of such damage or destruction, the
Lease shall terminate.
8.3 DESTRUCTION DURING FINAL YEAR. Notwithstanding anything to the
-----------------------------
contrary contained in Sections 8.1 and 8.2, if the Premises or the Building is
wholly or partially damaged or destroyed within the final twelve (12) months of
the Term of this Lease, Landlord may, at its option, by giving Tenant notice
within sixty (60) days after notice to Landlord of the occurrence of such damage
or destruction, elect to terminate the Lease.
8.4 DESTRUCTION OF TENANT'S PERSONAL PROPERTY, TENANT IMPROVEMENTS OR
-----------------------------------------------------------------
PROPERTY OF TENANT'S EMPLOYEES. In the event of any damage to or destruction of
------------------------------
the premises or the Building, under no circumstances shall Landlord be required
to repair any injury, or damage to, or make any repairs to or replacements of;
Tenant's personal property. However, Tenant shall deliver to Landlord the
proceeds of insurance received by Tenant from the "all risk" property policy
carried by Tenant on its Tenant Improvements, and Landlord shall, pursuant to
its receipt thereof, repair same to the extent Landlord shall receive such
insurance proceeds from Tenant (but if the amount of insurance proceeds shall
not be sufficient to cause the repair of the Tenant Improvements to be fully
made by Landlord, Tenant shall pay to Landlord, within ten (10) days of receipt
of request therefor, the additional amount of funds requested by Landlord in
order to complete the repair of the Tenant Improvements) and this Lease shall
remain, to the extent Landlord shall receive such insurance proceeds from Tenant
(but if the amount of insurance proceeds shall not be sufficient to cause the
repair of the Tenant Improvements to be fully made by Landlord, Tenant shall
pay to Tenant within ten (10) days of receipt of request therefor, the
additional amount of funds requested by Landlord in order to complete the repair
of the Tenant Improvements), in full force and effect. Landlord shall have no
responsibility for any contents placed or kept in or on the Premises or the
Building or the Real Property by Tenant or Tenant's Employees.
8.5 EXCLUSIVE REMEDY. This Article VIII shall be Tenant's sole and
----------------
exclusive remedy in the event of damage or destruction to the Premises or the
Building, and Tenant, as a material inducement to Landlord entering into this
Lease, irrevocably waives and releases Tenant's rights under California Civil
Code Sections 1932(2) and 1933(4). No damages, compensation or claim shall be
payable by Landlord for any inconvenience, any interruption or cessation of
Tenant's business, or any annoyance, arising from any damage to or destruction
of all or any portion of the Premises or the Building.
ARTICLE IX
----------
CONDEMNATION
------------
9.1 PERMANENT TAKING - WHEN LEASE CAN BE TERMINATED. If the whole of
-----------------------------------------------
the Premises, or so much of the Premises as to render the balance unusable by
Tenant, shall be taken under the power of eminent domain, the Lease shall
automatically terminate as of the date of final judgment in such condemnation,
or as of the date possession is taken by the condemning authority, whichever is
earlier. A sale by Landlord under threat of condemnation shall constitute a
"taking" for the purpose of this Article IX. No award for any partial or entire
taking shall be apportioned and Tenant assigns to Landlord any award which may
be made in such taking or condemnation, together with all rights of Tenant to
such award, including, without limitation, any award or compensation for the
value of all or any part of the leasehold estate; provided that nothing
contained in this Article IX shall be deemed to give Landlord any interest in or
to require Tenant to assign to Landlord any award made to Tenant for (a) the
taking of Tenant's personal property, or (b) interruption of or damage to
Tenant's business, or (c) Tenant's unamortized cost of the Tenant Improvements
to the extent in excess of the Tenant Improvement Allowance.
16
9.2 PERMANENT TAKING - WHEN LEASE CANNOT BE TERMINATED. In the event
--------------------------------------------------
of a partial taking which does not result in a termination of the Lease under
Section 9.1, Rent shall be proportionately reduced based on the portion of the
Premises rendered unusable, and Landlord shall restore the Premises or the
Building to the extent of available condemnation proceeds.
9.3 TEMPORARY TAKING. No temporary taking of the Premises or any part of
----------------
the Premises and/or of Tenant's rights to the Premises or under this Lease shall
terminate this Lease or give Tenant any right to any abatement of any payments
owed to Landlord pursuant to this Lease; any award made to Tenant by reason of
such temporary taking shall belong entirely to Tenant.
9.4 EXCLUSIVE REMEDY. This Article IX shall be Tenant's sole and exclusive
----------------
remedy in the event of a taking or condemnation. Tenant hereby waives the
benefit of California Code of Civil Procedure Section 1265.130.
9.5 RELEASE UPON TERMINATION. Upon termination of the Lease pursuant to
------------------------
this Article IX, Tenant and Landlord hereby agree to release each other from any
and all obligations and liabilities with respect to the Lease except such
obligations and liabilities which arise or accrue prior to such termination.
ARTICLE X
---------
DEFAULTS/REMEDIES
-----------------
10.1 EVENTS OF DEFAULT. For purposes of this Lease a "default" or "event of
-----------------
default" shall mean the occurrence of any of the following and the failure of
Tenant to cure same within the time hereinafter provided for cure:
a. Any failure by Tenant to pay any Rent or any other charge (or any
portion thereof) required to be paid by Tenant under this Lease, within ten (10)
days after Tenant has received written notice from Landlord that such payment
was not made when due hereunder; or
b. Any breach or failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after Tenant has
received written notice thereof from Landlord provided that if the nature of
such default is such that the same cannot reasonably be cured within a thirty
(30) day period, Tenant shall not be deemed to be in default if it shall
promptly commence such cure within such thirty (30) day period and thereafter
rectify and cure said default with due diligence within a reasonable period of
time; or
c. To the extent permitted by law, a general assignment by Tenant for
the benefit of creditors, or the filing by or against Tenant of any proceeding
under an insolvency or bankruptcy law, unless in the case of a proceeding filed
against Tenant the same is dismissed within ninety (90) days, or the appointment
of a trustee or receiver to take possession of all or substantially all of the
assets of Tenant unless possession is restored to Tenant within sixty (60) days,
or any execution, attachment, levy, sale or other judicially authorized seizure
or disposal of Tenant's leasehold interest hereunder or of all or substantially
all of Tenant's assets located upon the Premises or of Tenant's interest in this
Lease, unless in the case of an attachment, levy or seizure the same shall be
discharged within sixty (60) days.
10.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default
---------------------
by Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity, the option to pursue any one or more of the
following remedies (each and all of which shall be cumulative and
nonexclusive) without any notice or demand whatsoever:
a. Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in Rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim or
17
damages therefor; and Landlord may recover from Tenant the following: (i) The
worth at the time of award 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 reasonably avoided.
As used in Subsections (a)(i) and (ii) above, the "worth at the time
of award" shall be computed by allowing interest at the Interest Rate. As used
in Subsection (a)(iii) above, the "worth at the time of award" shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).
b. Landlord may at its election reenter the Premises and, without
terminating this Lease, at any time and from time to time relet the Premises and
improvements or any parts of them for the account and in the name of Tenant or
Landlord or otherwise to cure any default by Tenant or to exercise any other
right or remedy of Landlord hereunder. Landlord may execute any leases made
under this provision either in Landlord's name or in Tenant's name and shall be
entitled to all Rents from the use, operation or occupancy of the Premises or
improvements or both. Tenant shall nevertheless pay to Landlord on the due date
specified in this Lease the equivalent of all sums required of Tenant under this
Lease, plus Landlord's expenses, less the proceeds of any reletting or
attornment. In addition to all other rights and remedies it may have, Landlord
shall have all of the rights and remedies of a landlord under Section 1951.4 of
the California Civil Code. Landlord may do all things reasonably necessary for
such reletting, including repairing, remodeling and renovating of the Premises
or improvements and Tenant shall reimburse Landlord on demand for all costs
incurred by Landlord in connection therewith. If Landlord relets the Premises it
shall apply any sums received upon such reletting in the following order of
priority: (i) to the payment of all costs incurred by Landlord in restoring the
Premises to good order and repair, or in remodeling, renovating or otherwise
preparing the Premises for reletting, (ii) to the payment of all costs
(including without limitation any brokerage commissions) incurred by Landlord in
reletting the Premises, and in fulfilling Landlord's obligations with respect to
such reletting (such as, by way of example, providing services or utilities),
(ii) to the payment of Rent (and any interest thereon) due and unpaid hereunder,
and (iv) the balance, if any, to the payment of future Rent as the same may
become due hereunder, but Tenant shall not in any event have any claim or right
to receive any sums so collected by Landlord, even if such sums exceed the Rents
payable hereunder. No act by or on behalf of Landlord under this provision shall
constitute a termination of this Lease unless Landlord gives Tenant notice of
termination. Notwithstanding any election by Landlord not to terminate this
Lease Landlord may at any time thereafter elect to terminate this Lease for any
previous breach or default hereunder by Tenant which remains uncured or for any
subsequent breach or default.
c. Landlord shall be entitled at its election to each installment of
Rent or to any combination of installments for any period before termination,
plus interest at the Interest Rate on each such installment of Rent from the
due date of each such installment.
10.3 Assignment of Rents. Tenant assigns to Landlord all subrents and
-------------------
other sums falling due from subtenants, licensees and concessionaires (herein
called "subtenants") during any period in which Tenant is in default and Tenant
shall not have any right to such sums during that period. Landlord may at
Landlord's election reenter the Premises, without terminating this Lease, and
either or both collect these sums or bring action for the recovery of the sums
directly from such obligors. Landlord shall receive and collect all subrents
and proceeds from reletting, applying them in the following order of priority:
(a) to the payment of all costs incurred by Landlord in restoring the Premises
to good order and repair, or in remodeling, renovating or otherwise preparing
the Premises for reletting, (b) to the payment of all costs (including, without
limitation, attorneys' fees or brokers' commissions or both) incurred by
Landlord in reletting the Premises, and in fulfilling Landlord's obligations
with respect to such reletting (such as, by way of example, providing services
or utilities), (c) to the payment of Rent (and any interest thereon) due and
unpaid hereunder, and (d) the balance, if any, to the payment of future Rent as
the same may become due hereunder. Tenant shall nevertheless pay to Landlord on
the due date specified
18
in this Lease the equivalent of all sums required of Tenant under this Lease,
plus Landlord's expenses, less proceeds of the sums assigned and actually
collected under this provision.
10.4 WAIVER OF DEFAULT. No waiver by Landlord or Tenant of any violation or
-----------------
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other or later violation or
breach of the same or any other of the terms, provisions, and covenants herein
contained. Forbearance by Landlord in enforcement of one or more of the remedies
herein provided upon an event of default shall not be deemed or construed to
constitute a waiver of such default. The acceptance of any Rent hereunder by
Landlord following the occurrence of any default, whether or not known to
Landlord, shall not be deemed a waiver of any such default, except only a
default in the payment of the Rent so accepted.
10.5 BANKRUPTCY. If Tenant assumes this Lease and proposes to assign the
----------
same pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. (S)101 et
seq., or any successor statute (the "Bankruptcy Code") to any person or entity
who shall have made a bona fide offer to accept an assignment of this Lease on
terms acceptable to Tenant then notice of such proposed assignment, setting
forth (a) the name and address of such person, (b) all of the terms and
conditions of such offer, and (c) the adequate assurance to be provided Landlord
to assure such person's future performance under this Lease, including, without
limitation, the assurance referred to in Section 365(b)(3) of the Bankruptcy
Code, shall be given to Landlord by Tenant no later than twenty (20) days after
receipt by Tenant but in any event no later than ten (10) days prior to the date
that Tenant shall make application to a court of competent jurisdiction for
authority and approval to enter into such assignment and assumption, and
Landlord shall thereupon have the prior right and option, to be exercised by
notice to Tenant given at any time prior to the effective date of such proposed
assignment, to accept an assignment of this Lease upon the same terms and
conditions and for the same consideration, if any, as the bona fide offer made
by such person, less any brokerage commissions which may be payable out of the
consideration to be paid by such person for the assignment of this Lease.
ARTICLE XI
----------
DEFAULT BY LANDLORD
-------------------
Landlord shall not be in default hereunder unless Landlord fails to perform
the obligations required of Landlord within a reasonable time, but in no event
later than thirty (30) days after written notice by Tenant to Landlord in
writing specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord's obligation is such that more
than thirty (30) days are required for performance, then Landlord shall not be
in default if Landlord commences performance within such thirty (30) day period
and thereafter diligently prosecutes the same to completion. Tenant shall have
no rights as a result of any default by Landlord until Tenant gives thirty (30)
days' notice to any person who has a recorded interest pertaining to the
Building, specifying the nature of the default. Such person shall then have the
right to cure such default, and Landlord shall not be deemed in default if such
person cures such default within thirty (30) days after receipt of notice of the
default, or within such longer period of time as may reasonably be necessary to
cure the default. Notwithstanding anything to the contrary in the Lease,
Landlord's liability to Tenant for damages resulting from Landlord's breach of
any provision or provisions of the Lease shall not exceed the value of
Landlord's equity interest in the Building.
ARTICLE XII
-----------
SUBORDINATION, ATTORMENT AND NON-DISTURBANCE
--------------------------------------------
12.1 SUBORDINATION ATTORNMENT AND NON-DISTURBANCE. This lease shall be
---------------------------------------------
subject and subordinate at all times to the Master Lease and to the lien of
any mortgage, deed of trust or other security interest ("mortgage") now existing
or hereafter executed in any amount which effects the Building or for which
Landlord's interest or estate in the Premises is specified as security.
Notwithstanding the foregoing, Landlord shall have the right to subordinate or
cause to be subordinated any such liens to this Lease. In the event that any
mortgage is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any
19
subordination, have the right to attorn to, and shall attorn to, and become
Tenant of, the successor in interest to Landlord on all of the terms and
conditions contained in this Lease. Tenant covenants and agrees to execute and
deliver, within five (5) days of request by Landlord and in the form requested
by Landlord, any additional instruments evidencing the priority or subordination
of this Lease with respect to the lien of any such mortgage. A condition
precedent to the subordination herein and to the execution of any future
instrument of subordination is that Landlord shall obtain for the benefit of
Tenant a non-disturbance and attornment agreement from the lender in whose favor
the subordination is given, in content reasonably acceptable to Tenant. Tenant
shall promptly review and execute any non-disturbance agreement submitted to
Tenant by Landlord which meets with the requirements of this Section, and shall
promptly advise Landlord if Tenant disapproves of any such proposed agreement.
Said agreement shall provide that (a) Tenant will not be named or joined in any
proceeding to enforce the mortgage unless such is required by law in order to
perfect the proceeding, (b) enforcement of the mortgage will not terminate the
Lease or disturb Tenant in the possession and use of the Premises, unless Tenant
is in default beyond the period provided in the Lease to remedy the default, and
(c) any party succeeding to the interest of the Landlord as a result of the
enforcement of the mortgage shall be bound to the Tenant under all the terms,
covenants and conditions of this Lease from and after the date of succeeding to
the Landlord's interest under this Lease and for the balance of the Term of the
Lease, except that in no event will such party be liable for claims arising
prior to the date of succession, or be subject to offsets or defenses Tenant
might have against a prior Landlord, or be bound by any amendment to the Lease
made without the lender's consent, or be liable for completion of construction
of any improvements, or be bound by any Rent payments made more than one month
in advance to the prior Landlord, and (d) Tenant is obligated to attorn to any
party succeeding to the interest of the Landlord as a result of the enforcement
of a mortgage.
12.2 LANDLORD'S RIGHT TO ASSIGN. Landlord's interest in the Lease may
--------------------------
be assigned to any mortgagee or trust deed beneficiary as additional security.
Nothing in this Lease shall empower Tenant to do any act without Landlord's
prior consent which can, shall or may encumber the title of the owner of all or
any part of the Building.
12.3 NON-DISTURBANCE. Subject to Section 7.4 and notwithstanding any of
---------------
the provisions of this Article XII to the contrary, Tenant shall be allowed to
occupy the Premises, subject to the conditions of this Lease, and this Lease
shall remain in effect, until an event of default occurs or until Tenant's
rights are modified because of a condemnation proceeding pursuant to Article
IX, or because of the occurrence of damage and destruction pursuant to Article
VIII of the Lease.
12.4 ATTORNEY-IN-FACT. If Tenant fails to execute and deliver promptly any
---------------
documents or instruments required by this Article XII, such failure shall, at
Landlord's option, constitute a default under the Lease, and Tenant hereby
irrevocably constitutes and appoints Landlord as Tenant's special attorney-in-
fact to execute and deliver any such documents or instruments.
ARTICLE XIII
------------
ESTOPPEL CERTIFICATES
---------------------
Either party shall, upon not less than twenty (20) days' prior notice from
the other party (which request shall be made no more often than four (4) times
in any twelve (12)-month period), execute, acknowledge and deliver to the other
party a statement (a) certifying that this Lease is unmodified and in full force
and effect (or if there have been modifications, that the same is in full force
and effect as modified and stating the modifications) provided such
certification is true at the time, (b) certifying the date to which the Basic
Rent has been paid in advance, (c) stating whether or not, to the best knowledge
of the certifying party, the requesting party is in default under this Lease,
and if so, specifying such default and/or (d) certifying as to such other
matters with respect to this Lease as the requesting party may reasonably
request. Any such certificate made by Tenant or Landlord may be relied upon by
any prospective purchaser of the Premises or any part thereof, any prospective
assignee or subtenant of Tenant, any prospective mortgagee of Landlord, but,
provided such certificate was given in good faith by
20
the certifying party, it may not be relied upon by the requesting party to
dispute any claim by the certifying party of a default by the requesting party.
ARTICLE XIV
-----------
ENTRY BY LANDLORD
-----------------
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant to enter the Premises to inspect the same, ascertain whether
Tenant has complied with the terms of this Leasee, perform work required to be
performed by Tenant but with respect to which Tenant is in default, or
otherwise to cure any default of Tenant, or show the same to prospective
purchasers, insurers and mortgagees and, during the last two (2) years of the
Lease Term.
ARTICLE XV
----------
TENANT'S AND LANDLORD'S REPAIR OBLIGATIONS
------------------------------------------
15.1 TENANT'S REPAIR. Tenant shall, at Tenant's sole cost and expense, keep
---------------
the nonstructural portion of the Premises in good and sanitary condition and
repair at all times during the Term. All damage, injury or breakage to any part
or portion of the Premises or the Building caused by the willful or negligent
act or omission of Tenant or Tenant's Employees shall be promptly repaired by
Tenant, at Tenant's sole cost and expense, to the satisfaction of Landlord;
provided, however, that Tenant shall be entitled to receive reimbursement for
such expense to the extent that the cost of any such repair is covered by
insurance obtained by Landlord as part of Operating Expenses and is related to
damage to the Building rather than to the Premises. Landlord may make any
repairs which are not made by Tenant within a reasonable amount of time (except
in the case of emergency when such repairs can be made immediately), and charge
Tenant for the cost of such repairs. Tenant shall be solely responsible for the
design and function of all of Tenant Improvements whether or not installed by
Landlord at Tenant's request. Tenant waives all rights to make repairs to the
Premises or to the Building at the expense of Landlord, or to deduct the cost
of such repairs from any payment owed to Landlord under the Lease.
15.2 Landlord's Repair.
-----------------
(a) SCOPE OF LANDLORD'S REPAIRS. So long as no event of default
---------------------------
has occurred, Landlord shall maintain and repair the structural elements and the
public and common areas of the Building as the same may exist from time to time,
except for non-insured damage or wear and tear which is the result of a
negligent or willful act or omission of Tenant or Tenant's Employees. Landlord
shall have no obligation to make repairs under this Article XV until a
reasonable time after receipt of written notice of the need for such repairs.
In no event shall any payments owed by Tenant under the Lease be abated, nor
shall Landlord have any liability for interruption or interference in Tenant's
business, on account of Landlord's failure to make repairs under this Article
XV.
(b) LANDLORD'S RIGHT OF ENTRY TO MAKE REPAIRS. In addition to the
-----------------------------------------
right of entry set forth above in Article XIV, Landlord and Landlord's agents,
contractors, licensees, employees, directors, officers, partners, trustees and
invitees (collectively, "Landlord's Employees") shall have the right to enter
the Premises at all reasonable times for the purpose of making any alterations,
additions, improvements or repairs to the Premises or the Building as Landlord
may deem necessary or desirable, without liability to Tenant. Landlord shall
give reasonable notice to Tenant of Landlord's intent to enter the Premises and
effect repairs, except, however, in an emergency situation, in which case no
prior notice shall be required.
21
ARTICLE XVI
------------
SURRENDER OF PREMISES
---------------------
16.1 SURRENDER OF PREMISES. No act or thing done by Landlord or
---------------------
Landlord's Employee during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Landlord. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not,
or a mutual termination hereof, shall not work a merger, and at the option of
Landlord, shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises.
16.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the Lease
------------------------------------
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of Article VIII and this Article XVI, quit and surrender
possession of the Premises to Landlord in as good order and condition as at the
commencement of the Lease Term, and as thereafter improved by Tenant,
reasonable wear and tear and repairs hereunder excepted. Upon such expiration or
termination, Tenant shall, without expense to Landlord, remove or cause to be
removed from the Premises all items of furniture, trade fixtures, equipment,
free-standing cabinet work, and other articles of personal property which,
pursuant to Section 16.3 below, are and shall remain the property of Tenant,
and such property of any other persons claiming under Tenant, but shall not
remove any fixtures, Alterations, additions and tenant improvements to the
Premises which are, pursuant to Section 16.3 below, the property of Landlord,
and in all cases Tenant shall repair any damage to the Premises caused by any
such removal. Any Tenant's property which shall not be removed as aforesaid at
the expiration or termination of this Lease shall be deemed to have been
abandoned by Tenant, and may be removed by Landlord, at Tenant's expense,
without any liability to Tenant and without the requirement of any accounting to
Tenant therefor.
16.3 PROPERTY RIGHTS. All items of furniture, trade fixtures, equipment,
---------------
free-standing cabinet work, and other personal property acquired at Tenant's
expense (and not purchased with the proceeds of the Tenant Improvement
Allowance) shall be and remain Tenant's property at all times. All fixtures
(other than trade fixtures), Alterations, additions, repairs or improvements
attached to or built into, on, or about the Premises prior to or during the Term
hereof; at Tenant's expense (and not purchased with proceeds of the Tenant
Improvement Allowance) shall be and remain Tenant's property during the Term of
this Lease, but at the expiration or earlier termination hereof shall remain
part of the Premises and shall without further action by the parties become the
property of Landlord. All fixtures, Alterations, additions, repairs,
improvements, furniture, equipment, free-standing cabinet work and other
personal property paid for from the Tenant Improvement Allowance, shall be and
remain at all times the property of Landlord and shall not be removed by Tenant
at the end of the Lease Term. Upon written request from Tenant, Landlord shall
from time to time execute and deliver any instrument consistent with the
foregoing and otherwise reasonably acceptable to Landlord that may be required
by any equipment supplier, vendor, lessor and/or lender whereby Landlord waives
and/or releases any rights it may have or acquire with respect to any furniture,
equipment, personal property or trade fixtures Tenant or any subtenant of Tenant
may affix to the Premises amid agreeing that the same do not constitute realty.
ARTICLE XVII
------------
ARBITRATION
-----------
17.1 ARBITRATION.
-----------
a. No dispute between Landlord and Tenant shall be subject to
determination by arbitration unless a provision of thus lease specifies
specifically so provides Except as provided in Section 28.3 with respect to
arbitration of Fair Market Remutal Rate, whenever aiuy provision of this Lease
specifically provides that a matter shall be determined by arbitration in
accordance with thus Article XVII and either party notifies the other in writing
that such matter shall be so determined, then (i) each party shall, within
thirty (30) days thereafter, appoint an arbitrator and each party shall notify
the other party of the name and address of the arbitrator so appointed;
22
(ii) if either party shall fail to make such appointment and to serve notice
thereof within the time prescribed, then the appointment of an arbitrator on
behalf of such party shall be made in the same manner as provided in clause (iv)
below for the appointment of a third arbitrator in the case where the two
arbitrators shall fail to agree upon such third arbitrator; (iii) the
arbitrators so appointed shall meet within ten (10) days after the second
arbitrator is appointed and shall, if possible, determine such matter within
thirty (30) days after the second arbitrator is appointed, and their
determination shall be final and binding on the parties; (iv) if for any reason
such two arbitrators fail to agree on such matter within such period of thirty
(30) days, they shall appoint a third arbitrator, and in the event of their
failure to agree upon such third arbitrator within ten (10) days after the time
prescribed, either party on behalf of both may apply to the Los Angeles office
of the American Arbitration Association (or successor thereto) for the
appointment of such third arbitrator, and the other party shall not raise any
question as to the full power and jurisdiction of the American Arbitration
Association (or successor thereto) to entertain the application and make the
appointment; and (v) after the appointment of the third arbitrator each of the
first two arbitrators shall submit their respective determinations to the third
arbitrator who must select one or the other of such determinations, and the
selection so made shall in all cases be binding upon the parties. If any
arbitrator shall die, become disqualified or incapacitated, or shall fail or
refuse to act, before such matter shall have been determined, then, in place of
such arbitrator, an arbitrator shall promptly be appointed in the same manner as
the arbitrator who shall have died or become disqualified or incapacitated, or
who shall have failed or refused to act.
b. All arbitration shall be finally determined in the City of Los
Angeles and shall be governed (except as provided above) in accordance with the
applicable Rules of the American Arbitration Association (or any successor
thereto) and the judgement on the award rendered may be entered in any court
having jurisdiction. Landlord and Tenant agree and acknowledge that the
provisions of this Article XVII constitute an "Agreement" for purposes of
California Code of Civil Procedure Section 1280(a). Each arbitrator appointed
pursuant to Subsection (a) shall be an independent real estate management
professional who is either (i) a member of the Institute of Real Estate Managers
having the designation of Certified Property Manager, or (ii) a qualified full-
time professional property manager having primary responsibility for the
management and operation of one or more first-class office buildings in
metropolitan Los Angeles, and who is in either case resident in, and with at
least ten (10) years of full-time commercial property management experience in,
metropolitan Los Angeles.
17.2 PAYMENT OF EXPENSES. Each party shall pay the fees and expenses of
-------------------
the arbitrator appointed by or on behalf of it, and each shall pay one-half of
the fees and expenses of the third arbitrator, if any.
ARTICLE XVIII
-------------
SECURITY DEPOSIT
----------------
Concurrently with the execution of this Lease, Tenant shall deposit with
Landlord a security deposit in the sum specified in provision (p) of the
Fundamental Lease Provisions as the Security Deposit. The Security Deposit
shall be held by Landlord as security for the full and faithful performance of
Tenant's covenants and obligations under this Lease. The Security Deposit is
not an advance Basic Rent deposit, an advance payment of any other kind, or a
measure of Landlord's damages in case of Tenant's default. If Tenant fails to
comply with the full and timely performance of any or all of Tenant's covenants
and obligations set forth in this Lease, then Landlord may, from time to time,
without waiving any other remedy available to Landlord, use the Security
Deposit, or any portion of it, to the extent necessary to cure or remedy such
failure or to compensate Landlord for all damages sustained by Landlord
resulting from Tenant's failure to comply fully and timely with its obligations
pursuant to this Lease. Tenant shall immediately pay to Landlord on demand the
amount so applied in order to restore the Security Deposit to its original
amount, and Tenant's failure to immediately do so shall constitute a
default under the Lease. If Tenant is in compliance with the covenants and
obligations set forth in this Lease at the time which is sixty (60) days
following the time of both the expiration or termination of the Lease and
Tenant's vacating of the Premises as provided in California Civil Code Section
1950.7, Landlord shall return the Security Deposit to Tenant after the
expiration or termination of the Lease and Tenant's vacating of the Premises.
Each time the
23
Basic Rent shall increase pursuant to the provisions of this Lease, within five
(5) business days thereafter, Tenant shall pay to Landlord as additional
Security Deposit an amount equal to the difference between the new Basic Rent
and the Basic Rent in effect immediately prior to such increase. Landlord's
obligations with respect to the Security Deposit are those of a debtor and not a
trustee. Landlord shall not be required to maintain the Security Deposit
separate and apart from Landlord's general or other funds, and Landlord may
commingle the Security Deposit with any of Landlord's general or other funds.
Tenant shall not at any time be entitled to interest on the Security Deposit.
ARTICLE XIX
-----------
NO LIENS BY TENANT
------------------
Tenant shall at all times keep the Premises and the Building free from any
liens arising out of any work performed or allegedly performed, materials
furnished or allegedly furnished or obligations incurred by or for Tenant. At
any time Tenant either desires or is required to make any alterations, Landlord
may require Tenant, at Tenant's sole cost and expense, to obtain and provide to
Master Landlord and Landlord a completion and/or performance bond in a form and
by a surety acceptable to Landlord and in an amount not less than one and one-
half (1-1/2) times the estimated cost of such alterations to insure Master
Landlord and Landlord against liability from mechanics' and materialmen's liens
and to insure completion of the work and may also require such additional items
or assurances as Landlord in its sole discretion may deem reasonable or
desirable. Tenant agrees to indemnify and hold Landlord harmless from and
against any and all claims for mechanics', materialmen's or other liens in
connection with any alterations, repairs, or any work performed, materials
furnished or obligations incurred by or for Tenant, and in connection therewith,
Tenant shall provide Landlord with notice of any and all liens filed against the
Premises and/or the Building. Landlord reserves the right to enter the Premises
for the purpose of posting such notices of non-responsibility as may be
permitted by law, or desired by Landlord.
ARTICLE XX
----------
SERVICES
--------
20.1 HEATING, VENTILATING OR AIR-CONDITIONING. Subject to the full
----------------------------------------
performance by Tenant of all of Tenant's obligation under this Lease, Landlord
shall, on Monday through Friday, from 8:00 A.M. to 6:00 P.M., and on Saturday,
from 9:00 A.M. to 1:00 P.M., excepting state and federal holidays, provide to
the Premises heating, ventilation and air-conditioning ("HVAC") when, in the
judgment of Landlord, it may be required for the comfortable occupancy of the
Premises for general office purposes (subject, however, to any governmental act,
proclamation or regulation). Landlord shall not be responsible for any room
temperatures if Tenant's lighting and receptacle loads exceed the capacity of
Building Standard lighting and receptacles or the limits imposed by any
governmental authority. Landlord hereby reserves the right to modify the
Business Hours of the Building set forth above as long as the total business
hours of the Building shall include at least ten (10) hours on Mondays through
Fridays and four (4) hours on Saturdays.
20.2 CLEANING. Subject to the full performance by Tenant of the all of
--------
Tenant's obligations under this Lease, Landlord shall provide janitorial
services to the Premises comparable to the janitorial services being provided by
comparable landlords of comparable office buildings in the vicinity of the
Building ("Comparable Buildings"), each evening, five (5) days per week (except
state and federal holidays), provided the Premises are used exclusively in
accordance with Article IV of the Lease, and are kept reasonably in order by
Tenant. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish to the extent the same exceeds the refuse and rubbish usually
attendant upon the use of the Premises for general purposes. Landlord shall
not be responsible or liable for any act of omission or commission on the part
of the persons employed to perform said janitorial services, and said janitorial
services shall be performed at Landlord's direction without interference by
Tenant or Tenant's Employees.
24
20.3 ADDITIONAL SERVICES. Tenant agrees to immediately pay on demand all
-------------------
reasonable charges imposed by Landlord from time to time for all Building
services and utilities supplied to or used by Tenant in excess of or in addition
to those standard Building services and utilities which Landlord agrees to
provide Tenant in accordance with Sections 20.1 and 20.2 above (said excess and
additional building services and utilities are referred to as "Additional
Services"). Landlord may at any time cause a metering system or similar device
to be installed at Tenant's expense (which expense Tenant shall pay within ten
(10) working days of receipt of an invoice from Landlord covering the
installment cost of such metering system or similar device) to measure the
amount of building services, utilities and/or Additional Services consumed by
Tenant or used in the Premises.
20.4 LANDLORD'S RIGHT TO CEASE PROVIDING SERVICES. Landlord reserves the
--------------------------------------------
right in its sole and absolute discretion to reduce, interrupt or cease
providing the HVAC and janitorial services to the Premises or the Building, for
any or all of the following reasons or causes:
a. any accident, emergency, governmental regulation, or "act of
god," including, but not limited to, force majeure events; or
b. the making of any repairs, additions, alterations or
improvements to the Premises or the Building until said repairs, additions,
alterations or improvements shall have been completed.
No such interruption, reduction or cessation of any such services or
utilities shall constitute an eviction or disturbance of Tenant's use or
possession of the Premises or Building, or an ejection or eviction of Tenant
from the Premises, or a breach by Landlord of any of its obligations, or render
Landlord liable for any damages, including but not limited to any damages,
compensation or claims arising from any interruption or cessation of Tenant's
business, or entitle Tenant to be relieved from any of its obligations under the
Lease, or result in any abatement of Rent. In the event of any such
interruption, reduction or cessation, Landlord shall use reasonable diligence to
restore such service where it is within Landlord's reasonable control to do so.
ARTICLE XXI
-----------
SECURITY SERVICES
-----------------
21.1 LANDLORD'S OBLIGATION TO FURNISH SECURITY SERVICES. Tenant
--------------------------------------------------
acknowledges that Landlord does not furnish any security services to the
Premises or to the Building. Accordingly, Tenant shall have sole responsibility
for the protection of itself; Tenant's Employees and all property of Tenant and
Tenant's Employees located in, on or about the Premises or the Building.
Landlord reserves the right, in its sole discretion, to provide security
services to the Building at any time during the Term and to include the cost of
any such security services in the Operating Expenses for the Building.
Notwithstanding anything to the contrary contained in this Lease, (a) any
security service that may be provided by Landlord is intended solely for the
operation and benefit of the Building and is not intended for the benefit or
protection of the Premises or the invitees of Tenant and the other tenants
and/or occupants occupying space in the Building, and (b) Landlord and Tenant
shall not be liable to each other for injury, death or damage to or loss of
property by reason of Landlord's or Tenant's act or failure to act in providing
or maintaining any security in the Building.
21.2 TENANT'S RIGHT TO INSTALL SECURITY SYSTEM. If Tenant wishes to
-----------------------------------------
establish or install any automated and/or nonautomated security system in, on or
about the Premises, Tenant shall first notify Landlord of Tenant's plan for any
such system, and Landlord shall have the right to review and approve or
disapprove said plan in Landlord's discretion. If Landlord approves any such
plan and Tenant establishes or installs any automated and/or non-automated
security system in, on or about the Premises, and should such system adversely
affect the Premises or the Building or the desirability of the Premises or the
Building as office space, or as an office building, or have an adverse effect
on other tenants respectively, Landlord shall subsequently have the right to
review Tenant's security system from time to time and request Tenant to make
changes in personnel and/or equipment. Tenant shall make such requested changes
immediately thereafter. Landlord shall have no obligation to maintain, service
or
25
respond to Tenant's security system. Tenant hereby indemnifies and holds
Landhord harmless from and against any and all claims, losses and damages
(including, but not limited to actual and consequential damages) by or on behalf
of Tenant, or any other person, including but not limited to its employees,
visitors, invitees, licenses or customers arising directly or indirectly from
Landlord's not maintaining, servicing or responding to Tenant's security system.
ARTICLE XXII
------------
SUBSTITUTED PREMISES
--------------------
Landlord shall have the right to relocate the Premises to another part of
the Building on the following terms and conditions:
a. The new premises shall be substantially the same in size,
dimensions, configuration, decor, and quality as the Premises described in this
Lease, and shall be placed in that condition by Landlord at its sole cost;
b. The physical relocation of the Premises shall be accomplished by
Landlord at its sole cost;
c. Landlord shall give Tenant at least sixty (60) days' notice of
Landlord's intention to relocate the Premises;
d. The physical relocation of the Premises shall take place on a
weekend, if practicable, and shall be accomplished as quickly as reasonably
practicable;
e. All documented, reasonable and actual out-of-pocket costs
incurred by Tenant as a result of the relocation, including, without limitation,
costs incurred in changing addresses on Tenant's then present stock of
stationery and business cards, directories, advertising, and other such items,
but excluding any lost revenues or any intangible costs, shall be paid by
Landlord;
f. If the relocated premises are smaller than the Premises as they
existed before the relocation, Basic Rent shall be reduced to a sum computed by
multiplying the Basic Rent by a fraction, the numerator of which shall be the
total number of RSF in the relocated premises, and the denominator of which
shall be the total number of RSF in the Premises before relocation; and
g. The parties shall immediately execute an amendment to this Lease
stating the relocation of the Premises and the reduction of the Basic Rent, if
any.
ARTICLE XXIII
-------------
RULES AND REGULATIONS
---------------------
Tenant shall faithfully observe and comply with the Building rules and
regulations ("Rules and Regulations"), a copy of which is attached to this Lease
as Exhibit "D", and all reasonable modifications and additions to the Rules and
Regulations from time to time put into effect by Landlord; provided, however,
that no modifications or additions to the Rules and Regulations shall interfere
with Tenant's permitted use of the Premises as set forth in Section 4.1.
Landlord shall not be responsible to Tenant for the nonperformance of any of the
Rules and Regulations by any other occupant or tenant of the Building.
ARTICLE XXIV
------------
HOLDING OVER
------------
24.1 SURRENDER OF POSSESSION. Tenant shall surrender possession of the
-----------------------
Premises immediately upon the expiration of the Term or termination of the
Lease. If Tenant shall continue to occupy or possess the Premises after such
expiration or termination without the
26
consent of Landlord, then unless Landlord and Tenant have otherwise agreed in
writing, Tenant shall be a tenant from month-to-month. All the terms, provisions
and conditions of the Lease shall apply to this month-to-month tenancy except
those terms, provisions and conditions pertaining to the Term, and except that
the Basic Rent shall be immediately adjusted upward upon the expiration or
termination of the Lease to equal the greater of (a) one hundred fifty percent
(150%) of the then prevailing monthly rental rate for similar commercial space,
as determined by Landlord, or (b) one hundred fifty percent (150%) of the Basic
Rent for the Premises in effect under this Lease during the month which includes
the day immediately prior to the date of the expiration or termination of the
Lease. This month-to-month tenancy may be terminated by Landlord or Tenant upon
fifteen (15) days' prior notice to the nonterminating party. In the event that
Tenant fails to surrender the Premises upon such termination or expiration, then
Tenant shall indemnify and hold Landlord harmless against all loss or liability
resulting from or arising out of Tenant's failure to surrender the Premises,
including, but not limited to, any amounts required to be paid to any tenant or
prospective tenant who was to have occupied the Premises after said termination
or expiration and any related attorneys' fees and brokerage commissions.
24.2 PAYMENT OF MONEY AFTER TERMINATION. No payment of money by Tenant to
----------------------------------
Landlord after the termination of the Lease by Landlord, or after the giving of
any notice of termination to Tenant by Landlord which Landlord is entitled to
give Tenant under the Lease, shall reinstate, continue or extend the Term of
the Lease or shall affect any such notice given to Tenant prior to the payment
of such money, it being agreed that after the service of such notice or the
commencement of any suit by Landlord to obtain possession of the Premises,
Landlord may receive and collect when due any and all payments owed by Tenant
under the Lease, and otherwise exercise its rights and remedies. The making of
any such payments by Tenant shall not waive such notice, or in any manner affect
any pending suit or judgment obtained.
ARTICLE XXV
-----------
WAIVER
------
The waiver by Landlord or Tenant of any term, covenant, agreement or
condition contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or of any other term, covenant, agreement,
condition or provision of this Lease, nor shall any custom or practice which
may develop between the parties in the administration of the Lease be construed
to waive or lessen the right of Landlord or Tenant to insist upon the
performance by the other in strict accordance with all of the terms, covenants,
agreements, conditions, and provisions of the Lease. The subsequent acceptance
by Landlord of any payment owed by Tenant to Landlord under the Lease, or the
payment of Rent by Tenant, shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant, agreement, condition or provision of
the Lease, other than the failure of Tenant to make the specific payment so
accepted by Landlord, regardless of Landlord's or Tenant's knowledge of such
preceding breach at the time of the making or acceptance of such payment.
ARTICLE XXVI
------------
RIGHT TO PERFORMANCE
--------------------
All covenants and agreements to be performed by Tenant under the Lease
shall be performed by Tenant at Tenant's sole cost and expense. If Tenant shall
fail to perform any act on its part to be performed under the Lease, and such
failure shall continue for three (3) days after notice thereof to Tenant
(provided that no notice shall be required in cases of emergency), Landlord may,
but shall not be obligated to do so, without waiving or releasing Tenant from
any obligations of Tenant, perform any such act on Tenant's part to be made or
performed as provided in the Lease. All costs incurred by Landlord with
respect to any such performance by Landlord (including reasonable attorneys'
fees) shall be immediately paid by Tenant to Landlord.
27
ARTICLE XXVII
-------------
PARKING
-------
Landlord shall maintain and operate, or cause to be maintained and
operated, a subterranean automobile parking facility ("Parking Facility").
Tenant shall have the right, so long as Tenant complies with the terms,
provisions and conditions of this Lease and is occupying the Premises, to park
in the Parking Facility the number of passenger size automobiles set forth in
provision (v) of the Fundamental Lease Provisions, which parking spaces shall be
unreserved. In the event that, from time to time, the Parking Facility is
renovated or replaced, in whole or in part, Landlord shall have the right to
relocate Tenant's parking privileges to other parking facilities on a temporary
basis. If only a portion of the Parking Facility is renovated or replaced (for
example, due to repairs to the air ventilation system or other maintenance
work), Landlord shall also have the right to relocate Tenant's parking
privileges within the Parking Facility, either by allocating different parking
spaces to Tenant, re-striping the parking areas within the Parking Facility or
by any other reasonable means.
Tenant shall pay Landlord (or Landlord's parking contractor, if so directed
by Landlord) the monthly charges established from time to time by Landlord (or
Landlord's parking contractor, as the case may be) for parking in the Parking
Facility, payable in advance, with Tenant's payment of Basic Rent. As of the
date hereof, there is currently no charge for each of Tenant's parking spaces.
No deductions from the monthly charge shall be made for days on which the
Parking Facility is not used by Tenant. Tenant may, from time to time, request
additional parking spaces, and if Landlord or its parking contractor shall
provide the same, such spaces shall be provided and used on a month-to-month
basis, and otherwise on the foregoing terms and provisions, and subject to such
monthly parking charges as Landlord, or Landlord's parking contractor, as the
case may be, shall establish from time to time.
Tenant shall at all times comply with all applicable ordinances,
rules, regulations, codes, laws, statutes and requirements of all federal,
state, county and municipal governmental bodies or their subdivisions respecting
the use of the Parking Facility. Landlord reserves the right to adopt from time
to time, modify and enforce reasonable rules (the "Rules") governing the use of
the Parking Facility, including any key-card, sticker or other identification or
entrance system, and hours of operation. Landlord may refuse to permit any
person who violates any such Rules to park in the Parking Facility, and any
violation of the Rules shall subject the car to removal, at such person's
expense from the Parking Facility.
The parking spaces hereunder shall be provided on an unreserved "first-
come, first-served" basis. Tenant acknowledges that Landlord has or may arrange
for the Parking Facility to be operated by an independent contractor, not
affiliated with Landlord. In such event, Tenant acknowledges that Landlord shall
have no liability for claims arising through acts or omissions of such
independent contractor. Landlord shall have no liability whatsoever for any
damage to property or any other items located in the Parking Facility, nor for
any personal injuries or death arising out of any matter relating to the Parking
Facility, and in all events, Tenant agrees to look first to its insurance
carrier and to require that Tenant's Employees look to their respective
insurance carriers for payment of any losses sustained in connection with any
use of the Parking Facility. Tenant hereby waives on behalf of its insurance
carriers all rights of subrogation against Landlord or Landlord's agents.
Landlord reserves the right to assign specific spaces, and to reserve spaces for
visitors, small cars, disabled persons and for other tenants, guests of tenants
or other parties, and Tenant and persons designated by Tenant hereunder shall
not park in any such assigned or reserved spaces. Landlord also reserves the
right to close all or any portion of the Parking Facility in order to make
repairs or perform maintenance services, or to alter, modify, re-stripe or
renovate the Parking Facility, or if required by casualty, strike, condemnation,
act of God, governmental law or requirement or other reason beyond Landlord's
reasonable control. In such event, Landlord shall refund any prepaid parking
rent hereunder, prorated on a per diem basis. If, for any other reason, Tenant
or persons properly designated by Tenant, shall be denied access to the Parking
Facility, and Tenant or such persons shall have complied with the provisions of
this Lease, Landlord's liability shall be limited to such parking charges
(excluding tickets for parking violations) incurred by Tenant or such persons in
utilizing alternative
28
comparable parking, which amount Landlord shall pay upon presentation or
documentation supporting Tenant's claims in connection therewith.
Tenant may validate visitor parking by such method or methods as Landlord
or Landlord's parking contractor, as the case may be, may approve, at the
validation rate from time to time generally applicable to visitor parking.
Tenant agrees to acquaint all persons to whom Tenant assigns parking
spaces with any rules promulgated by Landlord with respect to the Parking
Facility and the parking privileges granted to Tenant herein.
ARTICLE XXVIII
--------------
MUST-TAKE SPACE
28.1 MUST-TAKE COMMENCEMENT DATE. Provided that no Tenant default exists
---------------------------
and subject to the terms and conditions set forth herein, Tenant shall lease the
Must-Take Space as set forth in Exhibit "A" from Landlord. The Lease of the
Must-Take Space shall commence on March 1, 1998, or the date actual possession
of the Must-Take Space is given to Tenant ("Must-Take Commencement Date").
28.2 BASE RENT AND ADDITIONAL RENT. The Base Rent per rentable square foot
-----------------------------
of the Must-Take Space shall be equal to the Base Rent per rentable square foot
in effect from time to time for the Initial Premises. Tenant's obligation to pay
Base Rent with respect to the Must-Take Space shall commence on the Must-Take
Commencement Date. Tenant's obligation to pay Additional Rent with respect to
the Must-Take Space shall also commence on the Must-Take Commencement Date.
ARTICLE XXIX
------------
QUIET ENJOYMENT
---------------
So long as Tenant pays all of the Rent due hereunder and performs all of
Tenant's other obligations hereunder, Landlord shall do nothing to affect
Tenant's right to peaceably and quietly have, hold and enjoy the Premises.
ARTICLE XXX
-----------
NOTICES
-------
Anything contained in any provision of this Lease to the contrary
notwithstanding, Tenant agrees, with respect to the Premises, to comply with and
remedy any default in this Lease or the Master Lease which is Tenant's
obligation to cure, within the period allowed to Landlord under the Master
Lease, even if such time period is shorter than the period otherwise allowed
therein due to the fact that notice of default from Landlord to Tenant is given
after the corresponding notice of default from Master Landlord to Landlord (as
Master Tenant under the Master Lease). Landlord agrees to forward to Tenant,
promptly upon receipt thereof by Landlord, a copy of each notice of default
received by Landlord in its capacity as Master Tenant under the Master Lease.
Tenant agrees to forward to Landlord, promptly upon receipt thereof, copies of
any notices received by Tenant from Master Landlord, or from any governmental
authorities. All notices, demands and requests shall be in writing and shall be
sent either by hand delivery or by a nationally recognized overnight courier
service (e.g., Federal Express), in either case return receipt requested, to the
address of the appropriate party. Notices, demands and requests so sent shall be
deemed given when the same are received and addressed to the parties as follows:
If to Tenant, at the address(es) as specified for Tenant in provision(s) of the
Fundamental Lease Provision or to such other place as Tenant may from time to
time designate in notice to Landlord; if to Landlord, at the address(es)
specified in provision (t) of the Fundamental Lease Provisions or to such other
places as Landlord may from time to time designate in a notice to Tenant.
29
ARTICLE XXXI
------------
BROKER
------
Landlord and Tenant represent and warrant to each other that no brokers
were involved in connection with the negotiation or consummation of this Lease
other than the brokers listed in provision (u) of the Fundamental Lease
Provisions. Each party agrees to indemnify the other, and hold it harmless, from
and against any and all claims, damages, losses, expenses and liabilities
(including reasonable attorneys' fees) incurred by said party as a result of a
breach of this representation and warranty by the other party.
ARTICLE XXXII
-------------
INTENTIONALLY OMITTED
---------------------
ARTICLE XXXIII
--------------
MISCELLANEOUS
-------------
33.1 SEVERABILITY. It is agreed that if any provision of this Lease shall
------------
be determined to be void by a court of competent jurisdiction, then such
determination shall not affect any other provision of this Lease and all such
other provisions shall remain in full force and effect.
33.2 ENTIRE AGREEMENT. It is understood and acknowledged that there are no
----------------
oral agreements between the parties hereto affecting this Lease and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
agreements and understandings, if any, between the parties hereto with respect
to the subject matter hereof. This Lease contains all of the terms, covenants,
conditions, warranties and agreements of the parties relating in any manner to
the rental, use and occupancy of the Premises, and none of the terms, covenants,
conditions or provisions of this Lease can be modified, deleted or added to
except in writing signed by the parties hereto. All exhibits referred to herein
are incorporated by reference and made a part hereof.
33.3 CUMULATIVE RIGHTS. The various rights, options, elections, powers and
-----------------
remedies contained in this Lease shall be construed as cumulative and no one of
them shall (except as otherwise expressly provided herein) be exclusive of any
of the others, or of any other legal or equitable remedy which either party
might otherwise have in the event of breach or default in the terms hereof; and
the exercise of one right or remedy by such party shall not impair its right to
any other right or remedy until all obligations imposed upon the other party
have been fully performed.
33.4 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
-----------------------
deemed or construed by the parties hereto or by any third person to create the
relationship of principal and agent or of partnership or of joint venture or of
any association between Landlord and Tenant.
33.5 SUCCESSORS. This Lease and all of the covenants and conditions
----------
herein contained shall be binding upon and shall inure to the benefit of the
heirs, executors, administrators, assigns and other successors in interest of
each of the parties; provided that the foregoing shall not be deemed to permit
any assignment or sublease under this Lease not otherwise expressly permitted by
the terms hereof.
33.6 CAPTIONS. The titles or captions in this lease are for reference
--------
purposes only and have no effect upon the construction or interpretation of any
part hereof. The use herein of the singular includes the plural and vice versa,
and the use herein of the neuter gender includes the masculine and the feminine
and vice versa, whenever and wherever the context so requires.
30
33.7 AUTHORITY. Each individual executing this Lease on behalf of a party
---------
hereto hereby represents and warrants respectively that such party is a duly
formed and existing entity qualified to do business in California, that such
party has full right and authority to execute and deliver this Lease and that
such person signing on behalf of Tenant or Landlord is authorized to do so.
33.8 INDUSTRY CLASS. Landlord and Tenant acknowledge and agree that for
--------------
purposes of this Lease the Building is considered to be a Class A building by
currently applicable commercial office building industry standards. Whenever
reference is made herein to the industry class of the Building, such reference
shall mean "Class A" unless due to the passage of time the Building shall no
longer fall within such class for reasons other than Tenant's failure to perform
its obligations hereunder, in which case such reference shall mean the then
actual industry classification applicable to such Building. Any dispute as to
the industry class of the Building may be submitted by either party to
arbitration pursuant to Article XVII hereof after giving the other party fifteen
(15) days prior notice of the intention to do so.
33.9 ATTORNEYS' FEES. If either party commences litigation against the
---------------
other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred.
33.10 GOVERNING LAW. This Lease shall be construed and enforced in
-------------
accordance with the laws of the State of California
33.11 MODIFICATION FOR LENDER. Upon Landlord's or Master Landlord's
-----------------------
request, Tenant agrees to modify this Lease to meet the requirements of any or
all lenders or ground lessors selected by Landlord or Master Landlord who
request such modification as a condition precedent to providing any loan or
financing or to entering into any ground lease affecting or encumbering the
Building or any part thereof; provided that such modification does not (a)
increase the Basic Rent, or (b) alter the Term, or (c) materially adversely
affect Tenant's rights under this Lease.
33.12 NO RECORDATION. Landlord and Tenant agree that in no event and under
--------------
no circumstances shall the Lease be recorded by Tenant.
33.13 CONFIDENTIALITY. This Lease document and the terms of this Lease,
---------------
and the covenants, obligations, and conditions contained in this Lease shall
remain strictly confidential. Tenant agrees to keep such terms, covenants,
obligations and conditions strictly confidential and not to disclose such
matters to any other landlord, tenant, prospective tenant, or broker. Provided,
however, Tenant may provide a copy of this Lease to a non-party solely in
conjunction with Tenant's reasonable and good faith effort to secure an assignee
or sublessee for the Premises
33.14 HAZARDOUS MATERIALS. Tenant shall comply with all federal, state
-------------------
or local laws, ordinances or regulations relating to industrial hygiene and
environmental conditions on, under or about the Building including, but not
limited to, soil and ground water conditions. Without limiting the generality
of the foregoing, Tenant shall not transport, use, store, maintain, generate,
manufacture, handle, dispose, release or discharge any "Hazardous Material" (as
defined below) upon or about the Building, nor permit Tenant's Employees or
other occupants of the Premises to engage in such activities upon or about the
Building. However, the foregoing provisions shall not prohibit the
transportation to and from, and the use, storage, maintenance and handling
within, the Premises of substances customarily used in connection with normal
office use provided: (a) such substances shall be used and maintained only in
such quantities as are reasonably necessary for the permitted use of the
Premises set forth in provision (r) of the Fundamental Lease Provisions,
strictly in accordance with applicable laws and the manufacturers' instructions
therefore, (b) such substances shall not be disposed of, released or discharged
on the Building, and shall be transported to and from the Premises in compliance
with all applicable laws, and as Landlord shall reasonably require, (c) if any
applicable law or Landlord's trash removal contractor requires that any such
substances be disposed of separately from ordinary trash, Tenant shall make
arrangements at Tenant's expense for such disposal
31
directly with a qualified and licensed disposal company at a lawful disposal
site (subject to scheduling and approval by Landlord), and shall ensure that
disposal occurs frequently enough to prevent unnecessary storage of such
substances in the Premises, and (d) any remaining such substances shall be
completely, properly and lawfully removed from the Building upon expiration or
earlier termination of this Lease.
Landlord shall have the right, at the following times, to enter the
Premises in order to inspect same and to conduct any testing, monitoring or
analysis reasonably required in connection therewith (collectively
"Inspection"):
a. Once in any calendar year upon reasonable notice to Tenant;
b. At any time during the Term of this Lease if, in Landlord's
reasonable judgement, Tenant is violating the use restrictions of this Lease or
is not in strict compliance with the regulations, rules or procedures of any
applicable governmental entity with respect to the transport, use, storage,
maintenance, generation, manufacturing, handling, disposal, release or discharge
of Hazardous Materials at the Premises, in which case Landlord shall give notice
to Tenant of the reason for the Inspection and Tenant shall provide Landlord
with access to the Premises for such Inspection within five (5) days of any such
notice; provided, however, that in an emergency situation Tenant will provide
Landlord with immediate access to the Premises.
If Tenant is violating the use restrictions of this Lease or is not in
strict compliance with the regulations, rules or procedures of the applicable
governmental entity, then all reasonable costs and expenses reasonably incurred
by Landlord in connection with any Inspection shall become due and payable by
Tenant as additional rent, within ten (10) days of presentation by Landlord of
an invoice therefor. If a dispute exists between Landlord and Tenant as to
whether Landlord has sufficient reason to believe that Tenant may be violating
the use restrictions of this Lease or may not be in compliance with any other
provision of this Lease or any applicable governmental entity with respect to
the transport, use, storage, maintenance, generation, manufacturing, handling,
disposal, release or discharge of Hazardous Materials at the Premises, Tenant
will provide Landlord with access to the Premises for an Inspection in
accordance with the provisions of the immediately preceding paragraph; provided,
however, that if there is no such violation or strict non-compliance, Landlord
shall be liable for the cost and expense incurred by Landlord in connection with
such Inspection.
Tenant shall promptly notify Landlord of: (i) any enforcement, cleanup or
other regulatory action taken or threatened by any governmental or regulatory
authority with respect to the presence of any Hazardous Material on the
Premises or the migration thereof from or to other property, (ii) any demands
or claims made or threatened by any party against Tenant or the Premises
relating to any loss or injury resulting from any Hazardous Material, (iii) any
release, discharge or nonroutine, improper or unlawful disposal or
transportation of any Hazardous Material on or from the Premises, and (iv) any
matters where Tenant is required by law to give a notice to any governmental or
regulatory authority respecting any Hazardous Material on the Premises.
Landlord shall have the right (but not the obligation) to join and participate,
as a party, in any legal proceedings or actions affecting the Premises
initiated in connection with any environmental, health or safety law. At such
times as Landlord may reasonably request, Tenant shall provide Landlord with a
written list identifying any Hazardous Material then used, stored, or
maintained upon the Premises, the use and approximate quantity of each such
material, a copy of any material safety data sheet ("MSDS") issued by the
manufacturer thereof; written information concerning the removal,
transportation and disposal of the same, and such other information as Landlord
may reasonably require or as may be required by applicable law. The term
"Hazardous Material" for purposes hereof shall mean any chemical, substance,
material or waste or component thereof which is now or hereafter listed,
defined or regulated as a flammable explosive, radioactive material, hazardous
or toxic chemical, substance, material or waste or component thereof (whether
injurious by themselves or in conjunction with other materials) by any federal,
state or local governing or regulatory body having jurisdiction, or which would
trigger any employee or community "right-to-know" requirements adopted by any
such body, or for which any such body has adopted any requirements for the
preparation or distribution of an MSDS. Without limiting the generality of the
foregoing, Hazardous Material shall include, but not be limited to substances
defined as "hazardous substances", "hazardous materials", or "toxic
32
substances" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; and those
substances defined as "hazardous wastes" in Section 25117 of the California
Health & Safety Code or as "hazardous substances" in Section 25316 of the
California Health & Safety Code; and in the regulations adopted and
publications promulgated from time to time pursuant to said laws.
If any Hazardous Material is released, discharged or disposed of by
Tenant, Tenant's Employees or any other occupant of the Premises, on or about
the Building in violation of the foregoing provisions, Tenant shall immediately,
properly and in compliance with applicable laws clean up and remove the
Hazardous Material from the Building and any other affected property and clean
or replace any affected personal property (whether or not owned by Landlord), at
Tenant's expense. Such clean-up and removal work shall be subject to Landlord's
prior written approval (except in emergencies), and shall include, without
limitation, any testing, investigation, and the preparation and implementation
of any remedial action plan required by any governmental body having
jurisdiction or reasonably required by Landlord. If Tenant shall fail to comply
with the provisions of this Section within five (5) days after written notice by
Landlord, or such shorter time as may be required by applicable law or in order
to minimize any hazard to persons or property, Landlord may (but shall not be
obligated to) arrange for such compliance directly or as Tenant's agent through
contractors or other parties selected by Landlord, at Tenant's expense (without
limiting Landlord's other remedies under this Lease or applicable law). If any
Hazardous Material is released, discharged or disposed of on or about the
Building and such release, discharge or disposal is not caused by Tenant,
Tenant's Employees or other occupants of the Premises, such release, discharge
or disposal shall be deemed damage under Article VIII of the Master Lease to
the extent that the Premises or common areas serving the Premises are affected
thereby; in such case, Landlord and Tenant shall have the obligations and rights
respecting such damage provided under Article VIII of the Master Lease.
IN WITNESS WHEREOF, the parties have executed the Lease as of the
date first set forth above, acknowledged that each party has carefully read
each and every provision of the Lease, that each party has freely entered into
the Lease of its own free will and volition, and that the terms, conditions and
provisions of the Lease are commercially reasonable as of the day and year
first above written.
"LANDLORD"
ARAI CORPORATION OF AMERICA, INC.,
a Delaware Corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: Printed: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Its: Agent
-----------------------------------
Date Executed: 2-18-97
-------------------------
"TENANT"
THE SHOPPERS' SOURCE,
a California Corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name Printed: ▇▇▇ ▇▇▇▇▇▇▇
-------------------------
Its: President/CEO
----------------------------------
Date Executed: 2/14/97
------------------------
33
EXHIBIT "A"
PREMISES
--------
[FLOOR PLAN APPEARS HERE]
34
EXHIBIT "B"
CONSTRUCTION AGREEMENT
------------ ---------
Landlord, at Landlord's sole cost and expense, shall cause the tenant
improvements identified herein with the following description and as noted on
Exhibit "A":
. Paint and wallcover removal and skim (8,881 RSF).
. Remove flooring and replace new.
. New carpet base.
. Strip tile and seal concrete.
. New VCT, paint, and wallcover removal and skim (777 RSF).
All work will be performed by a licensed general contractor of Landlord's choice
and shall be completed during normal business hours. All work shall be completed
in accordance with approved plans and specifications of the local governing
authorities.
35
EXHIBIT "C"
NOTICE OF LEASE TERM DATES
--------------------------
To:
Date:__________________________
RE: Lease dated February 6, 1997 between Arai Corporation of America, Inc., a
---------------- ---------------------------------
Delaware Corporation, Landlord, and The Shoppers' Source, a California
-------------------- -------------------- ------------
Corporation, Tenant, concerning the Garden Level located at 2101 East Coast
----------- ------------ ---------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
-----------------------------------------
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm as
follows:
1. That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the subject Lease, and that
there is no deficiency in construction.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject Lease, the Term
of said Lease commenced as of__________ for a term of five (5) years,
--------------
ending on ___________.
3. That in accordance with the subject Lease, rental commenced to accrue
on _____________________.
4. If the Commencement Date of the subject Lease is other than the first
day of the month, the first billing will contain a pro rata
adjustment. Each billing thereafter 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:
ARAI CORPORATION OF AMERICA, INC.
C/O INVESTMENT DEVELOPMENT SERVICES, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARAI CORPORATION OF AMERICA, INC.,
a Delaware Corporation
By: _______________________________________________
Name Printed: _____________________________________
Its: ______________________________________________
Date Executed: ____________________________________
(LANDLORD)
36
AGREED AND ACCEPTED:
THE SHOPPERS' SOURCE,
a California Corporation
By: /S/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name Printed: ▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Its: President/CEO
-----------------------------------
Date Executed: 2/14/97
-------------------------
(TENANT)
Attest: ________________________________
Name Printed: __________________________
Its: ___________________________________
[SEAL]
37
EXHIBIT "D"
-----------
RULES AND REGULATIONS
---------------------
1. The sidewalks, entrances, exits, passages, parking areas, courts,
elevators, vestibules, stairways, corridors, terraces, lobbies or halls shall
not be obstructed or used for any purpose other than ingress and egress. The
halls, passages, entrances, exits, elevators and stairways are not for the use
of the general public, and Landlord shall retain the right to control and
prevent access thereto of all persons whose presence, in the judgment of
Landlord, is deemed to be prejudicial to the safety, character, reputation and
interests of the Building and its tenants. No Tenant or Tenant's Employee shall
go up on the roof of the Building.
2. No curtains, blinds, shades or screens shall be attached to or hung
in, or used in connection with, any window of the Premises other than
Landlord's standard window covering without Landlord's prior consent. All
electric ceiling fixtures hung in offices or spaces along the perimeter of the
Building must be fluorescent, of a quality, type, design and bulb color approved
by Landlord. Neither the interior nor exterior of any windows shall be coated or
otherwise sunscreened without consent of Landlord.
3. No signs, picture, placard, advertisement, notice, lettering,
direction or handbill shall be exhibited, distributed, painted, installed,
displayed, inscribed, placed or affixed by any Tenant on any part of the
exterior of Premises or the interior of the Premises which is visible from the
exterior of the Premises, the Building or the Project without the prior consent
of Landlord. In the event of the violation of the foregoing by any Tenant,
Landlord may remove same without any liability, and may charge the expense
incurred in such removal to the Tenant violating this rule. Interior signs on
doors shall be inscribed, painted or affixed for each Tenant by the Landlord at
Tenant's expense, and shall be of a size, color and style acceptable to the
Landlord. Nothing may be placed on the exterior of corridor walls or corridor
doors other than Landlord's building standard sign on the corridor door, applied
and installed by Landlord.
4. The Building directory will be provided exclusively for the display of
the name and location of tenants of the Building and Landlord reserves the
right to exclude any other names therefrom. Any additional name(s) which Tenant
shall desire to have placed on the Building directory must first be approved by
Landlord and paid for by the Tenant.
5. Tenant shall not drill into, or in any way deface any part of the
Premises. No boring, cutting or stringing of wires or laying of linoleum or
other similar floor coverings shall be permitted, except with the prior consent
of the Landlord.
6. No bicycles, vehicles, birds or animals of any kind shall be brought
into or kept in or about the Premises or the Building, and no cooking shall be
done or permitted by Tenant on the Premises, except that the preparation of
coffee, tea, hot chocolate and similar items for Tenant and Tenant's Employees
shall be permitted; provided, however, that the power required shall not exceed
that amount which can be provided by a 30-amp circuit. No Tenant shall cause or
permit any unusual or objectionable odors to be produced or to permeate the
Premises or the Building.
7. The Premises shall not be used for manufacturing or for the
storage of merchandise except as such storage may be incidental to the use of
the Premises for general office purposes. No Tenant shall occupy or permit any
portion of the Premises to be occupied as an office for a public stenographer
or typist or for the manufacture or sale of liquor, narcotics, or tobacco in
any form, or as a medical office, or as a ▇▇▇▇▇▇ or manicure shop, or as an
employment bureau, or as a travel agency, without the consent of Landlord. No
Tenant shall sell or permit the sale of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise in or on the Premises. No
Tenant shall engage or pay any employees on the Premises except those actually
working for such Tenant on the Premises nor shall any Tenant advertise for
laborers giving an address at the Premises. The Premises shall not be used for
lodging or sleeping or for any immoral or illegal purposes.
38
8. No Tenant shall make, or permit to be made, any unseemly noises which
disturb other occupants of the Building, whether by the use of any musical
instrument, radio, television, phonograph, screening room, loud, unusual or
disruptive noise, or in any other way. No Tenant shall use, keep or permit to be
used any foul or noxious gas or substance in, on or about the Premises.
9. No Tenant nor any of Tenant's Employees shall at any time bring or
keep within the Premises or the Building any flammable, combustible or explosive
fluid, chemical substance, or material. Electric spaceheaters shall not be used
at any time by Tenant.
10. No new or additional locks or bolts of any kind shall be placed upon
any of the doors by Tenant, nor shall any changes be made in existing locks or
the mechanism thereof without the prior consent of Landlord. If Landlord
consents to such a lock change, Tenant must furnish Landlord with a key. Tenant
must, upon the termination of its tenancy, give, return, and restore to Landlord
all keys of stores, offices, vaults, and toilet rooms, either furnished to, or
otherwise procured by Tenant, and in the event at any time of any loss of keys
so furnished, Tenant shall pay to Landlord the cost of replacing the same or of
changing the lock or locks opened by such lost key if Landlord shall deem it
necessary to make such changes.
11. Furniture, freight, packages, equipment, safes, bulky matter or
supplies of any description shall be moved in or out of the Building only after
the Building Manager has been furnished with prior notice and given his approval
and only during such hours and in such manner as may be prescribed by the
Landlord from time to time. The scheduling and manner of all Tenant move-ins and
move-outs shall be subject to the discretion and approval of Landlord, and said
move-ins and move-outs shall only take place after 6:00 P.M. on weekdays, on
weekends, or at such other times as Landlord may designate. Landlord shall have
the right to approve or disapprove the movers or moving company employed by
Tenant, and Tenant shall cause said movers to use only the loading facilities
and elevators designated by Landlord. In the event Tenant's movers damage the
elevator or any other part of the Project, Tenant shall immediately pay to
Landlord the amount required to repair said damage. The moving of safes or other
fixtures or bulky or heavy matter of any kind must be done under the Building
Manager's supervision, and the person employed by any Tenant for such work must
be acceptable to Landlord, but such persons shall not be deemed to be agents or
servants of the Building Manager or Landlord, and Tenant shall be responsible
for all acts of such persons. The Landlord reserves the right to inspect all
safes, freight or other bulky or heavy articles to be brought into the Building
and to exclude from the Building all safes, freight or other bulky or heavy
articles which violate any of these Rules or the Lease of which these Rules are
a part. The Landlord reserves the right to determine the location and position
of all safes, freight, furniture or bulky or heavy matter brought onto the
Premises, which must be placed upon supports approved by Landlord to distribute
the weight.
12. No furniture shall be placed in front of the Building, or in any lobby
or corridor or balcony, without the prior written consent of Landlord. Landlord
shall have the right to remove all non-permitted furniture, without notice to
Tenant, and at the expense of Tenant.
13. No Tenant shall purchase water, ice, towel, janitorial or maintenance,
or other like services, from any person or persons not approved in writing by
the Landlord. No Tenant shall obtain or purchase food or beverages on the
Project from any vendor or supplier except at hours and under regulations fixed
by Landlord.
14. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as an office building and, upon written notice from
Landlord, Tenant shall immediately refrain from or discontinue such advertising.
15. Landlord reserves the right to exclude from the Building between the
hours of 6:00 P.M. and 7:00 A.M., Monday through Friday, and at all hours on
Saturday, Sunday, state and federal holidays, all persons who are not authorized
by Tenant. Such authorization shall be in accordance with procedures established
by Landlord in its sole and absolute discretion. Each Tenant shall be
responsible for all persons for whom it causes to be present in the Building and
39
shall be liable to Landlord for all acts of such persons. In the case of
invasion, riot, public excitement, act of God, or other circumstance rendering
such action advisable in Landlord's opinion, Landlord reserves the right to
prevent access of all persons, including Tenant, to the Building during the
continuance of the same by such actions as Landlord may deem appropriate,
including the closing and locking of doors.
16. Any persons employed by Tenant to do any work in or about the Premises
shall, while in the Building and outside of the Premises, be subject to and
under the control and direction of the superintendent of the Building (but shall
not be deemed to be an agent or servant of said superintendent or of the
Landlord), and Tenant shall be responsible for all acts of such persons.
17. All doors opening onto public corridors shall be kept closed, except
when in use for ingress and egress. All doors leading to equipment and utility
rooms shall be kept closed.
18. Canvassing, soliciting and peddling in the Building are prohibited
and each Tenant shall cooperate to prevent the same.
19. All office equipment of any electrical nature shall be placed by
Tenant in the Premises in settings and locations approved by Landlord, to absorb
or prevent any vibration, noise and annoyance.
20. No air conditioning unit or other similar apparatus shall be installed
or used by Tenant without the consent of Landlord.
21. Tenant shall faithfully observe and comply with the terms of any and
all covenants, conditions and restrictions recorded against the Project.
22. Restrooms and other water fixtures shall not be used for any purpose
other than that which the same are intended, and any damage resulting to the
same from misuse on the part of Tenant or Tenant's Employees shall be paid for
by Tenant. Each Tenant shall be responsible for causing all water faucets, water
apparatus and utilities to be shut off before Tenant or Tenant's Employees leave
the Premises each day and Tenant shall be liable for any waste or damage
sustained by other tenants or occupants of the Building or Landlord as a result
of Tenant's failure to perform said duty.
23. In the event the Building or the Premises is or later becomes equipped
with an electronic access control device, Tenant shall give Landlord the sum of
twenty-five dollars ($25.00) for each identification key or card issued to
Tenant as a deposit against the return of the identification key or card to
Landlord.
24. For all purposes of this Exhibit "D", the term "Tenant" shall be
defined to include and encompass Tenant's Employees and Tenant's contractors.
40
EXHIBIT "E"
-----------
INSURANCE REQUIREMENTS FROM CONTRACTORS & VENDORS
-------------------------------------------------
Landlord requires a Certificate of Insurance from all contractors and/or
vendors with the following insurance coverages:
l. Commercial General Liability
$1,000,000. Each occurrence/Aggregate should include Premises/
operations, contractual liability, products/completed operations
and fire legal liability
2. Workers' Compensation - Statutory Limits
3. Employer's Liability - $1,000,000.
4. Waiver of Subrogation and Additional Insured in favor of:
Arai Corporation of America, Inc.
---------------------------------
and Investment Development Services, Inc.
-----------------------------------------
5. Thirty (30) days written Notice of Cancellation to Landlord
6. Contractor's/Vendor's insurance is primary and non-contributory to
Landlord's insurance
The Certificate of Insurance should be sent to:
Arai Corporation of America, Inc.
and Investment Development Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
41
EXHIBIT "F"
-----------
CONFIRMATION REAL ESTATE AGENCY RELATIONSHIPS
---------------------------------------------
Property Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------------------
Property Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Level
-----------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------------------------------
Lessor: Arai Corporation of America, Inc., a Delaware Corporation
-----------------------------------------------------------
Lessee: The Shoppers' Source, a California Corporation
-----------------------------------------------------------
Transaction Type: Lease Agreement
-----------------------------------------------------------
The following agency relationship(s) is/are hereby confirmed for this
transaction:
Listing Agent: Investment Development Services, Inc.
---------------------------------------------------------
is the agent of (check if applicable)
X The Lessor exclusively
---
___ Both Lessor and Lessee
___ Other: ________________________
Representing Agent: ▇▇▇▇▇▇ Realty
-----------------------------------------------------
(If not the same as listing agent)
is the agent of (check if applicable)
___ The Lessor exclusively
X The Lessee exclusively
---
___ Both Lessor and Lessee
___ Other: __________________________
Ownership (check if applicable)
___ Owner/Lessor is a licensed California Real Estate Agent
___ Owner/Lessor is an attorney
We hereby acknowledge the agency relationships and disclosures described above.
ARAI CORPORATION OF AMERICA, INC., THE SHOPPERS' SOURCE,
A DELAWARE CORPORATION A CALIFORNIA CORPORATION
Lessor: /s/ [ILLEGIBLE] Lessee: /s/ ▇▇▇ ▇▇▇▇▇▇▇/CEO
-------------------------- ------------------------
▇▇▇ ▇▇▇▇▇▇▇
Date: 2-18-97 Date: 2/14/97
--------------------------- --------------------------
42
EXHIBIT "G"
-----------
TENANT EMERGENCY DIRECTIVE
--------------------------
TENANT: THE SHOPPERS' SOURCE
--------------------------------------------------------------
ADDRESS: ▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------
DURING BUSINESS HOURS (8:30 A.M.-5:00 P.M.)
CONTACT: BUSINESS PHONE FAX NUMBER
------- -------------- ----------
___________________________ ____________________ __________________
___________________________ ____________________ __________________
___________________________ ____________________ __________________
___________________________ ____________________ __________________
AFTER BUSINESS HOURS (5:00 P.M.-8:30 A.M.)
CONTACT: HOME PHONE
------- ----------
__________________________________________________ _________________
__________________________________________________ _________________
__________________________________________________ _________________
__________________________________________________ _________________
ALSO PLEASE INDICATE WHERE YOUR MONTHLY RENT STATEMENT SHOULD BE SENT:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
ALL CHECKS SHOULD BE MADE PAYABLE TO: ARAI CORPORATION OF AMERICA, INC.
----------------------------------------
Send Checks To: ARAI CORPORATION OF AMERICA, INC.
C/O INVESTMENT DEVELOPMENT SERVICES, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
43
EXHIBIT "H"
-----------
OPTION TO EXTEND TERM
---------------------
1 . OPTION: Tenant is given the option ("Renewal Option") to extend the Term of
------
this Lease, on all the provisions contained in this Lease except as to
Rent. Such Renewal Option shall be for an additional five (5) year period
(the "Option Term") following the expiration of the initial Term stated in
Section 1.5 of the Lease (the "Initial Term"). If Tenant elects to exercise
such Renewal Option, such Renewal Option shall be exercised by Tenant
giving written notice of exercise of the Renewal Option (the "Option
Notice") to Landlord at least six (6) months but not more than nine (9)
months before the expiration of the Initial Term. If such Option Notice is
not sent during such three (3) month period, such Renewal Option shall be
null and void.
2. OPTION PERSONAL: The Renewal Option is personal to Tenant and may not be
---------------
exercised or assigned, voluntarily or involuntarily, by, or to, any person
or entity other than Tenant. The Renewal Option is not assignable separate
and apart from this Lease. In the event that at the time the Renewal Option
is exercisable by Tenant, this Lease has been assigned, or a sublease
exists as to twenty percent (20%) or more of the Premises, the Renewal
Option shall be deemed null and void and Tenant, any assignee, or any
sublessee, shall not have the right to exercise the Renewal Option.
3. EFFECT OF DEFAULT ON RENEWAL OPTION: Tenant shall have no right to exercise
-----------------------------------
the Renewal Option, (i) if, at the time permitted for the exercise of such
Renewal Option, or at any time prior to the commencement of the Option
Term, an Event of Default has occurred under any of the provisions of this
Lease, or (ii) in the event that Landlord has given to Tenant two (2) or
more notices of default under this Lease during the twelve (12) month
period prior to the time that Tenant intends to exercise the Renewal
Option.
4. RENT DURING THE OPTION TERM: Tenant shall pay to Landlord, as Rent for the
----------------------------
Premises during the Option Term the higher of (i) the Renewal Rental Rate
(as hereinafter defined) or (ii) Rental paid in the month immediately prior
to the beginning of the Option Term, plus Tenants Pro Rata Share of the
Operating Expense Adjustment and all other charges pursuant to the Lease.
Renewal Rental Rate shall mean the rate being charged to new tenants for
comparable space by Landlord in the Building or, if not enough comparable
transactions exist in the Building, then the rate being charged to new
tenants for comparable space in similar buildings in the Newport
Beach/Corona del Mar area with similar amenities taking into consideration
the size, location, floor level, the proposed term of the Option Term, the
extent of the services to be provided and any other relevant terms and
conditions in each instance disregarding "tenant concessions", if any, then
being offered to prospective new tenants in the Building or comparable
buildings. The term "tenant concessions" shall include, without limitation,
so-called free rent, tenant improvement allowances, lease takeovers, etc.
All Rent payable during the Option Term shall be payable in the same manner
and under the same terms and conditions as Rent is paid during the Initial
Term.
5. DOCUMENTATION: Landlord and Tenant shall execute and deliver appropriate
--------------
documentation to evidence any renewal of the Lease and the terms and
conditions of the lease during the Option Term.
6. TERMS: All terms used in this Option to Extend, unless otherwise defined in
-----
this Option to Extend, shall have the same meaning as the terms defined in
the Lease.
7. RENEWAL RENTAL RATE: Landlord shall determine the Renewal Rental Rate by
--------------------
using its good faith judgment. Landlord shall use its best efforts to
provide written notice of such amount within thirty (30) days (but in no
event later than sixty (60) days) after Tenant sends the Option Notice to
Landlord exercising the Renewal Option. Tenant shall have fifteen (15) days
(the "Tenant's Review Period") after receipt of Landlord's notice of the
new rental within which to accept such rental or to reasonably object
thereto in writing. In
44
the event Tenant objects, Landlord and Tenant shall attempt to agree upon such
Renewal Rental Rate, using their best good faith efforts. If Landlord and Tenant
fail to reach agreement within fifteen (15) days following tenant's Review
Period (the "Outside Agreement Date"), then each party's determination shall be
submitted to arbitration in accordance with Subsections (a) through (h) below.
Failure of Tenant to so elect in writing within the Tenant's Review Period shall
conclusively be deemed its approval of the new rental determined by Landlord. In
the event that Landlord fails to timely generate the initial written notice of
Landlord's determination of the Renewal Rental Rate which triggers the
negotiation period of this Section 7, then Tenant may commence such negotiations
by providing the initial notice, in which event Landlord shall have fifteen (15)
days ("Landlord's Review Period") after receipt of Tenant's notice of the new
rental within which to accept such rental. In the event Landlord does not
affirmatively in writing consent to Tenant's proposed rental, such proposed
rental shall be deemed rejected and Landlord and Tenant shall attempt in good
faith to agree upon such Renewal Rental Rate, using their best good faith
efforts. If Landlord and Tenant fail to reach agreement within fifteen (15) days
following Landlord's Review Period (which shall be, in such event, the "Outside
Agreement Date" in lieu of the above definition of such date), then each party's
determination shall be submitted to arbitration in accordance with Subsections
(a) through (h) below.
(a) Landlord and Tenant shall each appoint one arbitrator who shall by
profession be a real estate broker who shall have been active over the five
(5) year period ending on the date of such appointment in the leasing of
commercial low-midrise properties in the Pasadena area. Neither Landlord
nor Tenant may consult with such arbitrator before he or she is appointed.
Each such arbitrator shall be appointed within fifteen (15) days after the
Outside Agreement Date.
(b) Not later than ten (10) days after both arbitrators are appointed, each
party shall separately, but simultaneously submit in a sealed envelope to
each arbitrator their separate suggested Renewal Rental Rate and shall
provide a copy of such submission to the other party. If the higher rate
of the two submitted suggested Renewal Rental Rates does not exceed the
lower rate by more than five percent (5%), then the two rates shall be
added and then divided by two (thus splitting the difference and avoiding
additional arbitration costs) with the resulting dollar amount becoming the
Renewal Rental Rate.
(c) If the Renewal Rental Rate is not determined pursuant to Subsection (b)
above, the two (2) arbitrators so appointed shall, on or before fifteen
(15) days from the date of the appointment of the last appointed
arbitrator, agree upon and appoint a third arbitrator who shall be a real
estate lawyer (neither party or the arbitrators may consult with such
arbitrator regarding the determination of the Renewal Rental Rate prior to
such appointment) instead of a broker, but who otherwise shall be qualified
under the same criteria set forth hereinabove for qualification of the
initial two (2) arbitrators.
(d) The three (3) arbitrators shall, within thirty (30) days of the appointment
of the third arbitrator, reach a decision as to whether the parties shall
use Landlord's or Tenant's submitted Renewal Rental Rate, and shall notify
Landlord and Tenant thereof. The determination of the arbitrators shall be
limited solely to the issue of whether Landlord's or Tenant's submitted
Renewal Rental Rate for the Premises is closer to the actual Renewal Rental
Rate for the Premises as determined by the arbitrators, taking into account
the requirements of this Subsection (d) regarding same.
(e) The decision of the majority of the arbitrators shall be binding upon
Landlord and Tenant.
(f) If either Landlord or Tenant of the two (2) arbitrators fail to appoint an
arbitrator within the time period set forth above, the unappointed
arbitrator or arbitrators
45
shall be appointed as quickly as possible by, and upon petition by either
Party to any court of competent jurisdiction.
(g) The cost of arbitration shall be paid by Landlord and Tenant equally.
(h) The arbitrators selected shall each be paid a fee of $2,000 ($1,000 to each
arbitrator), which fee shall be increased by $100 for each year which
elapses between the Commencement Date and date the Option Notice was sent.
46
[LETTERHEAD OF INVESTMENT DEVELOPMENT SERVICES, INC.]
August 13, 1997
▇▇. ▇▇▇ ▇▇▇▇▇▇▇
The Shoppers Source
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
RE: SECOND AMENDMENT TO LEASE
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ LEVEL - ADDITIONAL ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇:
Enclosed are four (4) copies of the above referenced Second Amendment to Lease
for your review and execution.
If you find the documents to be in order, please sign and initial where
indicated on all four (4) copies. Please retain one (1) copy for your files and
return three (3) copies to us so that we may forward these copies to the
Landlord for its review and approval. As Investment Development Services, Inc.
acts in the capacity of agent only, until Landlord reviews and approves this
Lease, the enclosed remains subject to further revision.
Please be advised that nothing contained herein or in the enclosed shall
constitute a commitment on the part of the Landlord to proceed with the
Amendment until such time as Landlord, in its sole and absolute discretion, has
executed and delivered the Amendment. Until such time as Landlord, in its sole
and absolute discretion, has executed and delivered the Amendment, Landlord
shall have the right to accept any offers from, and enter into a lease with,
third parties with respect to the subject premises.
Investment Development Services, Inc. employees are not permitted to give legal
advice. If you have any questions on the content of the enclosed documents, you
should consult your attorney or other advisors.
Should you have any questions or comments, please call.
Sincerely,
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ [ILLEGIBLE]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Site Manager Real Estate Manager
CD/j1
cc: Arai Corporation of America, Inc.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 92626/(714)
▇▇▇-▇▇▇▇/FAX (▇▇▇) ▇▇▇-▇▇▇▇
SECOND AMENDMENT TO LEASE DATED FEBRUARY 6, 1997 BY AND BETWEEN
ARAI CORPORATION OF AMERICA, INC., A DELAWARE CORPORATION, AS
LESSOR, AND THE SHOPPER'S SOURCE, A CALIFORNIA CORPORATION, AS
LESSEE, FOR THE PREMISES KNOWN AS ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
This Second Amendment to Lease is dated July 23, 1997.
SECTION 1.2 - RENTABLE AREA:
----------------------------
This section shall be amended to include the northeast corner of the
Garden Level comprising of 714 rentable square feet. Approximate square
footage shall be amended to read 9,291 usable square feet and 9,595
rentable square feet. Commencing March 1, 1998 the total square footage
shall be 10,042 usable square feet and 10,372 rentable square which
incorporates the Must-Take Space.
SECTION 2.2 - TERM OF LEASE:
----------------------------
The Commencement Date for northeast corner of the Garden Level
comprising of 714 rentable square feet shall be July 1, 1997, and the
Termination Date shall be April 14, 2002.
SECTION 3 OF EXHIBIT C - NOTICE OF LEASE TERM DATES:
----------------------------------------------------
The Base Monthly Rental, on a Full Service Gross basis, shall be as
follows:
GARDEN ▇▇▇▇▇ ▇▇▇ ▇▇▇ TOTAL
------------ ------- -----
July 1, 1997 - April 14, 1998: $ 8,969.81 $721.14 $ 9,690.95
April 15, 1998 - April 14, 1999: $10,237.48 $756.84 $10,994.32
April 15, 1999 - April 14, 2000: $10,720.38 $792.54 $11,512.92
April 15, 1999 - April 14, 2001: $11,203.28 $828.24 $12,031.52
April 15, 2001 - April 14, 2002 $11,686.18 $863.94 $12,550.12
SECTION O. OF FUNDAMENTAL LEASE PROVISIONS - TENANT'S PRO RATA SHARE:
---------------------------------------------------------------------
Effective July 1, 1997 - 20.44%
Effective March 1, 1998 - 20.10%
SECTION P. OF FUNDAMENTAL LEASE PROVISIONS - SECURITY DEPOSIT:
--------------------------------------------------------------
Lessor recognizes that Lessee has a security deposit of $8,881.00 by
virtue of the Lease Agreement dated February 7, 1997. Lessor requires an
additional security deposit of $721.14 for the northeast corner of the
Garden Level comprising of 714 RSF, bringing the total security deposit
to $9,602.14. Lessor agrees to hold said deposit throughout the term of
this Lease in accordance with Lease Agreement.
SECTION Q. OF FUNDAMENTAL LEASE PROVISIONS - TENANT IMPROVEMENTS:
----------------------------------------------------------------
Lessor shall not be required to participate financially in any tenant
improvements involving the northeast corner of the Garden Level
comprising of 714 RSF. All work completed in the leased premises shall
be performed by licensed contractors showing evidence of $1,000,000 in
general liability insurance naming Arai Corporation of America, Inc. and
Investment Development Services, Inc. as additional insured and proof of
worker's compensation coverage. All work shall be completed per building
and governmental code.
In addition, Lessor shall reserve the right to hire independent
contractors to perform inspections of any and all Tenant Improvement
work completed without prior consent. Lessee shall be responsible for
all costs associated with the inspections and any work necessary to
correct deficiencies.
Second Amendment
July 23, 1997
Page 2
SECTION R. OF FUNDAMENTAL LEASE PROVISIONS - USE:
-------------------------------------------------
The northeast corner of the Garden Level comprising of 714 RSF shall be
used for computer and equipment storage to comply with building and/or
governmental codes.
SECTION V. OF FUNDAMENTAL LEASE PROVISIONS - PARKING:
-----------------------------------------------------
No additional parking shall be allocated for the additional space in the
northeast corner of the Garden Level comprising of 714 RSF.
SECTION 5.3 - LEGAL FEES RELATED TO UNAUTHORIZED ALTERATIONS:
-------------------------------------------------------------
Lessee shall be financially responsible for any and all legal fees related
to their current Lease default regarding unauthorized expansion.
SECTION 20.5 - SIGNAGE:
-----------------------
No additional signage shall be allocated for the additional space in the
northeast corner of the Garden Level comprising of 714 RSF.
All terms and conditions of the base Lease Agreement, except those modified or
amended herein, shall remain in full force and effect.
ARAI CORPORATION OF AMERICA, INC., THE SHOPPER'S SOURCE, A
A DELAWARE CORPORATION CALIFORNIA CORPORATION
By: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------- -------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Agent Its: CEO
------------------------- -------------------------
Date: _________________________ Date: _________________________
"Lessor" "Lessee"