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EXHIBIT 10.6
FULL SERVICE MODIFIED GROSS LEASE
BETWEEN
INSURANCE COMPANY OF THE WEST
AS LANDLORD
AND
THE LIGHTSPAN PARTNERSHIP, INC.
AS TENANT
EXECUTED ON MAY 28TH, 1996
Initial
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TABLE OF CONTENTS
1. AGREEMENT TO LET....................................................... 1
2. PRINCIPAL LEASE PROVISIONS............................................. 1
3. TERM................................................................... 2
4. DELIVERY OF POSSESSION................................................. 2
5. USE OF PREMISES AND COMMON AREAS....................................... 2
5.1. PERMITTED USE OF PREMISES........................................ 2
5.2. COMPLIANCE WITH LAWS............................................. 2
5.3. CONDITION DURING PERIODS OF NON-USE.............................. 3
5.4. USE OF COMMON AREA............................................... 3
5.5. GENERAL COVENANTS AND LIMITATIONS ON USE......................... 3
6. SECURITY DEPOSIT....................................................... 3
7. RENT................................................................... 4
8. LEASE EXPENSES......................................................... 4
8.1. DEFINITION OF LEASE EXPENSES..................................... 4
8.2. BASE YEAR LEASE EXPENSES......................................... 4
8.3. PAYMENT OF LEASE EXPENSES........................................ 4
9. UTILITIES AND SERVICES................................................. 5
10. REAL PROPERTY TAXES.................................................... 5
10.1. DEFINITION OF TAXES.............................................. 5
10.2. PAYMENT OF TAXES................................................. 5
11. PERSONAL PROPERTY TAXES................................................ 6
12. MAINTENANCE............................................................ 6
12.1. TENANT'S DUTIES.................................................. 6
12.2. LANDLORD'S DUTIES................................................ 6
13. PARKING................................................................ 6
14. SIGNS.................................................................. 6
15. RULES, REGULATIONS, AND COVENANTS...................................... 6
16. EARLY ACCESS INSURANCE................................................. 6
17. PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE......................... 7
18. FIRE AND EXTENDED COVERAGE INSURANCE................................... 7
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19. BUSINESS INTERRUPTION INSURANCE........................................ 7
20. INSURANCE GENERALLY.................................................... 7
21. WAIVER OF SUBROGATION.................................................. 7
22. LANDLORD'S INSURANCE................................................... 8
23. ALTERATIONS............................................................ 8
24. SURRENDER OF PREMISES AND HOLDING OVER................................. 8
25. DEFAULT................................................................ 9
26. LANDLORD'S REMEDIES.................................................... 9
26.1. CONTINUATION OF LEASE............................................ 9
26.2. RENT FROM RELETTING.............................................. 9
26.3. TERMINATION OF TENANT'S RIGHT TO POSSESSION...................... 10
26.4. LANDLORD'S RIGHT TO CURE DEFAULT................................. 10
26.5. ENFORCEMENT COSTS................................................ 10
27. INTEREST AND LATE CHARGES.............................................. 10
28. QUARTERLY PAYMENTS..................................................... 10
29. DESTRUCTION............................................................ 10
30. CONDEMNATION........................................................... 11
31. ASSIGNMENT AND OTHER TRANSFERS......................................... 11
32. COMMON AREAS........................................................... 12
33. [INTENTIONALLY OMITTED]................................................ 12
34. ACCESS BY LANDLORD..................................................... 13
35. LANDLORD'S RESERVED RIGHTS............................................. 13
36. INDEMNITY AND EXEMPTION OF LANDLORD FROM LIABILITY..................... 13
37. HAZARDOUS SUBSTANCES................................................... 13
38. PROHIBITION AGAINST ASBESTOS-CONTAINING MATERIALS...................... 14
39. SECURITY MEASURES...................................................... 14
40. SUBORDINATION AND ATTORNMENT........................................... 15
41. ESTOPPEL CERTIFICATES.................................................. 15
42. WAIVER................................................................. 15
43. BROKERS................................................................ 16
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44. EASEMENTS.............................................................. 16
45. LIMITATIONS ON LANDLORD'S LIABILITY.................................... 16
46. SALE OR TRANSFER OF PREMISES........................................... 16
47. QUITCLAIM DEED......................................................... 16
48. NO MERGER.............................................................. 16
49. CONFIDENTIALITY........................................................ 16
50. MISCELLANEOUS.......................................................... 16
51. Exhibit "A"............................................................ 19
52. Exhibit "B"............................................................ 20
53. Exhibit "C"............................................................ 21
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FULL SERVICE MODIFIED GROSS LEASE
This Full Service Modified Gross Lease ("Lease") is executed as of May 28,
1996, between INSURANCE COMPANY OF THE WEST, a California corporation
("Landlord"), and THE LIGHTSPAN PARTNERSHIP, INC., a California corporation
("Tenant"), who agree as follows:
1. AGREEMENT TO LET. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, upon all the terms, provisions, and conditions contained
in this Agreement, those certain premises described in Paragraph 2.2, below
(the "Premises") along with the non-exclusive right to use, in common with
Landlord and the other users of space within the Project (as defined in
Paragraph 2.1, below), those portions of the Project intended for the common
use of all the tenants of the Project including, without limitation, the
landscaped areas, passageways, walkways, hallways, elevators (if any), parking
areas, and driveways (the "Common Areas"). This Lease confers no rights,
however, to the roof, exterior walls, or utility raceways of the Building nor
rights to any other building (if any) in the Project, nor with regard to either
the subsurface of the land below the ground level of the Project or with regard
to the air space above the ceiling of the Premises.
2. PRINCIPAL LEASE PROVISIONS. The following are the Principal Lease
Provisions of this Lease. Other portions of this Lease explain and define the
Principal Lease Provisions in more detail and should be read in conjunction
with this Paragraph. In the event of any conflict between the Principal Lease
Provisions and the other portions of this Lease, the Principal Lease Provisions
shall control. (Terms shown in quotations are defined terms used elsewhere in
this Lease).
2.1. "Project": Insurance Company of the West Building
(see Exhibit "A").
2.2. "Premises": ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ (see Exhibit "B").
2.3. Leasable Area of the Premises: Approximately 64,800 square feet
(subject to adjustment, at Landlord's election, based upon field verification
of the Premises following occupancy by Tenant, if so provided in the attached
Addendum).
2.4. Initial Lease Term: seven (7) years beginning as of the
Commencement Date.
2.4.1. "Commencement Date" (estimated): November 15, 1996
(see Exhibit "C").
2.4.2. "Initial Expiration Date": (estimated) October 31, 2003
(the Initial Expiration Date stated herein, even if adjusted pursuant to
Exhibit "C", must always be the last day of a calendar month).
2.4.3. Extension Rights: Yes X No__
(If yes, see Addendum to Lease).
2.5. "Anchor Tenants" in the Project: N/A while they are tenants in
the Project, along with such other tenants in the Project as may be so
designated by Landlord from time to time.
2.6. "Basic Monthly Rent": $72,627.84 (subject to adjustment as
provided in attached Addendum).
2.7. "Security Deposit": $90,123.84 (subject to adjustment based upon
field verification of the Premises following occupancy by Tenant, if so
provided in the attached Addendum). Tenant's Security Deposit does not
constitute last month's rent. Last month's rent must be separately paid by
Tenant on or before the first day of the last month of the Lease Term.
2.8. "Percentage Rent": Yes__ No X; If Yes, "Sales Percentage": _____
(If yes, see Addendum).
2.9. Guarantor: None.
2.10. Address for Landlord:
(Prior to Occupancy)
Insurance Company of the West
c/o American Assets, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Following Occupancy)
Insurance Company of the West
c/o American Assets, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Vice President
Landlord________ Tenant________
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2.11. Addresses for Tenant:
(Prior to Occupancy)
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Following Occupancy)
At the Premises
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇, Controller
2.12. Permitted Uses By Tenant: Office space and for no other use
("Permitted Use").
2.13. Exclusive Uses By Tenant: Yes No X (If yes, see
--- ---
Addendum).
2.14. Permitted Trade Name: The Lightspan Partnership, Inc.
2.15. Participating Brokers: ▇▇▇▇ ▇▇▇▇▇▇▇ & Company representing
Landlord and CB Commercial Real Estate Group Representing Tenant.
2.16. Amounts Payable upon Lease Execution $162,751.68
representing 4th month's rent and the Security Deposit identified in Paragraph
2.7, above.
3. TERM. The term of this Lease ("Term") shall commence on the
"Commencement Date", as defined in Paragraph 2.4.1, above, and shall expire on
the "Initial Expiration Date", as defined in Paragraph 2.4.2, above, subject to
(i) any extension rights described in the Addendum to this Lease, and (ii)
earlier termination, as provided in this Lease. The term "Expiration Date", as
used in this Lease shall mean the Initial Expiration Date, any earlier date
upon which this Lease is terminated by Landlord, as provided below, or, if the
Term is extended, then any extended Term expiration date.
4. DELIVERY OF POSSESSION. On or about August 1, 1996, Landlord shall
deliver possession of the Premises to Tenant in a broom clean condition. If
possession of the Premises is not delivered to Tenant on August 1, 1996, then
Landlord shall not be liable for any damage caused by such delay, and such
delay shall neither affect the validity of this Lease, affect Tenant's
obligations under this Lease, nor extend the Term, except that, unless Tenant
has caused or contributed to such delay, the Commencement Date will be extended
on a day-for-day basis by each day that expires beyond August 1, 1996 until
possession is turned over. However, if such delay is caused or contributed to
by Tenant then the Commencement Date will not be so extended. Tenant shall, by
acceptance of possession of the Premises, be deemed to have (i) accepted the
Premises in its then as-is condition with no right to require Landlord to
perform any additional work therein, and (ii) waived any express or implied
warranties regarding the condition of the Premises, including any implied
warranties of fitness for a particular purpose or merchantability. The
foregoing provisions of this Paragraph 4 are not intended to and will not
relieve Landlord of its liability for maintenance, as specifically set forth
elsewhere in this Lease.
5. USE OF PREMISES AND COMMON AREAS.
5.1. PERMITTED USE OF PREMISES. Tenant may use the Premises for the
Permitted Use specified in Paragraph 2.12 and for no other use. Any change in
the Permitted Use (or any change in Tenant's trade name from the Permitted
Trade Name identified in Paragraph 2.15, above) shall require Landlord's prior
written consent, which consent may be granted or withheld in Landlord's
reasonable discretion.
5.2. COMPLIANCE WITH LAWS. Tenant shall comply with all laws
concerning the Premises and/or Tenant's use of the Premises, including without
limitation the obligation at Tenant's sole cost to alter, maintain, or restore
the Premises in compliance with all applicable laws, even if such laws are
enacted after the date of this Lease, even if compliance entails costs to
Tenant of a substantial nature and even if compliance requires structural
alterations. Such obligation to comply with laws shall include without
limitation compliance with Title III of the Americans With Disabilities Act of
1990 (42 U.S.C. 12181 et seq.) (the "ADA"). If Tenant's use of the Premises
after the Commencement Date results in the need for modifications or
alterations to any portion of the Common Area or the Project in order to comply
with the ADA (and Landlord was not required to make such modifications pursuant
to Paragraph 11 of the Addendum to this Lease), then Tenant shall additionally
be responsible for the cost of such modifications and alterations.
Notwithstanding anything to the contrary in this Lease, as of the Commencement
Date the Premises and the Project shall conform to all requirements of any
recorded covenant, conditions, restrictions, and encumbrances recorded against
the Project ("CC&Rs"), all underwriter requirements associated with obtaining
the insurance required hereunder, and all rules, regulations, statutes,
ordinances, laws and building codes (collectively, "Laws") applicable to the
Project and the Premises. Tenant shall not be required to construct or pay the
cost of complying with any CC&Rs, underwriter's requirements, or Laws requiring
construction of improvements in the Premises which would constitute capital
improvements under generally accepted accounting principles unless such
compliance is necessitated by Tenant's particular use of the Premises or
Tenant's application for a permit or license with respect to the Premises.
Landlord_____ Tenant_____
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5.3 CONDITION DURING PERIODS OF NON-USE. During any period of time in
which Tenant is not continuously using and occupying the Premises, Tenant shall
take such measures as may be necessary or desirable, in Landlord's reasonable
opinion, to secure the Premises from break-ins and use by unauthorized persons,
to minimize the appearance of non-use, and to otherwise maintain the interior
and exterior portions of Tenant's Premises, including all windows and doors, in
first class condition and consistent with the manner in which the Premises were
maintained during Tenant's occupancy.
5.4 USE OF COMMON AREA. Tenant's use of the Common Area shall at all
times comply with the provisions of all rules and regulations regarding such use
as Landlord may from time to time adopt. In no event shall the rights granted to
Tenant to use the Common Area include the right to store any property in the
Common Area, whether temporarily or permanently. Any property stored in the
Common Area may be removed by Landlord and disposed of, and the cost of such
removal and disposal shall be payable by Tenant upon demand. Additionally, in no
event shall Tenant use any portion of the Common Area for loading, unloading, or
parking, except in those areas specifically designated by Landlord for such
purposes, nor for any sidewalk sale or similar commercial purpose.
5.5 GENERAL COVENANTS AND LIMITATIONS ON USE. Tenant shall not do, bring,
or keep anything in or about the Premises that will cause a cancellation of any
insurance covering the Premises. If the rate of any insurance carried by
Landlord is increased as a result of Tenant's use, Tenant shall pay to Landlord,
within 10 days after Landlord delivers to Tenant a notice of such increase, the
amount of such increase. Furthermore, Tenant covenants and agrees that no
noxious or offensive activity shall be carried on, in or upon the Premises nor
shall anything be done or kept in the Premises which may be or become a public
nuisance or which may cause embarrassment, disturbance, or annoyance to others
in the Building, on the Project, or on adjacent or nearby property. To that end,
Tenant additionally covenants and agrees that no light shall be emitted from the
Premises which is unreasonably bright or causes unreasonable glare; no sounds
shall be emitted from the Premises which are unreasonably loud or annoying; and
no odor shall be emitted from the Premises which is or might be noxious or
offensive to others in the Building, on the Project, or on adjacent or near-by
property. In addition, Tenant covenants and agrees that no unsightliness shall
be permitted in the Premises. Without limiting the generality of the foregoing,
all unsightly equipment, objects, and conditions shall be kept enclosed within
the Premises and screened from view; no refuse, scraps, debris, garbage, trash,
bulk materials, or waste shall be kept, stored, or allowed to accumulate except
as may be properly enclosed within the Premises; the Premises shall not be used
for sleeping or washing clothes, nor use the Premises for cooking (unless the
Permitted Use is as a restaurant) or the preparation, manufacture, or mixing of
anything that might emit any odor or objectionable noises or lights onto the
Project or nearby properties; and all pipes, wires, poles, antennas, and other
facilities for utilities or the transmission or reception of audio or visual
signals shall be kept and maintained enclosed within the Premises. Tenant shall
be solely responsible for the timely removal of all refuse, scraps, debris,
garbage, trash, bulk materials, or waste from the Premises which does not fit
within a regular office waste bin, and the deposit thereof in the trash
containers or dumpsters located adjacent to the Building. Further, Tenant shall
not keep or permit to be kept any bicycle, motorcycle, or other vehicle, nor any
animal (excluding seeing-eye dogs), bird, reptile, or other exotic creature in
the Premises unless Tenant operates a bona fide pet store, pet grooming
facility, or other veterinary medicine clinic, hospital, and/or related animal
care facility under direct operation and supervision of a State Licensed
Veterinarian, and such use has been specifically approved in writing by
Landlord, which consent may be withheld in Landlord's sole discretion. Neither
Tenant nor Tenant's Invitees shall do anything that will cause damage or waste
to the Project. Neither the floor nor any other portion of the Premises shall be
overloaded. No machinery, apparatus, or other appliance shall be used or
operated in or on the Premises that will in any manner injure, vibrate, or shake
all or any part of the Project. In the event of any breach of this Paragraph 5
by Tenant or Tenant's Invitees, Landlord, at its election, pay the cost of
correcting such breach and Tenant shall immediately, upon demand, pay the cost
thereof, plus a supervisory fee in the amount of ten percent (10%) of such cost.
6. SECURITY DEPOSIT. Upon the execution of this Lease, Tenant shall
deposit with Landlord cash in the amount of the Security Deposit set forth in
Paragraph 2.7, above (the "Security Deposit"), to secure the performance by
Tenant of its obligations under this Lease, including without limitation
Tenant's obligations (i) to pay Basic Monthly Rent and Additional Rent, and any
Percentage Rent payable by Tenant pursuant to the Addendum to this Lease, (ii)
to repair damages to the Premises and/or the Project caused by Tenant or
Tenant's agents, employees, contractors, licensees, and invitees (collectively,
"Tenant's Invitees"), (iii) to clean the Premises upon the termination of this
Lease, and (iv) to remedy any other defaults by Tenant in the performance of any
of its obligations under this Lease. If Tenant commits any default under this
Lease, Landlord may, at its election, use the Security Deposit to cure such
defaults, and to compensate Landlord for all damage suffered by Landlord from
such defaults, including, without limitation, attorneys' fees and costs incurred
by Landlord. Upon demand by Landlord, Tenant shall promptly pay to Landlord a
sum equal to any portion of the Security Deposit so used by Landlord, in order
to maintain the Security Deposit in the amount set forth in Paragraph 2.7, above
(subject to increase as set forth below). If the Basic Monthly Rent shall, from
time to time, increase during the Term, then, upon demand by Landlord, Tenant
shall deposit with Landlord cash in an amount necessary to increase the Security
Deposit such that it shall at all times bear the same proportion to the
then-current Basic Monthly Rent as the initial Security Deposit bears to the
initial Basic Monthly Rent. Following the Expiration Date or earlier termination
of this Lease, and within the time frame required by applicable law, Landlord
shall deliver to Tenant, at Tenant's last known address, any portion of the
Security Deposit not used by Landlord, as provided in this Paragraph. Landlord
may commingle the Security Deposit with Landlord's other funds and Landlord
shall not pay interest on such Security Deposit to Tenant.
Landlord Tenant
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7. RENT. Tenant shall pay to Landlord as minimum monthly rent, without
deduction, setoff, prior notice, or demand, the Basic Monthly Rent described in
Paragraph 2.6, above (subject to adjustment as provided in the attached
Addendum), in advance, on the first day of each calendar month throughout the
Term. If the Commencement Date is other than the first day of a calendar month,
then the Basic Monthly Rent payable by Tenant for the first month of the Term
(which shall be payable upon the Commencement Date) and the final month of the
Term shall be prorated on the basis of the actual number of days during the Term
occurring during the relevant month. All "Rental" (which include Basic Monthly
Rent, Percentage Rent, if any, and any items designated as "Additional Rent"
hereunder) shall be paid to Landlord at the same address as notices are to be
delivered to Landlord pursuant to Paragraph 2.10, above.
8. LEASE EXPENSES.
8.1. DEFINITION OF LEASE EXPENSES. As used in this Lease, the term
"Lease Expenses" shall mean and refer to all costs and expenses, of any kind or
nature, which are paid or incurred by Landlord relative to the operation,
repair, restoration, replacement, maintenance, and/or for management of the
Project including, without limitation, all costs and expenses relating to: (i)
all personnel involved in the operation, repair, replacement, maintenance, and
management of the Project (other than Landlord's corporate officers) including
wages, fringe benefits, and other labor payments (and including a pro rata share
of such expenses for employees of Landlord who do not work exclusively at the
Project), (ii) water, sewage disposal, drainage, refuse collection and disposal,
gas, electricity, and other utility services, and the maintenance of all
components, systems, and apparatus by which such utilities and services are
provided, (iii) general maintenance and repair of the Project, including,
without limitation, and among other things, the driveways, asphalt, and concrete
surfaces, the structural components of the improvements located within the
Project, including the portions of the roof to be maintained pursuant to
Paragraph 12.2, below, repainting of, improvements, and sweeping, janitorial and
security services (if any), (iv) maintenance of landscaping (including
irrigation and sprinkler systems) and, where and when necessary, replanting, (v)
keeping the parking area in good condition and free from litter, dirt, debris,
and other obstructions, and keeping all lighting and signage serving the Project
in good condition and fully operating, (vi) any expenses payable by Landlord
pursuant to the provisions of any recorded Covenants, Conditions, and
Restrictions affecting the Project, (vii) any personal property taxes,
assessments, or other impositions levied, assessed, or imposed upon any personal
property of Landlord used in connection with the Project, (viii) the cost of all
casualty, liability, and other insurance obtained by Landlord relative to the
Project, including all premiums therefore and any deductibles payable with
respect to any loss insured thereby, (ix) management fees (which management fees
will equal 5% of gross rents collected from tenants within the Project) and
legal, accounting, inspection, and consultation fees, (x) the cost of holiday
decorations, and (xi) capital improvements or structural modifications required
by any change in laws, ordinances, rules, or regulations governing the Project,
or other capital improvements or structural modifications deemed reasonably
necessary or desirable by Landlord, including, without limitation, capital
improvements or structural modifications which reduce Lease Expenses; provided,
however, any costs of such capital improvements or structural modifications (or
any other items within the definition of "Lease Expenses" which would be
capitalized under generally accepted accounting principles) shall be amortized
(including an interest factor) over the useful life of such capital improvements
or structural modifications. Notwithstanding anything to the contrary contained
in this Lease, Tenant shall not be liable for any deductibles payable with
respect to any loss insured against by insurance obtained by Landlord relative
to the Project in excess of $10,000 per loss (subject to adjustment in
accordance with increases in the consumer price index for the San Diego region
over the term of the Lease).
8.2. BASE YEAR LEASE EXPENSES. As used in this Lease, the term "Base
Year Lease Expenses" shall mean and refer to the Lease Expenses paid or incurred
by Landlord during calendar year 1997.
8.3. PAYMENT OF LEASE EXPENSES. Tenant shall pay to Landlord, on the
first day of each calendar month during the Term, commencing on the first day of
January 1998, as Additional Rent, an amount ("Tenant's Monthly Payment") equal
to one-twelfth of Tenant's Pro Rata Share of the amount by which the Lease
Expenses for such calendar year exceed the Base Year Lease Expenses ("Increased
Lease Expenses), as estimated by Landlord in the most recently delivered
Estimated Statement (as defined below). Landlord intends to deliver to Tenant,
prior to the commencement of each calendar year during the Term, a written
statement ("Estimated Statement") setting forth Landlord's estimate of the Lease
Expenses and Increased Lease Expenses allocable to the ensuing calendar year,
and Tenant's Pro Rata Share of such Increased Lease Expenses. Landlord may, at
its option, during any calendar year, deliver to Tenant a revised Estimated
Statement, revising Landlord's estimate of the Lease Expenses and Increased
Lease Expenses, in accordance with Landlord's most current estimate. Within
approximately 90 days after the end of each calendar year during the Term,
Landlord intends to deliver to Tenant a written statement ("Actual Statement")
setting forth the actual Lease Expenses allocable to the preceding calendar year
or, in the case of the calendar year in which the Commencement Date occurs, such
Actual Statement will set forth the Base Year Lease Expenses. Tenant's failure
to object to Landlord regarding the contents of an Actual Statement, in writing,
within 60 days after delivery to Tenant of such Actual Statement, shall
constitute Tenant's absolute and final acceptance and approval of the Actual
Statement. If the sum of Tenant's Monthly Payments actually paid by Tenant
during any calendar year exceeds Tenant's Pro Rata Share of the actual Increased
Lease Expenses allocable to such calendar year, then such excess will be
credited against future Tenant's Monthly Payments, unless such calendar year was
the calendar year during which the Expiration Date occurs (the "Last Calendar
Year"), in which event either (i) such excess shall be credited against any
monetary default of Tenant under this Lease, or (ii) if Tenant is not in default
under this Lease, then Landlord shall pay to Tenant such excess. If the sum of
Tenant's Monthly Payments actually paid by Tenant during any calendar year is
less than Tenant's Pro Rata Share of the actual Increased Lease Expenses
allocable to such calendar year, then Tenant shall, within ten days of delivery
of the Actual Statement, pay to Landlord the amount of such deficiency.
Landlord's delay in delivering any Estimated
Landlord___________ Tenant__________
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Statement or Actual Statement will not release Tenant of its obligation to pay
any Tenant's Monthly Payment or any such excess upon receipt of the Estimated
Statement or the Actual Statement, as the case may be. For purposes of this
Lease, the term "Tenant's Pro Rata Share" will mean and refer to the portion of
the Lease Expenses payable by Tenant. Tenant's Pro Rata Share will be
originally calculated as of the January 1 immediately following the
Commencement Date and will be re-calculated as of each January 1 thereafter
during the Term as the fractional portion of the total Increased Lease Expenses
(excluding therefrom the portion of the Increased Lease Expenses actually paid
by the Anchor Tenants in the Project) determined by multiplying such Increased
Lease Expenses by a fraction, the numerator of which is the leasable square
footage of the Premises, and the denominator of which is the total aggregate
leasable square footage of the Project, excluding the portions of the Project
occupied by the Anchor Tenants (who are designated as Anchor Tenants by Landlord
as of the date such calculation is being made). In the event the leasable
square footage in the Project changes from time to time due to the addition or
removal of buildings, such change will not result in a recalculation of
Tenant's Pro Rata Share until the January 1 next following such occurrence, as
if such change had not taken place until such following January 1. The
references in this Paragraph to the actual Increased Lease Expenses allocable
to a calendar year, shall include, if such calendar year is the Last Calendar
Year, the actual Increased Lease Expenses allocable to the portion of the Last
Calendar Year prior to the Expiration Date.
9. UTILITIES AND SERVICES. Except as otherwise provided in the Addendum
to this Lease, Landlord shall provide electricity, water, sewer, and gas to the
Premises for ordinary and customary uses as well as ordinary and customary
trash collection, janitorial, and window washing services. Except for
Landlord's obligations as set forth above, Tenant shall make all arrangements
for and pay the cost of all utilities and services (including without
limitation their connection charges and taxes thereon) furnished to the
Premises or used by Tenant, including without limitation telephone and
communication services. Landlord shall not be liable for failure to furnish any
utilities or services to the Premises when such failure results from causes
beyond Landlord's reasonable control, and such failure shall neither be deemed
an actual or constructive eviction, nor release Tenant from its obligations
under this Lease including, without limitation, Tenant's obligation to pay
Rental. If Landlord constructs new or additional utility facilities, including
without limitation wiring, plumbing, conduits, and/or mains, resulting from
Tenant's changed or increased utility requirements, Tenant shall on demand
promptly pay to Landlord the total cost of such items. If any governmental
authority having jurisdiction over the Project imposes mandatory controls
relating to the use or conservation of water, gas, electricity, power, or the
reduction of automobile emissions, Landlord, at its sole discretion, may comply
with such mandatory controls and, accordingly, require Tenant to so comply.
Landlord shall not be liable for damages to persons or property for any such
reduction, nor shall such reduction in any way be construed as a partial
eviction of Tenant, cause an abatement of rent, or operate to release Tenant
from any of Tenant's obligations under this Lease.
10. REAL PROPERTY TAXES.
10.1. DEFINITION OF TAXES. As used in this Lease, the term "Taxes"
shall mean and refer to all real property or real estate taxes, assessments,
and other impositions, whether general, special, ordinary, or extraordinary,
and of every kind and nature, which may be levied, assessed, imposed upon or
with respect to the Project, or any portion thereof, by any local, state, or
federal entity from time to time.
10.2. PAYMENT OF TAXES. Tenant shall pay to Landlord, on the first
day of each calendar month during the Term, commencing with the first day of
January, 1998, as Additional Rent, an amount ("Tenant's Monthly Tax Payment")
equal to one-twelfth of Tenant's Pro Rata Share of the amount by which the
Taxes for such calendar year exceed the Taxes which are assessed against the
Project during calendar year 1997 (the "Increased Taxes"), as estimated by
Landlord in the most recently delivered Estimated Tax Statement (as defined
below). Landlord intends to deliver to Tenant, prior to the commencement of
each calendar year during the Term, a written statement ("Estimated Tax
Statement") setting forth Landlord's estimate of the Taxes and Increased Taxes
allocable to the ensuing calendar year, and Tenant's Pro Rata Share of such
Increased Taxes. Landlord may, at its option, during any calendar year, deliver
to Tenant a revised Estimated Tax Statement, revising Landlord's estimate of
the Taxes and Increased Taxes, in accordance with Landlord's most current
estimate. No later than 90 days after the end of each calendar year during the
Term, Landlord intends to deliver to Tenant a written statement ("Actual Tax
Statement") setting forth the actual Taxes allocable to the preceding calendar
year or, in the case of the calendar year in which the Commencement Date
occurs, such Actual Tax Statement will set forth the Taxes which are assessed
against the Project during the calendar year in which the Commencement Date
takes place. Tenant's failure to object to Landlord regarding the contents of
an Actual Tax Statement, in writing, within 30 days after delivery to Tenant of
such Actual Tax Statement, shall constitute Tenant's absolute and final
acceptance and approval of the Actual Tax Statement. If the sum of Tenant's
Monthly Tax Payments actually paid by Tenant during any calendar year exceeds
Tenant's Pro Rata Share of the actual Increased Taxes allocable to such
calendar year, then such excess will be credited against future Tenant's
Monthly Tax Payments, unless such calendar year was the Last Calendar Year, in
which event either (i) such excess shall be credited against any monetary
default of Tenant under this Lease, or (ii) if Tenant is not in default under
this Lease, then Landlord shall pay to Tenant such excess. If the sum of
Tenant's Monthly Tax Payments actually paid by Tenant during any calendar year
is less than Tenant's Pro Rata Share of the actual Increased Taxes allocable to
such calendar year, then Tenant shall, within ten days of delivery of the
Actual Tax Statement, pay to Landlord the amount of such deficiency. Landlord's
delay in delivering any Estimated Tax Statement or Actual Tax Statement will
not release Tenant of its obligation to pay any Tenant's Monthly Tax Payment or
any such excess upon receipt of the Estimated Tax Statement or the Actual Tax
Statement, as the case may be. The references in this Paragraph to the actual
Increased Taxes allocable to a calendar year, shall include, if such calendar
year is the Last Calendar Year, the actual Increased Taxes allocable to the
portion of the Last Calendar Year prior to the Expiration Date. Notwithstanding
anything to the contrary
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contained in this Lease, Tenant shall not be liable for any Taxes or increases
in Taxes occasioned by or resulting from (i) a conveyance or other transfer of
the real property of which the Premises is a part (a) to any person or entity
affiliated with or related to Landlord or the partners, shareholders, officers,
or directors of Landlord, (b) in connection with estate planning of Landlord,
or (c) which is not a bona fide sale to an unrelated third party, or (ii)
assessments and other fees for improvements in services which do not benefit
the Premises, as reasonably determined by Landlord.
11. PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all
taxes, assessments, license fees, and other charges that are levied or
assessed against, or based upon the value of, Tenant's personal property
installed or located in or on the Premises including without limitation trade
fixtures, furnishings, equipment, and inventory (collectively, "Tenant's
Personal Property"). On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of such payments. If any such taxes, assessments, license
fees, and/or other charges are levied against Landlord or Landlord's property,
or if the assessed value of the Premises is increased by the inclusion of a
value placed on Tenant's Personal Property, and if Landlord pays such taxes,
assessments, license fees, and/or other charges or any taxes based on the
increased assessments caused by Tenant's Personal Property, then Tenant, on
demand, shall immediately reimburse Landlord for the sum of such taxes,
assessments, license fees, and/or other charges so levied against Landlord, or
the proportion of taxes resulting from such increase in Landlord's assessment.
Landlord may, at its election, pay such taxes, assessments, license fees,
and/or other charges or such proportion, and receive such reimbursement,
regardless of the validity of the levy.
12. MAINTENANCE.
12.1. TENANTS DUTIES. Subject to the provisions of Paragraphs 21, 29
and 30, below, Tenant shall at its sole cost maintain, repair, replace, and
repaint, all in first class condition, any damage to Premises or the Project
resulting from the acts or omissions of Tenant or Tenant's Invitees, including,
without limitation, any damage to the roof or damage relating to a roof
penetration caused by Tenant or Tenant's Invitees. If Tenant fails to maintain,
repair, replace, or repaint any portion of the Premises or the Property as
provided above then Landlord may, at its election, maintain, repair, replace,
or repaint any such portion of the Premises or the Project and Tenant shall
promptly reimburse Landlord for Landlord's actual cost thereof, plus a
supervisory fee in the amount of ten - percent (10%) of Landlord's actual cost.
12.2. LANDLORD'S DUTIES. Landlord shall at its sole cost maintain,
repair, replace, and repaint, all in first class condition, the Common Areas
and the Premises, except to the extent of Tenant's obligations as set forth in
Paragraph 12.1, above. Landlord's failure to perform its obligations set forth
in the preceding sentence will not release Tenant of its obligations under this
Lease, including without limitation Tenant's obligation to pay Rental. Tenant
waives the provisions of California Civil Code Section 1942 (or any successor
statute), and any similar principles of law with respect to Landlord's
obligations for tenantability of the Premises and Tenant's right to make
repairs and deduct the expense of such repairs from rent.
13. PARKING. Subject to the remaining provisions of this Paragraph,
Landlord grants to Tenant (for the benefit of Tenant and Tenant's invitees) the
right to the non-exclusive use of the parking area within the boundaries of and
serving the Project (the "Parking Area"). Tenant's use of the Parking Area
shall be subject to such rules as Landlord may, in its reasonable discretion,
adopt from time to time with respect to the Parking Area. Notwithstanding
anything to the contrary in this Paragraph, Landlord may, at its election,
construct improvements upon or otherwise alter in any manner the Parking Area
provided that Landlord makes reasonable amounts of parking available (or
reasonable amount of parking will remain available) to Tenant elsewhere on the
Project, or within a reasonable distance from the Project.
14. SIGNS. Tenant may not place, construct, or maintain any sign,
advertisement, awning, banner, or other exterior decoration (collectively,
"sign") in the Premises which is visible from the exterior of the Premises, or
on the Building without Landlord's prior written consent, which consent will
not unreasonably be withheld or delayed. Any sign that Tenant is permitted by
Landlord to place, construct, or maintain in the Premises or on the Building
shall comply with all applicable laws, ordinances, rules, or regulations, and
Tenant shall obtain any approval required by such laws, ordinances, rules, and
regulations. Landlord makes no representation with respect to Tenant's ability
to obtain any such approval. Tenant shall, at Tenant's sole cost, make any
changes to any of Tenant's signs in the Premises or on the Building as required
by any new or revised applicable laws, ordinances, rules, or regulations, or
any changes in the Sign Criteria.
15. RULES, REGULATIONS, AND COVENANTS. Tenant shall (and shall cause
Tenant's Invitees to) observe faithfully and comply strictly with any
reasonable rules and regulations which Landlord may from time to time adopt for
the Project as well as any recorded covenants, conditions, or restrictions
affecting the Premises or the Project, whether now existing or hereafter
adopted or amended from time to time (all of the foregoing, collectively,
"rules"). Landlord has no duty or obligation to enforce any rule against any
other tenant, and Landlord will not be liable to Tenant for violation of any
rule by any other tenant, or any other tenant's agents, employees, officers,
independent contractors, customers, invitees, visitors, or licensees.
16. EARLY ACCESS INSURANCE. At any time prior to the Commencement Date
that Tenant is making any Alterations (as defined below) to the Premises or
performing any of the Tenant's work, (i) Tenant shall, at Tenant's sole cost,
maintain (a) "Builder's Risk" insurance with respect to the Premises,
reasonably satisfactory to Landlord, and (b) all of the insurance to be
maintained by Tenant during the Term, including without limitation public
liability and property damage insurance, fire and extended coverage insurance
and special form, boiler and machinery
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insurance, and workers compensation insurance, (ii) the provisions of the
Paragraph in this Lease entitled "Indemnity and Exemption of Landlord from
Liability" shall be operative. Any Alterations pursuant to this Paragraph shall
be subject to all the provisions of the Paragraph in this Lease entitled
"Alterations". Nothing in this Paragraph shall be construed as granting
permission to Tenant to enter the Premises, or to make any Alterations, prior
to the Commencement Date and no such right shall exist unless specified in
Exhibit "C".
17. PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE. Tenant shall, at
Tenant's sole cost, maintain public liability and property damage insurance (i)
with a combined single limit liability of not less than $2,000,000.00, (ii)
insuring (a) against all liability of Tenant and Tenant's Invitees arising out
of or in connection with Tenant's use or occupancy of the Premises, and (b)
performance by Tenant of the indemnity provisions set forth in this Lease,
(iii) naming Landlord, its agent, and any Lender as additional named insureds,
(iv) containing cross-liability endorsements, and (v) which includes products
liability insurance (if Tenant is to sell merchandise or other products derived
from the Premises). Not more frequently than once every year, if, in the
reasonable opinion of Landlord, the amount of such insurance at that time is
not adequate, then Tenant shall increase such insurance as reasonably required
by Landlord. Additionally, if Tenant sells or serves alcoholic beverages from
the Premises, Tenant shall obtain and maintain "dram shop" coverage and such
other insurance coverage as Landlord may designate from time to time and in
such amounts as Landlord deems reasonably appropriate.
18. FIRE AND EXTENDED COVERAGE INSURANCE. Tenant shall, at Tenant's sole
cost, maintain on Tenant's Alterations and Tenant's Personal Property (as
defined below) a policy of standard fire and extended coverage and special form
insurance, with vandalism and malicious mischief endorsements, coverage with
respect to increased costs due to building ordinances, demolition coverage, and
sprinkler leakage coverage, in each case to the extent of at least 100 percent
of full replacement cost, and business interruption insurance, issued in the
name of Tenant with Landlord, Landlord's Lender and Landlord's designated agent
as additional insureds. Such "full replacement cost" shall be determined by the
company issuing such policy at the time the policy is initially obtained. Not
more frequently than once every two years, either Landlord or Tenant may, at
its election, notify the other that it elects to have the replacement value
redetermined by an insurance company. Such redetermination shall be made
promptly and in accordance with the rules and practices of the Board of Fire
Underwriters, or a like board recognized and generally accepted by the
insurance company, and Landlord and Tenant shall be promptly notified of the
results by the company. Such policy shall be promptly adjusted according to such
redetermination.
19. BUSINESS INTERRUPTION INSURANCE. Tenant shall obtain business
interruption insurance in amounts sufficient to reimburse Tenant for direct or
indirect loss of earnings attributable to all perils commonly insured against
by prudent tenants or attributable to prevention of access to the Premises or
to the Project as a result of such perils.
20. INSURANCE GENERALLY. If Tenant fails during the Term to maintain any
insurance required to be maintained by Tenant under this Lease, then Landlord
may, at its election, arrange for any such insurance, and Tenant shall
reimburse Landlord for any premiums for any such insurance within five days
after Tenant receives a copy of the premium notice. If any such premiums are
allocable to a period, a portion of which occurs during the Term and the
remainder of which occurs before or after the Term, then such premiums shall be
apportioned between Landlord and Tenant based upon the number of days during
such period that occur during the Term and the number of days that occur before
or after the Term, such that Tenant pays for the premiums that are allocable to
the period during the Term. Insurance required to be maintained by Tenant under
this Lease (i) shall be issued as a primary policy by insurance companies
authorized to do business in the state in which the Premises are located with a
Best's Rating of at least "A+" and a Best's Financial Size Category rating of at
least "XIV", as set forth in the most current edition of "Best's Insurance
Reports" (unless otherwise approved by Landlord), or such higher rating as may
be required by any Lender, (ii) shall name Landlord and any Lender as
additional named insureds, (iii) shall consist of "occurrence" based coverage,
without provision for subsequent conversion to "claims" based coverage, (iv)
shall not be cancelable or subject to reduction of coverage or other
modification except after 30-days' prior written notice to Landlord and any
Lender, and (v) shall not provide for a deductible or co-insurance provision in
excess of $5,000.00. Tenant shall, at least 30 days prior to the expiration of
each such policy, furnish Landlord with a renewal of or "binder" extending such
policy. Tenant shall promptly upon request deliver to Landlord copies of such
policy or policies or certificates evidencing the existence and amounts of such
insurance together with evidence of payment of premiums.
21. WAIVER OF SUBROGATION. Landlord and Tenant release each other,
Tenant's Invitees, and Landlord's employees, contractors, agents, invitees, and
licensees (collectively, "Landlord's Invitees") from all claims for damage,
loss, or injury to the Center, to Tenant's Personal Property, and to the
fixtures and Alterations of either Landlord or Tenant in or on the Project to
the extent such damage, loss or injury is one which would ordinarily be
covered by any insurance policies required to be carried by Landlord or Tenant
under this Lease and which is covered by any insurance policies carried by
Landlord or Tenant and in force at the time of such damage. Subject to the
remaining provisions of this Paragraph, Landlord and Tenant shall each cause
all insurance policies obtained by it pursuant to this Lease to provide that
the insurance company waives all right of recovery by way of subrogation
against Landlord and Tenant in connection with any damage, loss, or injury
covered by such policy. If any such policy cannot be obtained with a waiver of
subrogation, or is obtainable only by the payment of an additional premium
charge above that charged by insurance companies issuing policies without
waiver of subrogation endorsements, the party undertaking to obtain such
policy (the "Undertaking Party") shall so notify the other party (the "Notified
Party"). The Notified Party shall, within 10 days after the giving of such
notice, either obtain such policy from a company that is reasonably
satisfactory to the Undertaking Party and that will issue such policy with a
waiver of subrogation endorsement, or agree to pay the additional premium if
such policy is obtainable at additional cost. If such policy cannot be obtained
with a waiver of subrogation endorsement or the Notified Party
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refuses to pay such additional premium, then the Undertaking Party shall not be
required to obtain a waiver of subrogation endorsement with respect to such
policy.
22. LANDLORD'S INSURANCE. Landlord may, at its election, maintain any of
the following insurance, in such amounts and with such limits as Landlord shall
determine in its reasonable discretion: (i) Public liability and property damage
insurance, and products liability insurance; (ii) Fire and extended coverage and
special form insurance, coverage with respect to increased costs due to building
ordinances, demolition coverage, and sprinkler leakage coverage; (iii) boiler
and machinery insurance; (iv) fidelity insurance; (v) Plate-glass insurance; and
(vi) rental interruption insurance. The premiums, costs, expenses, and
deductibles (or similar costs or charges) of and/or with respect to any such
insurance (all of the preceding, collectively, "Insurance Expenses") shall be
included in Lease Expenses. Notwithstanding anything to the contrary contained
in this Lease, Landlord shall maintain standard fire and extended coverage and
special form insurance, with such endorsements as Landlord deems appropriate and
with coverage equal to at least 90 percent of the full replacement cost of the
Project.
23. ALTERATIONS. Tenant shall not make any alterations, improvements,
additions, installations, or changes of any nature in or to the Premises (any of
the preceding, "Alterations") unless (i) Tenant first obtains Landlord's written
consent, (ii) Tenant complies with all conditions which may be imposed by
Landlord, including but not limited to Landlord's selection of specific
contractors or construction techniques, and (iii) Tenant pays to Landlord the
reasonable costs and expenses of Landlord for architectural, engineering, or
other consultants which reasonably may be incurred by Landlord in determining
whether to approve any such Alterations; provided, however, Tenant shall not be
required to comply with the provisions of this sentence in the event such
Alterations consist of interior, non-structural alterations costing less than
$25,000, in the aggregate. At least 30 days prior to making any Alterations,
Tenant shall submit to Landlord, in written form, proposed detailed plans of
such Alterations. Tenant shall, prior to the commencement of any Alterations, at
Tenant's sole cost, (i) acquire (and deliver to Landlord a copy of) a permit
from appropriate governmental agencies to make such Alterations (any conditions
of which permit Tenant shall comply with, at Tenant's sole cost, in a prompt and
expeditious manner), (ii) obtain and deliver to Landlord (unless this condition
is waived in writing by Landlord) a lien and completion bond in an amount equal
to 125 percent of the estimated cost of the proposed Alterations, to insure
Landlord against any liability for mechanics' liens and to insure completion of
the work (provided, however, no such bond will be required if the estimated cost
of the proposed Alterations is less than $100,000, in the aggregate, or if
Landlord has mandated the particular contractor which Tenant is to use), (iii)
provide Landlord with 10 days' prior written notice of the date the installation
of the Alterations is to commence, so that Landlord can post and record an
appropriate notice of non-responsibility, and (iv) obtain (and deliver to
Landlord proof of) reasonably adequate workers compensation insurance with
respect to any of Tenant's employees installing or involved with such
Alterations (which insurance Tenant shall maintain in force until completion of
the Alterations). All Alterations shall become the property of Landlord upon the
expiration of the Lease and shall remain on and be surrendered with the Premises
on the Expiration Date or earlier termination of this Lease, except that
Landlord may, at its election, require Tenant to remove any or all of the
Alterations, by so notifying Tenant in writing on or before the Expiration Date
or earlier termination of this Lease (except where Landlord's prior consent to
an Alteration has been obtained, in which event Landlord must notify Tenant at
the time it grants its consent that Tenant will be required to remove such
Alteration), in which event, Tenant shall, at its sole cost, on or before the
Expiration Date or earlier termination of this Lease, repair and restore the
Premises to the condition of the Premises prior to the installation of the
Alterations which are to be removed. Tenant shall pay all costs for Alterations
and other construction done or caused to be done by Tenant and Tenant shall keep
the Premises free and clear of all mechanics' and materialmen's lien's resulting
from or relating to any Alterations or other construction. Tenant may, at its
election, contest the correctness or validity of any such lien provided that (a)
immediately on demand by Landlord, Tenant procures and records a lien release
bond, issued by a corporation satisfactory to Landlord and authorized to issue
surety bonds in the state in which the Premises are located, in an amount equal
to 125 percent of the amount of the claim of lien, which bond meets the
requirements of California Civil Code Section 3143 or any successor statute, and
(b) Landlord may, at its election, require Tenant to pay Landlord's attorneys'
fees and costs in participating in such an action. Notwithstanding anything to
the contrary contained in this Lease, Tenant's personal property and trade
fixtures shall be and remain the property of Tenant at all times; provided,
however, any such personal property and trade fixtures which are not removed by
Tenant on or before the Lease is terminated/expired, shall be and remain the
property of Landlord.
24. SURRENDER OF PREMISES AND HOLDING OVER. On the Expiration Date or
earlier termination of this Lease, (i) Tenant shall surrender to Landlord the
Premises and all Alterations (except for Alterations that Tenant is obligated to
remove as expressly set forth above) in a first class and clean condition,
ordinary wear and tear, damage and destruction covered by Paragraph 29 and not
caused by Tenant or Tenant's Invitees, damage from condemnation covered by
Paragraph 30, and Hazardous Substances not introduced in, on, under or about the
Premises by Tenant or Tenant's Invitees, excepted, (ii) Tenant shall remove all
of Tenant's Personal Property and perform all repairs and restoration required
by the removal of any Alterations or Tenant's Personal Property, and (iii)
Tenant shall surrender to Landlord all keys to the Premises (including without
limitation any keys to any exterior or interior doors). Landlord may elect to
retain or dispose of in any manner any Alterations or Tenant's Personal Property
that Tenant does not remove from the Premises on the Expiration Date or earlier
termination of this Lease as required by this Lease by giving written notice to
Tenant. Any such Alterations or Tenant's Personal Property that Landlord elects
to retain or dispose of shall immediately upon notice to Tenant vest in
Landlord. Tenant waives all claims against Landlord for any damage to Tenant
resulting from Landlord's retention or disposition of any such Alterations or
Tenant's Personal Property. Tenant shall be liable to Landlord for Landlord's
costs for storing, removing or disposing of any such Alterations or Tenant's
Personal Property. If Tenant fails to surrender the Premises to Landlord on the
Expiration Date or earlier termination of this Lease, Tenant shall
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indemnify Landlord against all liabilities, damages, losses, costs, expenses,
attorneys' fees and claims resulting from such failure, including without
limitation any claim for damages made by a succeeding tenant. If Tenant, with
Landlord's consent, remains in possession of the Premises after the Expiration
Date or earlier termination of this Lease, such possession by Tenant shall be
deemed to be a month-to-month tenancy terminable on 30-days' written notice
given at any time by Landlord or Tenant. During any such month-to-month
tenancy, Tenant shall pay, as Basic Monthly Rent, 150 percent of the Basic
Monthly Rent in effect immediately prior to the Expiration Date or earlier
termination of this Lease, as the case may be. All provisions of this Lease
except for those pertaining to Term shall apply to such month-to-month tenancy.
25. DEFAULT. The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant:
25.1. The vacating or abandoning of the Premises by Tenant if Tenant fails
to pay the Rental and perform its other obligations under this Lease.
25.2. Tenant's failure to make any payment of Rental within five business
days after receipt of notice from Landlord that such payment of Rental is past
due, provided that any such notice shall be in lieu of and not in addition to
any notice required under applicable unlawful detainer statutes, and no more
than one such notice shall be required during any calendar year. No grace period
prior to the imposition of a late charge pursuant to Paragraph 28 below, shall
extend the date when such Rental is due and payable, and Tenant shall be in
default under this Lease if such payment is not timely made.
25.3. Tenant's failure to observe or perform any of the provisions of this
Lease to be observed or performed by Tenant, other than described in the
preceding two Paragraphs where such failure shall continue for a period of ten
days after written notice of such failure from Landlord to Tenant; provided,
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under applicable unlawful detainer statutes; and provided
further, however, that if the nature of Tenant's default is such that more than
ten days are required for its cure, then Tenant shall not be deemed to be in
default if Tenant commenced such cure with in such ten day period and thereafter
diligently prosecutes such cure to completion within 30 days after Landlord's
written notice.
25.4. Tenant's failure to deliver to Landlord pursuant to Paragraph 50.2,
within 15 days after Landlord's written request, any financial statement of
Tenant (including without limitation a current annual balance sheet of Tenant)
reasonably requested by Landlord, or if any financial statement given to
Landlord by Tenant, or by any assignee, subtenant, or guarantor of Tenant, is
materially false or evidences that Tenant's net worth is negative, and Tenant
fails to furnish to Landlord, within 10 days after written notice from Landlord
to Tenant, with cash as an additional security deposit in an amount equal to the
aggregate Rental payable under this Lease for the six full calendar months
immediately following such notice.
25.5. The making by Tenant of any general arrangement or assignment for the
benefit of creditors; Tenant's becoming bankrupt, insolvent or a "debtor" as
defined in 11 U.S.C. Section 101, or any successor statute (unless, in the case
of a petition filed against Tenant, such petition is dismissed within 30 days
after its original filing); the institution of proceedings under the bankruptcy
or similar laws in which Tenant is the debtor or bankrupt; the appointing of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease (unless possession
is restored to Tenant within 30 days after such taking); the attachment,
execution, or judicial seizure of substantially all of Tenant's assets located
at the Premises or Tenant's interest in this Lease (unless such attachment,
execution, or judicial seizure is discharged within 30 days after such
attachment, execution, or judicial seizure); or, if Tenant is a partnership or
consists of more than one person or entity, any partners of the partnership or
any such other person or entity becoming bankrupt or insolvent or making a
general arrangement or assignment for the benefit of creditors.
26. LANDLORD'S REMEDIES. Landlord shall have the following remedies if
Tenant commits a default or breach under this Lease; these remedies are not
exclusive, but are cumulative and in addition to any remedies provided
elsewhere in this Lease, or now or later allowed by law.
26.1. CONTINUATION OF LEASE. No act by Landlord (including without
limitation the acts set forth in the succeeding sentence) shall terminate
Tenant's right to possession unless Landlord notifies Tenant in writing that
Landlord elects to terminate Tenant's right to possession. As long as Landlord
does not terminate Tenant's right to possession, Landlord may (i) continue this
Lease in effect, (ii) continue to collect Rental when due and enforce all the
other provisions of this Lease, (iii) to the extent permitted by law, enter the
Premises and relet them, or any part of them, to third parties for Tenant's
account, for a period shorter or longer than the remaining term of this Lease,
and (iv) have a receiver appointed to collect Rental and conduct Tenant's
business. Tenant shall immediately pay to Landlord all costs Landlord incurs in
such reletting, including, without limitation, brokers' commissions, attorneys'
fees, advertising costs, and expenses of remodeling the Premises for such
reletting.
26.2. RENT FROM RELETTING. If Landlord elects to relet all or any portion
of the Premises as permitted above, rent that Landlord receives from such
reletting shall be applied to the payment of, in the following order and
priority, (i) any indebtedness from Tenant to Landlord other than Basic Monthly
Rent due from Tenant, (ii) all costs incurred by Landlord in such reletting,
and (iii) Basic Monthly Rent due and unpaid under this Lease. After applying
such payments as referred to above, any sum remaining from the rent Landlord
receives from such reletting shall be held by Landlord and applied in payment
of future Basic Monthly Rent as it becomes due under
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this Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord unless and until all obligations of Tenant under this Lease, including
all future obligations, are satisfied in full.
26.3 TERMINATION OF TENANT'S RIGHT TO POSSESSION. Landlord may terminate
this Lease and Tenant's right to possession of the Premises at any time, by
notifying Tenant in writing that Landlord elects to terminate this Lease and
Tenant's right to possession. On termination of this Lease, Landlord has the
right to recover from Tenant (i) the worth at the time of the award of the
unpaid Basic Monthly Rent which had been earned at the time of such termination,
(ii) the worth at the time of the award of the amount by which the unpaid Basic
Monthly Rent which would have been earned after such termination until the time
of award exceeds the amount of such loss of Basic Monthly Rent that Tenant
proves could have been reasonably avoided, (iii) the worth at the time of the
award of the amount by which the unpaid Basic Monthly Rent for the balance of
the Term after the time of award (had there been no such termination) exceeds
the amount of such loss of Basic Monthly Rent that Tenant proves could be
reasonably avoided, and (iv) any other amount necessary to compensate Landlord
for all detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease or in the ordinary course of things would be likely
to result therefrom. The "worth at the time of the award" of the amounts
referred to in Clauses (i) and (ii) above is to be computed by allowing interest
at the Default Rate, as set forth below, or if no Default Rate is set forth,
then at the maximum rate permitted by applicable law. The "worth at the time of
the award" of the amount referred to in Clause (iii) above is to 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.
26.4 LANDLORD'S RIGHT TO CURE DEFAULT. Landlord, at any time after Tenant
commits a default or breach under this Lease, may cure such default or breach at
Tenant's sole cost. If Landlord at any time, by reason of Tenant's default or
breach, pays any sum or does any act that requires the payment of any sum, such
sum shall be due immediately from Tenant to Landlord at the time Landlord
notifies Tenant that such sum has been paid, and shall be deemed Additional Rent
under this Lease. If Tenant fails to timely pay any amount due under this
Paragraph, then (without curing such default) interest at the rate of ten
percent (10%) per annum shall accrue (and be immediately payable) on such
overdue amount until it is paid.
26.5 ENFORCEMENT COSTS. All costs and expenses incurred by Landlord in
connection with collecting any amounts and damages owing by Tenant pursuant to
the provisions of this Lease, or to enforce any provision of this Lease,
including reasonable attorneys' fees, whether or not any action is commenced by
Landlord, shall be paid by Tenant to Landlord upon demand. If Tenant fails to
timely pay any amount due under this Paragraph, then (without curing such
default) interest at the rate of ten percent (10%) per annum shall accrue (and
be immediately payable) on such overdue amounts until it is paid.
27. INTEREST AND LATE CHARGES. Late payment by Tenant to Landlord of Rental
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which would be impracticable or extremely difficult to fix. Such costs
include, without limitation, processing, collection and accounting charges, and
late charges that may be imposed on Landlord by the terms of any deed of trust
covering the Premises. Therefore, if any Rental is not received by Landlord
within ten days after its due date, then, without any requirement for notice to
Tenant, Tenant shall pay to Landlord an additional sum of ten percent (10%) of
such overdue amount as a late charge. Such late charge represents a fair and
reasonable estimate of the costs that Landlord will incur by reason of any late
payment by Tenant, and therefore this Paragraph is reasonable under the
circumstances existing at the time this Lease is made. Acceptance of such late
charge by Landlord shall not constitute a waiver of Tenant's default with
respect to such overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies available to Landlord under this Lease. In addition to
the late charge payable by Tenant, as provided above, if any such Rental is not
paid within 30 days after the date such Rental was due, then Tenant shall pay to
Landlord interest on such overdue Rental at the rate of three percent (3%) above
the "reference rate" announced from time to time by Bank of America, NT&SA (the
"Default Rate"). Such interest shall additionally accrue and be payable by
Tenant relative to any other amounts payable by Tenant to Landlord under the
provisions of this Lease which are not paid when due (if such reference rate
ceases to be announced, then a comparable "prime rate" shall be utilized,
selected by Landlord).
28. QUARTERLY PAYMENTS. If a late charge is payable under this Lease,
whether or not collected, for two installments of Basic Monthly Rent or other
Rental due under this Lease during any one calendar year during the Term, then
Basic Monthly Rent, and Tenant's Monthly Payments, shall automatically become
due and payable quarterly in advance, rather than monthly. All monies paid to
Landlord under this Paragraph may be commingled with other monies of Landlord
and shall not bear interest. If Tenant breaches any provision of this Lease,
then any balance remaining from funds paid to Landlord under the provisions of
this Paragraph may, at Landlord's election, be applied to the payment of any
monetary default of Tenant in lieu of being applied to the payment of personal
property taxes, real property taxes and insurance premiums.
29. DESTRUCTION. If the Project is totally or partially destroyed during
the Term, rendering the Premises totally or partially inaccessible or unusable,
then, subject to the remainder of this Paragraph, (i) Landlord shall restore the
Project to substantially the same condition as it was in immediately before such
destruction, (ii) Landlord shall not be required to restore Tenant's Alterations
or Tenant's Personal Property, unless they are an integral part of the Premises
and specifically covered by insurance proceeds received by Landlord, such
excluded items being the sole responsibility of Tenant to restore, (iii) such
destruction shall not terminate this Lease, and (iv) all obligations of Tenant
under this Lease shall remain in effect, except that the Basic Monthly Rent
shall be abated or reduced, between the date of such destruction and the date of
completion of restoration, by the ratio of (a) the area of the Premises rendered
unusable or inaccessible by the destruction to (b) the area of the Premises
prior to such
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destruction. Notwithstanding anything to the contrary in this Lease, Landlord
may, at its election, terminate this Lease by so notifying Tenant in writing on
or before the later of 120 days after such destruction or 60 days after
Landlord's receipt of the proceeds from insurance maintained by Landlord, if
(A) then-existing laws do not permit such restoration, (B) such destruction
occurs during the last year of the Term, (C) such destruction exceeds 25
percent (25%) of the then-replacement value of the Premises or the Project or
(D) Landlord determines that the cost of such restoration exceeds the amount of
insurance proceeds (including the amount of the insurance deductible) relating
to such destruction actually received by Landlord from insurance maintained by
Landlord. If Landlord so terminates this Lease, then (1) Landlord shall have no
obligation to restore the Project, (2) Landlord shall retain all insurance
proceeds relating to such destruction (other than insurance proceeds from
policies maintained by Tenant covering Tenant's personal property or
Alterations), and (3) this Lease shall terminate as of the date of such damage
or destruction. If Landlord restores the Premises as provided above, then
Tenant waives the provisions of California Civil Code Sections 1932(2) and
1933(4) or any successor statute with respect to any destruction of the
Premises. In the event Landlord restores the Premises following any such
destruction, Tenant shall immediately refixturize, re-equip, and restock the
Premises and shall re-open the Premises for business as soon thereafter as is
reasonably practicable. Notwithstanding anything to the contrary contained in
this Lease, Landlord shall notify Tenant, within 30 days after the occurrence
of any damage or destruction, how long Landlord reasonably estimates repair and
restoration will take. If Landlord estimates that repair and restoration will
take more than 270 days, Tenant shall have the right to elect to terminate the
Lease upon notice to Landlord within 15 days of the date Landlord notifies
Tenant of Landlord's estimate of the time required for such repair and
restoration. If Tenant exercises such right of termination, then (i) Landlord
shall have no obligation to restore the Project, (ii) Landlord shall retain all
insurance proceeds relating to such damage or destruction, and (iii) this Lease
shall terminate as of the date Tenant vacates the Premises, which Tenant shall
do no later than 15 days after the date of Tenant's notice of termination to
Landlord and, provided Tenant timely vacates the Premises, Tenant's Rental
obligations hereunder shall terminate as of the date of the destruction.
30. CONDEMNATION. If during the Term, or during the period of time
between the execution of this Lease and the Commencement Date, there is any
taking of all or any part of the Premises or any interest in this Lease by the
exercise of any governmental power, whether by legal proceedings or otherwise,
by any public or quasi-public authority, or private corporation or individual,
having the power of condemnation (any of the preceding a "Condemnor"), or a
voluntary sale or transfer by Landlord to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending (any of
the preceding, a "Condemnation"), the rights and obligations of Landlord and
Tenant shall be determined pursuant to this Paragraph. If such Condemnation is
of the entire Premises, then this Lease shall terminate on the date the
Condemnor takes possession of the Premises (the "Date of Condemnation"). A
temporary Condemnation of the Premises, or any part of the Premises, for less
than 180 days, shall not constitute a Condemnation under this Paragraph; but
the Basic Monthly Rent shall ▇▇▇▇▇ as to the portion of the Premises affected
during such temporary Condemnation. If such Condemnation is of any portion, but
not all, of the Premises, then this Lease shall remain in effect, except that,
if the remaining portion of the Premises is rendered unsuitable for Tenant's
continued use of the Premises, then Tenant may elect to terminate this Lease,
by so notifying Landlord in writing (the "Termination Notice") within 30 days
after the date Tenant has received notice of the nature and extent of the
Condemnation. Such termination shall be effective on the earlier of (i) the
date that is 30 days after the giving of the Termination Notice, and (ii) the
Date of Condemnation. If Tenant does not give to Landlord the Termination
Notice within such 30-day period, then all obligations of Tenant under this
Lease shall remain in effect, except that (unless the Premises are restored as
set forth below) Basic Monthly Rent shall be reduced by the ratio of (a) the
area of the Premises taken to (b) the area of the Premises immediately prior to
the Date of Condemnation. Notwithstanding anything to the contrary in this
Paragraph, if, within 20 days after Landlord's receipt of the Termination
Notice, Landlord notifies Tenant that Landlord at its cost will add to the
remaining Premises (or substitute for the Premises other comparable space in
the Project) so that the area of the Premises will be substantially the same
after the Condemnation as they were before the Condemnation, and Landlord
commences the restoration promptly and completes it within 150 days after
Landlord so notifies Tenant, then all obligations of Tenant under this Lease
shall remain in effect, except that Basic Monthly Rent shall be abated or
reduced during the period from the Date of Condemnation until the completion of
such restoration by the ratio of (A) the area of the Premises taken to (B) the
area of the Premises immediately prior to the Date of Condemnation. Unless
Landlord restores the Premises pursuant to the preceding sentence, or unless
Tenant gives to Landlord the Termination Notice within the relevant 30-day
period, Tenant at its sole cost shall accomplish any restoration required by
Tenant to use the Premises. All compensation, sums, or anything of value
awarded, paid, or received on a total or partial Condemnation (the "Award")
shall belong to and be paid to Landlord. Tenant shall have no right to any part
of the Award, and Tenant hereby assigns to Landlord all of Tenant's right,
title, and interest in and to any part of the Award, except that Tenant shall
receive from the Award any sum paid expressly to Tenant from the Condemnor for
Tenant's loss of goodwill. Landlord and Tenant waive the provisions of any
statute (including without limitation California Code of Civil Procedure
Section 1265.130 or any successor statute) that allows Landlord or Tenant to
petition the superior court (or any other local court) to terminate this Lease
in the event of a partial taking of the Premises. Notwithstanding anything to
the contrary contained in this Lease, if this Lease is not terminated pursuant
to this Paragraph 30 in connection with a Condemnation, Landlord shall use
Condemnation proceeds it receives to restore the Premises to a condition which
will reasonably allow Tenant to continue the conduct of its business.
31. ASSIGNMENT AND OTHER TRANSFERS. Without Landlord's prior written
consent, which shall not be unreasonably withheld, none of the following shall
occur (nor be permitted by Tenant to occur), voluntarily, involuntarily, by
operation of law, or otherwise (any of the following, a "Transfer"): (i) any
assignment, sublease, disposition, sale, concession, license, mortgage,
encumbrance, hypothecation, pledge, collateral assignment, or other transfer,
by Tenant of this Lease, any interest in this Lease, or all or any portion of
the Premises; or (ii) any
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assignment, disposition, sale, transfer, acquisition, or issuance of equitable
interests (whether stock, partnership or otherwise) in Tenant, to or by any
person, entity, or group of related persons or affiliated entities, whether in a
single transaction or in a series of related or unrelated transactions, which
results in such person, entity, or group holding (or assigning, transferring,
disposing of, or selling) 50 percent (50%) or more of the aggregate issued and
outstanding equitable interests in Tenant (other than as part of a public
offering of Tenant's securities). Landlord shall not be liable in damages to
Tenant or to any proposed subtenant, assignee or other transferee (any of the
preceding a "Proposed Transferee") if such consent is adjudicated to have been
unreasonably withheld, and, in such event, Tenant's sole remedy shall be to have
the proposed Transfer declared as valid as if Landlord's consent had been given,
although Tenant shall be entitled to reasonable attorney's fees if Tenant is the
prevailing party in such litigation. At least 20 days prior to entering into any
proposed Transfer, Tenant shall submit to Landlord the sum of $400.00 (as
payment toward Landlord's and Landlord's attorneys' cost of reviewing,
consenting to, rejecting and/or consummating any proposed Transfer), and a
written notice ("Tenant's Notice") which includes or sets forth in reasonable
detail (a) the form of the proposed Transfer, including without limitation all
related agreements, documents, instruments, exhibits, and escrow instructions,
(b) the name and address of the Proposed Transferee, (c) the terms and
conditions of the proposed Transfer, including without limitation the
commencement or effective date of the proposed Transfer, which shall be at least
30 days after Tenant's Notice is given, and (d) the nature, character, and
current banking, financial, and other credit information and references with
respect to the Proposed Transferee and the business of the Proposed Transferee
(including without limitation tax returns for the three most-recent years, a
business plan with cash-flow projections and financial projections with
assumptions and competitive market analysis), in reasonably sufficient detail to
enable Landlord to determine the Proposed Transferee's financial responsibility.
Within 20 days after Landlord's receipt from Tenant of such sum and Tenant's
Notice, and all documentation requested of Tenant by Landlord, Landlord shall
notify Tenant whether Landlord has consented to the proposed Transfer. If
Landlord fails to respond to the Tenant's Notice within such 20-day period,
Tenant may send a second notice to Landlord stating (in bold capital letters) as
follows: "TENANT HEREBY REQUESTS CONSENT TO THE PROPOSED TRANSFER DESCRIBED
BELOW. YOUR FAILURE TO RESPOND WITHIN TEN DAYS OF RECEIPT OF THIS NOTICE WILL
CONSTITUTE YOUR DEEMED APPROVAL TO THE DESCRIBED TRANSFER." If Landlord fails to
respond to such second notice within ten days of Landlord's receipt of such
notice, such Transfer will be deemed approved. Any consent by Landlord to any
proposed Transfer shall not constitute a consent with respect to any other
Transfer. If Landlord consents to any proposed Transfer, and Tenant fails to
consummate such Transfer on or before the commencement or effective date of the
proposed Transfer (as set forth in Tenant's Notice), then such consent shall be
deemed withdrawn and Tenant shall be required again to comply with this
Paragraph before making a Transfer. Landlord shall not have unreasonably
withheld its consent with respect to any Transfer if Landlord shall not have
received such sum or Tenant's Notice, if the nature or character of the Proposed
Transferee, or the proposed use and occupancy of the Premises by the Proposed
Transferee, is not in keeping with the dignity and character of the Building and
the surrounding area, if the proposed Transfer will result in the diminution of
the value or marketability of the Premises or the Project, if Landlord is not
satisfied that the Proposed Transferee is creditworthy, or if the proposed
Transfer will conflict with or result in a breach of any of the provisions of,
or constitute a default under, any agreement, instrument, or document to which
Landlord is a party or by which the Project may be bound. No Transfer shall
release or discharge Tenant from any liability, whether past, present, or
future, under this Lease and Tenant shall continue to remain primarily liable
under this Lease. Tenant irrevocably assigns to Landlord, as security for
Tenant's obligations under this Lease, all rent and other amounts from any
Transfer, and Landlord, or a receiver for Tenant appointed on Landlord's
application, may collect such rent and other amounts and apply them toward
Tenant's obligations under this Lease; except that, unless Tenant defaults under
this Lease, Tenant shall have the right to collect such rent and other amounts.
Unless otherwise agreed to by all parties, the Tenant's security deposit, if
any, shall be retained by Landlord and returned to the lawful tenant in
possession at the time of the Lease termination, subject to the terms and
conditions of Paragraph 6 of this Lease. Any Transfer must contain the following
provisions, which provisions whether contained in such Transfer or not, shall
apply to such Transfer: (A) Such Transfer shall be subject and subordinate to
all provisions of this Lease; (B) No Proposed Transferee shall be permitted to
enter into any Transfer without Landlord's prior written consent; and (C) At
Landlord's option, in the event of cancellation or termination of this Lease for
any reason or the surrender of this Lease, whether voluntarily, involuntarily,
by operation of law or otherwise, prior to the expiration of such Transfer, the
Proposed Transferee shall make full and complete attornment to Landlord for the
balance of the term of such Transfer. Such attornment shall be evidenced by an
agreement in form and substance satisfactory to Landlord which the Proposed
Transferee shall execute and deliver to Landlord within five days after request
by Landlord. Tenant shall promptly reimburse Landlord for Landlord's reasonable
cost (less any payment made by Tenant with Landlord as set forth above) of
reviewing, consenting to, rejecting and/or consummating any proposed Transfer,
including without limitation reasonable attorneys' fees. Tenant shall promptly
pay to Landlord fifty percent (50%) of all rents and other consideration, of
whatever nature, paid to (or for the benefit of) Tenant pursuant to any
Transfer, which exceed (1) if a sublease of a portion of the Premises, the
portion of the Basic Monthly Rent that is allocable to the portion of the
Premises subleased (such allocation based on the area of the portion subleased),
or (2) if any other Transfer, the Basic Monthly Rent.
32. COMMON AREAS. Landlord may, at its election, (i) close any of the Common
Areas to the extent required in the opinion of Landlord's legal counsel to
prevent a dedication of any of the Common Areas or the accrual of any rights to
any person or to the public in and to any portion of the Common Areas, (ii)
close, temporarily, any of the Common Areas for maintenance purposes, (iii)
designate other property outside the boundaries of the Project to become part of
the Common Areas, (iv) close off or otherwise utilize portions of the Common
Area while constructing improvements or making repairs or alterations to any
portion of the Project, and/or (v) make any changes to the Common Areas, or any
part of the Project, including without limitation changes to buildings or other
improvements, the addition of new buildings or other improvements, and/or
changes in the
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location of driveways, entrances, exits, vehicular parking spaces, or the
direction of the flow of traffic, provided that no such changes shall
materially and adversely affects Tenant's use and occupancy of the Premises for
the purposes contemplated hereunder.
33. [INTENTIONALLY OMITTED.]
34. ACCESS BY LANDLORD. Landlord and any of the Landlord's Invitees
shall have the right to enter the Premises at all reasonable times, during
normal business hours if feasible under the circumstances, and upon reasonable
notice, if feasible under the circumstances, (i) to determine whether the
Premises are in good condition and whether Tenant is complying with its
obligations under this Lease, (ii) to do any necessary maintenance or make any
restoration to the Premises that Landlord has the right or obligation to
perform, (iii) to serve, post, or keep posted, any notices required or allowed
under this Lease, (v) to post "for sale" or "for rent" or "for lease" signs
during the final six months of the Lease Term, as extended, (vi) to show the
Premises to brokers, agents, prospective buyers, prospective tenants, or other
persons interested in a listing of, financing, purchasing, or occupying the
Project, the Premises or any portion of the Project or the Premises (during the
final six months of the Lease Term, as extended), and (vii) to shore the
foundations, footings, and walls of the Project, and to erect scaffolding and
protective barricades around and about the Premises, but not so as to prevent
entry to the Premises, and to do any other act or thing necessary for the
safety or preservation of the Premises if any excavation or other construction
is undertaken or is about to be undertaken on any adjacent property or nearby
street. In the event of an emergency Landlord shall have the right to enter the
Premises at any time, without prior notice to Tenant. Landlord's rights under
clause (vii) of this Paragraph extend, with Landlord's consent, to the owner of
adjacent property on which excavation or construction is to take place and the
adjacent property owner's agents, employees, officers, and contractors.
Landlord shall not be liable for any inconvenience, disturbance, loss of
business, nuisance, or other damage arising out of any entry on the Premises as
provided in this Paragraph except damage resulting directly from the negligent
acts, or intentional misconduct of Landlord or Landlord's Invitees. Tenant
shall not be entitled to any abatement or reduction of Basic Monthly Rent or
other Rental because of the exercise by Landlord of any rights under this
Paragraph.
35. LANDLORD'S RESERVED RIGHTS. Landlord, as owner of the Project,
reserves the right from time to time: (i) to change the name of the Project;
(ii) to temporarily utilize portions of the Common Areas; and (iii) to utilize
the lighting standards and other areas or improvements in the Common Areas for
advertising purposes.
36. INDEMNITY AND EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby
indemnifies Landlord against all Claims (as defined below) and all costs,
expenses, and attorneys' fees incurred in the defense or handling of any such
Claims or any action or proceeding brought on any of such Claims. For purposes
of this Lease, "Claims" shall mean all liabilities, damages, losses, costs,
expenses, attorneys' fees, and claims (except to the extent they result from
Landlord's negligent acts or willful misconduct) arising from or which seek to
impose liability under or because of (i) Tenant's or Tenant's Invitees' use of
the Premises, (ii) the conduct of Tenant's business, (iii) any activity, work,
or things done by Tenant or any of Tenant's Invitees in or about the Premises or
elsewhere, (iv) any breach or default in the performance of any obligation to be
performed by Tenant under this Lease, and/or (v) any negligence of Tenant or any
of Tenant's Invitees. If any action or proceeding is brought against Landlord by
reason of any such Claims, Tenant upon notice from Landlord shall defend such
action or proceeding at Tenant's sole cost by legal counsel satisfactory to
Landlord. Except to the extent caused by Landlord's negligent acts or willful
misconduct (or Landlord's breach of this Lease), Tenant assumes all risk of,
Tenant waives all claims against Landlord in respect of, and Landlord shall not
be liable for, any of the matters set forth above in this Paragraph or any of
the following: injury to Tenant's business, loss of income from such business,
or damage or injury to the goods, wares, merchandise, or other property or the
person of Tenant, Tenant's Invitees, or any other persons in, upon, or about the
Premises, whether such damage, loss, or injury is caused by or results from
criminal acts, fire, steam, electricity, gas, water, rain, the breakage,
leakage, obstruction or other defects of pipes, sewer lines, sprinklers, wires,
appliances, plumbing, air-conditioning or lighting fixtures, or any other cause,
conditions arising upon the Premises, or other sources or places, and regardless
of whether the cause of such damage, loss, or injury or the means of repairing
such damage, loss, or injury is inaccessible to Tenant. This Lease shall not be
affected or impaired by any change to any part of the Project or any sidewalks,
streets or improvements nearby the Project. Landlord may, at its election, at
any time and without liability to Tenant, change the name of the Project. The
foregoing indemnifications and releases shall not apply to any Claims or other
matters to the extent they are covered by insurance.
37. HAZARDOUS SUBSTANCES. Landlord hereby notifies Tenant, and Tenant
hereby acknowledges that, prior to the leasing of the Premises pursuant to this
Lease, Tenant has been notified, pursuant to California Health and Safety Code
Section 25359.7 (or any successor statute), that Landlord knows; or has
reasonable cause to believe, that certain hazardous substances (as such term is
used in such Section 25359.7), including without limitation common cleaning
supplies, office supplies, spillage of petroleum products from motor vehicles,
and other consumer products, may have come to be located on or beneath the
Premises and/or the Project. Tenant hereby indemnifies Landlord against all
Environmental Claims (as defined below) and all costs, expenses, and attorneys'
fees incurred in the defense of any such Environmental Claims or any action or
proceeding brought on any of such Environmental Claims. For purposes of this
Paragraph, "Environmental Claims" shall mean all liabilities, damages, losses,
costs, expenses, attorneys' fees, and claims (except to the extent they arise
as a result of the negligent acts or willful misconduct of Landlord or
Landlord's Invitees), arising from or which seek to impose liability (i)
because of or relating to any discharges, releases, or threatened releases of
noise, pollutants, contaminants, herbicides, pesticides, insecticides, or
hazardous or toxic wastes, substances, or materials (any of the preceding a
"Hazardous Material") by Tenant or Tenant's Invitees into ambient air, water,
or land from, on, under, or above the Premises, (ii) relating
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to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or hazardous or toxic
wastes, substances, or materials from, on, or under, the Premises by Tenant or
Tenant's Invitees, or (iii) under any environmental law (which shall mean any
federal, state or local law, statute, regulation, ordinance, guideline, or
common law principle relating to public health or safety or the use or control
of the environment, including without limitation the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act, the California
Hazardous Waste Control Law, the Federal Clean Air Act, The California Air
Resources Act, the Federal Clean Water Act, the California ▇▇▇▇▇▇-Cologne Water
Quality Control Act, the Federal Resource Conservation and Recovery Act, the
California ▇▇▇▇▇▇▇-Z'▇▇▇▇-▇▇▇▇▇ Solid Waste Management and Recovery Act, and
California Health and Safety Code Section 25359.7) and relating to the Premises
in the use, storage, manufacture, disposal, transportation, or manufacture of
Hazardous Substances by Tenant or Tenant's Invitees during the Term. Tenant
agrees to promptly reimburse Landlord for all of Landlord's costs arising from
periodic monitoring of Tenant's use, handling, or storage of Hazardous
Substances at or surrounding the Premises if Tenant's use, handling, or storage
of Hazardous Substances is in violation of applicable laws. Neither Tenant nor
any of Tenant's Invitees shall use, manufacture, store, or dispose of any
Hazardous Materials anywhere within the Premises or the Project which are or
could (a) be detrimental to the Project, human health, or the environment,
except in accordance with all applicable laws, or (b) adversely affect the value
of the Premises or the Project. If the Premises are contaminated (or, due to the
acts or omissions of Tenant or Tenant's Invitees, the Project is contaminated)
by any Hazardous Material during the Term, then, when tenant acquires actual
knowledge of such contamination or actual knowledge of facts which would lead a
reasonable person to believe such contamination might exist (1) Tenant shall
promptly notify Landlord in writing of such contamination, and (2) Landlord may
elect to either (A) demand that Tenant perform all remediation required by
Landlord (to Landlord's satisfaction and at Tenant's sole cost, necessary to
return the Premises (and/or the Project) to at least as good a condition as the
Premises (or the Project) are in as of the date of this Lease, which Tenant
shall immediately do upon receipt of notice from Landlord, or (B) proceed to
cause such investigation, clean-up, and remediation work which Landlord deems
reasonably necessary or desirable to be undertaken, whereupon the entire cost
thereof (plus a supervisory fee equal to ten percent (10%) of such cost) will be
payable by Tenant to Landlord upon demand as Additional Rent. If Tenant does not
promptly commence and diligently pursue such remediation, then Landlord may, at
Landlord's election, perform or cause to be performed such remediation and
Tenant shall immediately, upon demand, pay the cost thereof, plus a supervisory
fee in the amount of ten percent (10%) of such cost.
38. PROHIBITION AGAINST ASBESTOS-CONTAINING MATERIALS. Tenant shall not
cause or allow Tenant's Invitees to cause any materials which contain asbestos
in any form or concentration ("Asbestos-Containing Materials") to be used or
stored in the Premises or used in the construction of any improvements or
alterations to the Premises, including, without limitation, building or
construction materials and supplies. Such prohibition against
Asbestos-Containing Materials shall apply regardless of whether the
Asbestos-Containing Materials may be considered safe or approved for use by a
manufacturer, supplier, or governmental authority, or by common use or practice.
Landlord shall have the right, upon reasonable notice, to enter upon and conduct
inspections of the Premises to determine Tenant's compliance with this
paragraph. If Tenant causes or allows Tenant's Invitees to cause
Asbestos-Containing Materials to be used or stored in the Premises or used in
the construction of any improvements or alterations to the Premises, (a) Tenant
shall, upon notice from Landlord, immediately remove such Asbestos-Containing
Materials at Tenant's sole cost, (b) such removal shall comply with all
applicable laws, regulations, and requirements concerning asbestos and the
removal and disposal of Asbestos-Containing Materials, (c) Tenant shall
reimburse Landlord for all expenses incurred in connection with any inspection
of the Premises conducted by Landlord, and (d) unless Tenant completes such
removal within 30 days after notice from Landlord, Landlord may, at its
election, do either or both of the following: (i) declare Tenant in breach of
this Lease and terminate this Lease upon 10 days prior written notice to Tenant,
and (ii) remove and dispose of the Asbestos-Containing Materials and obtain
reimbursement from Tenant for the cost of such removal and disposal. Tenant
shall indemnify Landlord and Landlord's directors, officers, employees, and
agents against all costs, liability, expenses, penalties, and claims for
damages, including, without limitation, litigation costs and attorneys' fees,
arising from (A) the presence of Asbestos-Containing Materials upon the
Premises, to the extent that such Asbestos-Containing Materials are used or
stored in the Premises or used in the construction of any improvements or
alterations to the Premises by Tenant or Tenant's agents, employees,
representatives, or independent contractors, (b) any lawsuit, settlement,
governmental order, or decree relating to the presence, handling, removal, or
disposal of Asbestos-Containing Materials upon or from the Premises, to the
extent that such Asbestos-Containing Materials are used or stored in the
Premises or used in the construction of any improvements or alternations to the
Premises by Tenant or Tenant's agents, employees, representatives or independent
contractors, or (C) Tenant's failure to perform its obligations to remove such
Asbestos-Containing Materials under this paragraph.
39. SECURITY MEASURES. Tenant acknowledges (i) that the Basic Monthly
Rent does not include the cost of any security measures for any portion of the
Project (ii) that Landlord shall have no obligation to provide any such security
measures, (iii) that Landlord has made no representation to Tenant regarding the
safety or security of the Project, and (iv) that Tenant will be solely
responsible for providing any security it deems necessary to protect itself, its
property, and Tenant's Invitees in, on, or about the Project. If Landlord
provides any security measures at any time, then the cost thereof shall be
included as part of the Lease Expenses, but Landlord will not be obligated to
continue providing such security measures for any period of time, Landlord may
discontinue such service without notice and without liability to Tenant, and
Landlord will not be obligated to provide such security measures with any
particular standard of care. Tenant assumes all responsibility for the security
and safety of Tenant, Tenant's property, and Tenant's Invitees. Tenant releases
Landlord from all claims for damage, loss, or injury to Tenant, Tenant's
Invitees, and/or to the personal property of Tenant and/or of Tenant's Invitees,
even if such damage, loss or injury is caused by or results from the criminal or
negligent acts of third parties. Landlord shall have no duty
Landlord Tenant
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to warn Tenant of any criminal acts or dangerous conduct that has occurred in or
near the Project, regardless of Landlord's knowledge of such crimes or conduct,
and Tenant is hereby instructed to conduct its own investigation through local
police agencies regarding any criminal acts or dangerous conduct that has
occurred in or near the Project.
40. SUBORDINATION AND ATTORNMENT. This Lease and Tenant's rights under
this Lease are subject and subordinate to any mortgage, deed of trust, ground
lease, or underlying lease (and to all renewals, modifications, consolidations,
replacements, or extensions thereof), now or hereafter affecting the Premises.
The provisions of this Paragraph shall be self-operative, and no further
instrument of subordination shall be required. In confirmation of such
subordination, however, Tenant shall promptly execute and deliver any
instruments that Landlord, any Lender, or the lessor under any ground or
underlying lease, may reasonably request to evidence such subordination,
provided that any such instruments shall contain language providing that so
long as Tenant is not in default under this Lease, the beneficiary under such
subordination instrument will not disturb Tenant's quiet possession of the
Premises. Notwithstanding the preceding provisions of this Paragraph, if any
ground lessor or Lender elects to have this Lease prior to the lien of its
ground lease, deed of trust, or mortgage, and gives written notice thereof to
Tenant that this Lease shall be deemed prior to such ground lease, deed of
trust, or mortgage, whether this Lease is dated prior or subsequent to the date
of such ground lease, deed of trust, or mortgage, then this Lease shall be
deemed to be prior to the lien of such ground lease or mortgage and such ground
lease, deed of trust, or mortgage shall be deemed to be subordinate to this
Lease. If any Lender, or the lessor of any ground or underlying lease affecting
the Premises, shall hereafter succeed to the rights of Landlord under this
Lease, whether by foreclosure, deed in lieu of foreclosure or otherwise, then
(i) such successor landlord shall not be subject to any offsets or defenses
which Tenant might have against Landlord, (ii) such successor landlord shall
not be bound by any prepayment by Tenant of more than one month's installment
of Basic Monthly Rent or any other Rental, (iii) such successor landlord shall
not be subject to any liability or obligation of Landlord except those arising
after such succession, (iv) Tenant shall attorn to and recognize such successor
landlord as Tenant's landlord under this Lease, (v) Tenant shall promptly
execute and deliver any instruments that may be necessary to evidence such
attornment, (vi) Tenant hereby irrevocably appoints Landlord (and such
successor landlord) as Tenant's special attorney-in-fact to execute and deliver
such instruments on behalf of Tenant, and (vii) upon such attornment, this
Lease shall continue in effect as a direct lease between such successor
landlord and Tenant upon and subject to all of the provisions of this Lease. If
any Lender requests reasonable amendment(s) to this Lease at any time during
the Term, then Tenant shall not unreasonably withhold or delay its written
consent to such amendment(s). Notwithstanding anything to the contrary
contained in this Lease, Tenant shall not be required to execute any documents
subordinating this Lease or attorning to any successor-in-interest or ground
lessor, unless such successor-in-interest or ground lessor assumes, in writing,
all obligations of the Landlord under this Lease from and after the date such
successor-in-interest or ground lessor succeeds to the interests of Landlord
under this Lease. Furthermore, any such successor-in-interest or ground lessor
who succeeds to Landlord's interest under this Lease shall, to the extent the
Landlord delivers any security deposit held by Landlord to such
successor-in-interest or ground lessor, assume Landlord's obligations under
this Lease with respect to such security deposit.
41. ESTOPPEL CERTIFICATES. Within 10 days after notice from Landlord,
Tenant shall execute and deliver to Landlord, in recordable form, a certificate
stating (i) whether this Lease is unmodified and in full force and effect, or
whether it is in full force and effect as modified, and stating all
modifications, (ii) the then-current Basic Monthly Rent, (iii) the dates to
which Basic Monthly Rent has been paid in advance, (iv) the amount of any
security deposit, prepaid rent or other payment constituting Rental which has
been paid, (iv) whether or not Tenant or Landlord is in default under this
Lease and whether there currently exist any defenses or rights of offset under
the Lease, and (v) such other matters as Landlord shall reasonably request
which are statements of fact. Tenant's failure to deliver such certificate
within such 10-day period shall be conclusive upon Tenant for the benefit of
Landlord, and any successor in interest to Landlord, any lender or proposed
lender, and any purchaser of the Project that, except as may be represented by
Landlord, this Lease is unmodified and in full force and effect, no Rental has
been paid more than 30 days in advance, and neither Tenant nor Landlord is in
default under this Lease. Tenant irrevocably constitutes and appoints Landlord
as its special attorney-in-fact to execute and deliver such certificate to any
third party if Tenant fails to deliver such certificate within such 10-day
period.
42. WAIVER. No delay or omission in the exercise of any right or remedy of
either party in the event of any default by the other party shall impair such
right or remedy or be construed as a waiver. The receipt and acceptance by
Landlord of delinquent Rental shall not constitute a waiver of any default other
than the particular Rental payment accepted. Landlord's receipt and acceptance
from Tenant, on any date (the "Receipt Date"), of an amount less than Rental due
on such Receipt Date, or to become due at a later date but applicable to a
period prior to such Receipt Date, shall not release Tenant of its obligation
(i) to pay the full amount of such Rental due on such Receipt Date or (ii) to
pay when due the full amount of such Rental to become due at a later date but
applicable to a period prior to such Receipt Date. No act or conduct of
Landlord, including without limitation, the acceptance of the keys to the
Premises, shall constitute an acceptance by Landlord of the surrender of the
Premises by Tenant before the Expiration Date. Only a written notice from
Landlord to Tenant stating Landlord's election to terminate Tenant's right to
possession of the Premises shall constitute acceptance of the surrender of the
Premises and accomplish a termination of this Lease. Landlord's consent to or
approval of any act by Tenant requiring Landlord's consent or approval shall not
be deemed to waive or render unnecessary Landlord's consent to or approval of
any other subsequent act by Tenant. Any waiver by either party of any default
must be in writing and shall not be a waiver of any other default concerning the
same or any other provision of this Lease. Tenant hereby waives any rights
granted to Tenant under California Code of Civil Procedure Section 1179,
California Civil Code Section 3275, and/or any successor statute(s). Tenant
represents and warrants that if Tenant breaches this Lease and, as a result,
this Lease is terminated, Tenant will not suffer any undue hardship as a result
of such
Landlord Tenant
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termination and, during the Term, will make such alternative or other
contingency plans to provide for its vacation of the Premises and relocation in
the event of such termination. Tenant acknowledges that Tenant's waivers set
forth in this Paragraph are a material part of the consideration for Landlord's
entering into this Lease and that Landlord would not have entered into this
Lease in the absence of such waivers.
43. BROKERS. Each party represents that, except as disclosed in Paragraph
2.15, above, no real estate broker, agent, finder, or other person is
responsible for bringing about or negotiating this Lease and neither party has
dealt with any real estate broker, agent, finder, or other person, relative to
this Lease in any manner. Each party hereby indemnifies the other against all
liabilities, damages, losses, costs, expenses, attorneys' fees and claims
arising from any claims that may be made against the indemnitee by any real
estate broker, agent, finder, or other person (other than as set forth above),
alleging to have acted on behalf of or to have dealt with the indemnitor.
44. EASEMENTS. Landlord may, at its election, from time to time, grant
such easements, rights and dedications, and cause the recordation of parcel
maps, easement and operating agreements, and restrictions affecting the
Premises and the Project. Tenant shall promptly sign any documents or
instruments to accomplish the foregoing upon request by Landlord. Tenant
irrevocably appoints Landlord as Tenant's special attorney-in-fact to execute
and deliver such documents or instruments on behalf of Tenant if Tenant refuses
or fails to do so.
45. LIMITATIONS ON LANDLORD'S LIABILITY. If Landlord is in default of this
Lease, and as a consequence Tenant recovers a money judgment against Landlord,
such judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levy against the right, title, and interest of
Landlord in the Project, and out of rent or other income from the Project
receivable by Landlord or out of the consideration received by Landlord from the
sale or other disposition of all or any part of Landlord's right, title, and
interest in the Project and from any insurance proceeds available to Landlord
with respect to such matter. Neither Landlord nor Landlord's shareholders,
officers, directors, agents, or the partners comprising Landlord (if any) shall
be personally liable for any deficiency.
46. SALE OR TRANSFER OF PREMISES. If Landlord sells or transfers any
portion of the Premises, and the purchaser or other transferee assumes
Landlord's obligations under this Lease from and after the date of such sale or
transfer in writing, Landlord, on consummation of the sale or transfer, shall
be released from any liability thereafter accruing under this Lease. If any
security deposit or prepaid rent has been paid by Tenant, Landlord shall
transfer the security deposit and/or prepaid rent to Landlord's
successor-in-interest and on such transfer Landlord shall be discharged from
any further liability arising from the security deposit or prepaid rent.
47. QUITCLAIM DEED. Tenant shall execute and deliver to Landlord on the
Expiration Date or earlier termination of this Lease, promptly on Landlord's
request, a quitclaim deed to the Premises, in recordable form, designating
Landlord as transferee.
48. NO MERGER. The voluntary or other surrender of this Lease by Tenant,
or a mutual cancellation of this Lease, or a termination by Landlord, shall not
work a merger, and shall, at the option of Landlord, terminate any existing
subleases or may, at the option of Landlord, operate as an assignment to
Landlord of any such subleases.
49. CONFIDENTIALITY. Except as essential to the consummation of the
transaction contemplated by this Lease (together with all amendments and
addenda hereto):
49.1. Tenant shall keep and maintain the terms of this Lease and the
transactions contemplated by this Lease or any aspect of this Lease in strict
confidence; and
49.2. Tenant may not make or allow any notices, statements,
disclosures, communication, or news releases concerning this Lease, the terms
of this Lease and the transactions contemplated by this Lease or any aspect of
this Lease.
Nothing provided herein, however, shall prevent Tenant from disclosing to its
legal counsel and/or certified public accountants, prospective purchasers, or
lenders the existence and terms of this Lease or any transaction under this
Lease, or any aspect of this lease, or from complying with any governmental or
court order or similar legal requirement which requires such party to disclose
this Lease, the terms of this Lease, the transaction contemplated by this Lease
and/or any aspect of this Lease; provided that such party uses reasonable and
diligent good faith efforts to disclose no more than is absolutely required to
be disclosed by such legal requirement. If Tenant violates this confidentiality
provision, in addition to all other remedies to which Landlord may be entitled
under law or in equity, Landlord shall be entitled to receive immediately the
entire value of any rent relief, rent abatement, free rent, reimbursement, or
other concession which Landlord has previously granted to Tenant.
50. MISCELLANEOUS.
50.1. Tenant covenants and agrees not to protest or in any way oppose
any application for a license to serve or sell liquor filed by tenants or other
users of space within the Project.
50.2. Upon Landlord's written request, no more frequently than once
per calendar year, Tenant shall promptly furnish to Landlord, with financial
statements certified by Tenant to be true and correct, reflecting Tenant's then
current financial condition. Such financial statements shall include a current
balance sheet and a profit and loss statement covering the most recent 12-month
period available. In addition, upon Landlord's written
Landlord Tenant
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request, Tenant shall allow Landlord, or a certified public accountant of
Landlord's choosing, to determine Tenant's current financial condition by
reviewing Tenant's current financial books, records, and accounts. Landlord
shall keep all such financial statements confidential except that the
exceptions applicable to Tenant's similar obligation in Paragraph 49.2, above,
shall apply to Landlord, and except that Landlord shall have the right to
disclose such information to any lender or prospective lender or purchaser or
prospective purchaser.
50.3. Notwithstanding any other provision in this Lease to the contrary,
Tenant shall refrain from selling or otherwise distributing any alcoholic
beverages unless such sale is specifically permitted pursuant to Paragraph
2.12, above, and in any event, such sales shall be expressly forbidden under
this Lease unless and until Tenant holds the appropriate license as issued
and/or approved by the California Alcoholic Beverage Control Agency.
50.4. This Lease shall be governed by and construed in accordance with the
laws of the state in which the Premises are located. If the Premises are located
outside of California, then the references in this Lease to California statutes
shall be deemed to include any relevant statute of the jurisdiction in which
the Premises are located that is comparable to such California statutes.
50.5. For purposes of venue and jurisdiction, this Lease shall be deemed
made and to be performed in the City of San Diego, California (whether or not
the Premises are located in San Diego, California) and Landlord and Tenant
hereby consent to the jurisdiction of the Courts of the County of San Diego.
50.6. This Lease may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one document.
50.7. Whenever the context so requires, all words used in the singular
shall be construed to have been used in the plural (and vice versa), each
gender shall be construed to include any other genders, and the word "person"
shall be construed to include a natural person, a corporation, a firm, a
partnership, a joint venture, a trust, an estate or any other entity.
50.8. Each provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law. If any provision of this Lease or the
application of such provision to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected by such
invalidity or unenforceability, unless such provision or such application of
such provision is essential to this Lease.
50.9. In the event any litigation, arbitration, mediation, or other
proceeding ("Proceeding") is initiated by any party against any other party to
enforce, interpret or otherwise obtain judicial or quasi-judicial relief in
connection with this Lease the prevailing party in such Proceeding shall be
entitled to recover from the unsuccessful party all costs, expenses, and actual
attorney's fees and expert witness fees relating to or arising out of () such
Proceeding (whether or not such Proceeding proceeds to judgment), and () any
post-judgment or post-award proceeding including without limitation one to
enforce any judgment or award resulting from any such Proceeding. Any such
judgment or award shall contain a specific provision for the recovery of all
such subsequently incurred costs, expenses, and actual attorney's fees and
expert witness fees.
50.10. This Lease shall become effective when it has been executed by each
Landlord and Tenant.
50.11. Subject to any restriction on transferability contained in this
Lease, this Lease shall be binding upon and shall inure to the benefit of the
successors-in-interest and assigns of each party to this Lease. Nothing in this
Paragraph shall create any rights enforceable by any person not a party to this
Lease, except for the rights of the successors-in-interest and assigns of each
party to this Lease, unless such rights are expressly granted in this Lease to
other specifically identified persons.
50.12. The headings of the Paragraphs of this Lease have been included only
for convenience, and shall not be deemed in any manner to modify or limit any of
the provisions of this Lease, or be used in any manner in the interpretation of
this Lease.
50.13. Time and strict and punctual performance are of the essence with
respect to each provision of this Lease.
50.14. This Lease contains the entire agreement between Landlord and
Tenant with respect to the subject matter of this Lease, is a complete and
exclusive statement of the terms of such agreement, and supersedes all prior
understandings, agreements, representations and warranties, if any, with
respect to such subject matter.
50.15. Each party to this Lease and its legal counsel have had an
opportunity to review and revise this Lease. The rule of construction that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Lease or any Addendum or Exhibit to this Lease,
and such rule of construction is hereby waived by Tenant.
50.16. All notices or other communications required or permitted to be
given to Tenant or Landlord shall be in writing and shall be personally
delivered, sent by certified mail, postage prepaid, return receipt requested,
or sent by an overnight express courier service that provides written
confirmation of delivery, to Tenant at the address set forth in Paragraph 2.11
of this Lease and to Landlord at the address set forth in Paragraph 2.10
Landlord Tenant
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of this Lease. Each such notice or other communication shall be deemed given,
delivered and received upon its actual receipt, except that if it is sent by
mail in accordance with this Paragraph, then it shall be deemed given,
delivered and received three days after the date such notice or other
communication is deposited with the United States Postal Service in accordance
with this Paragraph. Landlord or Tenant must give a notice of a change of its
address to the other, if such address changes.
50.17. If more than one person is Tenant, then the obligations of
Tenant under this Lease shall be the joint and several obligations of each of
such persons; provided, however, that any act or signature of one or more of any
of such persons and any notice or refund given to or served on any one of such
persons shall be fully binding on each of such persons.
50.18. All provisions, whether covenants or conditions, to be
performed or observed by Tenant shall be deemed to be both covenants and
conditions.
50.19. All payments to be made by Tenant to Landlord under this Lease
shall be in United States currency.
50.20. The Exhibits and Addendum attached to this Lease are
incorporated herein by this reference.
50.21. The parties hereto waive trial by jury in connection with
proceedings or counterclaims brought by either of the parties hereto against the
other.
50.22. This Lease and the Exhibits A, B, C, Addendum and rider, if any,
attached hereto and forming a part hereof, as set forth herein, constitute all
of the covenants, promises, assurances, representations, warranties, statements,
agreements, conditions and understandings between Landlord and Tenant
concerning the Premises and the Project and there are no covenants, promises,
assurances, representations, warranties, statements, conditions, or
understandings, either oral or written, between them, other than as herein set
forth. Except as herein otherwise provided, no subsequent alteration, change, or
addition to this Lease shall be binding upon Landlord or Tenant unless reduced
to writing and signed by each of them.
50.23. This Lease supersedes and revokes any and all previous
negotiations, arrangements, letters of intents, offers to lease, lease proposals
or drafts, brochures, representations, and information conveyed, whether oral or
written, between parties hereto or their respective representations or any other
person purported to represent Landlord or Tenant. The Tenant acknowledges it has
not been induced to enter into this Lease by any representations not set forth
in the Lease, nor has it relied on any such representations. No such
representations should be used in the interpretation or construction of this
Lease and the Landlord shall have no liability for any consequences arising as a
result of any such representations.
LANDLORD: Insurance Company of the West,
a California corporation
By: American Assets, Inc.,
a California corporation
Its Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Vice President
Date: May 28, 1996
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\
TENANT: The Lightspan Partnership, Inc.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
Its: Controller
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Date: May 24, 1996
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Landlord___________ Tenant__________
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ADDENDUM NO. 1
TO FULL SERVICE MODIFIED GROSS LEASE
1. BASIC RENT
Basic Monthly Rent (as defined below), during the Lease Term shall be as
follows:
Months 1-6 $ 72,627.84 per month (1.1208 per rentable square foot)--
subject to partial deferral as set forth in ▇▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇▇)
Months 7-12 $ 81,699.84 per month (1.2608 per rentable square foot)
Months 13-18 $ 90,123.84 per month (1.3908 per rentable square foot)
Months 19-24 $ 98,547.84 per month (1.5208 per rentable square foot)
Months 25-36 $103,083.84 per month (1.5908 per rentable square foot)
Months 37-48 $ 94,608.00 per month (1.46 per rentable square foot)
Months 49-60 $ 98,496.00 per month (1.52 per rentable square foot)
Months 61-72 $102,435.84 per month (1.5801 per rentable square foot)
Months 73-84 $106,533.27 per month (1.6433 per rentable square foot)
2. DEFERRED RENT
The Basic Monthly Rent due under the terms of Section 2.5, of this Lease
for the following identified period (hereinafter the "Deferral Period")
shall be partially deferred until the end of the Initial Lease Term as
set forth in Paragraph 2.4. Should Tenant commit a default or breach under
the terms of this Lease, as described in Paragraph 26, at any time during
the Initial Lease Term, the total amount of Basic Monthly Rent deferred
during the Deferral Period shall immediately become due and owing to
Landlord.
A. The Deferral Period shall consist of the following:
AMOUNT OF DEFERRED
MONTHS BASIC MONTHLY RENT
1, 2, and 3 $60,264.00 per month
As a result of such deferral, the Basic Monthly Rent initially
payable by Tenant hereunder during months 1, 2, and 3 of the Initial
Lease Term (but subject to the provisions hereof regarding default)
will be $12,363.84.
B. In the event no default or breach under the terms of the Lease has
been committed by Tenant as of the end of the Initial Lease Term, the
Basic Monthly Rent which was deferred in the Deferral Period will be
deemed forgiven.
C. Tenant shall be responsible for all Additional Rent, including
Tenant's Pro Rate Share of Lease Expenses (as defined in Section 8.1
of the Lease), during the entire Deferral Period.
3. OPTION TO EXTEND
Tenant shall have the option to extend the Term of this Lease (the
"Option") for one (1) period of five (5) years (such period an "extension
term") provided Tenant gives Landlord written notice of its election to
exercise the Option at least 180 days prior to the expiration of the Term
of this Lease. The terms and conditions governing such extension term will
be the same as those for the Initial Lease Term, except and to the extent
modified by the terms of Paragraph E, below. Time is of the essence.
A. The Option is personal to the Tenant originally named in this Lease
and may not be exercised by or be assigned to, voluntarily or
involuntarily, any other person or entity separate from the Lease.
The Option herein granted to Tenant may be assigned with any
permitted assignment of this Lease.
B. Tenant shall not have the right to exercise the Option,
notwithstanding anything set forth above to the contrary:
1. During any period of time commencing from the date Landlord gives
to Tenant a written notice that Tenant is in default under any
provision of this Lease, and continuing until the default alleged
in said notice is cured;
Landlord Tenant
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ADDENDUM NO. 1 - Page 1 of 4
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2. During the period of time commencing on the day after a monetary
obligation to Landlord is due from Tenant and unpaid (without any
necessity for notice thereof to Tenant) and continuing until the
obligation is paid;
3. At any time after the occurrence of any default described in
Paragraph 26 of the Lease other than those described in the
preceding paragraphs (without any necessity of Landlord to give
notice of such default to Tenant); or
4. In the event that Landlord has given to Tenant two or more notices
of default or a late charge has become payable under the Lease
during the twelve-month period prior to the time that Tenant
intends to exercise the Option.
C. The period of time within which the Option may be exercised shall not
be extended or enlarged by reason of Tenant's inability to exercise
the Option because of the foregoing provisions of Paragraph B, even if
the effect thereof is to eliminate Tenant's right to exercise the
Option.
D. All rights with respect to the Option shall terminate and be of no
further force or effect even after Tenant's due and timely exercise of
the Option, if, after such exercise, but prior to the commencement of
the applicable extension term, (1) Tenant fails to pay to Landlord a
monetary obligation of Tenant for a period of ten days after such
obligation become due (without any necessity of Landlord to give
notice thereof to Tenant); (2) Tenant fails to cure a non-monetary
default within 30 days after the date the Landlord gives notice to
Tenant of such default (or such longer time as is reasonably needed to
cure such default provided that Tenant commences its cure during such
30-day period and diligently prosecutes it to completion); or (3)
Landlord gives to Tenant two or more notices of default or a late
charge becomes payable for any such default, whether or not such
defaults are cured.
E. The Basic Monthly Rent shall be increased on the first day of the
extension term (the "Rental Adjustment Date") to 95% of "fair rental
value" of the Premises, determined in the following manner.
1. Not later than 270 days prior to the Rental Adjustment Date,
Landlord and Tenant shall meet in an effort to negotiate, in good
faith, the fair rental value of the Premises as of such applicable
Rental Adjustment Date. If Landlord and Tenant have not agreed upon
the fair rental value of the Premises at least 225 days prior to
the applicable Rental Adjustment Date, the fair rental value shall
be determined by appraisal as described below.
2. If Landlord and Tenant are not able to agree upon the fair rental
value of the Premises within the time period prescribed in
Paragraph 1, then Landlord and Tenant shall attempt to agree in
good faith upon a single appraiser not later than 210 days prior to
the applicable Rental Adjustment Date. If Landlord and Tenant are
unable to agree upon a single appraiser within such time period,
then Landlord and Tenant shall each appoint an appraiser not later
than 210 days prior to the applicable Rental Adjustment Date.
Within five days thereafter, the two appointed appraisers shall
appoint a third appraiser. If Landlord and Tenant agree upon an
appraiser, or if either Landlord or Tenant fails to appoint its
appraiser within the prescribed time period, the single appraiser
appointed shall determine the fair rental value of the Premises. If
both parties fail to appoint appraisers within the prescribed time
periods, then the first appraiser thereafter selected by a party
shall determine the fair rental value of the Premises. Each party
shall bear the cost of its own appraiser and the parties shall
share equally the cost of the single or third appraiser if
applicable. Each such appraiser must have at least five years
experience in the appraisal or commercial/industrial real property
in the area in which the Project is located and shall be members
of a professional organization such as MAI or equivalent.
3. For the purposes of such appraisal, the term "fair rental value"
shall mean the price that a ready and willing tenant would pay, as
of the applicable Rental Adjustment Date, as monthly rent to a
ready and willing Landlord of property comparable to the Premises
if such property were exposed for lease (on the terms and
conditions of this Lease) on the open market for a reasonable
period of time and taking into account that such property is used
for general office purposes under the terms and conditions of this
Lease. If a single appraiser is chosen, then such appraiser shall
determine the fair market value of the Premises. Otherwise, the
fair rental value of the Premises shall be the arithmetic average
of the two of the three appraisals which are closest in amount, and
the third appraisal shall be disregarded. In no event, however,
shall the Basic Monthly Rent be reduced by reason of such
computation or the operation of this Article.
Landlord and Tenant shall instruct the appraiser(s) to complete
their determination of the fair rental value no later than 190 days
prior to the applicable Rental Adjustment Date. If,
ADDENDUM NO.1 - Page 2 of 4 Landlord______ Tenant______
25
notwithstanding such instruction, the fair rental value is not
determined before the first day of an extension term, then Tenant
shall continue to pay to Landlord the Basic Monthly Rent
applicable to the Premises immediately prior to such extension
term, until the fair rental value of the Premises is determined.
When the fair rental value of the Premises is determined,
Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten days after receipt of such notice,
the difference between the Basic Monthly Rent actually paid by
Tenant to Landlord and the new Basic Monthly Rent determined
hereunder.
F. On each anniversary date of the commencement of an extension term the
Basic Monthly Rent will increase four percent (4%) annually.
4. ELECTRICAL SERVICE
Tenant shall be solely responsible for the cost of electric services for
the Premises.
5. BASE YEAR
Landlord shall utilize a 1997 Base Year, with expenses estimated on 100%
occupancy of the Project. Any increases in the Operating Expenses over the
previous year shall be passed through to Tenant as additional rent
pursuant to Paragraph 8.3 of the Lease. Operating Expenses shall be
reconciled at the end of each calendar year.
6. SPACE PLANNER ALLOWANCE
Landlord shall provide a $1,500.00 allowance for Tenant's interior planner
to prepare preliminary drawings.
7. PARKING
The Tenant shall have exclusive use of all parking on the site. Tenant
understands the building is currently parked at 4.2 spaces per 1,000
rentable square feet leased. All parking will be free for the Tenant and
Tenant's visitors.
8. ASSIGNMENT AND SUBLETTING
The Lightspan Partnership shall have the right to assign the Lease in its
entirety, or to sublease all or a portion of the Premises without the
consent of the Landlord to any entity resulting from a merger or
consolidation with The Lightspan Partnership or any subsidiary or
affiliate with The Lightspan Partnership, provided that the use is the
same as that of the Tenant and that the assignee has a net worth equal to,
or greater than, the Tenant at the time of assignment. Any other
assignment or sublease shall be made with a prior written approval of the
Landlord, whose consent shall not be unreasonably withheld or delayed.
Profits, if any, received by Tenant from subleasing shall be split 50/50
with the Landlord after all subleasing expenses including tenant
improvements, commissions, lost rent during vacancy, and other incidental
expenses are considered; except that the provisions of this sentence shall
not apply during the forty third through eighty fourth months of the
Initial Lease Term. Sale of Tenant's stock in a public offering will not
constitute an assignment or subletting under this Lease.
9. SIGNAGE
Tenant shall have complete discretion over signage within city codes and
regulations to be installed at its own cost and expense. Sign criteria
shall be in accordance with the regulations of the City of San Diego.
10. NON-DISTURBANCE AGREEMENT
A Non-Disturbance Agreement will be provided from the owner and all
lenders prior to lease commencement.
11. AMERICANS WITH DISABILITIES ACT
The Building's common areas are believed to meet current requirements set
forth by the Americans With Disabilities Act ("ADA"). In the event,
through no action by Tenant, Tenant is informed by the City of San Diego
(or other applicable government entity), that as part of the process of
obtaining approval for the plans and specifications for the Tenant's Work,
work must be performed relative to the Building's common areas in order to
bring them into compliance with the ADA, then Landlord shall bear the cost
of such improvements pursuant to Paragraph 12, below. None of the
construction allowance payable by Landlord pursuant to Exhibit "C" to the
Lease will be used to upgrade the Building for ADA requirements imposed as
conditions by the City of San Diego, as provided above.
Landlord Tenant
----- -----
ADDENDUM ▇▇. ▇ - ▇▇▇▇ ▇ ▇▇ ▇
▇▇
▇▇. LANDLORD'S IMPROVEMENTS TO THE PREMISES
The following improvements to the Building shall be paid for by Landlord.
The amounts so paid will not constitute a part of the construction
allowance payable by Landlord pursuant to Exhibit "C" to the Lease:
A. To the extent required by the City of San Diego (simply as a result of
Tenant's submittal of plans to the City and Tenant's application for permits,
and not as a result of any affirmative attempt by Tenant to call such matter to
the attention of the City) in order to meet applicable codes or regulations,
Landlord shall pay to raise the exterior metal railings on the Building
balconies.
B. To the extent required by the City of San Diego (simply as a result of
Tenant's submittal of plans to the City and Tenant's application for permits,
and not as a result of any affirmative attempt by Tenant to call such matter to
the attention of the City) in order to meet applicable codes or regulations,
Landlord will upgrade the existing ceiling to meet earthquake safety
requirements.
C. To the extent required by the City of San Diego (simply as a result of
Tenant's submittal of plans to the City and Tenant's application for permits,
and not as a result of any affirmative attempt by Tenant to call such matter to
the attention of the City) in order to meet applicable codes or regulations,
Landlord will upgrade the Premises to meet ADA requirements.
D. To the extent required by the City of San Diego (simply as a result of
Tenant's submittal of plans to the City and Tenant's application for permits,
and not as a result of any affirmative attempt by Tenant to call such matter to
the attention of the City) in order to meet applicable codes or regulations,
Landlord will change Halon to FM200 System in the designated computer room
(provided, however, such change will only be Landlord's responsibility if it is
required to meet applicable codes and not because of Tenant's particular use of
such space).
E. Landlord will remove the 75 kva transformers at each floor and replace
them with 150 kva transformers -- providing each floor with 400 amps.
F. To the extent required by the City of San Diego (simply as a result of
Tenant's submittal of plans to the City and Tenant's application for permits,
and not as a result of any affirmative attempt by Tenant to call such matter to
the attention of the City) in order to meet applicable codes or regulations (in
particular, Title 24), Landlord will install electronic time clocks for the
lighting system in the Building.
G. To the extent required by the City of San Diego (simply as a result of
Tenant's submittal of plans to the City and Tenant's application for permits,
and not as a result of any affirmative attempt by Tenant to call such matter to
the attention of the City) in order to meet applicable codes and regulations (in
particular, Title 24), Landlord will install 15 bypass timers for the lighting
system in the Building
13. GOVERNANCE.
Any provisions of this Addendum which conflict with the provisions of the
Lease preceding this Addendum shall supersede and replace such conflicting
Lease provisions.
TENANT: The Lightspan Partnership, Inc.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇
--------------------------
Its: CONTROLLER
--------------------------
Date: May 24, 1996
--------------------------
LANDLORD: Insurance Company of the West,
a California Corporation
By: American Assets, Inc.,
a California Corporation
Its Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Vice President
Date: MAY 28, 1996
--------------------------
ADDENDUM ▇▇. ▇ - ▇▇▇▇ ▇ ▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----- -----
27
EXHIBIT "A"
TO STANDARD OFFICE LEASE
SITE PLAN FOR THE BUILDING
--------------------------
To be inserted at a later date.
DISCLAIMER: This drawing is for general information purposes only. Any and all
features, matters and other information depicted hereon or contained herein are
for illustrative marketing purposes only, are subject to modification without
notice, are not intended to be relied upon by any party and are not intended to
constitute representations and warranties as to the size and nature of
improvements to be constructed (or that any improvements will be constructed) or
as to the Identity or nature of any occupants thereof.
Landlord Tenant
----- -----
28
EXHIBIT "B"
TO STANDARD OFFICE LEASE
DEMISED PREMISES PLAN
---------------------
Demised Premises Plan is to be the set of construction drawings as
completed by the Tenant or the Tenant's approved representative and approved by
the Landlord and appropriate government agency. Actual area of Demised Premises
Plan to be field verified upon occupancy of premises by Tenant. Rental rate
(basic rent) to be adjusted (increased or decreased) to reflect the actual
square footage.
Landlord Tenant
----- -----
29
EXHIBIT "C"
DESCRIPTION OF WORK
(Work Letter Agreement)
This Work Letter is executed simultaneously with and is an exhibit to that
certain Lease (the "Lease"), dated as of the date hereof between Insurance
Company of the West ("Landlord"), and The Lightspan Partnership ("Tenant"),
wherein Tenant is leasing certain office space (the "Premises") at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇"), ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇, as more particularly described
in the Lease. In consideration of the parties entering into the Lease and of
the mutual promises and covenants hereinafter contained, the Landlord and
Tenant hereby agree as follows:
SECTION A. REPRESENTATIVES. Landlord, at its expense, appoints Landlord's
Representative to act for Landlord and Tenant, at its expense, appoints
Tenant's Representative to act for Tenant in all matters covered by this Work
Letter Agreement. All inquiries, request, instructions, authorization and other
communications with respect to the matters covered by this Work Letter
Agreement will be made to Landlord's Representative or Tenant's Representative,
as the case may be. Either party may change its Representative under this Work
Letter Agreement at any time with one day prior written notice to the other
party.
Tenant's Representative: ▇▇▇▇▇▇ ▇▇▇▇▇, Space Matters
Landlord's Representative: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, American Assets
Space Planner: ▇▇▇▇▇▇ - ▇▇▇▇▇ Interior Architecture
SECTION 1. PLAN AND BID APPROVAL. Immediately following the execution of
this Lease, Tenant shall cause the following detailed plans and specifications
(the "Plans") to be prepared by ▇▇▇▇▇▇ ▇▇▇▇▇ Interior Architecture (or another
architect and/or space planner pre-approved by Landlord) and delivered to
Landlord; which Plans shall reflect the work to be performed within the Premises
by Tenant in order to suitably prepare the Premises for Tenant's use ("Tenant's
Work"). Plans to be approved include: 1) Tenant Approved Space Plan; 2)
Construction Specifications & Standards; 3) 50% Complete Drawings; and 4) Final
Construction Drawings. Tenant and Landlord agree that the mechanical and
electrical systems will be done on a design-build basis utilizing subcontractors
that are mutually acceptable to Tenant and Landlord. The selection of these
subcontractors will be managed by Tenant and the selected General Contractor
pursuant to Section 7 and shall (along with the plans and specifications
prepared by such subcontractors) be subject to Landlord's reasonable approval.
Space Planner will furnish plans to selected mechanical and electrical
design-build contractors ("Engineers"), to enable the Engineers to complete
drawings which will, when incorporated with other plans provided by Space
Planner, enable the selected General Contractor to secure a permit for
construction of the Tenant Improvements. Landlord shall, within five business
days following its receipt of the Plans, either approve such Plans or provide
Tenant with the reasons that Landlord is withholding such approval. Landlord and
Tenant acknowledge that Space Planner will continue with completion of drawings
and specifications during the Landlord review period. Tenant shall review
Landlord's comments and shall incorporate requested changes if there is no
disagreement. In the event Tenant disagrees with changes requested by Landlord,
Tenant and Space Planner will immediately meet to review Landlord's requested
changes and to reach mutually acceptable resolution. Any change to such Plans
will require Landlord's prior written consent unless they are minor in nature
and do not effect any of the matters described in (i) through (v), below.
Landlord may withhold its approval of any Tenant Plans (which term
hereinafter includes the plans and specifications prepared by the design-build
subcontractors referenced above), including any revisions requested by Tenant,
Tenant Work, or Change Orders which require work which:
(i) Exceeds or adversely affects the structural integrity of the
Building, or any part of the heating, ventilating, air
condition, plumbing, mechanical, electrical, communication, or
other systems of the Building;
(ii) Violates any agreement which affects the Building or binds
Landlord;
(iii) Landlord reasonably believes will increase the cost of
operation or maintenance of any of the systems or the Building;
(iv) Landlord reasonably believes will reduce the market value of
the Premises or the Building at the end of the term of the
Lease; or
(v) Does not conform to applicable building codes or is not
approved by all governmental authorities with jurisdiction over
the Building.
Landlord Tenant
---- ----
1
30
Failure of Landlord to disapprove any such Plans within the respective
time periods specified shall be deemed approval of such plans if Tenant sends
an additional 48 hour notice to Landlord that such failure will be deemed to
constitute Landlord's approval and Landlord still fails to respond.
1.1 Landlord and Tenant agree that the General Contractor will be
selected through a competitive bid of the contractor's overhead, profit,
general conditions, insurance and proposed project team. Upon execution of
this Lease, Tenant and Landlord will mutually agree upon up to three (3)
prospective general contractors who will be invited to participate in the
bid/interview process. Tenant will manage the contractor selection process and
Landlord will participate in interviews and the final contractor selection. All
such contractors (including the design-build contractors referenced above) will
bid (and all contracts will be let) on a fixed price or guaranteed maximum
price basis.
Upon selection of the General Contractor as provided above, Tenant will
enter into a construction contract with the selected General Contractor on a
fixed price or guaranteed maximum price basis. The selected General Contractor
will then manage the selection of the mechanical and electrical design-build
subcontractors, subject to Landlord's approval. The General Contractor and
design-build subcontractors will all agree in their construction agreements
that they will have no lien rights against Landlord's interest in the subject
property, but only in Tenant's leasehold interest therein.
1.2 Upon approval of the Plans (and any other construction documents) by
Tenant and Landlord, Tenant will cause the General Contractor to competitively
bid all of the work contained in the Plans (and other construction documents)
and to obtain a minimum of three bids for all trades. Landlord will participate
in the evaluation of all subcontractors bids and the selection of all
subcontractors to complete the work covered under Section 12 of Addendum 1 to
the Lease.
If the total cost of construction of the Tenant's Work (excluding work
covered under Section 12 of Addendum 1 to the Lease), together with all other
costs relating to the Tenant's Work which can be charged against the Allowance
(as defined below) pursuant to this Work Letter Agreement (the "Final Tenant
Improvement Cost"), is more than the Allowance, Tenant will either:
(i) Agree in writing to pay the amount by which the Tenant's Final
Tenant Improvement Cost exceed the Allowance, or,
(ii) Revise the Plans in order to assure that the Final Tenant
Occupancy Cost is acceptable to Tenant (and if greater than the
Allowance, then Tenant will also agree in writing to pay such
excess, as provided herein). Once such Plans have been approved
by Landlord, Tenant shall obtain fixed-price or guaranteed
maximum price bids for the Tenant's Work from three reputable,
licensed general contractors reasonably satisfactory to Landlord.
In addition, Tenant shall obtain separate, fixed-price bids from
such contractors for any work which is described in Paragraph 12
of Addendum No. 1 to this Lease which Landlord is required to pay
for pursuant to such Addendum. Once such bids are obtained,
Tenant shall submit such bids to Landlord. If none of the bids
obtained by Tenant are approved by Landlord, Tenant shall cause
the Tenant's Work to be re-bid (either by the same general
contractors or by other general contractors approved by
Landlord). If only one such bid is approved by Landlord, then
Tenant shall engage the contractor whose bid was approved by
Landlord to perform the Tenant's Work. If more than one bid is
approved, then Tenant shall select from among the approved bids.
The contractor selected to perform the Tenant's Work in
accordance with this paragraph is hereinafter referred to as the
"Tenant's Contractor."
SECTION 2. ESTIMATED DELIVERY DATE. Landlord shall make reasonable
efforts to cause the Premises to be delivered to Tenant in broom clean condition
on or before August 1, 1996, subject to delays from causes beyond the reasonable
control of Landlord such as, but not limited to, acts of God, strikes, work
stoppages, unavailability of or delay in receiving labor or materials, defaults
by contractors or subcontractors, weather conditions, fire or other casualty, or
action of governmental authorities.
SECTION 3. EFFECT OF DELAY ON LEASE TERM. In the event the Premises are
not delivered to Tenant by August 1, 1996, this Lease shall remain in full force
and effect except that the Commencement Date shall be delayed on a day-for-day
basis for the actual number of days of delay in delivery of the Premises. In the
event the Premises are not delivered to Tenant by August 1, 1996, this Lease
shall not, except as provided in ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇ affected or modified and
shall remain in full force and effect and Landlord shall not be liable for any
damage on account of any delay in delivery.
SECTION 4. TENANT INSTALLATION PERIOD. Landlord has notified Tenant that
it anticipates delivering the Premises to Tenant on or about August 1, 1996, in
order to allow Tenant an approximate 90-day
Landlord__________ Tenant___________
2
31
period in which to perform and complete the Tenant's Work (The "Tenant
Installation Period"). During the Tenant Installation Period, if (a) Tenant's
Contractor has been approved by Landlord, along with Tenant's Contractor's bid
for the Tenant's Work, (b) the Plans have been approved by Landlord, and (c)
Tenant has obtained all necessary governmental permits and approvals, Tenant
shall have the right and the obligation, promptly and in a good and workmanlike
manner, at Tenant's sole cost and expense (subject to Tenant's rights under
Section 8, below), to cause the Tenant's Work to be completed by Tenant's
Contractor. During the Tenant Installation Period, Tenant covenants and agrees
that Tenant shall be obligated under the provisions of the Lease even though
the Lease Term shall not commence until the Commencement Date.
SECTION 5. COORDINATION OF CONSTRUCTION. Tenant covenants and agrees that
Tenant and Tenant's Contractor (which for purposes of this Exhibit shall
include all subcontractors) shall not destroy or in any way damage any portion
of the Project exclusive of demolition work expressly approved by Landlord. All
of Tenant's Work shall be performed in strict accordance with the approved
Plans. Any deviation from such Plans (other than deviations which are minor in
nature and which do not affect any of the matters described in clauses (i)
through (v) of Section 1, above) will require Landlord's prior written approval.
SECTION 6. NO LANDLORD LIABILITY. Landlord will not be liable for any
loss, cost, damage, or expense incurred or claimed by Tenant or any other
person or party on account of the construction or installation of the Tenant's
Work or any other person or party on account of the construction or
installation of the Tenant's Work or any other improvements to the Premises
made by Tenant. Tenant hereby acknowledges and agrees that the compliance of
the Tenant's Work, or other Alterations made to the Premises by the Tenant and
any plans therefore, with all applicable governmental laws, codes, and
regulations shall be solely Tenant's responsibility. Landlord assumes no
liability or responsibility resulting from the failure of the Tenant to comply
with all applicable governmental laws, codes and regulations or for any defect
in any of the Tenant's Work or other Alteration to the Premises made by Tenant.
Landlord's review or approval of the Plans, or any other action taken by
Landlord pursuant hereto, shall not make Landlord responsible for any failure
of such Plans to meet Tenant's needs or comply with applicable laws, codes, and
regulations. Tenant agrees to indemnify, defend, and hold harmless Landlord
from any loss, cost, damage or expense incurred, claimed, asserted, or arising
in connection with any of the foregoing.
SECTION 7. CONSTRUCTION OF TENANT IMPROVEMENT BY TENANT'S CONTRACTOR.
After the Plans for the Tenant's Work have been approved by Landlord, Tenant,
and the local governing agencies, Tenant shall enter into a construction
contract reasonably satisfactory to Landlord with Tenant's Contractor. Landlord
shall the right to post a notice of non-responsibility at a prominent location
within Tenant's Premises. It shall be the responsibility of Tenant to enforce
the following requirements of Tenant's Contractor.
7.1 Tenant's Contractor shall be responsible for the repair, replacement,
or clean-up of any damage to the Project.
7.2 Tenant and Tenant's Contractor are responsible for compliance with
all applicable codes and regulations of duly constituted authorities having
jurisdiction as far as the performance of the Tenant's Work and completed
improvements are concerned for all work performed by Tenant or Tenant's
Contractor and all applicable safely regulations established by the Landlord for
the Center, and Tenant further agrees to save and hold Landlord harmless for
said work. Prior to commencement of construction, Tenant shall submit to
Landlord evidence of insurance as required by this Lease and evidence of
insurance of Tenant's Contractor.
7.3 Tenant's Contractor or subcontractors shall not post signs on any part
of the Center on the Premises.
7.4 Tenant shall be responsible for and shall obtain and record a Notice of
Completion promptly following completion of Tenant's Work.
7.5 Landlord may require that, prior to the commencement of construction,
Tenant shall obtain or cause its contractor to obtain payment and performance
bonds covering the faithful performance of the contract for the construction of
the Tenant's Work and the payment of all obligations arising thereunder. Such
bonds shall be for the mutual benefit of both Landlord and Tenant.
7.6 Tenant shall provide to Landlord a copy of the fully executed
construction contract, including all addendum and a line item breakdown by
trade thereto, between Tenant and its contractor of the Tenant's work.
Landlord Tenant
---- ----
3
32
7.7 Permits must be obtained and all necessary calculations, including,
but not limited to, those required under Title 24, must be submitted to the
local governing agencies for all work to be performed by Tenant or Tenant's
Contractor in the Premises.
7.8 The Tenant's Work shall be completed by Tenant in strict accordance
with the Plans (and any modifications approved by Landlord) in a good and
workmanlike manner, and using only new materials. Tenant shall ensure that the
Tenant's Work is completed without the filing of any mechanic's or materialmen's
liens against the Project and shall indemnify and defend Landlord against the
same.
SECTION 8. CONSTRUCTION ADVANCE. The Tenant's Work is to be constructed
by Tenant's Contractor in accordance with this Exhibit "C". Landlord shall pay
to Tenant's Contractor (or advance to Tenant for payment to Tenant's Contractor)
Twelve Dollars per square foot of the Premises for a total of $777,600.00 as a
tenant improvement allowance (the "Allowance"). No portion of the Allowance will
be payable by Landlord until Tenant has first paid (and Landlord has received
evidence of such payment) that portion of the Final Tenant Improvement Cost
which exceeds the amount of the Allowance (the "Excess Cost"). Once the Excess
Cost has been paid by Tenant, the Allowance will be disbursed as follows:
i. Tenant will cause the Tenant's Contractor to provide a payment
application no later than the 5th day of each month for work that
is completed the preceding month. Tenant's Contractor's payment
application will stipulate the percentage of completion of work by
each trade on a line-item-line-item basis. A retention totaling
10% of the total payment application will be withheld on each
payment application.
ii. Space Planner will review and approve Tenant's Contractor's
payment application and will submit to Tenant for processing.
iii. Following payment of the Excess Cost, Tenant will submit the
approved payment application to Landlord for payment. Landlord
will have no obligation to pay any amount in excess of the
Allowance, and any such excess cost will be Tenant's sole
responsibility. Landlord will (if it approves of such payment
application) make payment to Tenant within 15 business days of
receipt of the approved payment application along with all
appropriate back-up documentation (including releases) requested
by Landlord.
iv. Tenant shall be responsible to obtain unconditional lien releases
upon progress payments for all payments that are made throughout
the course of the project, as well as conditional lien releases to
accompany each payment application.
v. The final payment from Landlord to Tenant that covers the billing
for all retention amounts withheld during the project will be made
subject to the satisfaction of the following conditions:
8.1 Contractor has substantially completed the Tenant's Work in accordance
with the approved Plans.
8.2 A notice of completion has been properly recorded for Tenant's Work,
and 35 days have expired since the timely recordation of such notice of
completion without the filing of any liens.
8.3 Contractor has submitted a complete set of "as built" plans and
specifications to Landlord.
8.4 Tenant has provided to Landlord copies of all insurance certificates
required under this Lease.
8.5 A final certificate of occupancy (conditional or unconditional) for
the Premises has been issued by the appropriate governmental agency.
8.6 Tenant has provided Landlord with all material and labor lien releases
from Tenant's Contractor and subcontractors. Said lien releases must total at
least the amount of the Allowance plus any Excess Cost paid by Tenant.
8.7 Tenant has provided Landlord copies of all construction warranties and
guarantees in connection with construction of Tenant's Improvements.
8.8 Landlord has inspected and approved the Tenant's Work and believes
that the Tenant's Work has been performed in a good and workmanlike manner in
accordance with the approved Plans.
Landlord Tenant
---- ----
4
33
Tenant's submittal of a final payment application to Landlord will
constitute Tenant's representation to Landlord that the Tenant's Work has been
completed in a good and workmanlike manner and in accordance with the approved
Plans.
SECTION 9. USE OF LANDLORD'S CONSTRUCTION ALLOWANCE.
9.1 The Allowance that Landlord agrees to contribute toward Tenant's Work
shall in no event be applied toward Tenant's consultants (including Tenant's
Representative), moving expenses, furniture, fixtures, furnishings, personal
property, signs or any monetary obligations of Tenant under this Lease. It is
intended to be used solely for the cost of the tenant improvements that shall
become the property of Landlord and shall remain upon and be surrendered with
the Premises, as a part thereof, at the end of the Term of this Lease.
9.2 Landlord's Allowance may be used only to pay (i) fees, permits, and
utility charges associated with the construction of the Tenant's Work, (ii)
fees payable to Tenant's architect and/or space planner for preparation of the
Plans and overseeing construction of the Tenant's Work, and (iii) the actual
hard construction costs, including low voltage cabling for voice and data
systems (labor and materials), associated with the performance of the Tenant's
Work.
SECTION 10. INITIAL COMMENCEMENT OF LEASE TERM. The Lease Term shall
commence November 15, 1996. Notwithstanding the foregoing, in the event
possession of the Premises is delivered to Tenant later than August 1, 1996, the
November 15 date provided for in clause (i), above, shall be extended by the
number of days beyond August 1 which elapse before the Premises are delivered to
Tenant. Landlord and Tenant shall execute an amendment to this Lease to reflect
the exact date of commencement of the Lease Term (the "Commencement Date") as
set forth herein; however, any failure to do so shall not affect the
Commencement Date. If the Commencement Date provided for by this Section is
different than the estimated Commencement Date set forth in Paragraph 2.4.1 of
the Lease, then (a) the Commencement Date provided for by this Section shall
control and (b) Paragraphs 2.4.1 and 2.4.2 of the Lease shall be deemed amended
accordingly.
Landlord Tenant
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