OFFICE LEASE
LAKESHORE TOWERS
LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE II,
a California limited partnership,
as Landlord,
and
QUALITY SYSTEMS, INC.,
a California corporation,
as Tenant,
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
TABLE OF CONTENTS
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ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS ............................ 1
1.1 Premises, Building, Project and Common Areas .................................. 1
1.1.1 The Premises ......................................................... 1
1.1.2 The Building and The Project ......................................... 1
1.1.3 Common Areas ......................................................... 1
1.2 Verification of Rentable Square Feet and Usable Square Feet of Premises,
Building, and Project ......................................................... 2
ARTICLE 2 LEASE TERM ............................................................... 2
2.1 Lease Term .................................................................... 2
ARTICLE 3 BASE RENT ................................................................ 2
ARTICLE 4 ADDITIONAL RENT .......................................................... 2
4.1 General Terms ................................................................. 2
4.2 Definitions of Key Terms Relating to Additional Rent .......................... 3
4.2.1 Base Year ............................................................ 3
4.2.2 Building Direct Expenses ............................................. 3
4.2.3 Building Operating Expenses .......................................... 3
4.2.4 Building Tax Expenses ................................................ 3
4.2.5 Direct Expenses ...................................................... 3
4.2.6 Expense Year ......................................................... 3
4.2.7 Operating Expenses.................................................... 3
4.2.7.1 Inclusions to Operating Expenses ............................ 3
4.2.7.2 Exclusions to Operating Expenses ............................ 4
4.2.8 Taxes ................................................................ 7
4.2.8.1 Tax Expenses ................................................ 7
4.2.8.2 Other Costs ................................................. 8
4.2.8.3 Base Taxes .................................................. 8
4.2.9 Tenant's Share ....................................................... 8
4.3 Allocation of Direct Expenses ................................................. 8
4.4 Calculation and Payment of Additional Rent .................................... 9
4.4.1 Statement of Actual Building Direct Expenses and Payment by
Tenant ............................................................... 9
4.4.2 Statement of Estimated Building Direct Expenses ...................... 9
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible .............. 9
4.6 Landlord's Books and Records .................................................. 10
4.7 Security Deposit .............................................................. 10
4.7.1 Security Deposit ..................................................... 10
4.7.2 Landlord's Transfer of Security Deposit on Transfer of Real
Property ............................................................. 11
4.7.3 Restoration of Security Deposit ...................................... 11
4.7.4 Interest on Security Deposit ......................................... 11
4.7.5 Return of Security Deposit ........................................... 11
ARTICLE 5 USE OF PREMISES .......................................................... 11
5.1 Permitted Use ................................................................. 11
5.2 Prohibited Uses ............................................................... ▇▇
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[Quality Systems, Inc.]
TABLE OF CONTENTS
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ARTICLE 6 SERVICES AND UTILITIES .................................................. 11
6.1 Standard Tenant Services ..................................................... 11
6.2 Overstandard Tenant Use ...................................................... 12
6.2.1 Non-Electrical Usage ................................................ 12
6.2.2 Electrical Usage .................................................... 12
6.3 Interruption of Use .......................................................... 13
ARTICLE 7 REPAIRS ................................................................. 13
ARTICLE 8 ADDITIONS AND ALTERATIONS ............................................... 13
8.1 Landlord's Consent to Alterations ............................................ 13
8.2 Manner of Construction ....................................................... 13
8.2.1 Conditions to Alterations ........................................... 13
8.2.2 Base Building Changes ............................................... 14
8.3 Payment for Improvements ..................................................... 14
8.4 Payment For Initial Alterations .............................................. 14
8.5 Construction Insurance ....................................................... 15
8.6 Landlord's Property .......................................................... 15
8.7 Communications and Computer Lines ............................................ 15
ARTICLE 9 COVENANT AGAINST LIENS .................................................. 16
ARTICLE 10 INSURANCE ............................................................... 16
10.1 Indemnification and Waiver ................................................... 16
10.2 Tenant's Compliance With Landlord's Fire and Casualty Insurance .............. 16
10.3 Tenant's Insurance ........................................................... 16
10.4 Form of Policies ............................................................. 17
10.5 Subrogation .................................................................. 17
10.6 Additional Insurance Obligations ............................................. 17
ARTICLE 11 DAMAGE AND DESTRUCTION .................................................. 18
11.1 Repair of Damage to Premises by Landlord ..................................... 18
11.1.1 Damage to Building .................................................. 18
11.1.2 Damage to Premises .................................................. 18
11.2 Landlord's Option to Repair .................................................. 18
11.3 Tenant's Option to Cause Early Expiration .................................... 19
11.4 Waiver of Statutory Provisions ............................................... 19
ARTICLE 12 NONWAIVER ............................................................... 19
ARTICLE 13 CONDEMNATION ............................................................ 20
ARTICLE 14 ASSIGNMENT AND SUBLETTING ............................................... 20
14.1 Transfers .................................................................... 20
14.2 Landlord's Consent ........................................................... 21
14.3 Transfer Premium ............................................................. 21
14.4 Landlord's Option as to Subject Space ........................................ 22
14.5 Effect of Transfer ........................................................... 22
14.6 Occurrence of Default ........................................................ 23
14.7 Non-Transfers ................................................................ 23
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
TABLE OF CONTENTS
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ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF
TRADE FIXTURES .......................................................... 23
15.1 Surrender of Premises ........................................................ 23
15.2 Removal of Tenant Property by Tenant ......................................... 23
ARTICLE 16 HOLDING OVER ............................................................ 24
ARTICLE 17 ESTOPPEL CERTIFICATES ................................................... 24
ARTICLE 18 SUBORDINATION ........................................................... 24
ARTICLE 19 DEFAULTS; REMEDIES ...................................................... 25
19.1 Events of Default ............................................................ 25
19.2 Remedies Upon Default ........................................................ 25
19.3 Subleases of Tenant .......................................................... 26
19.4 Efforts to Relet ............................................................. 26
19.5 Landlord Default ............................................................. 27
ARTICLE 20 COVENANT OF QUIET ENJOYMENT ............................................. 27
ARTICLE 21 INTENTIONALLY DELETED ................................................... 27
ARTICLE 22 SIGNS ................................................................... 27
22.1 Tenant's Entry Door Signage .................................................. 27
22.2 Prohibited Signage and Other Items ........................................... 27
22.3 Building Directory ........................................................... 27
ARTICLE 23 COMPLIANCE WITH LAW ..................................................... 27
23.1 Applicable Laws .............................................................. 27
23.2 Hazardous Materials .......................................................... 28
23.3 Warranties; Notice of Release and Investigation .............................. 28
23.4 Indemnification .............................................................. 28
23.5 Remediation Obligations; Tenant's Rights on Cleanup by Landlord .............. 29
23.6 Definition of "Hazardous Material" ............................................. 29
ARTICLE 24 LATE CHARGES............................................................. 29
ARTICLE 25 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY
TENANT .................................................................. 30
25.1 Landlord's Cure .............................................................. 30
25.2 Tenant's Reimbursement ....................................................... 30
ARTICLE 26 ENTRY BY LANDLORD ....................................................... 30
ARTICLE 27 TENANT PARKING .......................................................... 31
27.1 Parking In General ........................................................... 31
27.2 Landlord Reservations ........................................................ 31
27.3 Visitor Validations .......................................................... 31
27.4 Parking Pass System .......................................................... 31
ARTICLE 28 MISCELLANEOUS PROVISIONS ................................................ 31
28.1 Terms; Captions .............................................................. 31
28.2 Binding Effect ............................................................... 32
28.3 No Air Rights ................................................................ 32
28.4 Modification of Lease ........................................................ 32
28.5 Transfer of Landlord's Interest .............................................. 32
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[Quality Systems, Inc.]
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28.6 Prohibition Against Recording ................................................ 32
28.7 Landlord's Title ............................................................. 32
28.8 Relationship of Parties ...................................................... 32
28.9 Application of Payments ...................................................... 32
28.10 Time of Essence .............................................................. 32
28.11 Partial Invalidity ........................................................... 32
28.12 No Warranty .................................................................. 33
28.13 Landlord Exculpation ......................................................... 33
28.14 Entire Agreement ............................................................. 33
28.15 Right to Lease ............................................................... 33
28.16 Force Majeure ................................................................ 33
28.17 Waiver of Redemption by Tenant ............................................... 33
28.18 Notices ...................................................................... 33
28.19 Joint and Several ............................................................ 34
28.20 Authority .................................................................... 34
28.21 Attorneys' Fees .............................................................. 34
28.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY ....................................... 34
28.23 Submission of Lease .......................................................... 35
28.24 Brokers ...................................................................... 35
28.25 Independent Covenants ........................................................ 35
28.26 Project or Building Name and Signage ......................................... 35
28.27 Counterparts ................................................................. 35
28.28 Confidentiality .............................................................. 35
28.29 Development of the Project ................................................... 35
28.29.1 Subdivision ......................................................... 35
28.29.2 The Other Improvements .............................................. 35
28.29.3 Construction of Project and Other Improvements ...................... 36
28.30 Building Renovations ......................................................... 36
28.31 No Violation ................................................................. 36
28.32 No Discrimination ............................................................ 36
28.33 Definition of Landlord ....................................................... 36
28.34 Tenant Representation With Respect to the General Electric Pension Trust ..... 36
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
EXHIBITS
A OUTLINE OF PREMISES
B PROJECT LEGAL DESCRIPTION
C DIRECT EXPENSES ALLOCATION
D RULES AND REGULATIONS
E FORM OF TENANT'S ESTOPPEL CERTIFICATE
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
LIST OF DEFINED TERMS
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Accountant ............................................................. 10
Additional Rent ........................................................ 3
Additional Required Work ............................................... 14
Affiliate .............................................................. 23
Alterations ............................................................ 13
Applicable Laws ........................................................ 28
Base Building .......................................................... 14
Base Building Systems .................................................. 14
Base Rent .............................................................. 2
Base Year .............................................................. 3
BOMA ................................................................... 8
Brokers ................................................................ 35
Building ............................................................... 1
Building Common Areas .................................................. 1
Building Direct Expenses ............................................... 3
Building Hours ......................................................... 12
Building Operating Expenses ............................................ 3
Building Tax Expenses .................................................. 3
CC&Rs .................................................................. 1
CEW Report ............................................................. 28
Common Areas ........................................................... 1
Comparable Buildings ................................................... 1
Contemplated Effective Date ............................................ 22
Contemplated Transfer Space ............................................ 22
Control ................................................................ 23
Direct Expenses ........................................................ 3
Electricity Usage Standard ............................................. 12
Environmental Laws ..................................................... 28
Estimate ............................................................... 9
Estimate Statement ..................................................... 9
Estimated Excess ....................................................... 9
Excess ................................................................. 9
Expense Year ........................................................... 3
Force Majeure .......................................................... 33
Hazardous Material ..................................................... 29
Holidays ............................................................... 12
HVAC ................................................................... 11
Initial Alterations .................................................... 15
Intention to Transfer Notice ........................................... 22
Lakeshore Towers ....................................................... 1
Landlord ............................................................... 1
Landlord Parties ....................................................... 16
Landlord Repair Notice ................................................. 18
Lease .................................................................. 1
Lease Commencement Date ................................................ 2
Lease Expiration Date .................................................. 2
Lease Term ............................................................. 2
Lease Year ............................................................. 2
Lines .................................................................. 15
Mail ................................................................... 34
Management Fee Cap ..................................................... 6
Nine Month Period ...................................................... 22
Notices ................................................................ 34
Operating Expenses ..................................................... 3
Original Improvements .................................................. 17
Other Improvements ..................................................... ▇▇
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[Quality Systems, Inc.]
Parking Structure ...................................................... 31
Premises ............................................................... 1
Project ................................................................ 1
Project Common Areas ................................................... 1
Proposition 13 ......................................................... 7
Renovations ............................................................ 36
Rent ................................................................... 3
rentable square feet ................................................... 2
Repair Notice .......................................................... 19
Security Deposit ....................................................... 10
Statement .............................................................. 9
Subject Space .......................................................... 20
Summary ................................................................ 1
Tax Expenses ........................................................... 7
Tenant ................................................................. 1
Tenant Auditor.......................................................... 10
Tenant's Share ......................................................... 8
Tenant's Transfer Costs ................................................ 22
Transfer Notice ........................................................ 20
Transfer Premium ....................................................... 22
Transferee ............................................................. 20
Transfers .............................................................. 20
usable square feet ..................................................... 2
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
LAKESH0RE TOWERS
OFFICE LEASE
This Office Lease (the "Lease"), dated as of the date set forth in Section
1 of the Summary of Basic Lease Information (the "Summary"), below, is made by
and between LAKESH0RE TOWERS LIMITED PARTNERSHIP PHASE IV, a California limited
partnership ("Landlord"), and QUALITY SYSTEMS, INC., a California corporation
("Tenant").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE DESCRIPTION
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1. Date: September 15,2004
2. Premises
(Article 1).
2.1 Building: Lakeshore Towers Building II
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
2.2 Premises: Approximately 11,996 rentable (10,643
usable) square feet of space located on
the fourth floor of the Building and
commonly known as Suite 450, as further
set forth in Exhibit A to the Lease.
3. Lease Term
(Article 2).
3.1 Length of Term of Lease
of Premises: Three (3) years and one (1) month.
3.2 Lease Commencement Date: May 1, 2005.
3.3 Lease Expiration Date: May 31, 2008.
4. Base Rent (Article 3):
Annual
Monthly Rental Rate
Annual Installment per Rentable
Period Base Rent of Base Rent Square Foot
------------ ------------ ------------
May 2005* through
May 2006 $323,892.00 $26,991.00 $27.00
June 2006 through
May 2007 $331,089.60 $27,590.80 $27.60
June 2007 through
May 2008 $338,287.20 $28,190.60 $28.20
* Notwithstanding the foregoing, no monthly Base Rent shall be due for May
2005.
5. Base Year Calendar year 2005
(Article 4):
6. Tenant's Share Approximately 9.38%
(Article 4):
7. Permitted Use General office use consistent with a
(Article 5): first-class office building.
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
8. Security Deposit $28,190.60
(Article 4):
9. Parking 43 unreserved parking spaces in the
(Article 27): Parking Structure and four (4) reserved
parking spaces in the Building's
subterranean parking area at the rates
set forth below. In addition, Tenant
shall have the right to use an
additional thirteen (13) unreserved
parking spaces in the Parking Structure
at the rates provided below subject to
Tenant's advising Landlord not less
than thirty (30) days in advance of the
date Tenant desires to use such
additional unreserved parking spaces.
Tenant may also use additional
unreserved parking spaces in the
Parking Structure subject to
availability of such spaces and payment
of Landlord's then current parking
charges for unreserved spaces or Fifty
Dollars ($50) per unreserved space,
whichever is greater. To the extent
available, Tenant may convert up to
five (5) of its unreserved parking
spaces to reserved parking spaces in
the Parking Structure at the reserved
rate set forth below.
Parking Parking Structure Parking Structure Building
Space Fees: Unreserved Reserved Rate Reserved Rate
Rate Per Space Per Space Per Space
Per Month Per Month Per Month
----------------- ----------------- -------------
$50.00 $125.00 $145.00
10. Address of Tenant Quality Systems, Inc.
(Section 28.18): ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Prior to and After Lease Commencement
Date)
11. Address of Landlord
(Section 28.18): See Section 28.18 of the Lease.
12. Broker(s) ▇▇▇▇ ▇▇▇▇▇ Real Estate Services
(Section 28.24): ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
and
▇▇▇▇▇▇▇ & Wakefield of California, Inc,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 Premises, Building, Project and Common Areas.
1.1.1 The Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the premises set forth in Section 2.2 of the Summary
(the "Premises"). The outline of the Premises is set forth in Exhibit A attached
hereto. The parties hereto agree that the lease of the Premises is upon and
subject to the terms, covenants and conditions herein set forth, and Tenant,
covenants as a material part of the consideration for this Lease to keep and
perform each and all of such terms, covenants and conditions by it to be kept
and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of Exhibit A
is to show the approximate location of the Premises in the "Building," as that
term is defined in Section 1.1.2, below, only, and such Exhibit is not meant to
constitute an agreement, representation or warranty as to the construction of
the Premises, the precise area thereof or the specific location of the "Common
Areas," as that term is defined in Section 1.1.3, below, or the elements thereof
or of the accessways to the Promises or the "Project," as that term is defined
in Section 1.1.2, below. Except as specifically set forth in Section 8.4 below,
Landlord shall not be obligated to provide or pay for any improvement work or
services related to the improvement of the Premises. Tenant also acknowledges
that neither Landlord nor any agent of Landlord has made any representation or
warranty regarding the condition of the Premises, the Building or the Project or
with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter. Tenant acknowledges that it is currently in possession of the
Premises and Tenant accepts the Premises in its current "AS IS" condition and
Tenant confirms that the Premises and the Building are in good and sanitary
order, condition and repair.
1.1.2 The Building and The Project. The Premises are a part of
the building set forth in Section 2.1 of the Summary (the "Building"). The
Building is part of an office project known as "Lakeshore Towers". The term
"Project", as used in this Lease, shall mean (i) the land on which the Project
is located which land is described in Exhibit B hereto, (ii) the Building, (iii)
the Common Areas, (iv) the other buildings located in the Project, and (v) at
Landlord's discretion, any additional real property, areas, land, buildings or
other improvements added thereto outside of the Project.
1.1.3 Common Areas. Tenant shall have the non-exclusive right to
use in common with Project tenants the Project Common Areas and the
non-exclusive right to use in common with other Building tenants the Building
this Lease. As Common Areas, subject to the rules and regulations referred to in
Article 5 of used herein those portions of the Project which are provided, from
time to time, for use in common by Landlord, Tenant and any other tenants of the
Project and such other portions of the Project designated by Landlord, in its
discretion, including certain areas designated for the exclusive use of certain
tenants, or to be shared by Landlord and certain tenants, are collectively
referred to herein as the "Common Areas". The Common Areas shall consist of the
"Project Common Areas" and the "Building Common Areas." The term "Project Common
Areas", as used in this Lease, shall mean (i) the portion of the Project
designated as such by Landlord and (ii) all common areas designated in that
certain Declaration of Covenants, Conditions and Restrictions and Reservation of
Easements for the Lakeshore Towers, dated October 17, 1989, recorded October 23,
1989, as Instrument No. 89569018 of the Official Records of Orange County,
California (the "CC&Rs"). The term "Building Common Areas", as used in this
Lease, shall mean the portions of the Common Areas located within the Building
designated as such by Landlord. The manner in which the Common Areas are
maintained and operated shall be at the sole discretion of Landlord, provided
that Landlord shall maintain and operate same in a manner consistent with that
of other first-class, high-rise office buildings in the ▇▇▇▇ ▇▇▇▇▇ Airport area
which are comparable in size (containing at least 200,000 rentable square feet),
quality of construction, and services and amenities to the Building (the
"Comparable Buildings") and the use thereof shall be subject to such rules,
regulations and restrictions as Landlord may make from time to time. Landlord
reserves the right to close temporarily, make alterations or additions to, or
change the location of elements of the Project and the Common Areas.
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
1.2 Verification of Rentable Square Feet and Usable Square Feet
of Premises, Building, and Project. For purposes of this Lease, "rentable square
feet" and "usable square feet" shall be calculated pursuant to "BOMA," as that
term is defined in Section 4.2.9, below. In the event that the rentable area of
the Premises, the Building and/or the Project shall hereafter change due to
subsequent alterations and/or other modifications to the Premises, the Building
and/or the Project, the rentable area of the Premises, the Building and/or the
Project, as the case may be, shall be appropriately adjusted as of the date of
such alteration and/or other modification, based upon the written verification
by Landlord's space planner of such revised rentable area. In the event of any
such adjustment to the rentable area of the Premises, the Building and/or the
Project, all amounts, percentages and figures appearing or referred to in this
Lease based upon such rentable area (including, without limitation, the amount
of the "Rent," as that term is defined in Article 4 of this Lease) shall be
modified in accordance with such determination.
ARTICLE 2
LEASE TERM
2.1 Lease Term. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "Lease
Term") shall be as set forth in Section 3.1 of the Summary and shall commence on
the date set forth in Section 3.2 of the Summary (the "Lease Commencement Date")
The term of this Lease shall terminate on the date set forth in Section 3.3 of
the Summary (the "Lease Expiration Date") unless this Lease is sooner terminated
as hereinafter provided. For purposes of this Lease, the term "Lease Year" shall
mean each consecutive twelve (12) month period during the Lease Term, commencing
on the Lease Commencement Date. For example, the first Lease Year will commence
on May 1, 2005 and end on April 30, 2006.
ARTICLE 3
BASE RENT
Tenant shall pay, without prior notice or demand, to Landlord or
Landlord's agent at the management, office of the Project, or, at Landlord's
option, at such other place as Landlord may from time to time designate in
writing, by a check for currency which, at the time of payment, is legal tender
for private or public debts in the United States of America, base rent ("Base
Rent") as set forth in Section 4 of the Summary, payable in equal monthly
installments as set forth in Section 4 of the Summary in advance on or before
the first day of each and every calendar month during the Lease Term, without
any setoff or deduction whatsoever. The Base Rent for June 2005 shall be paid at
the time of Tenant's execution of this Lease. If any Base Rent payment date
(including the Lease Commencement Date) falls on a day of the month other than
the first day of such month or if any payment of Base Rent is for a period which
is shorter than one month, the Base Rent for any fractional month shall accrue
on a daily basis for the period from the date such payment is due to the end of
such calendar month or to the end of this Lease Term at a rate per day which is
equal to 1/365 of the applicable annual Base Rent. All other payments or
adjustments required to be made under the terms of this Lease that require
proration on a time basis shall be prorated on the same basis.
ARTICLE 4
ADDITIONAL RENT
4.1 General Terms. In addition to paying the Base Rent
specified in Article 3 of this Lease, Tenant shall pay "Tenant's Share"
of the annual "Building Direct Expenses," as those terms are defined in
Sections 4.2.9 and 4.2.2 of this Lease, respectively, which are in excess of the
amount of Building Direct Expenses for the "Base Year," as that term is defined
in Section 4.2.1, below; provided, however, that in no event shall any decrease
in Building Direct Expenses for any "Expense Year," as that term is defined
in Section 4.2.6 below, below Building Direct Expenses for the Base Year
entitle Tenant to any decrease in Base Rent or any credit against sums due
under this Lease. Such payments by Tenant, together with any and all other
amounts payable by Tenant to Landlord pursuant to the terms of this Lease,
are hereinafter collectively referred to as the "Additional Rent", and the Base
Rent and the Additional Rent are herein collectively referred to as "Rent."
All amounts due under this Article 4 as Additional Rent shall be payable for
the same periods and in the same manner as the Base Rent; provided, however,
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
Additional Rent on account of Tenant's Share of Building Direct Expenses shall
not be due or payable during the first Lease Year. Without limitation on other
obligations of Tenant which survive the expiration of the Lease Term, the
obligations of Tenant to pay the Additional Rent provided for in this Article 4
shall survive the expiration of the Lease Term.
4.2 Definitions of Key Terms Relating to Additional Rent. As
used in this Article 4, the following terms shall have the meanings hereinafter
set forth:
4.2.1 Base Year. "Base Year" shall mean the period set forth in
Section 5 of the Summary.
4.2.2 Building Direct Expenses. "Building Direct Expenses" shall
mean "Building Operating Expenses" and "Building Tax Expenses", as those terms
are defined in Sections 4.2.3 and 4.2.4, below, respectively.
4.2.3 Building Operating Expenses. "Building Operating Expenses"
shall mean the portion of "Operating Expenses," as that term is defined in
Section 4.2.7 below, allocated to the tenants of the Building pursuant to the
terms of Section 4.3.1 below.
4.2.4 Building Tax Expenses. "Building Tax Expenses" shall mean
that portion of "Tax Expenses", as that term is defined in Section 4.2.8
below, allocated to the tenants of the Building pursuant to the terms of Section
4.3.1 below.
4.2.5 Direct Expenses. "Direct Expenses" shall mean "Operating
Expenses" and "Tax Expenses."
4.2.6 Expense Year. "Expense Year" shall mean each calendar year
in which any portion of the Lease Term falls, through and including the calendar
year in which the Lease Term expires, provided that Landlord, upon notice to
Tenant, may change the Expense Year from time to time to any other twelve (12)
consecutive month period, and, in the event of any such change. Tenant's Share
of Building Direct Expenses shall be equitably adjusted for any Expense Year
involved in any such change.
4.2.7 Operating Expenses.
4.2.7.1 Inclusions to Operating Expenses. "Operating
Expenses" shall mean all expenses, costs and amounts of every kind and nature
which Landlord pays during any Expense Year because of or in connection
with the ownership, management, maintenance, security, repair, replacement)
restoration or operation of the Project, or any portion thereof, subject to
the terms and provisions of Section 4.2.7. Without limiting the generality of
the foregoing, Operating Expenses shall specifically include any and all of the
following:
(i) the cost of supplying all utilities, the cost of
operating, repairing, maintaining, and renovating the utility,
telephone, mechanical, sanitary, storm drainage, and elevator
systems, and the cost of maintenance and service contracts in
connection therewith;
(ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting any governmental enactments
which may affect Operating Expenses, and the costs incurred in
connection with any governmentally mandated transportation system
management program or similar program;
(iii) the cost of earthquake insurance and all other
insurance carried by Landlord in connection with the Project as
reasonably determined by Landlord (and Landlord represents that it
shall carry earthquake insurance during the Base Year);
(iv) the cost of landscaping, relamping, and all
supplies, tools, equipment and materials used in the operation,
repair and maintenance of the Project, or any portion thereof;
(v) the cost of non-capital (as determined pursuant
to generally accepted accounting principles) parking area repair,
restoration, and maintenance;
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
(vi) fees and other costs, including reasonable
management fees, consulting fees, legal fees and accounting fees, of
all contractors and consultants in connection with the management,
operation, maintenance and repair of the Project;
(vii) payments under any equipment rental agreements
and the fair rental value of any management office space;
(viii) subject to Section 4.2.7.2(vi) below, wages,
salaries and other compensation and benefits, including taxes levied
thereon, of all persons engaged in the operation, maintenance and
security of the Project;
(ix) operation, repair and maintenance of all systems
and equipment and components thereof of the Project;
(x) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and
fixtures in common areas, maintenance and replacement of curbs and
walkways, and repair to roofs and reroofing;
(xi) amortization (including interest on the
unamortized cost) over the useful life, determined in accordance
with generally accepted accounting principles, of the cost of
acquiring or the rental expense of personal property used in
the maintenance, operation and repair of the Project, or any
portion thereof;
(xii) the cost of capital improvements or other costs
incurred in connection with the Project (A) which are intended to
effect economies in the operation or maintenance of the Project, or
any portion thereof (but only to the extent of the annual cost
savings reasonably anticipated by Landlord), (B) that are required
to comply with present or anticipated reasonable conservation
programs, (C) which are replacements of nonstructural items located
in the Common Areas required to keep the Common Areas in good order
or condition, or (D) that are required under any governmental law or
regulation enacted after the date of this Lease; provided, however,
that any capital expenditure shall be amortized (including interest
on the amortized cost) over its useful life reasonably determined in
accordance with generally accepted accounting principles;
(xiii) costs, fees, charges or assessments imposed by,
or resulting from any mandate imposed on Landlord by, any federal,
state or local government for fire and police protection, trash
removal, community services, or other services which do not
constitute "Tax Expenses" as that term is defined in Section 4.2.8,
below; and
(xiv) payments under any easement, license, operating
agreement, declaration, restrictive covenant, or instrument
pertaining to the sharing of costs by the Building with oilier
buildings in the Project.
4.2.7.2 Exclusions to Operating Expenses. Notwithstanding
the provisions of Section 4.2.7.1 above, for purposes of this Lease, Operating
Expenses shall not, however, include:
(i) costs, including marketing costs, legal fees,
space planners' fees, advertising and promotional expenses, and
brokerage fees incurred in connection with the original
construction or development, or original or future leasing of
the Project, and costs, including permit, license and inspection
costs, incurred with respect to the installation of tenant
improvements made for new tenants initially occupying space in
the Project after the Lease Commencement Date or incurred in
renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants of the
Project (excluding, however, such costs relating to any Common
Areas or parking facilities);
(ii) except as set forth in Sections 4.2.7.1 (xi),
(xii), and (xiii) above, depreciation, interest and principal
payments on mortgages and other debt
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
costs, if any, penalties and interest, costs of capital repairs and
alterations, and costs of capital improvements and equipment;
(iii) costs for which the Landlord is reimbursed by any
tenant or occupant of the Project or by insurance by its carrier or
any tenant's carrier or by anyone else, and electric power costs for
which any tenant directly contracts with the local public service
company;
(iv) any bad debt loss, rent loss, or reserves for bad
debts or rent loss;
(v) costs associated with the operation of the
business of the partnership or entity which constitutes the
Landlord, as the same arc distinguished from the costs of
operation of the Project (which shall specifically include, but not
be limited to, accounting costs associated with the operation
of the Project). Costs associated with the operation of the
business of the partnership or entity which constitutes the Landlord
include costs of partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions of
the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord's
interest in the Project, and costs incurred in connection with any
disputes between Landlord and its employees, between Landlord and
Project management, or between Landlord and other tenants or
occupants, and Landlord's general corporate overhead and general
and administrative expenses;
(vi) the wages and benefits of any employee who does
not devote substantially all of his or her employed time to the
Project unless such wages and benefits are prorated to reflect time
spent on operating and managing the Project vis-a-vis time spent on
matters unrelated to operating and managing the Project; provided,
that in no event shall Operating Expenses for purposes of this Lease
include wages and/or benefits attributable to personnel above the
level of Project manager;
(vii) amounts paid as ground rental for the Project by
the Landlord;
(viii) except for a Project management fee to the extent
allowed pursuant to item (xiii), below, overhead and profit
increment paid to the Landlord or to subsidiaries or affiliates of
the Landlord for services in the Project to the extent the same
exceeds the costs of such services rendered by qualified,
first-class unaffiliated third parties on a competitive basis;
(ix) any compensation paid to clerks, attendants or
other persons in commercial concessions operated by the Landlord,
provided that any compensation paid to any concierge at the Project
shall be includable as an Operating Expense;
(x) rentals and other related expenses incurred in
leasing air conditioning systems, elevators or other equipment which
if purchased the cost of which would be excluded from Operating
Expenses as a capital cost, except equipment not affixed to the
Project which is used in providing janitorial or similar services
and, further excepting from this exclusion such equipment rented or
leased to remedy or ameliorate an emergency condition in the
Project;
(xi) all items and services for which Tenant or any
other tenant in the Project reimburses Landlord or which Landlord
provides selectively to one or more tenants (other than Tenant)
without reimbursement;
(xii) costs, other than those incurred in ordinary
maintenance and repair, for sculpture, paintings, fountains or other
objects of art;
(xiii) fees payable by Landlord for management of the
Project in excess of five percent (5%) (the "Management. Fee Cap")
of Landlord's gross
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LAKRSHORE TOWERS BUILDING II
[Quality Systems, Inc.]
rental revenues, adjusted and grossed up to reflect a one hundred
percent (100%) occupancy of the Building with all tenants paying
rent, including base rent, pass-throughs, and parking fees (but
excluding the cost of after hours services or utilities) from the
Project for any calendar year or portion thereof;
(xiv) any costs expressly excluded from Operating
Expenses elsewhere in this Lease;
(xv) rent for any office space occupied by Project
management personnel to the extent the size or rental rate of such
office space exceeds the size or fair market rental value of office
space occupied by management personnel of the Comparable Buildings
in the vicinity of the Building, with adjustment where appropriate
for the size of the applicable project;
(xvi) costs arising from the negligence or willful
misconduct of Landlord or its agents, employees, vendors,
contractors, or providers of materials or services;
(xvii) costs (A) incurred to comply with laws relating
to the removal of Hazardous Material (as defined at Section 23.6
below) which was in existence in the Building or on the Project
prior to the Lease Commencement Date, and was of such a nature that
a federal, State or municipal governmental authority, if it then had
knowledge of the presence of such Hazardous Material, in the state,
and under the conditions that it then existed in the Building or on
the Project, would have then required the removal of such Hazardous
Material or other remedial or containment action with respect
thereto; and (B) costs incurred to remove, remedy, contain, or treat
Hazardous Material, which hazardous material is brought into the
Building or onto the Project after the date hereof by Landlord or
any other tenant of the Project and is of such a nature, at that
time, that a federal, State or municipal governmental authority, if
it had then had knowledge of the presence of such Hazardous
Material, in the state, and under the conditions, that it then
exists in the Building or on the Project, would have then required
the removal of such Hazardous Material or other remedial or
containment action with respect thereto;
(xviii) costs arising from Landlord's charitable or
political contributions;
(xix) any gifts provided to any entity whatsoever,
including, but not limited to, Tenant, other tenants, employees,
vendors, contractors, prospective tenants and agents;
(xx) the cost of any magazine, newspaper, trade or
other subscriptions;
(xxi) any amount paid to Landlord or to subsidiaries or
affiliates of the Landlord for services in the Project to the extent
the same exceeds the cost of such services rendered by qualified,
first-class unaffiliated third parties on a competitive basis;
(xxii) costs arising from Landlord's failure to comply
with any applicable governmental laws or regulations in existence at
the time of the Lease Commencement Date;
(xxiii) costs relating to categories of expenses for the
Project parking areas which were not included in Operating Expenses
during the Base Year, except to the extent the Base Year is
retroactively adjusted to include such categories; and
(xxiv) any entertainment expenses and travel expenses of
Landlord, its employees, agents, partners and affiliates.
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
If Landlord is not furnishing any particular work or service (the cost of
which, if performed by Landlord, would be included in Operating Expenses) to a
tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Project is not
at least ninety-five percent (95%) occupied during all or a portion of the Base
Year or any Expense Year, Landlord shall make an appropriate adjustment to the
components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been incurred had the Project been
ninety-five percent (95%) occupied; and the amount so determined shall be deemed
to have been the amount of Operating Expenses for such year. Operating Expenses
for the Base Year shall not include market-wide labor-rate increases due to
extraordinary circumstances, including, but not limited to, boycotts and
strikes, and utility rate increases due to extraordinary circumstances
including, but not limited to, conservation surcharges, boycotts, embargoes or
other shortages, or amortized costs relating to capital improvements.
4.2.8 Taxes.
4.2.8.1 Tax Expenses. "Tax Expenses" shall mean all federal,
state, county, or local governmental or municipal taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary (including, without limitation, real estate taxes, general and
special assessments, transit taxes, leasehold taxes or taxes based upon the
receipt of rent, including gross receipts or sales taxes applicable to the
receipt of rent, unless required to be paid by Tenant, personal property taxes
imposed upon the fixtures, machinery, equipment, apparatus, systems and
equipment, appurtenances, furniture and other personal property used in
connection with the Project, or any portion thereof), which shall be paid or
accrued during any Expense Year (without regard to any different fiscal year
used by such governmental or municipal authority) because of or in connection
with the ownership, leasing and operation of the Project, or any portion thereof
including the parking areas. Tax Expenses shall include, without limitation:
(i) any tax on the rent, right to rent or other
income from the Project, or any portion thereof, or as against the
business of leasing the Project, or any portion thereof;
(ii) any assessment, tax, fee, levy or charge in
addition to, or in substitution, partially or totally, of any
assessment, tax, fee, levy or charge previously included within the
definition of real property tax, it being acknowledged by Tenant and
Landlord that Proposition 13 was adopted by the voters of the State
of California in the June 1978 election ("Proposition 13") and that
assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property
owners or occupants, and, in further recognition of the decrease in
the level and quality of governmental services and amenities as a
result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project's contribution
towards a governmental or private cost-sharing agreement for the
purpose of augmenting or improving the quality of services and
amenities normally provided by governmental agencies;
(iii) any assessment, tax, fee, levy, or charge
allocable to or measured by the area of the Premises or the Rent
payable hereunder, including, without limitation, any business or
gross income tax or excise tax with respect to the receipt of such
rent, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof;
(iv) any assessment, tax, fee, levy or charge, upon
this transaction or any document to which Tenant is a party,
creating or transferring an interest or an estate in the Premises;
and
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
(v) all of the real estate taxes and assessments
imposed upon or with respect to the Building and Project. To the
extent such taxes are not currently known, Landlord shall reasonably
estimate the taxes and the Base Year Tax Expenses shall be
adjusted accordingly upon receipt of the actual tax adjustment
based upon such reassessment.
4.2.8.2 Other Costs. Any costs and expenses including,
without limitation, reasonable attorneys' and consultants' fees) incurred in
attempting to protest, reduce or minimize Tax Expenses shall be included in Tax
Expenses in the Expense Year such expenses are incurred. Tax refunds shall be
credited against Tax Expenses and refunded to Tenant regardless of when
received, based on the Expense Year to which the refund is applicable; provided,
however, in no event shall the amount to be refunded Tenant for any such Expense
Year exceed the total amount paid by Tenant as Additional Rent under this
Article 4 for such Expense Year. If Tax Expenses for any period during the Lease
Term or any extension thereof are increased after payment thereof for any
reason, including, without limitation, error or reassessment by applicable
governmental or municipal authorities, Tenant shall pay Landlord upon demand
Tenant's Share of any such increased Tax Expenses included by Landlord as
Building Tax Expenses pursuant to the terms of this Lease. Notwithstanding
anything to the contrary contained in this Section 4.2.8 (except as set forth in
Section 4.2.8.1, above), there shall be excluded from Tax Expenses (i) all
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents, receipts or income attributable to operations at the Project),
(ii) any items included as Operating Expenses, and (iii) any items paid by
Tenant under Section 4.5 of this Lease.
4.2.8.3 Base Taxes. The amount of Tax Expenses for the Base
Year attributable to the valuation of the Project, inclusive of tenant
improvements, shall be known as the "Base Taxes." If in any comparison year
subsequent to the Base Year the amount of Tax Expenses decreases below the
amount of Base Taxes for the Premises, then for purposes of all subsequent
comparison years, including the comparison year in which such decrease in Tax
Expenses occurred, the Base Taxes and therefore the Base Year shall be decreased
by an amount equal to the decrease in Tax Expenses.
4.2.9 Tenant's Share. "Tenant's Share" shall mean the percentages
set forth in Section 6 of The Summary. Tenant's Share is calculated by
multiplying the number of rentable square feet of the Premises as set forth in
Section 2 of the Summary, by 100, and dividing the applicable product by the
rentable square feet in the Building. The rentable square feet in the Premises
and Building is measured pursuant to the Building Owners and Managers
Association Standard Method for Measuring Floor Area in Office Buildings,
ANSI/BOMA Z65.1 - 1996 ("BOMA"), provided that the rentable square footage of
the Building shall include all of, and the rentable square footage of the
Premises therefore shall include a portion of, the square footage of the ground
floor Common Areas located within the Building and the Common Area and occupied
space of the portion of the Building or Project, dedicated to the service of the
Building. In the event either the rentable square feet of the Premises and/or
the total rentable square feet of the Building is remeasured, Tenant's Share for
the Premises shall be appropriately adjusted, and, as to the Expense Year in
which such change occurs, Tenant's Share for the Premises for such Expense Year
shall be determined on the basis of the number of days during such Expense Year
that each such Tenant's Share was in effect.
4.3 Allocation of Direct Expenses. The parties acknowledge that the
Building is a part of a multi-building project and that the costs and expenses
incurred in connection with the Project (i.e. the Direct Expenses) should be
shared between the tenants of the Building and the tenants of the other
buildings in the Project. Accordingly, as set forth in Section 4.2 above, Direct
Expenses (which consist of Operating Expenses and Tax Expenses) are determined
annually for the Project as a whole, and a portion of the Direct Expenses, which
portion shall be determined by Landlord in accordance with the CC&Rs, shall be
allocated to the tenants of the Building (as opposed to the tenants of any other
buildings in the Project) and such portion shall be the Building Direct Expenses
for purposes of this Lease (such allocation in accordance with the CC&Rs is
further described in Exhibit C hereto). Such portion of Direct Expenses
allocated to the tenants of the Building shall include all Direct Expenses
attributable solely to the Building and an equitable portion of the Direct
Expenses attributable to the Project as a whole.
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
4.4 Calculation and Payment of Additional Rent. If for any Expense Year
ending or commencing within the Lease Term, the applicable Tenant's Share of
Building Direct Expenses for such Expense Year exceeds the applicable Tenant's
Share of Building Direct Expenses applicable to the Base Year for the Premises,
then Tenant shall pay to Landlord, in the manner set forth in Section 4.4.1,
below, and as Additional Rent, an amount equal to the excess (the "Excess).
4.4.1 Statement of Actual Building Direct Expenses and Payment by
Tenant. Landlord shall give to Tenant following the end of each Expense Year, a
statement (the "Statement") which shall state the Building Direct Expenses
incurred or accrued for such preceding Expense Year and which shall indicate the
amount of the Excess. Upon receipt of the Statement for each Expense Year
commencing or ending during the Lease Term, if an Excess is present, Tenant
shall pay, with its next installment of Base Rent due, the full amount of the
Excess for such Expense Year, less the amounts, if any, paid during such Expense
Year as "Estimated Excess," as that term is defined in Section 4.4.2, below, and
if Tenant paid more as Estimated Excess than the actual Excess, Tenant shall
receive a credit in the amount of Tenant's overpayment against Rent next due
under this Lease. The failure of Landlord to timely furnish the Statement for
any Expense Year shall not prejudice Landlord or Tenant from enforcing its
rights under this Article 4. Even though the Lease Term has expired and Tenant
has vacated the Premises, when the final determination is made of Tenant's Share
of Building Direct Expenses for the Expense Year in which this Lease terminates,
if an Excess is present, Tenant shall immediately pay to Landlord such amount,
and if Tenant paid more as Estimated Excess than the actual Excess, Landlord
shall, within thirty (30) days, deliver a check, payable to Tenant in the amount
of the overpayment. The provisions of this Section 4.4.1 shall survive the
expiration or earlier termination of the Lease Term.
4.4.2 Statement of Estimated Building Direct Expenses. In
addition, Landlord shall give Tenant a yearly expense estimate statement (the
"Estimate Statement") which shall set forth Landlord's reasonable estimate (the
"Estimate") of what the total amount of Building Direct Expenses for the
then-current Expense Year shall be and the estimated excess (the "Estimated
Excess") as calculated by comparing the Building Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Building
Direct Expenses for the Base Year. The failure of Landlord to timely furnish the
Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4, nor
shall Landlord be prohibited from revising any Estimate Statement or Estimated
Excess theretofore delivered to the extent necessary. Thereafter, Tenant shall
pay, with its next installment of Base Rent due, a fraction of the Estimated
Excess for the then-current Expense Year (reduced by any amounts paid pursuant
to the last sentence of this Section 4.4.2). Such fraction shall have as its
numerator the number of months which have elapsed in such current Expense Year,
including the month of such payment, and twelve (12) as its denominator. Until a
new Estimate Statement is furnished (which Landlord shall have the right to
deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base
Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated
Excess set forth in the previous Estimate Statement delivered by Landlord to
Tenant.
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible.
4.5.1 Tenant shall be liable for and shall pay ten (10) days
before delinquency, taxes levied against Tenant's equipment, furniture, fixtures
and any other personal property located in or about the Premises. If any such
taxes on Tenant's equipment, furniture, fixtures and any other personal property
are levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 If the tenant improvements in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not affixed to
the real properly so as to become a part thereof, are assessed for real property
tax purposes at a valuation higher than the valuation at which tenant
improvements conforming to Landlord's "building standard" in other space in the
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LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
Building are assessed, then the Tax Expenses levied against Landlord or the
property by reason of such excess assessed valuation shall be deemed to be taxes
levied against personal property of Tenant and shall be governed by the
provisions of Section 4.5.1, above; provided that Landlord uniformly applies
such excess assessed valuation for (he same period uniformly to all tenants in
the Building.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall
pay prior to delinquency any (i) rent tax or sales tax, service tax, transfer
tax or value added tax, or any other applicable tax on the rent or services
herein or otherwise respecting this Lease, (ii) taxes assessed upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion of
the Project, including the Project parking facility, or (iii) taxes assessed
upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.
4.6 Landlord's Books and Records. Within six (6) months after receipt
of a Statement by Tenant, if Tenant disputes the amount of Additional Rent set
forth in the Statement, an independent certified public accountant (which
accountant is a member of a nationally recognized accounting firm, has previous
experience in reviewing financial operating records of landlords of office
buildings, and is retained by Tenant on a non-contingency fee basis)(the "Tenant
Auditor"), designated and paid for by Tenant, may, alter reasonable notice to
Landlord and at reasonable times, inspect Landlord's records with respect to the
Statement at Landlord's offices, provided that Tenant is not then in default
under this Lease and Tenant has paid all amounts required to be paid under the
applicable Estimated Statement and Statement, as the case may be. In connection
with such inspection, Tenant and Tenant's agents must agree in advance to follow
Landlord's reasonable rules and procedures regarding inspections of Landlord's
records, and shall execute a commercially reasonable confidentiality agreement
regarding such inspection. Tenant's failure to dispute the amount of Additional
Rent set forth in any Statement within six (6) months following Tenant's receipt
of such Statement shall be deemed to be Tenant's approval of such Statement and
Tenant, thereafter, waives the right or ability to dispute the amounts set forth
in such Statement. If after such inspection, Tenant still disputes such
Additional Rent, a determination as to the proper amount shall be made, at
Tenant's expense, by an independent certified public accountant (the
"Accountant") selected by Landlord and subject to Tenant's reasonable approval;
provided that if such certification by the Accountant proves that Direct
Expenses were overstated by more than five percent (5%), then the cost of the
Accountant, and the cost of such determination certification, shall be paid for
by Landlord. Any reimbursement amounts determined to be owing by Landlord to
Tenant or by Tenant to Landlord shall be (i) in the case of amounts owing from
Tenant to Landlord, paid within thirty (30) days following such determination,
and (ii) in the case of amounts owing from Landlord to Tenant, credited against
the next payment of Rent due Landlord under the terms of this Lease, or if the
Lease Term has expired, paid to Tenant within thirty (30) days following such
determination, In no event shall this Section 4.6 be deemed to allow any review
of any of Landlord's records by any subtenant of Tenant. Tenant agrees that this
Section 4,6 shall be the sole method to be used by Tenant to dispute the amount
of any Direct Expenses payable or not payable by Tenant pursuant to the terms of
this Lease, and Tenant hereby waives any other rights at law or in equity
relating thereto.
4.7 Security Deposit.
4.7.1 Security Deposit. Upon execution of this Lease, Tenant
shall deposit or cause to be deposited with Landlord a cash sum in the amount
equal Twenty-Eight Thousand One Hundred Ninety and 60/100 Dollars ($28,190.60)
(the "Security Deposit"). Landlord shall hold the Security Deposit as security
for the performance of Tenant's obligations under this Lease. If Tenant defaults
on any provision of this Lease, Landlord may, after such notice as may be
required under this Lease and without prejudice to any other remedy it has,
apply all or a part of the Security Deposit to:
4.7.1.1 Any Rent or other sum in default; or
4.7.1.2 Any expense, loss, or damage that Landlord may
suffer because of Tenant's default.
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ II
[Quality Systems, Inc.]
4.7.2 Landlord's Transfer of Security Deposit on Transfer of Real
Property. If Landlord disposes of its interests in the Premises, Landlord may
deliver or credit the Security Deposit to Landlord's successor-in-interest in
the Premises and thereupon be relieved of further responsibility with respect to
the Security Deposit.
4.7.3 Restoration of Security Deposit. If Landlord applies any
portion of the Security Deposit pursuant to Section 4.7.1 above, Tenant shall,
within thirty (30) days after demand by Landlord, deposit with Landlord an
amount sufficient to restore the Security Deposit to its original amount.
4.7.4 Interest on Security Deposit. Tenant is not entitled to any
interest on the Security Deposit.
4.7.5 Return of Security Deposit. If Tenant performs every
provision of this Lease to be performed by Tenant, the unused portion of the
Security Deposit shall be returned to Tenant or the last assignee of Tenant's
interest under this Lease within thirty (30) days following the expiration or
termination of the Lease Term.
ARTICLE 5
USE OF PREMISES
5.1 Permitted Use. Tenant shall use the Premises solely for the
Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or
permit the Premises or the Project to be used for any other purpose or purposes
whatsoever without the prior written consent of Landlord, which maybe withheld
in Landlord's sole discretion.
5.2 Prohibited Uses. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the Premises or
any part thereof for any use or purpose contrary to the provisions of the Rules
and Regulations set forth in Exhibit D, attached hereto, or in violation of the
laws of the United States of America, the State of California, or the
ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project
including, without limitation, any such laws, ordinances, regulations or
requirements relating to hazardous materials or substances, as those terms are
defined by applicable laws now or hereafter in effect. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or Project, or injure or annoy them or use or allow the Premises to he
used for any improper, unlawful or objectionable purpose, nor shall Tenant
cause, maintain or permit any nuisance in, on or about the Premises. Tenant
shall comply with, and Tenant's rights and obligations under the Lease and
Tenant's use of the Premises shall be subject and subordinate to, all recorded
easements, covenants, conditions, and restrictions now or hereafter affecting
the Project.
ARTICLE 6
SERVICES AND UTILITIES
6.1 Standard Tenant Services. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.
6.1.1 Subject to limitations imposed by all governmental rules,
regulations and guidelines applicable thereto, Landlord shall provide heating,
ventilation and air conditioning ("HVAC") when necessary for normal comfort for
normal office use in the Premises from 8:00 A.M. to 6:00 P.M. Monday through
Friday, and on Saturdays from 8:00 A.M. to Twelve Noon (collectively, the
"Building Hours"), except for the date of observation of New Year's Day,
Independence Day, Labor Day, Memorial Day, Thanksgiving Day, Christmas Day and,
at Landlord's discretion, other locally or nationally recognized holidays
(collectively, the "Holidays).
6.1.2 Landlord shall provide adequate electrical wiring and
facilities for connection to Tenant's lighting fixtures and incidental use
equipment, provided that (i) the connected electrical load of the incidental use
equipment docs not. exceed an average of six (6) ▇▇▇▇▇ per usable square foot of
the Premises, and (ii) the connected electrical load of Tenant's
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lighting fixtures does not exceed an average of two (2) walls per usable square
foot of the Premises, which electrical usage shall be subject to applicable laws
and regulations, including Title 24. Tenant shall bear the cost of replacement
of lamps, starters and ballasts for non-Building standard lighting fixtures
within the Premises.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes in the Building Common Areas.
6.1.4 Landlord shall provide janitorial services to the Premises
and window washing services in a manner consistent with Comparable Buildings.
6.1.5 Landlord shall provide nonexclusive, non-attended automatic
passenger elevator service during the Building Hours, shall have one elevator
available at all other times, including on the Holidays.
6.1.6 Landlord shall provide nonexclusive freight elevator service
subject to scheduling by Landlord.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.
6.2 Overstandard Tenant Use.
6.2.1 Non-Electrical Usage. Tenant shall not, without Landlord's
prior written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the Premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Landlord pursuant to the terms of Section
6.1 of this Lease. If Tenant uses water, heat or air conditioning in excess of
that supplied by Landlord pursuant to Section 6.1 of this Lease, Tenant shall
pay to Landlord, upon billing, the actual cost of such excess consumption, the
cost of the installation, operation, and maintenance of equipment which is
installed in order to supply such excess consumption, and the cost of the
increased wear and tear on existing equipment caused by such excess consumption;
and Landlord may install devices to separately meter any increased use and in
such event Tenant shall pay the cost of such increased use directly to Landlord,
on demand, at the rates charged by the public utility company furnishing the
same, including the cost of such additional metering devices. If Tenant desires
to use HVAC during non-Building Hours, Tenant shall give Landlord such prior
notice, if any, as Landlord shall from time to time establish as appropriate, of
Tenant's desired use in order to supply HVAC, and Landlord shall supply HVAC to
the Premises. The cost of after-hours HVAC is currently Sixty Dollars ($60) per
hour, per floor. Such cost shall increase hereafter to the extent of increases
in the direct and indirect costs to Landlord of providing such HVAC services.
The cost of HVAC supplied by Landlord during non-Building Hours shall be paid by
Tenant as Additional Rent.
6.2.2 Electrical Usage. If in any month Tenant uses electricity
(not including any electricity consumed in connection with the operation of the
Building's main HVAC system) in excess of the "Electricity Usage Standard" (as
defined below), Tenant shall pay to Landlord, upon billing, Landlord's cost of
such excess consumption and the reasonable cost of the installation, operation,
and maintenance of equipment which is required to be installed to supply such
excess capacity and/or consumption to Tenant. For purposes hereof, the
"Electricity Usage Standard" shall be an average of five (5) ▇▇▇▇▇ per rentable
square foot of the Premises of actual consumption, on a monthly Business Hours
basis. Tenant's use of electricity shall not exceed the capacity of the feeders
to the Project or the risers or wiring installation (which capacity is eight (8)
▇▇▇▇▇ per rentable square fool) and Tenant shall promptly discontinue any such
excess use promptly following receipt of notice of the same from Landlord. In
those cases where Landlord proposes to install equipment to be paid for by
Tenant or otherwise is proposing to require Tenant to pay for any cost related
to such excess consumption, Tenant may require Landlord, as a condition of such
charge by Landlord, to reasonably demonstrate that Landlord's actions and such
charges are consistent with the requirement of this Lease,
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6.3 Interruption of Use. Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent or otherwise, for failure to furnish or
delay in furnishing any service (including telephone and telecommunication
services), or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by breakage,
repairs, replacements, or improvements, by any strike, lockout or other labor
trouble, by inability to secure electricity, gas, water, or other fuel at the
Building or Project after reasonable effort to do so, by any riot or other
dangerous condition, emergency, accident or casualty whatsoever, by act or
default of Tenant or other parties, or by any other cause beyond Landlord's
reasonable control; and such failures or delays or diminution shall never be
deemed to constitute an eviction or disturbance of Tenant's use and possession
of the Premises or relieve Tenant from paying Rent or performing any of its
obligations under this Lease. Furthermore, Landlord shall not be liable under
any circumstances for a loss of, or injury to, property or for injury to, or
interference with, Tenant's business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the services or utilities as set forth in this Article
6.
ARTICLE 7
REPAIRS
Tenant shall, at Tenant's own expense, keep the Premises, including all
improvements, fixtures and furnishings therein, and the floor or floors of the
Building on which the Premises are located, in good order, repair and condition
at all times during the Lease Term. In addition, Tenant shall, at Tenant's own
expense, but under the supervision and subject to the prior approval of
Landlord, and within any reasonable period of time specified by Landlord,
promptly and adequately repair all damage to the Premises and replace or repair
all damaged, broken, or worn fixtures and appurtenances, except for damage
caused by ordinary wear and tear or beyond the reasonable control of Tenant;
provided however, that, at Landlord's option, or if Tenant fails to make such
repairs, Landlord may, but need not, make such repairs and replacements, and
Tenant shall pay Landlord the cost thereof, including a percentage of the cost
thereof (to be uniformly established for the Building and/or the Project)
sufficient to reimburse Landlord for all overhead, general conditions, fees and
other costs or expenses arising from Landlord's involvement with such repairs
and replacements forthwith upon being billed for same. Landlord may, but shall
not be required to, enter the Premises at all reasonable times to make such
repairs, alterations, improvements or additions to the Premises or to the
Project or to any equipment located in the Project as Landlord shall desire or
deem necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree. Tenant hereby waives any
and all rights under and benefits of subsection 1 of Section 1932 and Sections
1941 and 1942 of the California Civil Code or under any similar law, statute, or
ordinance now or hereafter in effect.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 Landlord's Consent to Alterations. Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical, plumbing or HVAC facilities or systems pertaining to the Premises
(collectively, the "Alterations") without first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant not less than thirty (30) days prior to the commencement thereof, and
which consent shall not be unreasonably withheld by Landlord, provided it shall
be deemed reasonable for Landlord to withhold its consent to any Alteration
which adversely affects the structural portions or the systems or equipment of
the Building or is visible from the exterior of the Building. The construction
of the initial improvements to the Premises shall be governed by the terms of
the Tenant Work Letter and not the terms of this Article 8.
8.2 Manner of Construction.
8.2.1 Conditions to Alterations. Landlord may impose, as a
condition of its consent to any and all Alterations or repairs of the Premises
or about the Premises, such requirements as Landlord in its reasonable
discretion may deem desirable, including, but not limited to, (i) the
requirement that Tenant utilize for such purposes only contractors,
subcontractors, materials, mechanics and materialmen selected by Tenant from a
list provided and approved by Landlord, and (ii) the requirement that upon
Landlord's request, Tenant shall, at
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Tenant's expense, remove such Alterations upon the expiration or any early
termination of the Lease Term. Tenant shall construct such Alterations and
perform such repairs in a good and workmanlike manner, in conformance with any
and all applicable federal, state, county or municipal laws, rules and
regulations and pursuant to a valid building permit, issued by the City of
Irvine, all in conformance with Landlord's construction rules and regulations;
provided, however, that prior to commencing to construct any Alteration, Tenant
shall meet with Landlord to discuss Landlord's design parameters and code
compliance issues. In performing the work of any such Alterations, Tenant shall
have the work performed in such manner as not to obstruct access to the Project
or any portion thereof, by any other tenant of the Project, and so as not to
obstruct the business of Landlord or other tenants in the Project. Tenant shall
not use (and upon notice from Landlord shall cease using) contractors, services,
workmen, labor, materials or equipment that, in Landlord's reasonable judgment,
would disturb labor harmony with the workforce or trades engaged in performing
other work, labor or services in or about the Building or the Common Areas. In
addition to Tenant's obligations under Article 9 of this Lease, upon completion
of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded
in the office of the Recorder of the County of Orange in accordance with Section
3093 of the Civil Code of the State of California or any successor statute, and
Tenant shall deliver to the Project construction manager a reproducible copy of
the "as built" drawings of the Alterations, as well as all permits, approvals
and other documents issued by any governmental agency in connection with the
Alterations.
8.2.2 Base Building Changes. In the event any Alterations which
Tenant proposes to make to the Premises require or give rise to
governmentally-required changes ("Additional Required Work") to the Base
Building, Landlord and Tenant shall work together to eliminate, if possible, or
otherwise minimize the Additional Required Work. Absent elimination of such
Additional Required Work or a mutually acceptable allocation of such changes as
between Landlord and Tenant, the cost of such changes shall be borne by Tenant.
As used herein, (i) "Base Building" means the structural portions of the
Building, the Base Building Systems, the public restrooms, elevators, exit
stairwells and the systems and equipment located in the internal core of the
Building, and (ii) "Base Building Systems" means all systems and equipment
(including plumbing, HVAC, electrical fire/life/safety elevator and security
systems) that serve all or part of the Building.
8.3 Payment for Improvements. Except as otherwise provided in Section
8.4 below with respect to the Initial Alterations (as defined below) if payment
is made directly to contractors, Tenant shall (i) comply with Landlord's
requirements for final lien releases and waivers in connection with Tenant's
payment for work to contractors, and (ii) cause its contractors to sign
Landlord's standard contractor's rules and regulations. If Tenant orders any
work directly from Landlord, Tenant shall pay to Landlord an amount equal to
five percent (5%) of the cost of such work to compensate Landlord for all
overhead, general conditions, fees and other costs and expenses arising from
Landlord's involvement with such work, If Tenant does not order any work
directly from Landlord, Tenant shall reimburse Landlord for Landlord's
reasonable, actual, out-of-pocket costs and expenses actually incurred in
connection with Landlord's review of such work.
8.4 Payment For Initial Alterations. Notwithstanding anything herein to
the contrary, Landlord shall reimburse Tenant in the maximum amount of
Fifty-Three Thousand Four Hundred Fifty Dollars ($53,450) for costs incurred for
painting of painted walls in the Premises and carpeting in the Premises (the
"Initial Alterations") subject to the following conditions:
8.4.1 The cost of the Initial Alterations shall be incurred and
the installation of the Initial Alterations shall occur between April 1, 2005
and July 31, 2005;
8.4.2 The Initial Alterations shall be Alterations for purposes
of this Lease and shall be subject to the terms and provisions of this Lease
including Article 8;
8.4.3 The Initial Alterations shall equal or exceed in quality
Landlord's then Building standard for carpeting and paint;
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8.4.4 Tenant shall provide to Landlord such evidence as Landlord
may reasonably require to confirm the actual out-of-pocket cost and expense
actually incurred for the Initial Alterations; and
8.4.5 Landlord shall provide the Initial Alterations
reimbursement to Tenant within thirty (30) days after the later of (i)
completion and/or installation of initial Alterations and (ii) receipt of final
lien releases and waivers or, at Landlord's option, conditional lien releases
and waivers for the Initial Alterations. Nothing herein shall impose on Landlord
any liability or responsibility for the Initial Alterations.
8.5 Construction Insurance. In addition to the requirements of Article
10 of this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries "Builder's All Risk" insurance in an amount approved by
Landlord covering the construction of such Alterations, and such other insurance
as Landlord may reasonably require, it being understood and agreed that all of
such Alterations shall be insured by Tenant pursuant to Article 10 of this
Lease immediately upon completion thereof. In addition, in connection with any
Alteration, Landlord may, in its discretion, require Tenant to obtain a lien and
completion bond or some alternate form of security satisfactory to Landlord in
an amount sufficient to ensure the lien-free completion of such Alterations and
naming Landlord as a co-obligee.
8.6 Landlord's Property. All Alterations, improvements, fixtures,
equipment and/or appurtenances which may be installed or placed in or about the
Premises, from time to time, shall be at the sole cost of Tenant and shall be
and become the property of Landlord, except that Tenant may remove any
Alterations, improvements, fixtures and/or equipment which Tenant can
substantiate to Landlord have not been paid for with any Tenant improvement
allowance funds provided to Tenant by Landlord, provided Tenant repairs any
damage to the Premises and Building caused by such removal and returns the
affected portion of the Premises to a building standard tenant improved
condition as determined by Landlord. Furthermore, Landlord may, by written
notice to Tenant prior to the end of the Lease Term, or given following any
earlier termination of this Lease, require Tenant, at Tenant's expense, to
remove any such Alterations or improvements and to repair any damage to the
Premises and Building caused by such removal and returns the affected portion of
the Premises to a building standard tenant improved condition as determined by
Landlord. If Tenant fails to complete such removal and/or to repair any damage
caused by the removal of any Alterations or improvements in the Premises and
return the affected portion of the Premises to a building standard tenant
improved condition as reasonably determined by Landlord, Landlord may do so and
may charge the cost thereof to Tenant. Tenant hereby protects, defends,
indemnifies and holds Landlord harmless from any liability, cost, obligation,
expense or claim of lien in any manner relating to the installation, placement,
removal or financing of any such Alterations, improvements, fixtures and/or
equipment in, on or about the Premises, which obligations of Tenant, shall
survive the expiration or earlier termination of this Lease.
8.7 Communications and Computer Lines. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "Lines") in or serving the Premises, provided that (i) Tenant
shall obtain Landlord's prior, written consent, use an experienced and qualified
contractor approved in writing by Landlord, and comply with all of the other
provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of spare
Lines and space for additional Lines shall he maintained for existing and future
occupants of the Project, as determined in Landlord's reasonable opinion, (iii)
the Lines therefor (including riser cables) shall be appropriately insulated to
prevent excessive electromagnetic fields or radiation, and shall be surrounded
by a protective conduit reasonably acceptable to Landlord, (iv) any new or
existing Lines servicing the Premises shall comply with all applicable
governmental laws and regulations, (v) as a condition to permitting the
installation of new Lines, Landlord may require that Tenant remove existing
Lines located in or serving the Premises and repair any damage in connection
with such removal, and (vi) Tenant shall pay all costs in connection therewith.
Landlord reserves the right to require that Tenant remove any Lines located in
or serving the Premises which are installed in violation of these provisions, or
which are at any time in violation of any laws or represent a dangerous or
potentially dangerous condition.
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ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project, and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least twenty (20) days prior to the commencement of any such
work on the Premises (or such additional time as may be necessary under
applicable laws) to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Tenant shall remove any such lien or
encumbrance by bond or otherwise within ten (10) days after notice by Landlord,
and if Tenant shall fail to do so, Landlord may pay the amount necessary to
remove such lien or encumbrance, without being responsible for investigating the
validity thereof. The amount so paid shall be deemed Additional Rent under this
Lease payable upon demand, without limitation as to other remedies available to
Landlord under this Lease. Nothing contained in this Lease shall authorize
Tenant to do any act which shall subject Landlord's title to the Building or
Premises to any liens or encumbrances whether claimed by operation of law or
express or implied contract, Any claim to a lien or encumbrance upon the
Building or Premises arising in connection with any such work or respecting the
Premises not performed by or at the request of Landlord shall be null and void,
or at Landlord's option shall attach only against Tenant's interest in the
Premises and shall in all respects be subordinate to Landlord's title to the
Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1 Indemnification and Waiver. Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever (including, but not limited to, any personal injuries resulting
from a slip and fall in, upon or about the Premises) and agrees that Landlord,
its partners, subpartners and their respective officers, agents, servants,
employees, and independent contractors (collectively, "Landlord Parties") shall
not be liable for, and are hereby released from any responsibility for, any
damage either to person or property or resulting from the loss of use thereof,
which damage is sustained by Tenant or by other persons claiming through Tenant.
Tenant shall indemnity, defend, protect, and hold harmless the Landlord Parties
from any and all loss, cost, damage, expense and liability (including without
limitation court costs and reasonable attorneys' fees) incurred in connection
with or arising from any cause in, on or about the Premises (including, but not
limited to, a slip and fall), any acts, omissions or negligence of Tenant or of
any person claiming by, through or under Tenant, or of the contractors* agents,
servants, employees, invitees, guests or licensees of Tenant or any such person,
in, on or about the Project or any breach of the terms of this Lease, either
prior to, during, or after the expiration of the Lease Term, provided that the
terms of the foregoing indemnity shall not apply to the gross negligence or
willful misconduct of Landlord. Should Landlord be named as a defendant in any
suit brought against Tenant in connection with or arising out of Tenant's
occupancy of the Premises, Tenant shall pay to Landlord its costs and expenses
incurred in such suit, including without limitation, its actual professional
fees such as reasonable appraisers', accountants' and attorneys' fees. The
provisions of this Section 10.1 shall survive the expiration or sooner
termination of this Lease with respect to any claims or liability arising in
connection with any event occurring prior to such expiration or termination.
10.2 Tenant's Compliance With Landlord's Fire and Casualty Insurance.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 Tenant's Insurance. Tenant shall maintain the following coverages
in the following amounts.
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10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
(including loss of use thereof) arising out of Tenant's operations, and
contractual liabilities (covering the performance by Tenant of its indemnity
agreements) including a Broad Form endorsement covering the insuring provisions
of this Lease and the performance by Tenant of the indemnity agreements set
forth in Section 10.1 of this Lease, for limits of liability not less than:
Bodily Injury and $5,000,000 each occurrence
Property Damage Liability $5,000,000 annual aggregate
Personal Injury Liability $5,000,000 each occurrence
$5,000,000 annual aggregate
0% Insured's participation
10.3.2 Physical Damage Insurance covering (i) all office
furniture, business and trade fixtures, office equipment, free-standing cabinet
work, movable partitions, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii)
improvements which exist in the Premises as of the Lease Commencement Date
(excluding the Base Building) (the "Original Improvements"), and (iii) all other
improvements, alterations and additions to the Premises. Such insurance shall be
written on an "all risks" of physical loss or damage basis, for the full
replacement cost value (subject to reasonable deductible amounts) new without
deduction for depreciation of the covered items and in amounts that meet any
co-insurance clauses of the policies of insurance and shall include coverage for
damage or other loss caused by fire or other peril including, but not limited
to, vandalism and malicious mischief, theft, water damage of any type, including
sprinkler leakage, bursting or stoppage of pipes, and explosion, and providing
business interruption coverage for a period of one year.
10.3.3 Worker's Compensation and Employer's Liability or other
similar insurance pursuant to all applicable state and local statutes and
regulations.
10.4 Form of Policies. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, and any other
party the Landlord so specifies, as an additional insured, including Landlord's
managing agent, if any; (ii) specifically cover the liability assumed by Tenant
under this Lease, including, but not limited to, Tenant's obligations under
Section 10.1 of this Lease; (iii) be issued by an insurance company having a
rating of not less than A-X in Best's Insurance Guide or which is otherwise
acceptable to Landlord and licensed to do business in the State of California;
(iv) be primary insurance as to all claims thereunder and provide that any
insurance carried by Landlord is excess and is non-contributing with any
insurance requirement of Tenant; (v) be in form and content reasonably
acceptable to Landlord; and (vi) provide that said insurance shall not be
canceled or coverage changed unless thirty (30) days' prior written notice shall
have been given to Landlord and any mortgagee of Landlord. Tenant shall deliver
said policy or policies or certificates thereof to Landlord on or before the
Lease Commencement Date and at least thirty (30) days before the expiration
dates thereof. In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificate, Landlord may, at its option, procure such
policies for the account of Tenant, and the cost thereof shall be paid to
Landlord within five (5) days after delivery to Tenant of bills therefor.
10.5 Subrogation. Landlord and Tenant intend that their respective
property loss risks shall be borne by insurance carriers to the extent above
provided, and Landlord and Tenant hereby agree to look solely to, and seek
recovery only from, their respective insurance carriers in the event of a
property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor.
10.6 Additional Insurance Obligations. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance
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required to be carried by Tenant pursuant to this Article 10 and such other
reasonable types of insurance coverage and in such reasonable amounts covering
the Premises and Tenant's operations therein, as may be reasonably requested by
Landlord, but in no event in excess of the amounts and types of insurance then
being required of tenants in Comparable Buildings occupying comparable space and
engaged in a similar use as Tenant.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 Repair of Damage to Premises by Landlord.
11.1.1 Damage to Building. Tenant shall promptly notify
Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord, which are consistent with the character of the Project,
provided that access to the Premises and any restrooms serving the Premises
shall not be materially impaired.
11.1.2 Damage to Premises. Upon the occurrence of any damage to
the Premises, upon notice (the "Landlord Repair Notice") to Tenant from
Landlord, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant's insurance
required under Section 10.3.2(ii) and (iii) of this Lease, and Landlord shall
repair any injury or damage to the Original Improvements installed in the
Premises and shall return such Original Improvements to their original
condition; provided that if the cost of such repair by Landlord exceeds the
amount of insurance proceeds received by Landlord from Tenant's insurance
carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant
to Landlord prior to Landlord's commencement of repair of the damage. In the
event that Landlord does not deliver the Landlord Repair Notice within sixty
(60) days following the date the casualty becomes known to Landlord, Tenant
shall, at its sole cost and expense, repair any injury or damage to the Original
Improvements installed in the Premises and shall return such Original
Improvements to their original condition. Whether or not Landlord delivers a
Landlord Repair Notice, prior to the commencement of construction, Tenant shall
submit to Landlord, for Landlord's review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall select
the contractors to perform such improvement work. Landlord shall not be liable
for any inconvenience or annoyance to Tenant or its visitors, or injury to
Tenant's business resulting in any way from such damage or the repair thereof;
provided however, that if such fire or other casualty shall have damaged the
Premises or Common Areas necessary to Tenant's occupancy, and the Premises are
not occupied by Tenant as a result thereof, then during the time and to the
extent the Premises are unfit for occupancy, the Rent shall be abated in
proportion to the ratio that the amount of rentable square feet of the Premises
which is unfit for occupancy for the purposes permitted under this Lease bears
to the total rentable square feet of the Premises. In the event that Landlord
shall not deliver the Landlord Repair Notice, Tenant's right to rent abatement
pursuant to the preceding sentence shall terminate as of the date which is
reasonably determined by Landlord to be the date Tenant should have completed
repairs to the Premises assuming Tenant used reasonable due diligence in
connection therewith.
11.2 Landlord's Option to Repair. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after the
date of discovery of the damage, such notice to include a termination date
giving Tenant sixty (60) days to vacate the Premises, but Landlord may so elect
only if the Building or Project shall be damaged by fire or other casualty or
cause, whether or not the Premises are affected, and one or more of the
following conditions is present: (i) in Landlord's reasonable judgment, repairs
cannot reasonably be completed within one hundred eighty (180)
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days after the date of discovery of the damage (when such repairs are made
without the payment of overtime or other premiums); (ii) the holder of any
mortgage on the Building or Project or ground lessor with respect to the
Building or Project shall require that the insurance proceeds or any portion
thereof be used to retire the mortgage debt, or shall terminate the ground
lease, as the case may be; (iii) the damage is not fully covered by Landlord's
insurance policies; (iv) Landlord decides to rebuild the Building or Common
Areas so that they will be substantially different structurally or
architecturally; or (v) the damage occurs during the last twelve (12) months of
the Lease Term. In the event Landlord does not terminate this Lease as set forth
above, and in Landlord's reasonable judgment, (A) the repairs cannot be
completed within such one hundred eighty (180) days, as set forth in (i) above,
or (B) if the damage occurs during the last twelve (12) months of the Lease Term
and the repairs cannot be completed within one hundred twenty (120) days after
the date of discovery of the damage, Landlord shall provide Tenant with written
notice ("Extended Repair Notice") of the time within which such repairs may be
completed, in Landlord's reasonable judgment.
11.3 Tenant's Option to Cause Early Expiration. If damage to the Project,
Building or Premises causes the Premises to be unusable for their intended
purposes and Landlord advises Tenant in the Extended Repair Notice that (i)
repairs cannot be completed within one hundred eighty days (180) days after the
date of discovery of the damage, or (ii) if the damage occurs during the last
twelve (12) months of the Lease Term, repairs cannot be completed within one
hundred twenty (120) days after the date of discovery of the damage, Tenant may
elect to cause the Expiration Date to be accelerated. Such election shall be
made in writing to Landlord within thirty (30) days after receipt of the
Extended Repair Notice. Tenant's election to accelerate the Expiration Date
shall be made by written notice to Landlord within thirty(30) days after receipt
of Landlord's Notice and shall specify the new Expiration Date, which date shall
not be later than forty-five (45) days after Tenant's receipt of the Extended
Repair Notice.
11.4 Waiver of Statutory Provisions. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.
ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
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ARTICLE 13
CONDEMNATION
If the whole or any material part of the Premises, Building or Project
shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-public use or purpose, or if any adjacent
property or street shall be so taken or condemned, or reconfigured or vacated by
such authority in such manner as to require the use, reconstruction or
remodeling of any material part of the Premises, Building or Project, or if
Landlord shall grant a deed or other instrument in lieu of such taking by
eminent domain or condemnation, Landlord shall have the option to terminate this
Lease effective as of the date possession is required to be surrendered to the
authority. If more than twenty-five percent (25%) of the rentable square feet of
the Premises is taken, or if access to the Premises is substantially impaired,
in each case for a period in excess of one hundred eighty (180) days, Tenant
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. Tenant shall not
because of such taking assert any claim against Landlord or the authority for
any compensation because of such taking and Landlord shall be entitled to the
entire award or payment in connection therewith, except that Tenant shall have
the right to file any separate claim available to Tenant for any taking of
Tenant's personal property and fixtures belonging to Tenant and removable by
Tenant upon expiration of the Lease Term pursuant to the terms of this Lease,
and for moving expenses, so long as such claims do not diminish the award
available to Landlord, its ground lessor with respect to the Building or Project
or its mortgagee, and such claim is payable separately to Tenant. All Rent shall
be apportioned as of the date of such termination. If any part of the Premises
shall be taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of the California Code of Civil
Procedure. Notwithstanding anything to the contrary contained in this Article
13, in the event of a temporary taking of all or any portion of the Premises for
a period of one hundred eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Transfers. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into any
license or concession agreements or otherwise permit the occupancy or use of the
Premises or any part thereof by any persons other than Tenant and its employees
and contractors (all of the foregoing are hereinafter sometimes referred to
collectively as "Transfer(s)" and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a "Transferee"). If
Tenant desires Landlord's consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the "Transfer Notice") shall include (i) the proposed
effective date of the Transfer, which shall not be less than thirty (30) days
nor more than one hundred eighty (180) days after the date of delivery of the
Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the "Subject Space"), (iii) all of the terms of the proposed
Transfer and the consideration therefor, including calculation of the "Transfer
Premium", as that term is defined in Section 14.3 below, in connection with such
Transfer, the name and address of the proposed Transferee, and a copy of all
existing executed and/or proposed documentation pertaining to the proposed
Transfer, including all existing operative documents to be executed to evidence
such Transfer or the agreements incidental or related to such Transfer, (iv)
current financial statements of the proposed Transferee certified by an officer,
partner or owner thereof, business credit and personal references and history of
the proposed Transferee and any other information reasonably required by
Landlord which will enable Landlord to determine the financial responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee's business and proposed use of the Subject Space, and (v) an executed
estoppel certificate from Tenant in the form attached hereto as Exhibit E. Any
Transfer made without Landlord's prior written consent shall, at Landlord's
option, be null, void and of no effect, and shall, at Landlord's option,
constitute a default by Tenant under this Lease. Whether or not Landlord
consents to any proposed Transfer, Tenant shall pay Landlord's
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reasonable review and processing fees, as well as any reasonable professional
fees (including, without limitation, attorneys', accountants', architects',
engineers' and consultants' fees) incurred by Landlord, within thirty (30) days
after written request by Landlord, in an amount not to exceed One Thousand Five
Hundred Dollars ($1,500) in the aggregate, for a Transfer in the ordinary course
of business (for purposes hereof, a Transfer shall be deemed not to be in the
"ordinary course of business" if Landlord is required to review documentation
related to such Transfer on more than two (2) separate occasions).
14.2 Landlord's Consent. Landlord shall not unreasonably withhold or
delay its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice. Without limitation as
to other reasonable grounds for withholding consent, the parties hereby agree
that it shall be reasonable under this Lease and under any applicable law for
Landlord to withhold consent to any proposed Transfer where one or more of the
following apply:
14.2.1 The Transferee is of a character or reputation or
engaged in a business which is not consistent with the quality of the Building
or the Project;
14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or
instrumentality thereof;
14.2.4 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
14.2.5 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease; or
14.2.6 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Project at the
time of the request for consent, or (ii) is negotiating with Landlord or has
negotiated with Landlord during the six (6) month period immediately preceding
the date Landlord receives the Transfer Notice, to lease space in the Project.
If Landlord consents to any Transfer pursuant to the terms of this Section
14.2, Tenant may within six (6) months after Landlord's consent, but not later
than the expiration of said six-month period, enter into such Transfer of the
Premises or portion thereof, upon the same terms and conditions as are set forth
in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1
of this Lease, provided that if there are any changes in the terms and
conditions from those specified in the Transfer Notice (i) such that Landlord
would initially have been entitled to refuse its consent to such Transfer under
this Section 14.2, or (ii) which would cause the proposed Transfer to be more
favorable to the Transferee than the terms set forth in Tenant's original
Transfer Notice, Tenant shall again submit the Transfer to Landlord for its
approval and other action under this Article 14. Notwithstanding anything to the
contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent under Section 14.2 or
otherwise has breached or acted unreasonably under this Article 14, their sole
remedies shall be a suit for declaratory judgment and an injunction for the
relief sought, and Tenant hereby waives all other remedies, including, without
limitation, any right at law or equity to terminate this Lease, on its own
behalf and, to the extent permitted under all applicable laws, on behalf of the
proposed Transferee.
14.3 Transfer Premium. If Landlord consents to a Transfer as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay to
Landlord one hundred percent (100%) of any "Transfer Premium," as that term is
defined in this Section 14.3, received by Tenant from such Transferee. "Transfer
Premium" shall mean all rent, additional rent or other consideration payable by
such Transferee in connection with the Transfer in excess of the Base Rent and
Additional Rent payable by Tenant under this Lease during the term of the
Transfer (on a per rentable square foot basis if less than all of the Premises
is transferred), after deducting the reasonable expenses incurred by Tenant for
(i) any changes, alterations and improvements to the Premises in connection with
the Transfer, (ii) any free base rent reasonably provided to the
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Transferee in connection with the Transfer, (iii) any brokerage commissions in
connection with the Transfer, and (iv) twenty-five percent (25%) of the amount
of any Base Rent and Additional Rent paid by Tenant to Landlord with respect to
the Subject Space during the period commencing on the later of (a) the date
Tenant contracts with a reputable broker to market the Subject Space, and (b)
the date Tenant vacates the Subject Space, until the commencement of the term of
the Transfer (collectively, "Tenant's Transfer Costs"). "Transfer Premium" shall
also include, but not be limited to, key money, bonus money or other cash
consideration paid by Transferee to Tenant in connection with such Transfer, and
any payment in excess of fair market value for services rendered by Tenant to
Transferee or for assets, fixtures, inventory, equipment, or furniture
transferred by Tenant to Transferee in connection with such Transfer. The
determination of the amount of Landlord's applicable share of the Transfer
Premium shall be made on a monthly basis as rent or other consideration is
received by Tenant under the Transfer. For purposes of calculating the Transfer
Premium on a monthly basis, (i) Tenant's Transfer Costs shall be deemed to be
expended by Tenant in equal monthly amounts over the entire term of the Transfer
and (ii) the Rent paid for the Subject Space by Tenant shall be computed after
adjusting such rent to the actual effective rent to be paid, taking into
consideration any and all leasehold concessions granted in connection therewith,
including, but not limited to, any rent credit and tenant improvement allowance.
For purposes of calculating any such effective rent all such concessions shall
be amortized on a straight-line basis over the relevant term.
14.4 Landlord's Option as to Subject Space. Notwithstanding anything to
the contrary contained in this Article 14, in the event Tenant contemplates a
Transfer of all or a portion of the Premises (or in the event of any other
Transfer or Transfers entered into by Tenant as a subterfuge in order to avoid
the terms of this Section 14.4), Tenant shall give Landlord notice (the
"Intention to Transfer Notice") of such contemplated transfer (whether or not
such contemplated transfer or any of the terms of such contemplated transfer
have been determined). The Intention to Transfer Notice shall specify the
portion of the rentable amount of square feet of the Premises which Tenant
intends to transfer (the "Contemplated Transfer Space"), the contemplated date
of commencement of the contemplated transfer (the "Contemplated Effective Date")
and the contemplated length of the term of such contemplated transfer, and shall
specify that such Intention to Transfer Notice is delivered to Landlord pursuant
to this Section 14.4 in order to allow Landlord to elect to recapture the
Contemplated Transfer Space for the term set forth in the Intention to Transfer
Notice. Thereafter, Landlord shall have the option, by giving written notice to
Tenant within thirty (30) days after receipt of any Intention to Transfer
Notice, to recapture the Contemplated Transfer Space. Such recapture shall
cancel and terminate this Lease with respect to such Contemplated Transfer Space
as of the Contemplated Effective Date until the last day of the term of the
contemplated transfer is set forth in the Intention to Transfer Notice. In the
event of a recapture by Landlord, this Lease shall be cancelled with respect to
less than the entire Premises, the Rent reserved herein shall be prorated on the
basis of the number of rentable square feet retained by Tenant in proportion to
the number of rentable square feet contained in the Premises, and this Lease as
so amended shall continue thereafter in full force and effect, and upon request
of either party, the parties shall execute written confirmation of the same. If
Landlord declines, or fails to elect in a timely manner, to recapture such
Contemplated Transfer Space under this Section 14.4, then, subject to the other
terms of this Article 14, for a period of nine (9) months (the "Nine Month
Period") commencing on the last day of such thirty (30) day period, Landlord
shall not have any right to recapture the Contemplated Transfer Space with
respect to any transfer made during the Nine Month Period, provided that any
such transfer is substantially on the terms set forth in the Intention to
Transfer Notice and, provided further, that any such transfer shall be subject
to the remaining terms of this Article 14. If such a transfer is not so
consummated within the Nine Month Period (or if the transfer is so consummated,
then upon the expiration of the term of any transfer of such Contemplated
Transfer Space consummated within such Nine Month Period), Tenant shall again be
required to submit a new Intention to Transfer Notice to Landlord with respect
to any contemplated transfer, as provided above in this Section 14.4.
14.5 Effect of Transfer. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of
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any Transfer Premium Tenant has derived and shall derive from such Transfer, and
(v) no Transfer relating to this Lease or agreement entered into with respect
thereto, whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than five percent (5%), Tenant shall pay
Landlord's costs of such audit.
14.6 Occurrence of Default. Any Transfer hereunder shall be subordinate
and subject to the provisions of this Lease, and if this Lease shall be
terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as canceled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant's agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord's enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord's right to
enforce any term of this Lease against Tenant or any other person. If Tenant's
obligations hereunder have been guaranteed, Landlord's consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.
14.7 Non-Transfers. Notwithstanding anything to the contrary contained in
this Article 14, an assignment or subletting of all or a portion of the Premises
to an entity which is controlled by, controls, or is under common control with,
Tenant (an "Affiliate"), shall not be deemed a Transfer under this Article 14,
provided that Tenant notifies Landlord of any such assignment or sublease and
promptly supplies Landlord with any documents or information requested by
Landlord regarding such assignment or sublease or such Affiliate, and further
provided that such assignment or sublease is not a subterfuge by Tenant to avoid
its obligations under this Lease. "Control", as used in this Section 14.7, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether by the
ownership of voting securities, by contract or otherwise.
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 Surrender of Premises. No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in writing by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not constitute a
surrender of the Premises or effect a termination of this Lease, whether or not
the keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.
15.2 Removal of Tenant Property by Tenant. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or
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Tenant, reasonable wear and tear and repairs which are specifically made the
responsibility of Landlord hereunder excepted. Upon such expiration or
termination, Tenant shall, without expense to Landlord, remove or cause to be
removed from the Premises all debris and rubbish, and such items of furniture,
equipment, business and trade fixtures, free-standing cabinet work, movable
partitions and other articles of personal property owned by Tenant or installed
or placed by Tenant at its expense in the Premises, and such similar articles of
any other persons claiming under Tenant, as Landlord may, in its sole
discretion, require to be removed, and Tenant shall repair at its own expense
all damage to the Premises and Building resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to the product of (i) the Rent applicable
during the last rental period of the Lease Term under this Lease, and (ii) a
percentage equal to 150%. Such month-to-month tenancy shall be subject to every
other applicable term, covenant and agreement contained herein. Nothing
contained in this Article 16 shall be construed as consent by Landlord to any
holding over by Tenant, and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration or other termination of this Lease. The provisions of
this Article 16 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all loss, costs
(including reasonable attorneys' fees) and liability resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender and any
lost profits to Landlord resulting therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) business days following a request in writing by Landlord,
Tenant shall execute, acknowledge and deliver to Landlord an estoppel
certificate, which, as submitted by Landlord, shall be substantially in the form
of Exhibit E, attached hereto (or such other form as may be required by any
prospective mortgagee or purchaser of the Project, or any portion thereof),
indicating therein any exceptions thereto that may exist at that time, and shall
also contain any other information reasonably requested by Landlord or
Landlord's mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. At any time during the Lease Term,
Landlord may require Tenant to provide Landlord with a current financial
statement and financial statements of the two (2) years prior to the current
financial statement year. Such statements shall be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, shall be audited by an independent certified public accountant. Failure
of Tenant to timely execute, acknowledge and deliver such estoppel certificate
or other instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements included in the estoppel certificate
are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present (including that
certain Ground Lease (Parcel 8), dated January 1, 1998, between Lakeshore LLC,
as lessor, and Landlord, as lessee) and future ground or underlying leases of
the Building or Project and to the lien of any mortgage, trust deed or other
encumbrances now or hereafter in force against the Building or Project or any
part thereof, if any, and to all renewals, extensions, modifications,
consolidations and replacements thereof, and to all advances made or hereafter
to be made upon the security of such mortgages or trust deeds, unless the
holders of such mortgages, trust deeds or other encumbrances, or the lessors
under such ground lease or underlying leases, require in writing that this Lease
be superior thereto.
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Tenant covenants and agrees in the event any proceedings are brought for the
foreclosure of any such mortgage or deed in lieu thereof (or if any ground lease
is terminated), to attorn, without any deductions or set-offs whatsoever, to the
lienholder or purchaser or any successors thereto upon any such foreclosure sale
or deed in lieu thereof (or to the ground lessor), if so requested to do so by
such purchaser or lienholder or ground lessor, and to recognize such purchaser
or lienholder or ground lessor as the lessor under this Lease, provided such
lienholder or purchaser or ground lessor shall agree to accept this Lease and
not disturb Tenant's occupancy, so long as Tenant timely pays the Rent and
observes and performs the terms, covenants and conditions of this Lease to be
observed and performed by Tenant. Landlord's interest herein may be assigned as
security at any time to any lienholder. Tenant shall, within ten (10) days of
request by Landlord, execute such further instruments or assurances as Landlord
may reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases. Tenant waives the provisions of any current or future
statute, rule or law which may give or purport to give Tenant any right or
election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 Events of Default. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other
charge required to be paid under this Lease, or any part thereof, when due
unless such failure is cured within five (5) days after notice; or
19.1.2 Except where a specific time period is otherwise set
forth for Tenant's performance in this Lease, in which event the failure to
perform by Tenant within such time period shall be a default by Tenant under
this Section 19.1.2, any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided that if the nature of such default is
such that the same cannot reasonably be cured within a thirty (30) day period,
Tenant shall not be deemed to be in default if it diligently commences such cure
within such period and thereafter diligently proceeds to rectify and cure such
default; or
19.1.3 Abandonment or vacation of all or a substantial portion
of the Premises by Tenant and Tenant is otherwise in default under this Lease;
or
19.1.4 The failure by Tenant to observe or perform according to
the provisions of Articles 5, 14, 17 or 18 of this Lease where such failure
continues for more than five (5) days after notice from Landlord, provided
however, such notice shall be in addition to, and not in lieu of, the periods
for performance set forth in such Articles of this Lease; or
19.1.5 Tenant's failure to occupy the Premises within ten (10)
days after the Lease Commencement Date.
The notice periods provided herein are in lieu of, and not in addition to,
any notice periods provided by law.
19.2 Remedies Upon Default. Upon the occurrence of any event of default
by Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice
or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be
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occupying the Premises or any part thereof, without being liable for prosecution
or any claim or damages therefor; and Landlord may recover from Tenant the
following:
(i) The worth at the time of award of the amount of any unpaid
rent which has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom, specifically including but not
limited to, brokerage commissions and advertising expenses incurred, and
any special concessions made to obtain a new tenant; and
(1) At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time
by applicable law.
The term "rent" as used in this Section 19,2 shall be deemed to be and to
mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Paragraphs
19.2. l(i) and (ii), above, the "worth at the time of award" shall be computed
by allowing interest at the rate set forth in Article 25 of this Lease, but in
no case greater than the maximum amount of such interest permitted by law. As
used in Paragraph 19.2.l (iii) above, the "worth at the time of award" shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has the
right to sublet or assign, subject only to reasonable limitations). Accordingly,
if Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.
19.2.3 Landlord shall at all times have the rights and remedies
(which shall be cumulative with each other and cumulative and in addition to
those rights and remedies available under Sections 19.2.1 and 19.2.2, above, or
any law or other provision of this Lease), without prior demand or notice except
as required by applicable law, to seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof.
19.3 Subleases of Tenant. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant, as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
19.4 Efforts to Relet. No re-entry or repossession, repairs, maintenance,
changes, alterations and additions, reletting, appointment of a receiver to
protect Landlord's interests hereunder, or any other action or omission by
Landlord shall be construed as an election by Landlord to terminate this Lease
or Tenant's right to possession, or to accept a surrender of the Premises, nor
shall same operate to release Tenant in whole or in part from any of Tenant's
obligations hereunder, unless express written notice of such intention is sent
by Landlord to
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Tenant. Tenant hereby irrevocably waives any right otherwise available under any
law to redeem or reinstate this Lease.
19.5 Landlord Default. Notwithstanding anything to the contrary set forth
in this Lease, Landlord shall not be in default in the performance of any
obligation required to be performed by Landlord pursuant to this Lease unless
(i) in the event such default is with respect to the payment of money, Landlord
fails to pay such unpaid amounts within five (5) business days of written notice
from Tenant that the same was not paid when due, or (ii) in the event such
default is other than the obligation to pay money, Landlord fails to perform
such obligation within thirty (30) days after the receipt of notice from Tenant
specifying in detail Landlord's failure to perform; provided, however, if the
nature of Landlord's obligation is such that more than thirty (30) days are
required for its performance, then Landlord shall not be in default under this
Lease if it shall commence such performance within such thirty (30) day period
and thereafter diligently pursue the same to completion. Upon any such default
by Landlord under this Lease, Tenant may, except as otherwise specifically
provided in this Lease to the contrary, exercise any of its rights provided at
law or in equity.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
ARTICLE 21
[INTENTIONALLY DELETED]
ARTICLE 22
SIGNS
22.1 Tenant's Entry Door Signage. Tenant's identifying signage shall be
provided by Landlord, at Tenant's cost, and such signage shall be comparable to
that used by Landlord for other similar floors in the Building and shall comply
with Landlord's then-current Building standard signage program.
22.2 Prohibited Signage and Other Items. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
separately approved by Landlord may be removed without notice by Landlord at the
sole expense of Tenant. Tenant may not install any signs on the exterior or roof
of the Project or the Common Areas. Any signs, window coverings, or blinds (even
if the same are located behind the Landlord-approved window coverings for the
Building), or other items visible from the exterior of the Premises or Building,
shall be subject to the prior approval of Landlord, in its sole discretion.
22.3 Building Directory. A building directory will be located in the
lobby of the Building. Tenant shall have the right, at Tenant's sole cost and
expense, to designate five (5) name strips to be displayed under Tenant's entry
in such directory for the Premises.
ARTICLE 23
COMPLIANCE WITH LAW
23.1 Applicable Laws. Tenant shall not do anything or suffer anything to
be done in or about the Premises or the Project which will in any way conflict
with any law, statute, ordinance or other governmental rule, regulation or
requirement now in force or which may hereafter be enacted or promulgated
("Applicable Laws"). At its sole cost and expense, Tenant
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shall promptly comply with all such Applicable Laws which relate to (i) Tenant's
use of the Premises, (ii) the Alterations in the Premises, or (iii) the Base
Building, but as to the Base Building, only to the extent such obligations are
triggered by Tenant's Alterations or Tenant's use of the Premises for
non-general office use. Should any standard or regulation now or hereafter be
imposed on Landlord or Tenant by a state, federal or local governmental body
charged with the establishment, regulation and enforcement of occupational,
health or safety standards for employers, employees, landlords or tenants, then
Tenant agrees, at its sole cost and expense, to comply promptly with such
standards or regulations. Tenant shall be responsible, at its sole cost and
expense, to make all alterations to the Premises as are required to comply with
the governmental rules, regulations, requirements or standards described in this
Article 23. The judgment of any court of competent jurisdiction or the admission
of Tenant in any judicial action, regardless of whether Landlord is a party
thereto, that Tenant has violated any of said governmental measures, shall be
conclusive of that fact as between Landlord and Tenant,
23.2 Hazardous Materials. Tenant shall not cause or permit any Hazardous
Material to be generated, brought into, used, stored, or disposed of in or about
the Premises, Building or Project by Tenant or its agents, employees,
contractors, subtenants, or invitees, except for such substances that are
required in the ordinary course of Tenant's business conducted on the Premises
or are otherwise approved by Landlord. Tenant shall:
23.2.1 Use, store, and dispose of all such Hazardous Material
in strict compliance with all applicable statutes, ordinances, and regulations
in effect during the Lease Term that relate to public health and safety and
protection of the environment ("Environmental Laws"), including those
Environmental Laws identified in Section 23.6; and
23.2.2 Comply at all times during the Lease Term with all
Environmental Laws.
23.3 Warranties; Notice of Release and Investigation. Tenant acknowledges
receipt of that certain Report for Phases IV and V Site Characterization dated
April 24, 1991, CEW Project No. ▇▇-▇▇▇▇▇-▇▇ prepared by Converse Environmental
West, for Parker Hannifin Corporation (as amended and updated "CEW Report")
concerning certain contamination of ground water lying under or about or
otherwise affecting the Project. Landlord warrants and represents to Tenant
that, to Landlord's actual knowledge without independent investigation or
inquiry, as of the date of this Lease:
23.3.1 Except as provided in the CEW Report, there has been no
release onto or under the Project of any Hazardous Material in violation of any
Environmental Law;
23.3.2 The Building shall contain no PCBS, PCB- contaminated
electrical equipment, or asbestos-containing materials; and
23.3.3 Except as provided in the CEW Report, Landlord has
received no notice that the Project is in violation of any Environmental Law.
If, during the Lease Term (including any extensions), either
Landlord or Tenant becomes aware of (i) any actual or threatened release of any
Hazardous Material on, under, or about the Premises, Building or Project, or
(ii) any inquiry, investigation, proceeding, or claim by any government agency
or other person regarding the presence of Hazardous Material on, under, or about
the Premises, Building or Project, that party shall give the other party written
notice of the release or investigation within five (5) days after learning of it
and shall simultaneously furnish to the other party copies of any claims,
notices of violation, reports, or other writings received by the party providing
notice that concern the release or investigation.
23.4 Indemnification. Landlord and Tenant shall, at that party's sole
expense and with counsel reasonably acceptable to the other party, indemnify,
defend, and hold harmless the other party and the other party's shareholders,
directors, officers, employees, partners, affiliates, and agents with respect to
all losses arising out of or resulting from the release of any Hazardous
Material in or about the Premises, Building or Project, or the violation of any
Environmental Law, by that party or that party's employees, agents, contractors,
or invitees. This indemnification includes all losses, liabilities, obligations,
penalties, fines, claims, actions (including remedial or enforcement actions of
any kind and administrative or judicial proceedings, orders, or judgments),
damages (including consequential and punitive damages),
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and costs (including attorney, consultant, and expert fees and expenses)
resulting from the release or violation. This indemnification shall survive the
expiration or termination of this Lease.
23.5 Remediation Obligations; Tenant's Rights on Cleanup by Landlord. If
the presence of any Hazardous Material brought onto the Premises, Building or
Project by either Landlord or Tenant or by Landlord's or Tenant's employees,
agents, contractors, or invitees results in contamination of the Premises,
Building or Project, that party shall promptly take all necessary actions, at
the party's sole expense, to return the Premises, Building or Project to the
condition that existed before the introduction of such Hazardous Material.
Tenant shall first obtain Landlord's approval of the proposed remedial action,
which shall not be unreasonably withheld or delayed. This provision does not
limit the indemnification obligations set forth in Section 23.4 above.
If Landlord undertakes any cleanup, detoxification, or similar action,
whether or not required by any government or quasi-government agency, as a
result of the presence, release, or disposal in or about the Building or Project
of any Hazardous Material, and that action requires that Tenant be denied access
to the Premises or Tenant is otherwise unable to conduct its business on the
Premises for a period of greater than twenty-four (24) hours, Base Rent shall be
abated for the period that Tenant is unable to conduct its business at the
Premises. Subject to Section 23.4, the costs of any Hazardous Material testing,
cleanup or remediation undertaken by Landlord during the Lease Term shall be
borne by Landlord, shall not be included in Operating Expenses and shall not be
the obligation of Tenant.
23.6 Definition of "Hazardous Material". As used herein, the term
"Hazardous Material" shall mean any hazardous or toxic substance, material, or
waste that is or becomes regulated by the United States, the State of
California, or any local government authority having jurisdiction over the
Building or Project. Hazardous Material includes:
23.6.1 Any "hazardous substance," as that term is defined in
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (CERCLA) (42 United States Code Sections 9601-9675);
23.6.2 "Hazardous waste," as that term is defined in the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 United States Code
Sections 6901-6992k);
23.6.3 Any pollutant, contaminant, or hazardous, dangerous, or
toxic chemical, material, or substance, within the meaning of any other
applicable federal, state, or local law, regulation, ordinance, or requirement
(including consent decrees and administrative orders imposing liability or
standards of conduct concerning any hazardous, dangerous, or toxic waste,
substance, or material, now or hereafter in effect);
23.6.4 Petroleum products;
23.6.5 Radioactive material, including any source, special
nuclear, or byproduct material as defined in ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Sections
2011-2297g-4;
23.6.6 Asbestos in any form or condition; and
23.6.7 Polychlorinated biphenyls (PCBS) and substances or
compounds containing PCBS.
ARTICLE 24
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) business days after
Tenant's receipt of written notice from Landlord that said amount is due, then
Tenant shall pay to Landlord a late charge equal to five percent (5%) of the
overdue amount plus any reasonable attorneys' fees incurred by Landlord by
reason of Tenant's failure to pay Rent and/or other charges when due hereunder.
The late charge shall be deemed Additional Rent and the right to require it
shall be in addition to all of Landlord's other rights and remedies hereunder or
at law and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner. In addition to the late charge described
above, any Rent
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or other amounts owing hereunder which are not paid within ten (10) days after
the date they are due shall bear interest from the date when due until paid at a
rate per annum equal to ten percent (10%) per year or, if less, the highest rate
permitted by applicable law.
ARTICLE 25
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
25.1 Landlord's Cure. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent, except to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant's part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.
25.2 Tenant's Reimbursement. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, upon delivery by
Landlord to Tenant of statements therefor: (i) sums equal to expenditures
reasonably made and obligations incurred by Landlord in connection with the
remedying by Landlord of Tenant's defaults pursuant to the provisions of Section
25.1; (ii) sums equal to all losses, costs, liabilities, damages and expenses
referred to in Article 10 of this Lease; and (iii) sums equal to all
expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all reasonable legal fees and other amounts so expended. Tenant's
obligations under this Section 25.2 shall survive the expiration or sooner
termination of the Lease Term.
ARTICLE 26
ENTRY BY LANDLORD
Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, or to
current or prospective mortgagees, ground or underlying lessors or insurers, or
prospective tenants; (iii) post notices of nonresponsibility; or (iv) alter,
improve or repair the Premises or the Building, or for structural alterations,
repairs or improvements to the Building or the Building's systems and equipment.
Notwithstanding anything to the contrary contained in this Article 26, Landlord
may enter the Premises at any time to (A) perform services required of Landlord,
including janitorial service; (B) take possession due to any breach of this
Lease in the manner provided herein; and (C) perform any covenants of Tenant
which Tenant fails to perform. Landlord may make any such entries without the
abatement of Rent, except as otherwise provided in this Lease, and may take such
reasonable steps as required to accomplish the stated purposes. Tenant hereby
waives any claims for damages (other than personal injury and property damage to
the extent caused by Landlord's negligence or willful misconduct in connection
with an entry by Landlord into the Premises) or for any injuries or
inconvenience to or interference with Tenant's business, lost profits, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby. For each of the above purposes, Landlord shall at all times have a key
with which to unlock all the doors in the Premises, excluding Tenant's vaults,
safes and special security areas designated in advance by Tenant. In an
emergency, Landlord shall have the right to use any means that Landlord may deem
proper to open the doors in and to the Premises. Any entry into the Premises by
Landlord in the manner hereinbefore described shall not be deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises. No provision
of this Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decorations except as otherwise expressly agreed to be performed
by Landlord herein.
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ARTICLE 27
TENANT PARKING
27.1 Parking In General. Tenant shall have the right, but not the
obligation, to rent from Landlord, commencing on the Lease Commencement Date, up
to the amount of parking spaces set forth in Section 9 of the Summary, on a
monthly basis throughout the Lease Term, which parking spaces shall pertain to
the Project parking structure ("Parking Structure") and, with respect to
Building reserved parking spaces, in the Building subterranean reserved parking
area. The location of the reserved parking spaces shall be mutually agreed upon
by Landlord and Tenant. Tenant shall pay Landlord for automobile parking spaces
at the time Base Rent is due on a monthly basis at the prevailing rate set forth
in Section 9 of the Summary. In addition, Tenant shall be responsible for the
full amount of any taxes imposed by any governmental authority in connection
with the renting of such parking spaces by Tenant or the use of Parking
Structure by Tenant. Tenant's continued right to use the parking spaces is
conditioned upon Tenant abiding by all rules and regulations which are
prescribed from time to time for the orderly operation and use of the Parking
Structure and in the Building subterranean reserved parking area, including any
sticker or other identification system established by Landlord, Tenant's
cooperation in seeing that Tenant's employees and visitors also comply with such
rules and regulations and Tenant not being in default under this Lease.
27.2 Landlord Reservations. So long as Tenant's use is not adversely and
materially affected (and it is deemed not to be adversely and materially
affected if reasonably comparable substitute parking is made available),
Landlord specifically reserves the right to change the size, configuration,
design, layout and all other aspects of the Parking Structure and in the
Building subterranean parking area, at any time and Tenant acknowledges and
agrees that Landlord may, without incurring any liability to Tenant and without
any abatement of Rent under this Lease, from time to time, close-off or restrict
access to the Parking Structure and in the Building subterranean parking area,
for purposes of permitting or facilitating any such construction, alteration or
improvements. Landlord may delegate its responsibilities hereunder to a parking
operator in which case such parking operator shall operate the Parking Structure
and any other parking facilities at the Project in a first class manner and
shall have all the rights of control attributed hereby to the Landlord. The
parking spaces used by Tenant pursuant to this Article 27 are provided to Tenant
solely for use by Tenant's own personnel and such spaces may not, except in the
case of a Transfer approved by Landlord pursuant to Article 14 above, be
transferred, assigned, subleased or otherwise alienated by Tenant without
Landlord's prior approval.
27.3 Visitor Validations. Tenant may validate visitor parking by such
method or methods as Landlord may establish, at the validation rate from time to
time generally applicable to visitor parking.
27.4 Parking Pass System. Landlord shall install as part of the security
system for the Building an access card recognition system for the Parking
Structure and the Building subterranean reserved parking area. The number of
parking facility access cards available to Tenant shall equal the number of
parking spaces rented by Tenant. Effective on the first day of a calendar month,
on at least thirty (30) days' prior notice to Landlord, Tenant may decrease or
increase the number of parking spaces which it rents in the Parking Structure or
the Building subterranean reserved parking area subject to the maximum number of
parking spaces in each such facility as set forth in the Summary. Tenant shall
pay the deposit established by Landlord for the Building and Parking Structure
access cards which deposit shall initially be Fifteen Dollars ($15) per card.
ARTICLE 28
MISCELLANEOUS PROVISIONS
28.1 Terms; Captions. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The necessary grammatical
changes required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed.
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The captions of Articles and Sections are for convenience only and shall not be
deemed to limit, construe, affect or alter the meaning of such Articles and
Sections.
28.2 Binding Effect. Subject to all other provisions of this Lease, each
of the covenants, conditions and provisions of this Lease shall extend to and
shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
28.3 No Air Rights. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
28.4 Modification of Lease. Should any current or prospective mortgagee
or ground lessor for the Building or Project require modification of this Lease,
which modification will not cause an increase in cost or expense to Tenant or in
any other way materially and adversely change the rights and obligations of
Tenant hereunder, then and in such event, Tenant agrees that this Lease may be
so modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. At the request of Landlord or any mortgagee or ground lessor,
Tenant agrees to execute and acknowledge a short form of lease and deliver the
same to Landlord within ten (10) days following the request therefor.
28.5 Transfer of Landlord's Interest. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project or
Building and in this Lease, and Tenant agrees that in the event of any such
transfer, Landlord shall automatically be released from all liability under this
Lease and Tenant agrees to look solely to such transferee for the performance of
Landlord's obligations hereunder after the date of transfer and such transferee
shall be deemed to have fully assumed and be liable for all obligations of this
Lease to be performed by Landlord, including the return of any Security Deposit,
and Tenant shall attorn to such transferee.
28.6 Prohibition Against Recording. Except as provided in Section 28.4 of
this Lease, neither this Lease, nor any memorandum, affidavit or other writing
with respect thereto, shall be recorded by Tenant or by anyone acting through,
under or on behalf of Tenant.
28.7 Landlord's Title. Landlord's title is and always shall be paramount
to the title of Tenant. Nothing herein contained shall empower Tenant to do any
act which can, shall or may encumber the title of Landlord.
28.8 Relationship of Parties. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.
28.9 Application of Payments. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.
28.10 Time of Essence. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
28.11 Partial Invalidity. If any term, provision or condition contained in
this Lease shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, provision or condition to persons
or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
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28.12 No Warranty. In executing and delivering this Lease, Tenant has not
relied on any representations, including, but not limited to, any representation
as to the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.
28.13 Landlord Exculpation. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the
Premises shall be limited solely and exclusively to an amount which is equal to
the interest of Landlord in the Building, provided that in no event shall such
liability extend to any sales or insurance proceeds received by Landlord or the
Landlord Parties in connection with the Project, Building or Premises. Neither
Landlord nor any of the Landlord Parties shall have any personal liability
therefor, and Tenant hereby expressly waives and releases such personal
liability on behalf of itself and all persons claiming by, through or under
Tenant. The limitations of liability contained in this Section 28.13 shall inure
to the benefit of Landlord's and the Landlord Parties' present and future
partners, beneficiaries, officers, directors, trustees, shareholders, agents and
employees, and their respective partners, heirs, successors and assigns. Under
no circumstances shall any present or future partner of Landlord (if Landlord is
a partnership) or trustee or beneficiary (if Landlord or any partner of Landlord
is a trust) have any liability for the performance of Landlord's obligations
under this Lease. Notwithstanding any contrary provision herein, neither
Landlord nor the Landlord Parties shall be liable under any circumstances for
injury or damage to, or interference with, Tenant's business, including but not
limited to, loss of profits, loss of rents or other revenues, loss of business
opportunity, loss of goodwill or loss of use, in each case, however occurring.
28.14 Entire Agreement. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease constitutes the parties' entire agreement with respect to the leasing of
the Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in writing signed by the parties hereto.
28.15 Right to Lease. Landlord reserves the absolute right to effect such
other tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
Project. Tenant does not rely on the fact, nor does Landlord represent, that any
specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.
28.16 Force Majeure. An actual delay or stoppage resulting from fire,
earthquake, explosion, flood, hurricane, the elements, acts of God or the public
enemy, war, invasion, insurrection, rebellion, riots, industry-wide labor
strikes or lock-outs (which objectively preclude Landlord or Tenant from
obtaining from any reasonable source, labor or substitute materials at a
reasonable cost necessary for performing its respective obligations hereunder),
or governmental acts, and other causes beyond the reasonable control of the
party obligated to perform, except with respect to the obligations imposed with
regard to Rent and other charges to be paid by Tenant pursuant to this Lease
(collectively, a "Force Majeure"), notwithstanding anything to the contrary
contained in this Lease, shall excuse the performance of such party for a period
equal to any such prevention, delay or stoppage and, therefore, if this Lease
specifies a time period for performance of an obligation of either party, that
time period shall be extended by the period of any delay in such party's
performance caused by a Force Majeure.
28.17 Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant
and for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant's right of occupancy of the Premises after any termination of this
Lease.
28.18 Notices. All notices, demands, statements, designations, approvals
or other communications (collectively, "Notices") given or required to be given
by either party to the
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other hereunder or by law shall be in writing, shall be (A) sent by United
States certified or registered mail, postage prepaid, return receipt requested
("Mail"), (B) transmitted by telecopy, if such telecopy is promptly followed by
a Notice sent by Mail, (C) delivered by a nationally recognized overnight
courier with verification of delivery requested, or (D) delivered personally.
Any Notice shall be sent, transmitted, or delivered, as the case may be, to
Tenant at the appropriate address set forth in Section 10 of the Summary, or to
such other place as Tenant may from time to time designate in a Notice to
Landlord, or to Landlord at the addresses set forth below, or to such other
places as Landlord may from time to time designate in a Notice to Tenant. Any
Notice will be deemed given (i) three (3) days after the date it is posted if
sent by Mail, (ii) the date the telecopy is transmitted if transmitted before
5:00 p.m. Pacific Time on a business day, otherwise on the next business day,
(iii) the date the overnight courier delivery is made, or (iv) the date personal
delivery is made (if made on a business day, otherwise on the next business
day). As of the date of this Lease, any Notices to Landlord must be sent,
transmitted, or delivered, as the case may be, to the following addresses:
Lakeshore Towers Limited Partnership Phase IV
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Building Manager
and
LTLP IV Corp.
c/o GE Investments
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Asset Manager
28.19 Joint and Several. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
28.20 Authority. If Tenant is a corporation, trust or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant's state of
incorporation and (ii) qualification to do business in California.
28.21 Attorneys' Fees. In the event that either Landlord or Tenant should
bring suit for the possession of the Premises, for the recovery of any sum due
under this Lease, or because of the breach of any provision of this Lease or for
any other relief against the other, then all costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.
28.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
IN ANY ACTION OR PROCEEDING ARISING THEREFROM, LANDLORD AND TENANT HEREBY
CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF
CALIFORNIA, (II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW,
AND (III) IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR
IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S
USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY
PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT
SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS
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SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT
SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.
28.23 Submission of Lease. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of, option for or
option to lease, and it is not effective as a lease or otherwise until execution
and delivery by both Landlord and Tenant.
28.24 Brokers. Landlord and Tenant hereby warrant to each other that they
have had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate brokers or agents
specified in Section 12 of the Summary (the "Brokers"), and that they know of no
other real estate broker or agent who is entitled to a commission in connection
with this Lease. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses, liabilities, lawsuits, judgments, costs and expenses (including without
limitation reasonable attorneys' fees) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of any dealings with any
real estate broker or agent, other than the Brokers, occurring by, through, or
under the indemnifying party.
28.25 Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord.
28.26 Project or Building Name and Signage. Landlord shall have the right
at any time to change the name of the Project or Building and to install, affix
and maintain any and all signs on the exterior and on the interior of the
Project or Building as Landlord may, in Landlord's sole discretion, desire.
Tenant shall not use the words "Lakeshore" or the name of the Project or
Building or use pictures or illustrations of the Project or Building in
advertising or other publicity or for any purpose other than as the address of
the business to be conducted by Tenant in the Premises, without the prior
written consent of Landlord.
28.27 Counterparts. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
28.28 Confidentiality. Tenant acknowledges that the content of this Lease
and any related documents are confidential information. Tenant shall keep such
confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant's financial,
legal, and space planning consultants.
28.29 Development of the Project.
28.29.1 Subdivision. Landlord reserves the right to further
subdivide all or a portion of the Project. Tenant agrees to execute and deliver,
upon demand by Landlord and in the form requested by Landlord, any additional
documents needed to conform this Lease to the circumstances resulting from such
subdivision.
28.29.2 The Other Improvements. If portions of the Project or
property adjacent to the Project (collectively, the "Other Improvements") are
owned by an entity other than Landlord, Landlord, at its option, may enter into
an agreement with the owner or owners of any or all of the Other Improvements to
provide (i) for reciprocal rights of access and/or use of the Project and the
Other Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Project and the Other
Improvements, provided that Tenant's rights under this Lease are not materially
impaired, (iii) for the allocation of a portion of the Direct Expenses to the
Other Improvements and the operating expenses and taxes for the Other
Improvements to the Project, and (iv) for the use or improvement of the Other
Improvements and/or the Project in connection with the improvement,
construction, and/or excavation of the Other Improvements and/or the Project.
Nothing contained herein shall be deemed or construed to limit or otherwise
affect Landlord's right to convey all or any portion of the Project or any other
of Landlord's rights described in this Lease.
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[Quality Systems, lnc.]
28.29.3 Construction of Project and Other Improvements. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction.
28.30 Building Renovations. It is specifically understood and agreed that
Landlord has no obligation and has made no promises to alter, remodel, improve,
renovate, repair or decorate the Premises, Building, or any part thereof and
that no representations respecting the condition of the Premises or the Building
have been made by Landlord to Tenant except as specifically set forth herein or
in the Tenant Work Letter. However, Tenant hereby acknowledges that Landlord is
currently renovating or may during the Lease Term renovate, improve, alter, or
modify (collectively, the "Renovations") the Project, the Building and/or the
Premises. Except for (i) emergencies, or (ii) repairs, alterations, improvements
or additions required by governmental or quasi-governmental authorities or court
order or decree, such Renovations shall be performed in a manner so as not to
materially interfere with Tenant's access to the Premises or Parking Area.
Subject to the forgoing, Tenant hereby agrees that such Renovations shall in no
way constitute a constructive eviction of Tenant nor entitle Tenant to any
abatement of Rent. Landlord shall have no responsibility and shall not be liable
to Tenant for any injury to or interference with Tenant's business arising from
the Renovations, nor shall Tenant be entitled to any compensation or damages
from Landlord for loss of the use of the whole or any part of the Premises or of
Tenant's personal property or improvements resulting from the Renovations, or
for any inconvenience or annoyance occasioned by such Renovations.
28.31 No Violation. Tenant hereby warrants and represents that neither its
execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys' fees
and costs, arising from Tenant's breach of this warranty and representation.
28.32 No Discrimination. Tenant covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this
Lease is made and accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any person or group
of persons, on account of sex, marital status, age, race, color, religion,
creed, national origin or ancestry, in the leasing, subleasing, renting,
transferring, use, occupancy, tenure or enjoyment of the Premises herein leased,
nor shall Tenant itself, or any person claiming under or through it, establish
or permit such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenant's
lessees, sublessees, subtenants or vendees in the Premises.
28.33 Definition of Landlord. The term "Landlord," as used in this Lease,
so far as covenants or obligations on the part of Landlord are concerned, shall
be limited to mean and include only the owner or owners, at the time such
covenant or obligation is to be performed, of the Building or the lessees under
any ground lease of the Building, if any.
28.34 Tenant Representation With Respect to the General Electric Pension
Trust. Tenant is not aware of any ownership relationship between Tenant and the
General Electric Pension Trust or its affiliates, except to the extent Tenant is
a publicly traded company and the General Electric Pension Trust or its
affiliates may own shares of Tenant's stock.
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[Quality Systems, Inc.]
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.
"Landlord":
LAKESHORE TOWERS LIMITED
PARTNERSHIP PHASE IV, a California limited
partnership
By: LTLP IV CORP., a Delaware corporation, the
sole General Partner of Lakeshore Towers
Limited Partnership Phase IV
By: /s/ ILLEGIBLE
---------------------------------
Its: President
"Tenant":
QUALITY SYSTEMS, INC.,
a California corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Its: ▇▇▇ ▇▇▇▇▇▇▇▇▇, CHAIRMAN
By ____________________________________
Its _________________________________
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EXHIBIT A
LAKESHORE TOWERS
OUTLINE OF PREMISES
[GRAPHIC OMMITED]
EXHIBIT A - Page 1
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
EXHIBIT B
LAKESHORE TOWERS
PROJECT LEGAL DESCRIPTION
Parcels 1 through 7 of Parcel Map 89-274 in the City of Irvine, County of
Orange, State of California as recorded in Book 267, Pages 18-26 of Parcel Maps.
EXHIBIT B - Page 1
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
EXHIBIT C
LAKESHORE TOWERS
DIRECT EXPENSES ALLOCATION
Common Area Expenses as defined in Paragraph 2.12 of the CC&Rs shall be
assessed to the various buildings in the Project pursuant to paragraph 10 of the
CC&Rs. Paragraph 10.5 of the CC&Rs provides for allocation of assessments in an
equitable manner based on relative gross square footage of the buildings. The
ratios are as follows:
--------------------------------------------------------------------------------
Building I - Office 401,789 sq. ft. 45.6%
Building I - Retail 6,000 sq. ft. 0.7%
Restaurant 12,100 sq. ft. 1.4%
Sporting Club 89,940 sq. ft. 10.2%
Building II 129,206 sq. ft. 14.7%
Building III 241,505 sq. ft. 27.4%
TOTAL 880,540 sq. ft. 100.0%
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EXHIBIT C - Page 1
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
EXHIBIT D
LAKESHORE TOWERS
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors or windows of the Premises without obtaining
Landlord's prior written consent. Tenant shall bear the cost of any lock changes
or repairs required by Tenant. Two keys will be furnished by Landlord for the
Premises, and any additional keys required by Tenant must be obtained from
Landlord at a reasonable cost to be established by Landlord. Upon the
termination of this Lease, Tenant shall restore to Landlord all keys of stores,
offices, and toilet rooms, either furnished to, or otherwise procured by, Tenant
and in the event of the loss of keys so furnished, Tenant shall pay to Landlord
the cost of replacing same or of changing the lock or locks opened by such lost
key if Landlord shall deem it necessary to make such changes.
2. All doors opening to public corridors shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. Landlord reserves the right to close and keep locked all entrance
and exit doors of the Building during such hours as are customary for comparable
buildings in the Irvine, California area. Tenant, its employees and agents must
be sure that the doors to the Building are securely closed and locked when
leaving the Premises if it is after the normal hours of business for the
Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. Landlord will furnish passes to persons for
whom Tenant requests same in writing. Tenant shall be responsible for all
persons for whom Tenant requests passes and shall be liable to Landlord for all
acts of such persons. Landlord and his agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
or the Project during the continuance thereof by any means it deems appropriate
for the safety and protection of life and property.
4. No furniture, freight or equipment of any kind shall be brought into
the Building without prior notice to Landlord. All moving activity into or out
of the Building shall be scheduled with Landlord and done only at such time and
in such manner as Landlord designates. Landlord shall have the right to
prescribe the weight, size and position of all safes and other heavy property
brought into the Building and also the times and manner of moving the same in
and out of the Building. Safes and other heavy objects shall, if considered
necessary by Landlord, stand on supports of such thickness as is necessary to
properly distribute the weight. Landlord will not be responsible for loss of or
damage to any such safe or property in any case. Any damage to any part of the
Building, its contents, occupants or visitors by moving or maintaining any such
safe or other property shall be the sole responsibility and expense of Tenant.
5. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except between
such hours, in such specific elevator and by such personnel as shall be
designated by Landlord.
6. The requirements of Tenant will be attended to only upon application
at the management office for the Project or at such office location designated
by Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.
7. No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on any part of the Premises or the
Building without the prior written consent of the Landlord. Tenant shall not
disturb, solicit, peddle, or canvass any occupant of the Project and shall
cooperate with Landlord and its agents of Landlord to prevent same.
EXHIBIT D - Page 1
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
8. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from the violation of this rule shall
be borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.
9. Tenant shall not overload the floor of the Premises, nor ▇▇▇▇, drive
nails or screws, or drill into the partitions, woodwork or drywall or in any way
deface the Premises or any part thereof without Landlord's prior written
consent. Tenant shall not purchase spring water, ice, towel, linen, maintenance
or other like services from any person or persons not approved by Landlord.
10. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machine or machines other than fractional
horsepower office machines shall be installed, maintained or operated upon the
Premises without the written consent of Landlord.
11. Tenant shall not use or keep in or on the Premises, the Building, or
the Project any kerosene, gasoline or other inflammable or combustible fluid,
chemical, substance or material.
12. Tenant shall not without the prior written consent of Landlord use
any method of heating or air conditioning other than that supplied by Landlord.
13. Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in or on the Premises, or permit or allow the Premises
to be occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Project by reason of noise, odors, or vibrations, or
interfere with other tenants or those having business therein, whether by the
use of any musical instrument, radio, phonograph, or in any other way. Tenant
shall not throw anything out of doors, windows or skylights or down passageways.
14. Tenant shall not bring into or keep within the Project, the Building
or the Premises any animals, birds, aquariums, or, except in areas designated by
Landlord, bicycles or other vehicles.
15. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances,
rules and regulations.
16. The Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the use of the
Premises provided for in the Summary. Tenant shall not occupy or permit any
portion of the Premises to be occupied as an office for a messenger-type
operation or dispatch office, public stenographer or typist, or for the
manufacture or sale of liquor, narcotics, or tobacco in any form, or as a
medical office, or as a ▇▇▇▇▇▇ or manicure shop, or as an employment bureau
without the express prior written consent of Landlord. Tenant shall not engage
or pay any employees on the Premises except those actually working for such
tenant on the Premises nor advertise for laborers giving an address at the
Premises.
17. Landlord reserves the right to exclude or expel from the Project any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.
18. Tenant, its employees and agents shall not loiter in or on the
entrances, corridors, sidewalks, lobbies, courts, halls, stairways, elevators,
vestibules or any Common Areas for the purpose of smoking tobacco products or
for any other purpose, nor in any way obstruct such areas, and shall use them
only as a means of ingress and egress for the Premises.
19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to ensure the most effective operation
of the Building's heating and air conditioning system, and shall refrain from
attempting to adjust any controls.
20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of trash and garbage in Irvine,
California without violation of any law or ordinance governing such disposal.
All
EXHIBIT D - Page 2
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.
21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
22. Any persons employed by Tenant to do janitorial work shall be
subject to the prior written approval of Landlord, and while in the Building and
outside of the Premises, shall be subject to and under the control and direction
of the Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.
23. No awnings or other projection shall be attached to the outside
walls of the Building without the prior written consent of Landlord, and no
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises other than Landlord standard
drapes. All electrical ceiling fixtures hung in the Premises or spaces along the
perimeter of the Building must be fluorescent and/or of a quality, type, design
and a warm white bulb color approved in advance in writing by Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the prior written consent of Landlord. Tenant shall abide by
Landlord's regulations concerning the opening and closing of window coverings
which are attached to the windows in the Premises, if any, which have a view of
any interior portion of the Building or Building Common Areas.
24. The sashes, sash doors, skylights, windows, and doors that reflect
or admit light and air into the halls, passageways or other public places in the
Building shall not be covered or obstructed by Tenant, nor shall any bottles,
parcels or other articles be placed on the windowsills.
25. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.
26. Tenant must comply with the State of California "No-Smoking" law set
forth in California Labor Code Section 6404.5, and any local "No-Smoking"
ordinance which may be in effect from time to time and which is not superseded
by such State law.
27. Tenant hereby acknowledges that Landlord shall have no obligation to
provide guard service or other security measures for the benefit of the
Premises, the Building or the Project. Tenant hereby assumes all responsibility
for the protection of Tenant and its agents, employees, contractors, invitees
and guests, and the property thereof, from acts of third parties, including
keeping doors locked and other means of entry to the Premises closed, whether or
not Landlord, at its option, elects to provide security protection for the
Project or any portion thereof. Tenant further assumes the risk that any safety
and security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.
28. All office equipment of any electrical or mechanical nature shall be
placed by Tenant in the Premises in settings approved by Landlord, to absorb or
prevent any vibration, noise and annoyance.
29. Tenant shall not use in any space or in the public halls of the
Building, any hand trucks except those equipped with rubber tires and rubber
side guards.
30. No auction, liquidation, fire sale, going-out-of-business or
bankruptcy sale shall be conducted in the Premises without the prior written
consent of Landlord.
31. No tenant shall use or permit the use of any portion of the Premises
for living quarters, sleeping apartments or lodging rooms.
32. Tenant shall have the exclusive right to use its reserved parking
spaces, if any, from 8:00 A.M. to 6:00 P.M. Monday through Friday.
Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Premises,
Building, the Common Areas and the Project, and for the preservation of
EXHIBIT D - Page 3
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
good order therein, as well as for the convenience of other occupants and
tenants therein. Landlord may waive any one or more of these Rules and
Regulations for the benefit of any particular tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant, nor prevent Landlord from thereafter enforcing any such
Rules or Regulations against any or all tenants of the Project. Tenant shall be
deemed to have read these Rules and Regulations and to have agreed to abide by
them as a condition of its occupancy of the Premises.
EXHIBIT D - Page 4
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
EXHIBIT E
LAKESHORE TOWERS
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of ___________, ________ by and between ____________
as Landlord, and the undersigned as Tenant, for Premises on
the____________floor(s) of the office building located at ________,____________,
California___________, certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease
and all amendments and modifications thereto. The documents contained in Exhibit
A represent the entire agreement between the parties as to the Premises.
2. The undersigned currently occupies the Premises described in the
Lease, the Lease Term commenced on ____________________, and the Lease Term
expires on __________________, and the undersigned has no option to terminate or
cancel the Lease or to purchase all or any part of the Premises, the Building
and/or the Project.
3. Base Rent became payable on________________________.
4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.
5. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:
6. Tenant shall not modify the documents contained in Exhibit A without
the prior written consent of Landlord's mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through _________________________________. The current monthly installment of
Base Rent is $___________________________________.
8. All conditions of the Lease to be performed by Landlord necessary to
the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder. In addition, the undersigned has not delivered any notice to
Landlord regarding a default by Landlord thereunder.
9. No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Landlord except as provided in the Lease.
10. As of the date hereof, there are no existing defenses or offsets,
or, to the undersigned's knowledge, claims or any basis for a claim, that the
undersigned has against Landlord.
11. If Tenant is a corporation or partnership, each individual executing
this Estoppel Certificate on behalf of Tenant hereby represents and warrants
that Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.
12. There are no actions pending against the undersigned under the
bankruptcy or similar laws of the United States or any state.
13. Other than in compliance with all applicable laws and incidental to
the ordinary course of the use of the Premises, the undersigned has not used or
stored any hazardous substances in the Premises.
14. To the undersigned's knowledge, all tenant improvement work to be
performed by Landlord under the Lease has been completed in accordance with the
Lease and has been accepted by
EXHIBIT E - Page 1
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]
the undersigned and all reimbursements and allowances due to the undersigned
under the Lease in connection with any tenant improvement work have been paid in
full.
The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee or prospective purchaser,
and acknowledges that said prospective mortgagee or prospective purchaser will
be relying upon the statements contained herein in making the loan or acquiring
the property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.
Executed at________________on the______________day of_____________,___________.
"Tenant":
________________________________________
a ______________________________________
By:_____________________________________
Its:____________________________________
By: ____________________________________
Its: ___________________________________
EXHIBIT E - Page 2
LAKESHORE TOWERS BUILDING II
[Quality Systems, Inc.]